Bright v. Hutton.

pany, except in the extraordinary case of all having contracted, for contributories are those only who have contracted by themselves or agents with a creditor, or who have agreed to indemnify or repay, in part or in all, those who have contracted with the creditor on their own account. We consider the law to have been most correctly laid down by Lord Cranworth in Carrick's case, 1 Sim. (N. s.) 509, s. c. 5 Eng. Rep. 114. All the questions of contributories resolve themselves into two simple questions of fact; first, by far the most frequent occurrence, did the alleged contributory make, or authorize to be made, the contract in respect of which he is called on to contribute, on his account jointly with others? or, secondly, if any one or more entered into the contract on his own or their own behalf, did he agree to indemnify the person or persons contracting, in part or in all, against the consequences of that contract? The machinery of this act (the 11 & 12 Vict. c. 45) is undoubtedly not well adapted to such a case. This statute was followed up by the 12 & 13 Vict. c. 108, passed to amend the former. It is enacted, that notwithstanding any thing in that act importing a more limited application thereof, the same shall apply to all partnerships, associations, or companies whereof the partners or associates are not less than seven in number, whether incorporated or unincorporated. This statute renders all liable, whether their purpose were commercial or not. We think that the term "association" is applicable to such a body of persons as is described in your lordships' question. That body would, we think, have been within the 11 & 12 Vict. if its object had been commercial, the only question on that act being, whether a railroad fell within that description. The object of the 12 & 13 Vict. was to extend the former acts, upon which a more limited construction was put. This body would clearly have fallen within the 9 & 10 Vict. c. 28. We are of opinion, therefore, that it was meant to be comprised in the class of "associations." It is perfectly true that some of the provisions in this statute, as well as the bulk of those under the former, are applicable only to partnerships and companies which have a jointstock capital and credits, who are united together with a common purpose of making joint contracts, who for that purpose are bound by the agency of one another, or by that of one or more common agents; be they directors or officers, and who would necessarily become contributories bound by such joint contract. But though these provisions are inapplicable generally to the cases of projectors of different companies, there may be cases in which they, or some of them, are capable of being applied with advantage, entirely or partially; and we think it is for the Court of Chancery to decide, which it has undoubtedly a discretion to do, (11 & 12 Vict. c. 45, s. 12,) on each application, whether the particular concern is one to which it will, under all the circumstances, be proper that the act should be applied. We think this consideration affords an answer to an objection which appeared at first sight to present a formidable difficulty-that there are associations comprehended in those which we consider to be within. the Winding-up Acts, in which there would be a great difficulty and

Bright v. Hutton.

inconvenience in applying the acts; at the same time, it may be observed that there are others in which they may with convenience be applied. We answer your lordships' question by stating that the proposed case is one to which the Winding-up Acts may be applied if the court think fit, not one to which the court must apply them.

LORD CHANCELLOR. My lords, I shall propose to your lordships to pursue the same course which I suggested to your lordships in the last case, namely, to adjourn the further consideration of this case. The learned judges have now given their opinions, in which, as at present advised, I entirely concur, that this is a case which does fall within the acts of parliament, if the Court of Chancery shall so think fit. The great point in the opinion which has been delivered, in which I entirely concur, is, that, according to that opinion, every word in the acts of parliament in question has given to it its natural import; and though it is very difficult, I admit, to bring within the act of parliament some of the cases which are by this construction brought within it, yet it would be impossible to give the natural effect to the words of the act of parliament if your lordships were to come to a contrary conclusion. It strikes me, therefore, that the opinion of the learned judges is one in which your lordships will probably entirely concur; but as this case came before your lordships on the merits, and this was a preliminary point, upon which the opinion of the judges has been taken, and has now been delivered to your lordships, I should propose, as I did in the former case, that your lordships should adjourn the further consideration of this case, in order that the case itself may be heard at your lordships' bar upon the merits; and when the argument is concluded, your lordships will then, with the assistance which you have now derived from the opinion just delivered, be enabled, without difficulty, to dispose of the case.

LORD BROUGHAM. My lords, I take it to be quite clear that my noble friend has pointed out the course which we ought to pursue. The argument at the bar was stopped in order to obtain the opinion of the learned judges on the question, whether we ought to go on with the case at all; because the result of the learned judges giving a contrary opinion would have been to have stopped the appeal altogether, that is, if your lordships had been of the same opinion with the judges. Therefore we waited until we saw whether or not that opinion would be given for or against the case being within the act of parliament, and whether or not we should agree with that opinion if it were so given. The judges are clearly and unanimously of opinion that the case is within the act of parliament; and I agree with my noble and learned friend and with the judges. I was originally of that opinion two years ago, agreeing with Lord Cottenham. I afterwards, I own, had doubts on the subject; those doubts the further consideration of the case, and no doubt also the learned opinion and arguments of the learned judges, have tended to remove; and I am prepared to say that my opinion, as well as my noble and learned friend's, agrees with the opinion of the judges. But it is not necessary that we

Bright v. Hutton.

should now dispose of that.

It is quite sufficient for us to

say that

we see good reason for going on with the case.

The further consideration of the case was then adjourned.

June 28.

The consideration of these cases was resumed this day before the same lords, assisted by the judges1.

C. P. Cooper, on the second point of his argument, cited Sichell's case, 1 Sim. (N. s.) 187, 190; s. c. 1 Eng. Rep. 194; Brittain's case, 1 Sim. (N. s.) 281; s. c. 7 Eng. Rep. 28; Capper's case, ld. 178; s. c. 2 Eng. Rep. 77; Carrick's case, Id. 505; s. c. 5 Eng. Rep. 114; Hunter's case, Id. 435; s. c. 4 Eng. Rep. 164; and other cases in equity, where doubts were thrown out as to the correctness of the decision in Upfill's case, 2 H. L. C. 674; s. c. 1 Eng. Rep. 13; and also the case of Ashpitel v. Sercombe, 5 Exch. 147, and the cases at law there cited; and contended, in substance, that it was contrary to the well-established doctrine of the courts of law to imply, as against Mr. Brignt, an authority from him to his co-provisional committee-men, or to the managing committee, to bind him by their contracts; and that, therefore, the call which had been made by the Master, not being made for the purpose of defraying any expenses for which Bright was liable, could not be sustained as against him.

Bethell, contrà. There have been three propositions contended for by Mr. Cooper: first, that though Mr. Bright is properly on the list of contributories, he is not liable for any thing; secondly, that if he is liable to contribute at all, he is only liable for that proportionate sum that bears the same ratio to the whole amount required as the number of shares that he agreed to take bears to the whole number of shares in the concern; and, thirdly, that if he is not liable in that ratio, he is liable only to the extent of 2s. per share on the number of shares that he agreed to take. Our propositions in support of the official manager's appeal are of this nature, that the Master was wrong in limiting Mr. Bright's liability to the expenses incurred between the 14th October and the 30th November. We object to both termini, and submit, that from the time Mr. Bright became a provisional committee-man he must be taken to have embarked in the proceeding as it then was, and to be liable retrospectively for his share of the expenses from the commencement of the project. The Master thought that the authority to incur expenses, which was implied, following Upfill's case, must be taken to have ceased when it became impossible to obtain the act of parliament; but I submit, that as Mr. Bright did not apply to have his name removed from the provisional committee, his liability continued. As to the propositions of the other side, it is only necessary to state the first for it to answer itself; for every person on the list of contributories must be liable to something, and there has been no appeal from the order placing him on

The judges present on this occasion were PARKE, ALDERSON, PLATT, and MARTIN, BB., and COLERIDGE, MAULE, CRESSWELL, WILLIAMS, and CROMPTON, JJ.

Bright v. Hutton.

the list. In answer to the second proposition, I say that this is not like the case of a completely formed company, in which case the proposition would be good; but here the status of each person is positive, and not relative to the position which he would hold when the company should be completely formed. In fact, the case must be viewed as if there were two companies, the company ultimately intended to be formed, and the body of provisional committee-men associated together to form that company. Between the members of this latter body there exists no actual bond or vinculum that would enable the minority to bind the majority, or vice versa, unless upon the principle that there existed an implied authority from the whole of this body to the managing committee to enter into contracts and incur expenses necessary to the obtaining the act of parliament. This was what was established by the decision of this house in Upfill's case, namely, in other words, that the circumstance of being a provisional committee-man and an allottee of shares amounted to the proof of facts to authorize the assumption of this implied authority. Upon what principle, then, can the liability of this provisional committeeman be limited to the expenses incurred between the 14th October and the 30th November? It is clear that the authority that is given is not only an authority for the future, but the past. Suppose any order to have been given prior to a provisional committee-man having accepted shares, and the order to have been in fieri when he accepted shares, does he not, by becoming a complete member of this association, become liable for every expense incurred from the commencement, for the purpose of establishing the company, at least, every expense that would be justified under the terms of the 23d section of the 7 & 8 Vict. c. 110, "and all other acts necessary for obtaining an act of incorporation, or other act for enabling the company to execute such works?" This point is not without authority. In Upfill's case, Lord Brougham (2 H. L. C. 692; s. c. 1 Eng. Rep. 18) says, in commenting on Nockolls v. Crosby, 2 B. & Cr. 814, and Fox v. Clifton, 6 Bing. 776, "Neither of these cases resembles the one at the bar; neither of them decides, that if several persons join in a plan to form a partnership, and one of them accepts a given proportion of the stock, which would give him certain rights were the partnership formed and in active operation, he can recover money paid for necessary expenses in the preliminary and provisional proceedings, or that he must not be held to give an authority, impliedly at least, to pledge his credit for the necessary expenses of the concern whereof he was a member."

[LORD BROUGHAM. That was only said to negative the authority of those two cases upon the question then before the house. I did not intend to lay down any rule of law inconsistent with those cases.]

The moment the deposit was paid up upon shares it was applicable to the payment of expenses incurred ab initio; this proves the liability for previous expenses. The case of Ex parte Dale, 16 Jur. 207; s. c. 9 Eng. Rep. 255, clearly establishes the liability for expenses subsequent to the 30th November, 1815, that is, the expenses of winding up the company. I deny that legal liability is to be the measure of

VOL. XII.

2

Bright v. Hutton.

the equitable liabilities. I submit, that if a person permits his name to be placed on the provisional committee, and accepts shares as one of that body, he must be taken to give authority to his fellow committee-men to act for him in his absence in all matters defined on the prospectus and enumerated in the 23d section of the Registration Act, 7 & 8 Vict. c. 110; but if it be denied that at law he is not liable in respect of the contract of his fellow committee-men, then I say that in equity he is liable, for as he would be entitled to participate in profits, should such arise, in consequence of the acts of his co-committee-men so, on the ground of mutuality, must he be liable for the expenses.

C. P. Cooper, in reply. Upfill's case has decided nothing as to the extent of the liability of the party, it only decided that he was a contributory; and the real question on the first appeal is quite open, namely, whether the authority for the committee of management to contract on behalf of the members of the provisional committee is to be implied. Cottle's case decided that the mere circumstance of being a provisional committee-man did not create any liability; therefore, until the 14th October, when Bright combined the character of provisional committee-man and allottee, he was not liable, even according to the decision in Upfill's case; he was not, therefore liable for any expenses incurred previous to that date.

At the close of the argument the Lord Chancellor moved that the following question should be put to the judges, which was agreed to by the house. The question submitted to the judges stated the facts, as stated in this report antecedent to the order for winding up the company, but it is considered unnecessary to repeat them, the letter A being substituted for the name of Mr. Bright. The question asked

was

"Do the facts above stated afford sufficient evidence at law to warrant a verdict, that A is liable to a creditor, on the employment of the managing directors, for work done necessary for obtaining the act of parliament?"

June 28. PARKE, B., delivered the following answer: - All her majesty's judges who have heard the argument are of opinion, that but for the decision of your lordships' house in Upfill's case, the facts above stated would not have warranted a verdict, that A is liable to a creditor, on the employment of the managing directors, for work done necessary for obtaining the act of parliament. We consider that Upfill's case decided two points, first, of law, that similar evidence was such as was fit to be considered by a jury in determining the question of fact, that he was liable on the ground of having given authority, and therefore would have warranted a verdict against him; and, secondly, it decided the question of fact, that Mr. Upfill had given the authority. Upon the former point, we consider your lordships' decision to be binding upon every inferior court, and for that reason answer the question in the affirmative. But for that case, we, upon other decisions, should have been of a contrary opinion.