CASES

ARGUED AND DETERMINED.

IN THE

HOUSE OF LORDS;

DURING THE YEAR 1852.

BRIGHT V. HUTTON; HUTTON v. BRIGHT; In re THE JOINT-STOCK COMPANIES WINDING-UP ACTs, 1848, 1849; In re THE DIRECT BIRMINGHAM, OXFORD, READING, AND BRIGHTON RAILWAY COMPANY.1

August 6, 1851; June 22, 26, 28, 1852.

Joint-Stock Companies Winding-up Acts - Provisional Committeeman-Upfill's Upfill's Case overruled - Abortive Company.

A railway company was projected and provisionally registered, having a provisional committee of more that seven persons. The provisional committee resolved to establish the company as proposed by the prospectus, and to apply for an act of parliament for that purpose, and appointed a managing committee of more than seven persons. In consequence of not being able to procure a sufficient number of subscribers the project was abandoned, and no act of parliament was ever applied for:

Held, that such company or association was within the meaning of the Joint-Stock Companies Winding-up Acts of 1848, 1849.

Semble, (per the judges,) that a body of persons associated to obtain an act of parliament to enable them to act as a company for "commercial or trading purposes," whose ultimate though not immediate purpose is commercial or trading, is within the 7 & 8 Vict. c. 111. But it is well settled at law that there is no partnership between such an association, "no common power of binding each other merely by such a relation; each binds himself by his own acts only."

H., a member of the provisional committee in the above projected, but abandoned company, who was not present at the meeting when the managing committee was appointed, and who never acted in the affairs of the company, but who accepted shares as a provisional committee-man, and paid his deposit thereon, is not liable at law to a creditor, on the employment of the managing committee, for work done, necessary for obtaining the proposed act of parliament. And held, (virtually overruling Upfill's case, 2 H. L. C. 674; s. c. 14 Jur. 843; 1 Eng. Rep. 13,) that H. is not liable in equity to contribute, beyond his deposit, towards the expenses of the company.

Per the Lord Chancellor, dubitante Lord Campbell. Although the House of Lords is bound

1 16 Jur. 695. Before the LORD CHANCELLOR, LORDS TRURO, CAMPBELL, and CRANWORTH, assisted by Judges PARKE, ALDERSON, PLATT, and MARTIN, BB., and MAULE, WIGHTMAN, ERLE, WILLIAMS, TALFOURD, and CROMPTON, JJ.

Bright v. Hutton.

by its own decision in any particular case, so that that particular decision could not be reversed but by an act of parliament, yet the house is not so bound by any rule of law which it might lay down, if, upon a subsequent occasion, it should differ from that rule.

66

In the year 1845 a company or association was formed for the purpose of constructing a railway from Birmingham to Oxford, and thence to Reading and Brighton, for the conveyance of goods and passengers. The capital of the company was to be 2,000,000l., divided into 80,000 shares of 251. each, upon each of which shares a deposit of 2l. 12s. 6d. was to be paid. The company was provisionally registered, pursuant to the stat. 7 & 8 Vict. c. 110, intituled “ An Act for the Registration, Incorporation, and Regulation of Joint-Stock Companies," by the name or style of "The Direct Birmingham, Oxford, Reading, and Brighton Railway Company." A prospectus was printed, published, and circulated amongst the public by the promoters of the said company, containing the names of ninety-three persons, amongst whom was the appellant, Henry Smith Bright, as being the provisional committee of the said company; and the prospectus contained a statement of the objects of the said company, and invited the public to apply for shares therein. On the 2d October, 1845, Henry Smith Bright wrote a letter to the secretary of the company, requesting to know what number of shares had been allotted to the directors. On the 8th October, 1845, a meeting of the provisional committee, Mr. Bright not being present, was held at the offices of the company in Moorgate street, at which a committee of management was appointed, and certain resolutions were passed giving authority to the committee of management to allot shares, and "to apply the funds of the company in payment of all expenses incurred in its formation, and in the preparation of the plans and sections to be submitted to parliament." A copy of the resolutions passed at that meeting was forwarded to each member of the provisional committee, and amongst others to Henry Smith Bright. The several persons who had been so appointed the managing committee accepted and took upon themselves the office and duties of such managing committee, and employed solicitors, agents, surveyors, engineers, and other persons to do and perform the acts necessary to be done in and about the formation of the said company, and the preparation of the plans, sections, and books of reference required by the standing orders of the houses of parliament, to be deposited on or before the 30th November, 1845, in order to the obtaining an act of incorporation in the then following session of parliament, and such expenses amounted in the whole to 10,174l. 11s. 5d. On the 9th October, 1845, a meeting of the managing committee was held, at which meeting a resolution was passed, "That the provisional committee have 100 shares each." On the 10th October, 1845, Mr. Rayner, the secretary of the company, sent a circular letter to each member of the provisional committee, and amongst others to Henry Smith Bright, which was in the following terms:-"Sir, I am requested to inform you that the committee of management has apportioned 100 shares in this company to each member of the provisional committee. You will please inform me, on or before Wednesday morning next, whether

Bright v. Hutton.

you will take that or any less number. Should you not reply by that time, the committee will consider you decline taking any." On the 14th October, 1845, the appellant wrote in reply, "I am willing to take the 100 shares in your company placed at my disposal as a member of the provisional committee." The shares were accordingly allotted, and the appellant duly paid the sum of 2627. 10s., being the amount of the deposit on the said 100 shares. 67,630 shares were allotted in the said company, but out of that number deposits were paid on 4,295 shares only, and it consequently became impossible to proceed with the undertaking, and the same was abandoned. Some only of the members of the provisional committee, who accepted the 100 shares apportioned to them, paid the deposit on such shares, or made any payment or contribution on account of the expenses incurred in the formation of the said company, and the preparation of the plans, sections, and books of reference. The members of the committee of management, and some of the members of the provisional committee, have been called upon to pay, and have paid, large sums of money in liquidation of the said expenses, but the sums so contributed have been unequal in amount.

On the 21st December, 1849, an order was made by his honor the late Vice-Chancellor of England, for the dissolution and winding up of the said company, under the provisions of the said Joint-Stock Companies Winding-up Acts, 1848 and 1849. Master Brougham, to whom the winding up of the affairs of the said company was referred, duly appointed James Hutton, the respondent in the first appeal, official manager of the company; and in settling the list of contributories, the Master placed the name of the appellant on the list of contributories of the said company as a contributory in respect of 100 shares, "as a member of the provisional committee who has paid on his shares." The Master, in his report, dated the 13th June, 1851, found that the sum of 7,898l. 10s., being the expenses comprised in the said sum of 10,1747. 11s. 5d., up to the 30th November, 1845, was necessarily incurred by the managing committee in preparing to launch the common concern in which the said several contributories had engaged, and was of opinion that each of the above-named contributories (which list included Bright,) was legally liable to bear and pay his ratable proportion of the necessary expenses of the committee in preparing the launch of the common concern, incurred between the 14th October, 1845, and the 30th November, 1845, both inclusive, being the sum of 4,5621. 10s. 7d.; and that others of the above-named contributories (not including Bright) were liable to contribute towards the expenses incurred before the 14th October, 1845, and after the 30th November, 1845; and he was of opinion that each of the several contributories was legally liable to bear and pay a ratable proportion of the costs incurred in winding up the company, according to the number of shares held by him; and he thereby made a call of 10l. per share, according to the number of shares in respect of which each contributory was on the list, each of the several contributories who had already made any payment, by way of contribution to the said expenses or otherwise, having credit given him for the

Bright v. Hutton.

amount so paid by him against such call. Both Bright and the of ficial manager were dissatisfied with this finding of the Master; Bright because he was made liable for any of the expenses, and the official manager because Bright was not declared liable for his proportion of the expenses incurred before the 14th October, 1845, and after the 30th November, 1845; and accordingly Bright moved, before Lord Cranworth, late Vice-Chancellor, that the order of the Master for the call of 10l. per share might be discharged as against him; and the official manager moved to discharge that part of the Master's finding by which Bright's liability to contribute was confined to the expenses incurred between the 14th October, 1845, (the date of his accepting the allotment of shares,) and the 30th November, 1845, (the day after which it was impossible that the undertaking could proceed;) but it was by arrangement agreed, that, for the purpose of appealing to this house, the Vice-Chancellor should affirm both findings of the Master; which was accordingly done, and both motions were refused. From the orders refusing those motions these two appeals were now brought.

These appeals were argued before Lord Truro, (Lord Chancellor,) Lord Cranworth, and other lords, on the 6th August, 1851, by C. P. Cooper and Morris, (with them G. O. Edwards,) on behalf of Mr. Bright; and by Bethell and Roxburgh, (with them C. S. Webb,) on behalf of Mr. Hutton, the official manager; but the house did not then decide them, their lordships being desirous, as it was understood, of having the assistance of the judges before deciding these cases, which had become so important in consequence of the decision of the house in Upfill's case, 2 H. L. C. 674; s. c. 14 Jur. 843; 1 Eng. Rep. 13.

The case now came on to be argued before the house and the judges, by one counsel on each side, their lordships having previously expressed a desire that a preliminary question, which was not raised upon the appeal, namely, whether a company which had become abortive, like the present, and had never obtained its act of parliament, was or was not within the scope and meaning of the Winding-up Acts of 1848 and 1849, should be argued.

June 22, 1852. C. P. Cooper, for Mr. Bright. The questions to be argued are first, whether a company, formed only to such an extent as this was, is within the Winding-up Acts; secondly, whether, assuming that it is, Mr. Bright is liable for more than a deposit of 2s. per share, according to the 23d section of the 7 & 8 Vict. c. 110. It has been very frequently a subject of regret by judges of the court of chancery, that projects of this description have been made the subjects of winding-up orders. Ex parte James, 1 Sim. (N. s.) 145, 146; s. c. 3. Eng. Rep. 218. None of the acts of parliament to which I am about to refer point to any jurisdiction to be exercised by the court of chancery, except in cases of partnerships or quasi partnerships. The origin of the Winding-up Acts was this that, according to the deci sions of courts of equity, see Van Sandau v. More, 1 Russ. 441, it was practically impossible to have a dissolution and winding up of a joint-stock concern without having every individual member of the