THE UNIVERSITY 
 
 OF ILLINOIS 
 
 LIBRARY 
 

 
THE 
 
 LIABILITIES 
 
 INCURRED BY THE 
 
 PEOJECTOES, MAMGEES & SHAEEHOLDEES 
 
 OF 
 
 E A I L W A Y 
 
 AND OTHER 
 
 JOmi-STOCK COMPANIES CONSIDEEED: 
 
 AND ALSO 
 
 THE EIGHTS AND LIABILITIES AKISING FKOM 
 
 lEANSFEKS OE SHAPES. 
 
 affilritten eipresslg for non-professional use. 
 
 By GEORGE HENRY LEWIS, 
 
 OP THE MIDDLE TEMPLE, ESQ. 
 
 SECOND EDITION. 
 
 LONDON: 
 
 SMITH, ELDER AND CO., 65, GORNHILL. 
 
 1846. 
 
London: 
 
 Printed by Stewart and Murray, 
 Old Bailey. 
 

 3 3?,T 
 
 iZ 
 
 ADVERTISEMENT. 
 
 /4 
 
 tr 
 
 The Author does not venture to suppose that this little pub- 
 lication will be found of any use to his professional brethren, and 
 therefore he trusts he incurs no charge of presumption by 
 placing it before the world, in the face of the learned treatises 
 on the subject already before the Profession, or soon to be 
 forthcoming. At the same time, he earnestly hopes that he 
 does not lay himself open to an imputation of another character. 
 Publications having the nature of “ Law for the Million^'' or 
 “ Evert/ Man his own Lawyer f he believes to be discreditable 
 to the writers, and mischievous to the readers ; and he would 
 much regret an opinion that these pages contain anything 
 in common with publications in all respects so exceptionable . 
 Indeed, he feels confident that any members of the Profession 
 who may honour his production with a perusal, will at once 
 perceive that, so far from attempting to lead non- professional 
 persons to act for themselves in legal matters — an object in his 
 view perfectly chimerical— it will, if it succeed in contributing 
 to the diffusion of sound information, both of general rights 
 and surrounding dangers, really induce the public more 
 anxiously to seek professional advice. To those for whom 
 this humble effort is really designed, the Author can only 
 say, he wishes that there were less necessity for its existence 
 than he fears there is, and that every man had so much 
 knowledge of law as to deter him from being “ his own 
 Lawyer 
 
 Ji-C, * ^ 
 
TABLE OF CONTENTS. 
 
 Introduction 
 
 Page 
 
 . 1 
 
 Chap. I. — The different Species of Partnerships, 
 
 and their legal positions considered * . 3 
 
 The ordinary Private Partnership . . • . 3 
 
 The Joint Stock Company 6 
 
 The Unincorporated Joint Stock Company . . .7 
 
 The Incorporated Joint Stock Company . . .7 
 
 Alterations made by the Joint Stock Companies’ Act . 8 
 
 Chap. II. — Of Companies not within the Operation 
 OF THE Joint Stock Companies’ Act (7 & 8 Viet. c. 110) 11 
 General Proceedings in forming a Company . .11 
 
 Part 1. — Liabilities incurred before the formation of the 
 
 Company . . .12 
 
 1. Of Projectors and Managers 15 
 
 Subscribers interfering in the Management . . 22 
 
 2. Of Subscribers merely as such . . . .31 
 
 Part 2. — Liabilities incurred after the complete formation 
 
 of the Company 36 
 
 Part 3. — Of the Transfer of Shares in Companies not within 
 
 the Provisions of the Joint Stock Companies’ Act . 39 
 The Special Provisions of the 7 W. 4 and 1 Vic. c. 73, 
 as to Transfer of Shares 42 
 
 Chap. III. — Of Companies under the Regulation of 
 7 & 8 ViCT. c. 110 (the Joint Stock Companies’ Act) . . 47 
 
 Proceedings to be taken in forming a Company . . 47 
 
 Part 1. — The Liabilities incurred before Provisional Regis- 
 tration of the intended Company . . . .55 
 
 Part 2. — The Liabilities incurred after the Provisional 
 Registration of the Company, and before its Establish- 
 ment by Complete Registration, Charter, Letters Pa- 
 tent, or Act of Parliament 58 
 
 Part 3. — The Liabilities after the Complete Registration of 
 the Company, and in the case of Railway and other 
 Companies, for executing public works, until obtain- 
 ing an Act of Parliament. . . . . .63 
 
 Part 4. — Of the Transfer of Shares in Companies within 
 
 the operation of the Joint Stock Companies’ Act . 65 
 
 Conclusion . ^ 75 
 
 Summary of the Authorities for constituting Joint Stock 
 
 Companies 75 
 
 Companies authorized by Special Acts of Parliament, 
 Charters, or Letters Patent, or otherwise constituted . 75 
 Companies not included in the foregoing, and not within 
 the Provisions of the Joint Stock Companies’ Act . 76 
 Companies subject to the Provisions of the Joint Stock 
 
 Companies’ Act .76 
 
 Suggestions whether Foreign and Colonial Railway 
 Companies are within the Act 77 
 
INTRODUCTION. 
 
 It is to be feared that not a small number of persons^ 
 are in the habit of engaging in what may be termed 
 the Share Trade,” at the present time of a truly 
 colossal magnitude, without being in the least degree 
 acquainted with the responsibilities which attach to 
 them, either as Projectors, Managing Committee-men, 
 or even, as mere Shareholders. The fact, if so, is 
 one of a startling character ; for although there may 
 be much of a healthy character in the present rapid 
 increase of Railway and other Joint Stock Com- 
 panies, productive alike of general and individual 
 prosperity, yet it must be owned, even by the most 
 ardent speculator, that many of the projects now 
 afloat are but shadows, and will not bear the strong 
 light of a rigid inquiry. The shareholders in these 
 Companies will have to stand the day of reckoning, 
 and may then learn, what it would be well if they 
 learned beforehand, the responsibilities attaching to 
 the position. These considerations have suggested 
 the idea, that a plain untechnical statement of those 
 responsibilities would be a work of much practical 
 utility ; and the Writer of these pages has therefore 
 endeavoured to give his sentences as little of a legal 
 colouring as one accustomed to the use of legal 
 
 B 
 
2 
 
 INTRODUCTION. 
 
 phraseology can do ; whilst, at the same time, he has 
 aimed at setting forth the general principles upon 
 the subject fully and precisely, leaving as few ques- 
 tions of doubt as the present state of Joint Stock Law, 
 and the judicial interpretations of it, will admit of. 
 But while the Writer trusts that this work may be 
 relied on as a safe guide upon general rules and 
 principles, he would earnestly caution his readers 
 against being led by it in any other than ordinary 
 cases. Where the circumstances of a case are in any 
 respect special, that man is the best friend to himself 
 who seeks professional advice before he acts. It is 
 manifest that the nature and design of these pages 
 preclude the possibility of their containing a minute 
 and professional discussion of the law. Neither, if 
 it were possible, would it be beneficial to those for 
 whom they are designed. With these observations 
 the Writer leaves the work to do what good it may, 
 sincerely trusting that it may be found to fill up the 
 void which now exists in the publications of the day 
 relating to these all-engrossing transactions. 
 
3 
 
 CHAPTER I. 
 
 THE DIFFEllENT SPECIES OF PARTNERSHIPS, AND 
 THEIR LEGAL POSITIONS CONSIDERED. 
 
 With a view to the better understanding of the law 
 relating to Joint Stock Companies, it will be well to 
 consider the nature of a common private trading 
 partnership. For this purpose a few words will 
 suffice. Two or more persons may form a partner- 
 ship for the purpose of trade, v/ithout deed or instru- 
 mentj or any personal act. The circumstance of 
 one trade being carried on under the names of 
 A, B, and C, is sufficient to create a partnership 
 between those individuals, with all its liabilities as 
 regards the world; and the bare permission of an 
 individual, that his name shall be used, though he is 
 to derive no benefit therefrom, makes him responsible 
 as a partner. The several members of a partnership 
 have each a separate interest in his own share, but for 
 the purposes of the partnership business and liabilities 
 the law has this rule, that all their rights and respon- 
 sibilities are joint, — that is, that, upon the death of any 
 partner, the property credits, rights, and liabilities of the 
 firm remain solely to the survivors. But this apparent 
 injustice is only superficial; for the Court of Chan- 
 cery provides means whereby the deceased partner’s 
 estate may be charged with the debts, and receive the 
 
 B 2 
 
4 
 
 THE DIFFERENT SPECIES 
 
 benefit of his share of the profits.^' From the same 
 principle it arises, that the act of one partner in the 
 concerns of the partnership, is the act of and bind- 
 ing on all as regards the world ;f and proceedings 
 upon any contract affecting the partnership must be 
 by or against all the living members of the firm. 
 A man once a partner retains that character, as 
 regards the world, until notice of his retirement is 
 circulated in the most extensive manner. After that 
 notice, the retiring partner ceases to be responsible 
 for the future obligations of the firm. If he has put 
 any one in his place in the firm, such new partner 
 then becomes jointly responsible with his co-partners 
 to all future liabilities ; but the retiring partner re- 
 mains liable for the debts of the firm incurred up to 
 the period of his retirement. Adding to this, that 
 each partner is liable to answer for the whole of the 
 debts of the partnership, however small the extent 
 of his share, or even if he has no share whatever, 
 we have a general notion of the nature of a part- 
 nership, and the liabilities of its individual members 
 to the world, and also how that liability may be de- 
 termined. The rights and liabilities of partners, as 
 between each other, are almost as various as the 
 number of partnerships. Each individual case has its 
 own special circumstances, and its appropriate contract. 
 
 * The rule of law is strictly for the convenience and benefit of 
 the trading community, the reasons o£ which need not, however, be 
 stated here, 
 
 t The writer does not think it necessary to notice here, and in 
 other parts, the cases where the knowledge of persons dealing with 
 a partner, of particular circumstances in the transaction affect thei 
 rights as against the remainder of the firm. The writer has appended 
 this note only as illustrating the remark in the introduction. 
 
OF PARTNERSHIPS. 
 
 5 
 
 But the general rules may be stated to be, that each 
 partner has a separate independent interest in his 
 share — that no partner is liable for more than a share 
 of the debts equal to his share of the profits — that 
 in case one partner has paid more than his share of 
 the debts, he has a right to have the burden equally 
 divided by a proper allotment of the liabilities be- 
 tween himself and the rest, which, in legal phrase, is 
 termed a right to a contribution, and which right is 
 obtained by means of a suit in Equity to adminster the 
 partnership affairs. So a partner (subject, of course, to 
 any previous agreement) may determine his liability on 
 the future engagements of the firm by retiring from the 
 partnership at his pleasure without any formal act on 
 his part; but he cannot put in his place any nominee he 
 may select. In this respect he is subject to the pleasure of 
 his copartners, and without their consent has nopowe^ 
 to compel them to admit another person to his share in 
 the partnership. Elis independent power is confined 
 to claiming the payment to him, and value of his share. 
 Moreover, the management of private partnerships 
 is almost always subject to some terms agreed upon ; 
 but the general law is, that each partner has full 
 authority to conduct the affairs of the partnership,, 
 and to bind the others hy his acts done in such affairs. 
 The rule is, that each partner is the agent of the 
 whole firm, and empowered to act for it. Again^ 
 arising out of the joint character of the partnership 
 interest is this disability, that one partner cannot sue 
 the others in respect of any goods or money which 
 he had provided for the general benefit, as that 
 would be only a roundabout way of obtaining a con- 
 tribution which is the fitting subject of a suit in 
 
6 
 
 THE DIFFERENT SPECIES 
 
 Equity. This, in brief, is the legal position of a 
 private partnership ; first, as between itself and the 
 world ; and secondly, as between its individual mem- 
 bers. We shall see in what respects a public partner- 
 ship or Joint Stock Company differs from this. 
 
 In considering the nature of a Joint Stock Company 
 it will hardl}^ be necessary to refer to the multifarious 
 forms which it assumes. Our business is with the 
 substance and not with the shadow, however beau- 
 tiful or deformed. Neither do we intend to include 
 in the description such Joint Stock Companies as 
 Banking Companies, Schools, Scientific and Literary 
 Institutions, Friendly Societies, Loan Societies, and 
 Benefit Building Societies; for though these are 
 various species of the same genus, and have, therefore, 
 many points of similarity, yet they mostly have 
 peculiar characteristics, not falling within the scope of 
 our observations. Joint Stock Company then is^ 
 a partnership of an indefinite .number, or a large 
 definite number, of individuals, and therefore 
 called a Public partnership, united together for 
 the purpose of carrying on trade or business, having 
 a common stock or property divided into shares, 
 and confiding the management of its affairs to a 
 limited number of persons, either chosen from 
 the body of the partnership at large, or employed by 
 it, and superintended by some of its own members. 
 Such partnerships were, before the passing of the 
 Act of 7 & 8 Vic. c. 110, (the Joint Stock Com- 
 panies’ Act), which we shall presently notice more at 
 large, divided into two distinct classes, differing in 
 the extent of their privileges and disabilities, rights 
 and liabilities. These were the Incorporated and 
 
OP PARTNERSHIPS. 
 
 7 
 
 the Unincorporated. It is necessary to notice shortly 
 their several features. An Unincorporated Joint- 
 Stock Company (which class was by far the more 
 numerous) was in all respects similar to a private 
 partnership. Each member was liable for the whole 
 amount of the company’s debts, washable, as such, to 
 the bankrupt laws as a trader, and w^as bound by the 
 acts of his partners. In fact, in every particular, 
 except in respect of transferring his interest in 
 the partnership to a stranger, a member of an Un- 
 incorporated company was surrounded with the 
 same rights and responsibilities as he would be in an 
 Ordinary partnership. The Company, as a whole, 
 was also in the same position, and but for the aid of 
 some Acts of Parliament, of v/hich such companies 
 were at liberty to avail themselves by taking certain 
 prescribed steps, could not sue or be sued upon a 
 contract, or other cause of action, without the whole 
 of the members being joined in the proceedings by 
 name. A member of the Company could not sue it 
 for work done, or goods supplied for it, or money lent 
 to it by him, but was driven to a suit in equity for 
 contribution. There were also difBculties in the trans- 
 mission of the Company’s property, which savour 
 too much of legal technicality, to admit of in- 
 sertion here. Incorporated companies were of two 
 sorts. 1st, Those incorporated by Royal Charter, or 
 Letters Patent from the Crown; and, 2ndly, Those 
 incorporated by an Act of Parliament, but for the 
 purposes of the present statement, their features 
 were similar. The point of difference was this ; that 
 an Act of Parliament was necessary, where arbitrary 
 powers (affecting strangers to the company) were sought. 
 
8 
 
 THE DIFFERENT SPECIES 
 
 which the spirit of our law does not allow the Crown 
 to confer. An Incorporated Company was such a 
 Joint Stock Company as we have described, formed 
 by authority into one aggregate perpetual bodj’^, 
 having a common seal and a common name, or 
 style of incorporation ; by which it held property ; 
 was recognised and acted in legal proceedings, (the 
 individual miembers not being named,) thereby avoid- 
 ins: all the difficulties adverted to in the case of an 
 Unincorporated Company. The members were liable 
 for debts only to the extent of their shares in the 
 Company, and were not subject as such to the 
 bankrupt laws. Neither were they liable, on account 
 of the joint trade, in their individual capacities, nor 
 one of them for the debts or engagements contracted 
 by the others, but only for their respective shares or 
 interest in the joint stock, and that, upon trade and 
 contracts carried on or made in their corporate cha- 
 racter only* So also a member could enter into a con- 
 tract with the Company, and sue upon it, in the 
 courts of law. In all these particulars, therefore, it 
 differed from, and had advantages beyond, an ordi- 
 nary trading partnership, and an Unincorporated 
 Company. The law relating to Joint Stock Com- 
 panies, has now, however, received considerable 
 alteration and improvement by the Act 7 & 8 Vic. c. 
 110, which came into operation on the 1st Nov. 1844. 
 By it the formation of companies is placed under 
 a healthy system of supervision, and the liabilities of 
 persons engaged in them, though as unlimited as ever, 
 are rendered more clear and easy of ascertainment 
 than before the act. But this by no means renders 
 unnecessary a discussion of the law as existing prior 
 
OF PARTNERSHIPS. 
 
 9 
 
 to that act; for many of the numerous Companies now 
 before the world in various stages of advancement, 
 were formed under its operation, and recourse must 
 frequently be had to its rules for the decision of 
 rights and liabilities between adverse parties. Thus 
 we see that before the Act of 7 & 8 Vic. c. 110, 
 there were no means by which a large number of 
 men combining together for commercial enterprises^, 
 or other works or business of magnitude and im- 
 portance, could, without an Act of the Legislature, 
 or Royal Charter, place themselves in a position con- 
 venient for wielding so large a body, managing its 
 concerns, and exercising its legal rights, and that 
 even now, except in the case of Incorporated Com- 
 panies, similar to those existing before the Act of 
 7 & 8 Vic., the polity of the English law does not 
 allow of such a partnership company, however 
 gigantic, being formed without throwing upon every 
 individual member of it the aggregate debts of the 
 whole body.^ In other countries in Europe, this 
 state of the law does not exist. It is only necessary 
 to mention the partnership En Commandite'^'' in 
 France, and the Anonymous Partnership'^ in Ireland, 
 in proof of the observation. It does not fall within 
 our design to discuss the policy of our law on this 
 point. But, however much opinions may differ on it, 
 all who know anything of the legal disabilities and 
 difficulties under which Unincorporated Companies 
 
 * There is one limited exception to this general statement. By an 
 Act of 7 Will. 4 and 1 Vic., hereafter noticed, the Crown is em- 
 powered by Letters Patent to grant, that the liability of shareholders 
 in an Unincorporated Company may be restricted to a certain amount 
 per share, to be limited by the Letters Patent. 
 
10 THE DIFFERENT SPECIES OF PARTNERSHIPS. 
 
 and their individual members laboured before the 
 recent act, will readily acknowledge the boon that has 
 been conferred by the Legislature on companies of 
 that class, notwithstanding the remaining traits of 
 an ordinary partnership, which they still retain, as 
 presently will be noticed. 
 
 We have now shortly reviewed the general legal 
 character, of an Ordinary partnership, an Unincor- 
 porated Company, and an Incorporated Company, 
 as existing prior to the Joint Stock Companies’ 
 Act. That act leaves untouched the Ordinary 
 Partnership, and the Incorporated Company, and 
 has supplied means whereby what was before an 
 Unincorporated, may become an Incorporated com- 
 pany,' having certain privileges of the old Incorpo- 
 rated Company, but retaining the liabilities though 
 not the disabilities of its former character — that is, 
 whilst the Shareholders retain all their former liabili- 
 ties, the Company is relieved (as an aggregate body) 
 from many difficulties which the former nature of its 
 constitution entailed upon it ^ 
 
 These observations have now led us more imme- 
 diately to consider the question of liability, and in 
 doing so, it will be convenient and desirable on ac- 
 count of the present state of the law on the subject, 
 to divide it into two parts, 1st, As to Companies in 
 existence before the Act 7 & 8 Vic. c. 110. And 
 2ndly, as to subsequent Companies. We shall thus, 
 by following out the subject in different divisions, 
 keep the law applying to each, distinct, and prevent 
 an erroneous application of it by a mistaken selection 
 of a passage, and at the same time provide a more 
 ready reference to the desired part. 
 
11 
 
 CHAPTER II. 
 
 OF COMPANIES NOT WITHIN THE OPERATION OF THE 
 JOINT STOCK companies’ ACT (7 & 8 ViC. C. 110.). 
 
 For the better understanding of the principles here- 
 after laid down, it will be well to consider shortly, 
 what the nature of those proceedings were, that led 
 to the formation of a Joint Stock Company, before 
 the recent statute subjected it to regulations. The 
 only limits or restrictions placed upon the formation 
 of these companies, were the extent of the will and 
 ingenuity of the projectors ; and the mode of opera- 
 tion was equally uncontrolled. An individual having 
 conceived and brought forth a project, good, bad, or 
 indifferent, or worse, obtained the half consent, or 
 that silence which is said to imply consent, of some 
 men of respectability and station, as approving his 
 project, and having styled them Patrons, Vice-Presi- 
 dents, Directors, and so forth, sent before the world 
 a Prospectus of the Company, with a parade of Lords 
 This and Sirs Something That, for Patrons, Presi- 
 dents, Boards, Consulting Committees,” and other 
 snug Association Parliaments (of which the Projector 
 was in reality the Speaker), and a capital of any given 
 number of £1,000,000 that his fancy might create. 
 Meetings were held, at which some one of the so- 
 called Vice-Patrons, Vice-Presidents, or Directors, 
 with kind innocence presided, and others attended. 
 By these^means subscribers were obtained, and The 
 Company^^ began operations, — plans, surveys, offices. 
 
12 
 
 COMPANIES NOT INCLUDED IN 
 
 contracts, and subscription deeds — all directed from 
 time to time at these meetings by the secret wheel 
 which moved The Company,” and consented to 
 from pure ignorance by those present, and all this 
 before the actual formation of the company accord- 
 ing to the Prospectus. In due time the promised 
 child, it may be, proved an abortion, and the Di~ 
 rectors ” and Subscribers found that by attending the 
 meetings, and other trivial acts, something more than 
 mere moonshine remained to their share. On the con- 
 trary, if the project succeeded, to the full extent of 
 having its shares subscribed for and paid up within 
 the terms of the prospectus, the Company was then 
 completely formed, and became a public partnership, 
 with the incidents of a private partnership, as w e 
 have before described; and whatever the results of 
 the speculation, all the shareholders became in fact 
 partners, and liable for and to each other. 
 
 In discussing the liabilities of persons engaged in 
 such a company, we shall consider them as they arose 
 at different stages of the Company’s existence, viz. — 
 1st, Before its complete formation ; and, 2nd, After 
 that period ; and under each head, consider separately 
 the liabilities of persons projecting and assisting in 
 the management of the company, and afterw^ards 
 those of the subscribers merely. 
 
 Part 1. Before the complete formation of the Com- 
 pany, 
 
 In proceeding with this division of the subject, it 
 is necessary to observe in the outset, that the word 
 
 Companf'^ is here used as synonymous with Part- 
 nership and therefore, in considering the formation of 
 a Company, we have only to carry our minds to the 
 
THE JOINT STOCK COMPANIES’ ACT. 
 
 13 
 
 common occurrence of the formation of an ordinary 
 partnership. The fact of two persons engaged in 
 the same but separate trades, proposing to a third 
 of the same trade that the three should form a 
 partnership upon certain specified terms, does not 
 in fact form them, or even the two first, into a 
 partnership, until such third person consents to 
 the agreement, though, if the two incur any ex- 
 penses in making the proposition, they would 
 have to pay the amount of them to the person or 
 persons they employed. And further, if that third 
 person consents on condition that a fourth joins, and 
 brings with him a certain amount of capital, and, on 
 that understanding, deposits money towards the for- 
 mation of a common fund, and a fourth cannot be 
 found, then neither is the third a partner with the 
 two first, unless he has signed an unconditional agree- 
 ment of partnership, nor is his money liable to bear 
 any of those preliminary expenses mentioned, unless 
 he so agrees on depositing it. Exactly for the same 
 reason, the circumstance of A, B, and C putting forth 
 a Prospectus of a Company, with a capital of 100,000Z. 
 say, and stating certain terms in the Prospectus, is 
 not the formation of a Company. A bare proposi- 
 tion is no partnership. Before the passing of the 
 recent Statute, the formation of a Company was that 
 period of time when the terms of the Prospectus, as 
 to the amount of capital to be subscribed for, the 
 payment of deposits, signing of deeds, and any 
 other conditions attached by the Prospectus, to per- 
 sons desiring to become shareholders in the Company 
 had been complied with, when, in fact, every part of 
 the proposed capital stock had its subscriber or 
 partner answerable to the general partnership for 
 
14 
 
 COMPANIES NOT INCLUDED IN 
 
 the amount, and when every person proposing to be- 
 come a partner had consented to the terms of agree- 
 ment which were to bind the whole. Until that 
 period there was no Company in existence and no joint 
 stock ; in fact, it was but a scheme or project ; and 
 with reference to persons subscribing or applying for 
 shares in the proposed Company, and who did not 
 interfere in the preliminary management of it, there 
 was this implied condition, viz. that they consented 
 to become partners, and take the liabilities of 
 partners, only if a certain number of other persons 
 representing the amount of the proposed capital did 
 so also. We shall see how material these observa- 
 tions are, when we come to consider the liabilities of 
 persons'who have been engaged in projecting, or have 
 subscribed to companies which have failed attaining a 
 complete formation. But of course the foregoing are 
 general principles only, and, doubtless, in many cases 
 where, on payment of their deposits, subscribers have 
 signed the company’s deed, it will be found by the 
 terms of it, that by the fact of their signature, though 
 not by payment of deposit merely, they became 
 partners, with all the liabilities of that position, how- 
 ever small the amount of capital subscribed, or few 
 the subscribers. However, it is only with the gene- 
 ral case that we have to deal, and we trust sufficient 
 has been said to define the meaning of the heading 
 of this section — Before the formation of the com- 
 pany.” Now, with reference to the liabilities in- 
 curred in this stage, it is to be observed that, in 
 general, no cause for question on the subject has 
 arisen, except in cases where the project has proved 
 abortive, or a failure, and the Company has failed to 
 be formed ; for, as we shall see presently, upon its 
 
THE JOINT STOCK COMPANIES’ ACT. 
 
 15 
 
 formation all the previous liabilities of a few indi- 
 viduals become transferred to the whole body. 
 Without further delay, therefore, we shall proceed 
 to consider in this place, 1st, The liabilities of per- 
 sons engaged in the projection and management of 
 the intended Company ; and 2ndly, The liabilities of 
 the subscribers. But we must first notice that the re- 
 cent Statute has some operation on Companies either 
 entirely or partially formed before the 1st November, 
 1844 (the day on which it came into operation), as to 
 which we refer to a subsequent part of these pages. 
 In the present discussion on the liabilities of Mana- 
 gers and Subscribers, and also as to the Transfer of 
 shares, we only include such Companies and proceed- 
 ings as are entirely exempt from its provisions. 
 With regard to such Companies partially or entirely 
 formed before, but yet within the provisions of the 
 recent Statute, it needs only to be stated that all 
 their proceedings, up to the time of their becoming 
 subject to those provisions, will be regulated by the 
 old law, and after that period by the provisions of 
 the Statute, for which the reader is referred to a 
 subsequent page. We now proceed with those which 
 have either altogether remained under the operation 
 of the old law', or continued so during any part of 
 their existence. 
 
 Following the order proposed, we have to consider, 
 
 1st. Of the liabilities of the persons engaged in 
 the projection and management of the intended 
 Company. 
 
 The main question here rests upon the general law 
 relating to an ordinary partnership. Now, unques- 
 tionably, if certain individuals combine together for a 
 
16 
 
 COMPANIES NOT INCLUDED IN 
 
 common object, and in the prosecution of that object 
 place before the world a prospectus, in which they 
 name themselves, or suffer themselves to be named 
 (we are here speaking only of those cases where 
 persons have, beyond question, managed a project, 
 and not of doubtful cases of interference, which we 
 shall notice presently) as having the management and 
 direction of the affairs of the proposed Company, 
 they constitute an ostensible partnership, that is a 
 partnership as regards the world ; and if there is an 
 express agreement to that effect, or if by their deal- 
 ings such an agreement can be implied, they create 
 between themselves an actual partnership, and are 
 liable to each other. The formation of the Company 
 is the business of their partnership. It follows then, 
 as a necessary consequence of the position which 
 they fill, that if the Company they propose to form 
 fails to attract public support, and eventually, from 
 lack of that support the project is abandoned, what- 
 ever charges or expenditure may have been incurred 
 in the endeavours to bring the scheme to a successful 
 issue, or in the preliminary management and carry- 
 ing on of its concerns, and whether expressly 
 allowed by the Committee, or Governing Body or 
 not, or impliedly receiving their sanction, as being for 
 the benefit of their project, must fall on those who 
 placed it before the public: and following out the 
 analogy to the law of an ordinary partnership, it is 
 clear that each individual is liable for the whole 
 amount of that expenditure, he being left to his 
 remedy (if there is an actual partnership mifer for a 
 contribution, against his colleagues. If there is no 
 actual partnership, than each committee-man will 
 individually bear the claims made upon him in respect 
 
THE JOINT STOCK COMPANIES* ACT. 
 
 17 
 
 of debts incurred in promoting the scheme. So that 
 it may, and has, undoubtedly, frequently happened 
 that the whole burden has ultimately fallen upon the 
 shoulders of some more wealthy member or members 
 of a committee, whose project has failed. This respon- 
 sibility of a manager commences with the period of 
 his becoming so, and terminates with his retirement 
 from the post, in the legal manner presently noticed, 
 and extends to all engagements in the intermediate 
 time; and also to such contracts, as, though made 
 before the period of his membership, were subse- 
 quently ratified by the Committee of which he was 
 a member, (see Mandsley v. Le Blanc, 2 Car. & P. 
 409, n.) which ratification in effect is as to liability 
 the creation of a new contract. It must here be 
 noticed, that by the law of contract a member of a go- 
 verning body, where there is such an actual partner- 
 ship inter se, as we have been supposing, cannot relieve 
 himself of his responsibility by quitting the project. 
 And the reasons for such a rule are certainly just. 
 The nature of the transaction is this : A, B, and C 
 contract between themselves mutually to use their 
 endeavours, and to bear the expenses in case of 
 failure, to obtain a certain desired end. It would 
 certainly be wrong that any one of the three should 
 be at liberty to retire from the agreement, and leave 
 the w^eight of it on the remaining two, or cause its 
 abandonment. In proof of the rule here stated, may 
 be quoted the case of the Kidwelly Canal Company 
 V, Raby,* in which Mr. Baron Wood, who tried the 
 cause, used these words : Whenever there is an 
 
 agreement between several, one party cannot with- 
 
 * 2 Price 93. 
 
18 
 
 COMPANIES NOT INCLUDED IN 
 
 draw without the consent of the others.” The case 
 was this: the defendant Raby, and many other 
 persons had signed a paper, running in these 
 words : A list of subscribers to a fund for carrying 
 
 into execution a plan for the improVement of the 
 harbour of Kidwelly, and making proper communi- 
 cation therewith from the several collieries in the 
 neighbourhood by a canal and railroads.” The de- 
 fendant had been also actively engaged in an appli- 
 cation to Parliament for an act to carry out the 
 object in view, and had attended some sittings of the 
 Parliamentary Committee upon the Bill introduced 
 for that purpose. The defendant afterwards dis- 
 approved of certain proceedings of the Company, 
 and procured his name to be erased from the Bill by 
 the Chairman of the Committee, and signified 
 that he should withdraw his subscription. The 
 Bill eventually passed, with his name omitted. 
 The action was brought for calls upon the de- 
 fendant’s shares, according to his subscription, 
 which he opposed on the ground of his alleged 
 withdrawal. It was decided that he had not 
 relieved himself of his liability by what occurred 
 before the committee, which was not competent to 
 discharge him, and that without having the consent 
 of all those with whom he had engaged in the un- 
 dertaking, he could not withdraw. He was therefore 
 held liable, as a shareholder, for the calls. But, if the 
 circumstances of the case are sufficient only to 
 create an ostensible partnership, and not an actual 
 partnership, then a member of the Committee may^ 
 retire without the consent of the others, for then 
 there is no such contract as we have stated; 
 but he must take proper means to dissolve his 
 
THE JOINT STOCK COMPANIES’ ACT. 19 
 
 partnership as to the world. One authority in proof 
 of this also, will suffice. It is the case of ^^Double- 
 day V. Marshall and others.”^ The circumstances 
 were these : — The defendants had consented to 
 become Directors of a projected Company, and 
 attended one or two meetings ; but then, without 
 taking any steps to divest themselves of the character 
 of Directors, ceased to act as such. The remaining 
 Directors subsequently made a contract with the 
 plaintiff, and upon that contract the defendants were 
 held liable. Lord C. J. Tindall said, They stand in 
 the like situation with the members of a partnership, 
 who, after they have seceded from the firm, still allow 
 their names to remain exposed over a shop door.” 
 There is in this, an exact analogy to an ordinary 
 trading partnership, and as in that case so in this, 
 the retiring partner should not only remove his 
 name from the list, but advertise his retirement 
 in the Gazette, and expressly inform those of it 
 who are ordinarily dealing with the Company, or, in 
 fact, have been at all employed by it. So also in 
 such a Governing body, even where only an osten- 
 sible partnership by express or implied agreement 
 existed, the individual members are liable not only 
 upon contracts made by the whole body, but by 
 any portion of it, provided such contract were made 
 in the furtherance of their common object, and this 
 upon the implied authority that exists between all 
 partners. The foregoing principles will be found to 
 have an equally full application when we come to con- 
 sider companies formed subsequent to the Joint Stock 
 
 * 4 M. and P., 750 ; S. C. 7 Bing. 110. 
 
20 
 
 COMPANIES NOT INCLUDED IN 
 
 Companies’ Act, though at a different stage of the 
 Company’s existence. The question. Whether the 
 members of the governing body are entitled to any 
 indemnity from the Subscribers to the scheme ? will 
 be considered under the second division of this sec- 
 tion, when we purpose to treat of the Liabilities of 
 Subscribers. 
 
 But besides the clear and undoubted cases which 
 we have been supposing, where there is in the con- 
 duct of the project a body of persons who are either 
 actually or ostensibly partners, there are cases far 
 more numerous, many instances of which have al- 
 ready come, and are continually coming before the 
 Courts of Law for decision, where the fact of the 
 existence of a partnership of either kind is uncertain, 
 or where (there being no partnership) the claim rests 
 on the alleged existence of a contract, either express 
 or implied. But all these cases are properly to be 
 considered here, because if the fact of partnership or 
 contract is established in any given instance of alleged 
 liability, that is a case where the person held liable 
 has been engaged either generally, or by interference 
 on particular occasions, in the management of the 
 proposed Company. — To take, first, the case of a dis- 
 puted partnership. This is, of course, entirely a 
 question of fact. All that the law requires to be 
 established in order to the existence of an ostensible 
 partnership, or, in other words, to the creating and in- 
 curring the incidents and liabilities of a partnership as 
 to strangers is, as we have seen, that the party charged 
 had joined with others in the prosecution of a com- 
 mon business, for their common profit, or had even 
 permitted others to use his name for that purpose. 
 
THE JOINT STOCK COMPANIES ACT. 
 
 21 
 
 either with or without deriving any benefit himself. 
 The proof of either of these facts may, and frequently 
 does, rest upon very trivial circumstances of consent 
 and confirmation, which may more easily be imagined 
 than gravely described. In almost every case where 
 the fact is sought to be proved, the name has been used 
 in the Prospectus of the Company, and w^e have shown 
 that that is sufficient, if with the consent of the owner. 
 That consent may be proved by the circumstance that 
 the individual was aware of his name being used, and 
 did not contradict the implication that it was used by 
 his authority, or that he attended any proceedings of 
 the Company, knowing of the circumstance, or that 
 he on any occasion acted in the capacity he was 
 stated to fill, or any other circumstance from which 
 it might be implied that he authorized the use of his 
 name, either in the Prospectus or in contracts, letters, 
 or otherwise, as filling the character of a manager. 
 This fact of assent being established, he then takes his 
 place with the others, and must share with them, or 
 bear alone the responsibilities of the transactions. 
 The reasonableness and justice of this legal principle 
 is obvious. It is not to be suffered that unscru- 
 pulous persons should be allowed to use names 
 of respectability, as it were, to bait their trap, and 
 engage persons to supply goods, undertake works, or 
 advance money upon the faith of those names, 
 who, when pay-day comes, find that the owners of 
 them were not in fact concerned, and therefore 
 resort must be had to those beings, less substantial 
 than shadows, who, for their own purposes, had 
 helped themselves to their credit. The law wisely 
 denies that any man should be saved from the effects 
 
22 
 
 COMPANIES NOT INCLUDED IN 
 
 of his own easy disposition or negligence. In law, 
 if not in morals, there is a culpability in such con- 
 duct. The consequences are but a just retribution 
 for it, whilst the rule which entails them, is necessary 
 for the safe protection of strangers. But happily, as 
 we shall see hereafter, the opportunity for this cri- 
 minal abuse of public credulity is very much curtailed 
 by the wise provisions of the Joint Stock Companies’ 
 Act, beneficial alike to the public who hitherto have 
 been deluded and ensnared, and to the individuals 
 who have been made the means for that end. But, 
 in addition to the presumption of partnership arising 
 from the use of a name, it may also be from a sub- 
 scriber interfering generally in the management of 
 the undertaking, and attending meetings of the 
 company for that purpose. This class of cases, and 
 those which we propose in the next place to consider, 
 viz., where the subscriber has made himself liable on 
 particular contracts, are so similar in their circum- 
 stances, though in their results very different, as to the 
 extent of liability, that for convenience they may be 
 classed together. The writer has not thought it requi- 
 site to quote authorities for all the positions and prin- 
 ciples which have been stated, because they are such 
 clear landmarks of the law, that it would be a work of 
 superfluity to do so, neither would it answer any 
 useful end to detail those cases of disputed fact of 
 partnership which he has referred to generally. To 
 do so efficiently in a work of this character would 
 not only be impracticable, but render it needlessly 
 cumbersome. 
 
 The next point we have to consider is the ques- 
 tion, Whether a subscriber has made himself liable 
 
THE JOINT STOCK COMPANIES’ ACT. 
 
 23 
 
 by contract, and in this way been concerned in the 
 management of the company ? If so, it is clear he 
 is as much bound by the contract, and chargeable 
 upon it, as if he alone had made it solely for his own 
 benefit. This question is an entirely different one from 
 that of a partnership of either kind. In that case, as 
 we have seen, one partner may bind all without 
 their authority, other than that which exists in the 
 feet of partnership : but the question of contract 
 rests upon the act of the individual or his agent. 
 Therefore, whilst a Committee-man or Director, upon 
 the ground of a partnership, will be chargeable with 
 the whole liabilities of the Company, a mere sub- 
 scriber can only be charged (beyond the extent of 
 his subscription) on such contracts as he can be 
 shown to have made, or authorized, or subsequently 
 confirmed. To ascertain, by a minute examination 
 of cases, in what instances subscribers have been 
 held to be contracting parties with persons having 
 claims on the Company, would be needless and 
 almost endless. A few instances only will be given 
 as a sufficient example of the many. In the first 
 place, to quote the rule laid down by the present 
 learned Chief Justice, Lord Denman, in the case of 
 Bell V, Francis (2 Car. & P. 66), which was in these 
 words Where persons become Directors in one oi 
 these proposed Companies they make themselves 
 liable, and other persons may do so if they interfere in 
 the management^ and hold themselves out as persons 
 giving the order'' It is therefore evident from this 
 rule that something more than the acts of subscrip- 
 tion and payment of deposits is necessary to render 
 
24 
 
 COMPANIES NOT INCLUDED IN 
 
 subscribers liable as partners in these undertakings. 
 We have in a previous page discussed the case of 
 the name of the person being used, and mentioned 
 that a general liability upon the ground of part- 
 nership may be created by a general interference 
 in the management of the Company, and a particu- 
 lar liability by special acts of interference, more or 
 less extended according to the character of the in- 
 terference. In addition to these a liability may 
 attach by the effect of admissions made by sub- 
 scribers that they are responsible, though they 
 had not in any way interfered in the management. 
 There have been several cases of this description,^ 
 which leave the legal effect of such admissions 
 standing alone very doubtful, but this may be 
 stated confidently, that if the ground of claim 
 against a subscriber rests upon alleged interference, 
 such an admission of liability would go far towards 
 proving the validity of the claim (Harvey v. Kay, 
 9 B. and C. 356). For this reason, as well as on 
 other grounds, caution in making such admissions 
 is most desirable in either view of the case. With 
 reference to the liability of subscribers upon inter- 
 ference in the management, we must necessarily 
 confine the discussion to the statement of general 
 principles and considerations, which are applied in 
 the legal determination of individual cases. It was 
 the practice with projected Companies, prior to the 
 recent statute, to hold public meetings (not simply 
 of the Committee) from time to time, for the manage- 
 
 * It is not necessary to quote these cases, considering the design 
 of this publication. 
 
THE JOINT STOCK COMPANIES’ ACT. 
 
 25 
 
 merit of its concerns, and for obtaining the authoritj^ 
 and consent of subscribers to the company pro- 
 ceeding with its works, although not yet formed ac- 
 cording to the terms of its prospectus. This practice 
 is now prohibited, as we shall see ; but subscribers 
 may still render themselves liable by private acts of 
 interference and confirmation. The custom alluded 
 to was very well adapted to the object, doubtless 
 frequently in view, viz. rendering the subscribers 
 liable beyond the terms of their agreement founded 
 on the prospectus. It must be in the knowledge of 
 every one how such meetings were held, and what 
 proceedings took place at them. Some influential 
 person (ignorant of such transactions, and the lia- 
 bilities attaching to them) was procured to act as 
 chairman, and subscribers (possibly acquainted with 
 the business, but ignorant of the consequences of 
 their acts) naturally desirous to know the state of 
 the company in which they had invested their money, 
 attended the meetings. The real managing person, fre- 
 quently styled the Managing^'' or Resident Director p 
 or Secretary^'" provided business for the meeting, and 
 according to his plans suggested works to be done, and 
 read reports stating what had been done, and what en- 
 gagements had been entered into by ^^the Company,” 
 and thereupon resolutions were adopted, confirming 
 the acts done, and authorizing further proceedings. 
 The consequence of these transactions will be easil}" 
 perceived, upon comparing them with the principles 
 laid down. Not unfrequently, the liability incurred 
 has been that of a partnership, which has entailed 
 ruinous consequences upon the individuals who un- 
 suspectingly and ignorantly have been drawn into 
 c 
 
26 
 
 COMPANIES NOT INCLUDED IN 
 
 the engagements. Such is the case if a subscriber 
 has habitually attended these meetings, and taken a 
 part in them ; but if he has only been at one or two 
 of them, then, probably, his liability will be limited 
 to the acts done at those meetings. The terms of 
 the resolutions passed will be the agreement binding 
 on him. It is evident that they may extend to the 
 confirmation of the whole proceedings of the com- 
 pany, or only of a single act. The extent of 
 liability vaides accordingly. But in some cases, 
 where such an act of the subscriber has been con- 
 sidered as proving a partnership between him and 
 the managing body, his liability has been held to 
 extend to all contracts made by them from the 
 period of his subscription, and not simply from the 
 date of the interference, upon the principle that the 
 act of interference is held to refer to the original 
 act of subscription, and to show that by that sub- 
 scription the subscriber considers himself as be- 
 coming a partner. See for this the case of Ellis v. 
 
 Schmaeck (3 M. & P. 220.) And this is only 
 one form of the multifarious ways by w^hich a sub- 
 scriber may become liable. Writing letters to the 
 committee, requiring them to proceed — joining 
 with others in a declaration of approval — super- 
 intending or viewing any of the works in progress 
 — offering suggestions, and many other similar acts, 
 which will easily suggest themselves to the reader, 
 will all entail a greater or less degree of liability. 
 Another circumstance to be noted is, whether the 
 projectors have faithfully adhered to the terms of 
 the prospectus, or deviated from it in a greater or 
 less degree. In the case of strict adherence to the 
 
THE JOINT STOCK COMPANIES ACT. 
 
 27 
 
 prospectus, slight acts of interference will be suffi- 
 cient to create liability ; such, for instance, as at- 
 tending the kind of meeting we have mentioned, or in 
 any manner, however insignificant, authorizing, con- 
 firming, ratifying, approving or acting upon any of 
 the proceedings of the managers ; on the other hand, 
 if the managers have deviated from the original 
 plan to any material extent, then the law requires 
 a much stricter degree of proof than in the ordinary 
 case, for, in addition to the circumstances before 
 stated as necessary to establish the claim, it must be 
 shown that the subscriber was cognisant of the vio- 
 lation, and sanctioned it. As instances of cases, 
 where the liability which we have been discussing 
 has been in question, we give the two following, in 
 one of which the claim failed, and in the other 
 succeeded. But it is necessary to caution the non- 
 professional readers not to place reliance on the 
 result obtained in these instances ; for as all cases of 
 this class are disputes of fact and not of law, the 
 decision rests entirely on the verdict of a jury ; and 
 it would defy even universal knowledge to point 
 out anything more uncertain than the decision 
 of that tribunal. In this respect, however valuable 
 in a constitutional point of view, the verdicts of juries 
 have fully justified the popular saying of the glo- 
 rious uncertainty of” (what is falsely termed) the 
 law.” To mention an instance confirmatory of 
 his remark : — In the first case above noticed, the 
 claim failed ; and in the case of Lake v. the Duke 
 of Argyll, in the Queen’s Bench, against the same 
 individuals, resting upon identically the same cir- 
 cumstances of proof, the opposite result was produced, 
 c 2 
 
28 
 
 COMPANIES NOT INCLUDED IN 
 
 In the latter case, the Court of Queen’s Bench, from a 
 consideration of that respect and almost sanctity which 
 the spirit of the law attaches to trial by jury, refused 
 to interfere, it being entirely a question of fact. The 
 first of the cases we referred to is that of Wood v, 
 the Duke of Argyll (7 Scott, N. B. 885). The 
 names of the defendants, the Duke of Argyll and 
 Sir James Cockburn, had been used, the first as 
 president, and the second as vice-president, in a 
 projected company, designating itself The British 
 American Association for Emigration and Coloniza- 
 tion.’' The professed object of the company was to 
 encourage emigration, and to purchase lands in 
 British America. The defendants were proved to 
 have been present at the Consulting Council” 
 twice out of six times, certain resolutions being then 
 adopted ; and the Duke of Argyll acted as chairman, 
 and signed the minutes, which contained statements 
 of contracts, proceedings on the part of the Com- 
 pany, and authority to continue negotiations, &c. &c. 
 Each of the defendants signed a document agreeing 
 to take shares and pay deposits, when shares to the 
 amount of 50,000Z. shall have been taken, upon 
 having twenty-one days’ notice thereof.” The asso- 
 ciation was destroyed by a public exposure ; and it 
 did not appear that 50,000Z. had ever been subscribed 
 for, or that any step had been taken by deed or charter^ 
 or act of incorporation^ to legalize the concern. The 
 claim was for engineering work, and was rested upon 
 the argument, that, as the defendants had allowed 
 themselves to be held out to the world as partners, 
 they were liable, though they had not actively inter- 
 fered. The defence was that there was no evidence 
 
THE JOINT STOCK COMPANIES’ ACT. 29 
 
 of partnership, but that at the most the defendants 
 only engaged to become partners when the stipulated 
 capital should have been subscribed. The result is 
 shewn in, and the principles of law, which we have 
 before stated, will be confirmed by, the words of the 
 Lord Chief Justice Tindal in giving judgment. 
 left it to the jury, upon all the facts, to say, 1st, whether 
 or not there had been any direct contract entered into 
 by the defendants with the plaintiffs ; 2ndly, whether 
 there was any partnership formed, of which the de- 
 fendants were members; and 3rdiy, whether the 
 defendants had held themselves out to the worlds or 
 to the plaintiffs^ as partners, so as to be responsible 
 for the acts of other members on behalf of the 
 general body. The jury found, that there had been 
 no direct contract, and there is no pretence for 
 saying that there ever was a complete partner- 
 ship ; all was contingent on an event that never oc- 
 curred, viz. ^ the subscription of shares to the value 
 of 50,000Z. The jury also thought that the evi- 
 dence did not warrant them in coming to the con- 
 clusion that the defendants held themselves out as 
 partnersT The Court refused to disturb the ver- 
 dict. As we have mentioned, another jury, in a dif- 
 ferent action, resting upon the same circumstances, 
 held the defendants liable. The instance where the 
 claim was established by the jury was the case o 
 Harrison v. Heathorn (6 Scotts, N.R. 735). The 
 action was against a number of persons as partners 
 in a company called The Anglo-American Gold 
 Mining Association,” upon a contract entered into 
 by one of the defendants and two other persons, on 
 behalf of the whole partnership. One of the de- 
 
30 
 
 COMPANIES NOT INCLUDED IN 
 
 fendants (not the one referred to) denied that he was 
 a partner. The facts appearing in evidence’ were, 
 that certain bills of the Company becoming due, 
 at a meeting (at which the defendant was present) 
 resolutions were passed for raising money to meet 
 them by the sale of some property belonging to the 
 company, or by sale of additional shares. That the 
 directors accordingly entered into an agreement 
 with the plaintiffs, under which they were to retire 
 the bills for the honour of the company, having the op- 
 tion to take certain shares in discharge of the money 
 advanced by them, or to require the repayment of it 
 by the shareholders. This agreement was confirmed 
 at a subsequent meeting, at which the defendant was 
 not present. He had not signed the Deed of Settle- 
 ment, nor become possessed of shares by any of the 
 modes prescribed by the deed. The defendant was 
 held liable as a shareholder, and upon a review of 
 the case by the Court of Common Pleas, it w'as held 
 that the jury was loarr anted in holding that the 
 attendance at the meeting was an admission by the 
 defendant that he was a shareholder, and dispensed 
 Mfith the necessity of more formal proof, by showing 
 that he had conformed to the requisites of the deed 
 or otherwise, and that the confirmation of the agree- 
 ment at the second meeting was sufficient evidence 
 of agreement on the part of the Company to bind 
 those members who were not present at the 
 meeting. It will be perceived that this was a 
 case where the company was completely formed, 
 and therefore does not apply in ail its bearings to 
 that of a project only. But so far as it shows the 
 possible effect of attendance at a meeting of the 
 
THE JOINT STOCK COMPANIES’ ACT. 
 
 31 
 
 company, it will serve in a qualified manner as an 
 illustration of the rules applicable to shareholders in 
 a company before its complete formation. We trust 
 sufficient has been now stated to mark out in broad 
 and unmistakeable characters, the liabilities of persons 
 who, as Projectors or Managers, engage in the forma- 
 tion of an intended Company. What has been 
 stated, both with reference to those persons and sub- 
 scribers, will as fully apply to the projectors, pro- 
 visional committee-men, and subscribers before the 
 complete registration of the company under the 
 system now in force, and hereafter discussed. Such 
 persons may, by consulting; the nrincinl^s 
 stated, guard, themselves against many of the evil 
 results which have hitherto taileri V;itb :i 
 force upon others occupying a similar position in 
 such projects, and may avoid those shoals and quick- 
 sands which persons engaged in the heat of specula- 
 tion are but too apt to leave out of consideration. 
 Having now traced in their different extents and 
 positions, the liabilities incurred by persons either 
 actually or ostensibly assuming the control of a 
 projected company, and also of such subscribers as, 
 by their acts on particular occasions, have made them- 
 selves parties to, and confirmed the engagements of^ 
 the projectors or managing body, — we have now to 
 consider. 
 
 2ndly, The liabilities of subscribers to a projected 
 company before its complete formation. 
 
 In this class we only include such persons as have 
 simply paid their deposits, and have in no other way 
 made themselves parties to the transactions of the 
 
32 
 
 COMPANIES NOT INCLUDED IN 
 
 company. The effect of signing the Deed of Settle- 
 ment of the company it is not easy to state in a general 
 proposition. The signing may, according to the 
 terms of the Prospectus or the Deed itself, be only a 
 conditional signing — that is, as we have before 
 observed, that other persons, representing a certain 
 amount of capital, joined in the liability, or it may 
 be, from the absence of such a condition, an absolute 
 signing, making the person so signing a complete 
 partner, liable not only for future, but past en- 
 gagements, upon a principle we shall presently 
 notice, that though contracts may not have been 
 ordered into by the order of a person, yet if he after- 
 wards received the benefit of them he is liable upon, 
 them. In this latter CctOtJ me signing of the Deed 
 will constitute the subscriber a partner from the 
 original starting of the project, and bring upon him 
 consequent liabilities. Then as to such persons, we 
 may consider the question of their liabilities to have 
 been already discussed under the head relating to 
 Managers. Occasion is here given to observe (and 
 this remark applies to companies under the Joint 
 Stock Companies’ Act), that if a shareholder in an 
 intended company wishes to save himself from such 
 an effect of signing the Partnership Deed, he can 
 only do so by making such a condition as we have 
 noticed the foundation of the act; and in order to 
 that, should see that the terms of the deed corres- 
 pond. Otherwise, as the effect of the deed is to 
 substitute a new agreement between the projectors 
 and the public subscribing, viz., the terms of the deed, 
 in the place of the prospectus ; and as these terms pro- 
 bably, in the ordinary case, create an unconditional 
 
THE JOINT STOCK COMPANIES ACT. 
 
 33 
 
 partnership, the shareholders signing, however short of 
 the whole number, may be his companions in that act, 
 nay, even if he be the only one to do so, will become 
 equally responsible with the projectors or managers 
 for the debts of the concern. Subscribers, therefore, 
 should be careful lest they too hastily and incon- 
 siderately place their signatures to such documents, 
 entailing, as the act does, consequences so momen- 
 tous as have been mentioned. At the same time, 
 with respect to the obligation of such persons to sign 
 the Deed, it may be stated upon general principles^ 
 that they are bound by the terms to be collected ifoni 
 the agreement existing between them and the pro- 
 jectors in the conjoint effects of the prospectus, the 
 application for shares, and the Letter of Allotments 
 The three documents in general constitute an agree- 
 ment that at a certain time the subscriber will sign 
 the Deed of Partnership, and pay his deposit, and un- 
 doubtedly a breach of this agreement will subject him 
 to an action for damages. But in some cases the 
 writer has seen a contract attached to the allotment, 
 that in case of failure to sign the deed the shares shall 
 be forfeited. This, of course, is a part of the agree- 
 ment, and the subscriber’s default brings a forfeiture 
 of his shares, but probably (for no case of this charac- 
 ter has yet occurred in practice) the construction of 
 the agreement may be, that in such a case no action 
 would lie for the breach of it, Tiie writer would 
 only wish to observe that a cautious subscriber will 
 not run at the earliest moment to sign the deed, as 
 possibly in the few days allowed for that purpose the 
 scheme may prove a failure, and, in that case, his 
 position would be far preferable to that of a subscriber 
 c 5 
 
34 
 
 COMPANIES NOT INCLUDED IN 
 
 who had signed. For, with reference to the former, 
 it may be laid down, that unless it is otherwise pro- 
 vided by the Prospectus, or Letter of Allotment, 
 which constitutes, as we have seen, the agreement 
 binding on subscribers until they sign the Com- 
 pany’s Deed of Settlement, they cannot in any 
 event (as mere subscribers) be subject to a greater 
 loss than the amount of their deposits. Even to 
 this extent in many projects (v/hich have failed 
 to attain the formation of a company), subscribers 
 are not liable. We must remember that, in these 
 cases, it is to the prospectus and the letters of appli- 
 cation for and allotments of shares (the Agreement) 
 that we must look to decide the question. Now, in 
 some cases, these documents are entirely silent upon 
 the point of whose shoulders are to bear the expenses 
 incurred. In others, the managing committee or 
 directors engage, that in case of failure the subscribers 
 shall have their deposits returned without deduc- 
 tion, or with a deduction of not more than 5s. or IO 5 . 
 per share. In others it may be a condition that 
 subscribers are to indemnify the projectors and 
 managers against all expenses notwithstanding failure, 
 and that the return of deposits is to be subject to 
 their payment. In each of these cases the question 
 to be solved is an easy one. The general rule is, 
 that, in the absence of any agreement on the sub- 
 ject, if the project fail to become a company from 
 lack of subscribers, or by reason of its abandonment, 
 whether for good or indifferent reasons, or from the 
 mismanagement or wilful misconduct of the pro- 
 jectors or managing body, — in every such case, the 
 subscribers, who are not themselves parties to the 
 
THE JOINT STOCK COMPANIES’ ACT. 
 
 35 
 
 cause of failure, are entitled to a return of all their 
 deposits free of any deduction. Of course, this 
 right, resting upon the general principle of contract 
 or agreement, may also be given up either altogether 
 or in part by the same means. The onl}^ question, 
 therefore, is. What is the agreement between the 
 subscribers and the intended company ? Again, a 
 subscriber will not be liable upon expenditure in- 
 curred in any deviation from the proposed object of 
 the company, to which he is not a party. In fact, it 
 is not the project he agreed to forward by his sub- 
 scription, and authorized the managers to carry out. 
 It is right, therefore, that he should not incur any 
 liability upon it. But every act done by him, as an 
 existing member of the company, after knowledge of 
 the fact, will be a confirmation by him of the 
 proceeding. This latter rule applies as well after the 
 complete formation of the company as before. 
 Neither, it would seem upon general principles, 
 would subscribers be liable to a deduction from their 
 deposits for expenses or losses which had been in- 
 curred by the wilful misconduct of the projectors, 
 or managing committee, but this does not affect any 
 liabilities they may have to strangers. In short, the 
 position of a subscriber before the complete forma- 
 tion of the company, is similar to that of a person 
 proposing to become a partner in an ordinary part- 
 nership, upon certain terms being complied with, as 
 instanced in a former page. The circumstances of 
 the case of Wood v. The Duke of Argyll, supply a 
 further illustration of the position of a mere sub- 
 scriber in this respect, in the ordinary case. We 
 have referred to the sources from whence the terms 
 
36 
 
 COMPANIES NOT INCLUDED IN 
 
 of the agreement are to be drawn, and by which, 
 consequent!}", the liability of the subscriber, in case 
 the project fails, must be determined. It only re- 
 mains, in future, that persons subscribing to a Joint 
 Stock Company, should exercise the same degree of 
 caution that they would do if they were going to 
 form an ordinary trading partnership. 
 
 The course of our observations now brings us to 
 
 o 
 
 the second division of this chapter, viz., — 
 
 Part II. After the complete formation of the Com- 
 pany, 
 
 The discussion of this branch of the subject will 
 be comparatively short and easy. We have shown 
 (p. 12) the point of time at which the company may 
 be said to be completely formed. At that time the 
 managing body and the subscribers (then become the 
 shareholders) form one large partnership or Joint 
 Stock Company. The liabilities of this sometimes 
 gigantic body, and every individual member of it as 
 between^ the company and the world, and between 
 the members themselves and (as to companies formed 
 before the Joint Stock Companies’ Act and not being 
 within its provisions) its legal positions are, as before 
 stated, exactly the same as those of an ordinary 
 partnership.^ It needs therefore but to refer the 
 reader to what has been stated (p. 3 to 6) with re- 
 ference to such a partnership, in order to acquaint 
 the members of a Joint Stock Company fully 
 formed, with their legal position. But it should be 
 
 * From this statement is excluded, of course, the class of companies 
 authorized by Letters Patent, under the 7 W. 4 and 1 Vic., c. 73, to 
 ihe extent that they are privileged by their Charters. 
 
THE JOINT STOCK COMPANIES ACT. 
 
 37 
 
 stated that all expenses/contracts, engagements, and 
 liabilities which, before the formation of the compan}^, 
 were incurred or entered into by the projectors or 
 managing body upon its formation, belong to the 
 whole bod}^, and that whether those liabilities w^ere 
 incurred merely in the formation of the company or 
 in carrying out its objects in anticipation of its form- 
 ation. 
 
 The words of the late Lord Tenterden on this 
 subject wdll illustrate this principle of law. That 
 great judge, then Lord C. J. Abbot, in an action^ 
 brought against persons who constituted the ma- 
 naging committee before the formation of a com- 
 panj", which was afterwards established by Act of 
 Parliament upon a contract made by them before its 
 formation, and which action they successfully resisted 
 on this rule of law, that, Before an act passes for 
 such a work as this, the surveyor, or other persons 
 employed in it, look to the committee, or body of 
 adventurers who first employ them ; but after the 
 passing of the act it must be considered that they 
 look to the company, or persons made liable under 
 the act. I take it that the liability must be con- 
 sidered as not fixed till it is known whether an act 
 will pass or not ; but I leave it as a question to the 
 jury whether the credit was not given to the com- 
 mittee in case the proposed act did not pass, and 
 to the company if it did.” This decision has been 
 followed by an eminent living judge, Mr. Baron 
 Alderson (Kerridge v. Hesse, 9 C. & P. 200.) A 
 notion must not be entertained that because the 
 obtaining an act was the point of formation of the 
 * Moneypenny y. Ilartland, C. & P. 352. 
 
38 
 
 COMPANIES NOT INCLUDED IN 
 
 company in this case, such is the ordinary case even 
 as to the companies existing before November, 1 844 ; 
 and as to subsequent companies, we shall see that 
 the direct provisions of the act lead to the opposite 
 conclusion. It would appear that in the case stated, 
 the company was to be formed by the Act of Par- 
 liament, which event therefore was contingent upon 
 obeying the act. And, probably, as we shall 
 soon notice, there may be a question how far 
 the decision extends to companies formed under 
 the operation of the recent statute. These deci- 
 sions justify a former observation, that the questions 
 of the liability of managers and subscribers, which 
 have already been discussed, will only arise in those 
 cases where the company has not been formed, or, 
 since the Joint Stock Companies’ Act, has not been 
 completely registered, which may be, as we have seen, 
 from lack of support, neglect, or misconduct of the 
 managers, or by general consent. From the period 
 of the company’s formation, the liability of managers 
 and shareholders alike extends to all the engage- 
 ments of the firm, without limitj but, as in this case, 
 there is an actual partnership between the members, 
 the right of having contribution exists for one against 
 another in the same manner as in an ordinary part- 
 nership. So, by the terms of the partnership the ma- 
 nagers are authorized to pledge the company’s credit 
 upon contracts necessary for conducting the business 
 of the company ; but they cannot deviate from the 
 original plan without the consent of the shareholders, 
 the mode of procuring which varies in different 
 companies, being ordinarily stated in the Deed of 
 Settlement. But if there are no provisions, then the 
 
THE JOINT STOCK COMPANIES’ ACT. 
 
 39 
 
 dissent of one member alone binds the whole. The 
 interference of shareholders in the management, by at- 
 tendance at meetings or otherwise, therefore lays upon 
 them no further obligation ; for it is merely exercising 
 in person that authority v/hich they have delegated for 
 general exercise to the managers or directors. This 
 partnership exists between all the members, until 
 it is determined as to any one or more by death 
 or bankruptcy, or by transfer of shares, or forfeiture 
 by non-compliance with the terms of the deed. In 
 the case of death or bankruptcy, the property in 
 the shares becomes vested in the representatives or as- 
 signees, and they must take proper steps to become 
 legal owners of them by becoming members of the 
 partnership ; and in these particular instances the 
 liabilities attaching to the late owner, attach to the per- 
 sons taking his shares as his representatives or assig- 
 nees, but only to the extent of the late owner’s effects. 
 And in the case of forfeiture of shares, the company 
 is at liberty to sell or allot them, free of that 
 liability, to any such person, who thereupon be- 
 comes a partner, with such liabilities as will be 
 noticed in the discussion to which we now pro- 
 ceed, viz. 
 
 Part III. Of the Transfer of Shares in Companies 
 not within the Provisions of the Joint Stock Companies^ 
 
 Act. 
 
 We have noticed that a member of an ordinary 
 partnership may not transfer to another his share in 
 it, so as to constitute such person a member of the 
 partnership, without the express consent of all the 
 co-partners. The possession of this right is peculiar 
 
40 
 
 COMPANIES NOT INCLUDED IN 
 
 to Joint Stock Companies, and is, in fact, the only 
 distinction between an ordinary partnership and an 
 unincorporated company. The exercise of the right 
 of transfer is, however, subject to such restrictions 
 as may be provided by the Deed of Settlement, 
 or other instrument containing the terms of partner- 
 ship. Previously to the recent statute, not onl}’' 
 were the owners entitled to transfer actual shares in 
 an established company, but it was lawful for per- 
 sons to whom the managers of the intended com- 
 pany had allotted shares, to sell either the letter of 
 allotment, banker’s receipt for deposit, or scrip, be- 
 fore the formation of the company. In the case of the 
 sale of the letter of allotment, the company might or 
 not at its 'pleasure (if there was no agreement binding 
 it to do so) accept the holder of the letter as the share- 
 holder, instead of the original applicant ; but in gene- 
 ral there could be no power to compel it. However, 
 supposing it did do so (for it cannot now be done), 
 yet the original applicant and allottee could not 
 divest himself, by not becoming a shareholder, of any 
 liability to persons contracting with the company, 
 which attached to him by any such special acts of in- 
 terference or general management as have been 
 mentioned. But it is clear that he saved himself 
 from all liabilities which the act of signing the deed 
 and taking the shares entailed, they being transferred 
 to the holder of the letter signing the deed. The 
 restrictions (if any) on the right of transfer, are only 
 such as are contained in the Deed of Settlement, 
 which generally contains clauses explanatory of the 
 power to transfer shares, and the mode of doing so 
 ordinarily requiring a registry of the transfer to be 
 
THE JOINT STOCK COMPANIES’ ACT. 
 
 41 
 
 made in the company’s books after a certain form. 
 These clauses, whatever may be their purport, contain 
 the terms on which the company agrees to accept as 
 a partner, representing that portion of their common 
 capital which the shares name, the nominee of the 
 original shareholder, and so everv successive nominee. 
 It is, therefore, only by a literal and strict compliance 
 with these provisions that a shareholder can deter- 
 mine the partnership between him and the company, 
 and transfer his interest in it to another. It follows, 
 that, supposing the Company’s Deed requires certain 
 forms to be observed in the transfer, a mere agree- 
 ment to sell, or delivery over of the scrip, will be 
 insufficient to determine the seller’s liability on, 
 or to entitle the buyer to, the benefits of the shares. 
 Take the case of a registry being necessarJ^ — If, be- 
 fore that registry is effected, a call is made on the 
 shares, undoubtedly the shareholder in the books of 
 the company is bound to pay the amount, and can be 
 compelled, unless the company release him. Or if, 
 in the same case, a dividend is declared upon the 
 shares, the company will be quite secure in paying it 
 to the shareholder whose name appears in its books. Of 
 course, as between the buyer and seller, the contract 
 is binding, therefore, in the one case the buyer will 
 have to repay the amount of the call to the seller, 
 and in the other the seller will have to transfer the 
 dividend to the buyer. A breach of this duty will 
 subject the party committing it to legal proceedings 
 for damages. So, again, a contract to sell a share 
 may be enforced, not by actually compelling the 
 seller or buyer to complete the bargain, (for this can 
 only be done, if at all, by a suit in Chancery), but by 
 
42 
 
 COMPANIES NOT INCLUDED IN 
 
 an action for damages in a court of law. The same 
 mode of determining the partnership between an in- 
 dividual shareholder and the company, as regards his 
 liability to the world, applies as to determining his 
 liability to the company. Therefore all contracts 
 made between the agreement to sell a share, and the 
 full legal completion of the sale, are chargeable upon 
 the shareholder whose name appears in the partner- 
 ship or company’s books. In this case, also, there 
 would be a remedy against the buyer, but it would 
 be surrounded with difficulties. It is therefore evi- 
 dent, on all grounds, that the sale of a share once 
 agreed upon, should be speedily completed. Such 
 a course is necessary as well for the safety of the 
 buyer as the seller, for it is but a poor satisfaction to 
 feel that there is a right of action which may pro- 
 duce nothing in return, for hard cash lost. It is 
 requisite here to notice the provisions of the statute 
 7 Wm. 4, & 1 Vic. c. 73, which was an Act 
 for better enabling Her Majesty to confer certain 
 powers and immunities on trading and other com- 
 panies.” As to all companies authorized under 
 the powers of this act, its provisions regulating 
 the transfer of shares in them are still in force. 
 By section 2, the Queen may, by Letters Patent, 
 confer certain privileges belonging to incorporated 
 companies, without granting actual incorporation, 
 and (by section 3,) may authorize by Letters Pa- 
 tent, all legal proceedings of the company to be 
 brought by or against one or two officers of the 
 company to be appointed for that purpose, and 
 directs enrolment of the Letters Patent and certain 
 returns by the act directed to be made (sec. 16); 
 
THE JOINT STOCK COMPANIES’ ACT. 
 
 43 
 
 when the principal place of business of the company 
 shall be in England or Wales, then to the Enrolment 
 Office of the Court of Chancery in England ; when 
 in Scotland, then to the General Registry Office at 
 Edinburgh, and when in Ireland,^ then to the Enrol- 
 ment Office of the Court of Chancery in Ireland. 
 The provisions as to the transfer of shares in these 
 companies are the following : — Sect. 20. No person 
 becoming a member of any such company or body, 
 whether by the transfer of any share therein or other- 
 wise, shall be entitled to sue for or recover any share 
 of the profits thereof, unless and until a return of 
 the transfer or other facts whereby he shall so become 
 a member shall be registered pursuant to the provi- 
 sions hereinbefore contained,” and (sect. 21) Any 
 person ceasing to be a member of any such company 
 or body, whether by the transfer of any share, or by 
 death or otherwise, shall be considered, for all pur- 
 poses of liabilit}^ as continuing a member of such com- 
 pany or body, until a return of the transfer or other 
 fact, whereby he shall have so ceased to be a member, 
 shall be registered, pursuant to the provisions herein- 
 before contained.” The mode of obtaining a return 
 and registration of the transfer is this : — On a trans- 
 fer of shares, the company is to have (sect. 9) ^^a 
 notice in writing specifying the date of such transfer, 
 the distinguishing number of the share transferred, 
 the name, and (except in the case of a body politic) 
 the place of abode of the person by whom, or on 
 whose behalf, and of the name and (except as afore- 
 said) the place of abode of the person to whom such 
 transfer is made,” and it may be given, by leaving the 
 transfer when executed by both parties or some note 
 
44 
 
 COMPANIES NOT INCLUDED IN 
 
 or memorandum thereof signed by them, at the 
 general or only office of the said company or body.” 
 Then (sec. 10) the Company is bound to make a 
 return, within three calendar months after the receipt 
 of the notice to the appropriate office, of the transfer 
 in the form prescribed by the Act; ^^and such com- 
 pany or body are hereby required, on the request in 
 writing of either of the parties, forthwith to make 
 such return accordingly;” and (sec. 17) the clerks 
 of the several offices are required to register the 
 returns, which they are bound to do immediately on 
 presentation. These provisions of the act are so 
 plain that they scarcely require comment, and are 
 at the i^ame time so strict in their requirements, 
 and as to the consequences of neglecting them, as to 
 need no remarks to enforce their observance. Thus 
 we see that in order to render a transfer of shares in 
 companies existing before the Joint Stock Company’s 
 Act fully complete, and therefore effectual for both 
 parties, the following points must be looked to : — 
 1st. What are the provisions of the Deed of Settle- 
 ment? 2ndly. Is the Company one of those privi- 
 leged by Letters Patent under 7 Wm. 4. and 1 Vic. 
 c. 73?^ 3rdly. Has the Company availed itself of the 
 provisions of the Joint Stock Companies’ Act? In 
 the first two events, we have seen what is necessary 
 to complete the transfer. The requisites in the last 
 
 * There are previous acts for enabling privileges to be granted to 
 unincorporated companies, under which, probably, some now existing 
 companies may be acting. It W’ould be well, therefore, always to 
 ascertain what is the particular authority under w’hich tl)e company 
 acts ; and to observe the requisite forms required by it, in making the 
 transfer. 
 
THE JOINT STOCK COMPANIES’ ACT. 
 
 45 
 
 case will be stated in a future page. Then, supposing 
 the transfer to be effectually made, it only remains to 
 notice what liabilities the transferee incurs. He is, 
 by the transfer, placed in the position of a partner 
 with the other members of the company, and becomes 
 responsible with them for its engagements. His 
 liability commences wdth the time of the transfer, 
 and continues until he ceases to be a shareholder. 
 If the transfer be made after the complete formation, 
 there is no guarantee that the concern is a profitable 
 one, the risk is on the purchaser ; but if it be made 
 before that period, then, if the project fails to become 
 a company (unless otherwise agreed betw^een them), 
 every transferee is entitled to have his purchase- 
 money refunded by his transferor, until at last the 
 share comes back to the original vendor, who must 
 rest upon his claim against the projectors, which will 
 be decided by the principles mentioned in a former 
 part. This danger of refunding only applies to com- 
 panies formed before the recent act, for under the pre- 
 sent law we shall see that such transfers are disallowed. 
 But as to those companies, a person to whom an 
 allotment was made had no means of ridding himself 
 of the liability either to the company, to strangers, or 
 to his transferee, until the complete formation of the 
 company (as it seems to have been decided), that he 
 had no power to compel his partner to take upon him 
 the responsibility of a shareholder, if he felt disin- 
 clined to do so; and the partner, although he was 
 entitled to claim the shares, if so disposed, incurred 
 no liability to the company or strangers, if he did not 
 sign the deed, or register his name as one of the mem- 
 bers, or act as a shareholder, see (Harrisons. Heathorn, 
 
46 COMPANIES NOT INCLUDED IN 7 & 8 VICT. 
 
 p. 29). These principles are stated upon con- 
 sideration of the ordinary mode of conducting these 
 transactions. They might, of course, be rendered in- 
 applicable by the agreement of the parties, but silence 
 on the subject leaves them in full operation. By the 
 operation of these rules the original applicant retained 
 all the liability on, and lost all the benefit of the 
 shares allotted, while the purchaser was at liberty to 
 accept them, if beneficial ; in which case, of course, 
 he would gladly take the liability, or to reject them, 
 and have back his purchase money, if worthless, and 
 thereby throw the liability on the original holder. 
 Ordinary caution on the vendor’s part in making it 
 a condition of sale that the purchaser shall take all 
 risks, and stand in the vendor’s position, will obviate 
 all those difficulties. We shall see that these prin- 
 ciples still have their operation. Nor did any inter- 
 mediate transferee, who disposed of the letter, receipt, 
 or scrip, before the formation of the company, and had 
 not interfered in the management, incur any liability 
 whatever. This includes the whole subject so far as 
 it relates to companies to which the law, prior to 
 the Joint Stock Companies’ Act, now applies. 
 
47 
 
 CHAPTER III. 
 
 OF COMPANIES UNDER THE REGULATION OF 7 & 8 
 VICT. C. 110, THE JOINT STOCK COMPANIES’ ACT. 
 
 We propose first to state concisely the several stages 
 which must now be gone through in the formation of 
 a Joint Stock Company, under the provisions of this 
 act, which is (sec. 1) directed to come into opera- 
 tion on the 1st Nov. 1844. Its design is, in the words 
 of the preamble, to make provision for the due 
 registration of Joint Stock Companies during the 
 formation and subsistence thereof; and also, after 
 such complete registration as is hereinafter men- 
 tioned, to invest such companies with the qualities 
 and incidents of corporations, with some modifications, 
 and subject to certain conditions and regulations; 
 and also to prevent the establishment of any com- 
 panies which shall not be duly constituted and regu- 
 lated according to the provisions of this act.” It is 
 to apply (sec. 2)to every Joint Stock Company estab- 
 lished in any part of Great Britain and Ireland, except 
 Scotland ; and established in Scotland, and having an 
 office or place of business in any other part of the 
 United Kingdom, for any commercial purpose, or 
 for any purpose of profit, or for the purpose of As- 
 surance or Insurance (except banking companies, 
 
48 
 
 OF COMPANIES UNDER THE 
 
 schools, and scientific and literary institutions; and 
 also friendly societies, loan societies, and benefit 
 building societies respectively, duly certified and 
 enrolled under the statutes in force concerning such 
 societies, other than such friendly societies as grant 
 assurances to the extent” therein specified. The term 
 Joint Stock Company” is defined to comprehend 
 every partnership having a capital divided into shares 
 transferable without the express consent of all the 
 copartners — the several assurance societies (life, 
 fire, and marine, and annuities on lives), and also 
 friendly societies assuring more than £200 on one 
 life, or to one person in respect of several lives; 
 and lastly, every partnership which, either at its 
 forndation or by subsequent admission, shall con- 
 sist of more than twenty-five members. The act 
 is not to extend (sec. 63) to partnerships for work- 
 ing mines, minerals, and quarries on the Cost 
 Book Principle,” nor (sec. 64) to the Anonymous 
 Partnerships” in Ireland. And its operation, except 
 as specially provided, is not to extend to any com- 
 pany for executing any bridge, road, cut, canal, 
 reservoir, aqueduct, waterwork, or navigation, tun- 
 nel, archway, railway, pier, port, harbour, ferry, or 
 dock which cannot be carried into execution with- 
 out obtaining the authority of Parliament;” nor 
 except as specially provided to any company in- 
 corporated, or which may be hereafter incorporated 
 by statute or charter, nor to any company authorized, 
 or which may be hereafter authorized by statute or 
 letters patent, to sue and be sued in the name of 
 some officer or other person,” (such as companies 
 authorized under the before-mentioned act, 7 Wra. 4, 
 and 1 Vic. c. 73). 
 
JOINT STOCK COMPANIES ACT. 
 
 49 
 
 Having' ascertained the time and objects of the act^s 
 operation, we next proceed to notice the nature of its 
 operation. As we shall, for greater precision, use 
 the phraseology of the act, it is necessary to notice 
 first, that (sec. 3) the expression, promoter of a 
 company,’’ is to apply to every person acting, by what- 
 ever name, in the forming and establishing of a com- 
 pany, at any period prior to its complete registration, 
 — the word directors ” means the persons having the 
 direction, conduct, management, and superintendence 
 of the affairs of a company (i. e. we suppose one 
 completely registered) — the word ^"subscriber,” a per- 
 son having agreed in writing to take, or having taken, 
 shares in a proposed company, or a company formed, but 
 not having executed the Deed of Settlement, and the 
 word ""shareholder,” a person entitled to a share, who 
 has executed the Deed of Settlement. The act then 
 (sec. 4) directs, "" that before proceeding to make pub- 
 lic, whether by way of prospectus, handbill, or adver- 
 tisement, any intention or proposal to form any com- 
 pany for any purpose ” wdthin the act, whether 
 requiring Parliamentary authority or not, ""it shall 
 be the duty of the promoters of such company ” to 
 make a return to the Joint Stock Companies’ Register 
 Office of the several particulars set forth in the act; 
 and amongst others of the names of the promoters, 
 with their occupations and addresses ; and that, upon 
 such return, the company is to be entitled to a cer- 
 tificate of provisional registration. And (sec. 7) no 
 such company is to act otherwise than provisionally, 
 in accordance with the act, until its complete registra- 
 tion, which may be, upon the company being formed, 
 by some deed of the shareholders, which must con- 
 
 D 
 
50 
 
 OF COMPANIES UNDER THE 
 
 tain the provisions specially directed by the act ; or 
 (sec. 9) as to companies for executing Parliamentary 
 works ; such, for instance, as Railway Companies, 
 upon such requisitions being complied with as are 
 appointed by the standing Orders of Parliament ; the 
 requisite documents in either case^ being returned to 
 the Register Office before the complete registration of 
 the company. At this point of time the company 
 is completely established, with the privileges con- 
 ferred by the act ; and it remains now to trace the 
 powers belonging to the managers at these different 
 stages to act in the concerns of the company, conse- 
 quently, to bind the subscribers and sliareholders with 
 its engagements. The subject of transfer of shares will 
 follow at a subsequent page. First, there is the gene- 
 ral enactment (sec. 7) already mentioned, that before 
 complete registration the company is not to act 
 otherwise than provisionally, in accordance with the 
 act. Before provisional registration (sec. 24) the 
 promoters of a company are not to allot shares, issue 
 scrip, or receive deposits, either absolutely or con- 
 ditionally, or make any contract whatsoever in the 
 name, or on the behalf of the intended company ; 
 but upon provisional registration (sec. 23) they are 
 enabled to act in the following matters for twelve 
 months (if not before completely registered) ; after 
 which time the provisional registrationmustberenewed, 
 viz. : — To assume tlie name of the intended company : 
 To open subscription lists : To allot shares and re- 
 ceive deposits of not more than IO 5 . per cent, on 
 every share ; and also in companies making Rail- 
 ways and other works by Act of Parliament, such 
 further deposit as the standing Orders require; and 
 
JOINT STOCK companies’ ACT. 
 
 51 
 
 also to perform such other acts only as are necessary 
 for constituting the company, or for obtaining Letters 
 Patent, or a Charter, or an Act of Parliament” But 
 it is not lawful for them to make calls, nor to pur- 
 chase contract for, or hold lands, nor to enter into 
 contracts for any service, or for the execution of any 
 works, or for the supply of any stores, except such 
 services and stores, or other things, as are necessarily 
 required for the establishing of the company; and 
 except any purchase or other contract to be made con- 
 ditional on the completion of the company, and to 
 take effect after the certificate of complete registration. 
 Act of Parliament, or Charter, or Letters Patent, 
 shall have been obtained ; and except in the case of 
 companies for executing such” (Railway and other) 
 works as aforesaid, contracts for services in making 
 surveys and performing all other acts necessary for 
 obtaining an Act of Incorporation, or other act for 
 enabling the company to execute such works. Upon 
 complete registration (sec. 25) the company and share-- 
 holders are declared to be incorporated for the legal 
 purposes therein stated, but so as not in any respect 
 to restrict the liability of any of the shareholders, 
 who shall (subject to the provisions of the act) re- 
 main liable as if the company had not been in- 
 corporated. Among other powers, which may be 
 then exercised, the following may be used by all 
 such Joint Stock Companies, except Railway and 
 other companies for executing works by authority of 
 Parliament : viz. to enter into contracts for the execu- 
 tion of the works, and for the supply of stores or 
 other necessary purposes of the company: to pur- 
 chase lands, tenements, and hereditaments, in the name 
 
 D 2 
 
52 
 
 OF COMPANIES UNDER THE 
 
 of the company, or of trustees, for the purpose of a 
 place or places of business : and also (with a licence 
 from the Board of Trade) such other lands, tenements, 
 and hereditaments, as the business of the company may 
 require : to issue certificates of shares, to receive in- 
 stalments or calls, to borrow money, to declare 
 dividends, to perform all other acts necessary for 
 carrying into effect the purposes of the company in all 
 respects, as other partnerships are entitled to do, and to 
 appoint directors and other officers, subject to the 
 provisions of the act, and the Deed of Settlement of 
 the Company. Raihvay and other companies for ex- 
 ecuting works by authority of Parliament, are on 
 such complete registration, and before obtaining an 
 Act of Parliament, entitled to exercise all the 
 powders given to other companies completely regis- 
 tered, except the powers to Renter into contracts, 
 (otherwise than conditionally, upon obtaining such 
 act), to purchase lands, to receive instalments from 
 shareholders, (beyond the deposits required by the 
 standing Orders, ‘‘or such other sum as may be 
 requisite for obtaining the Act of Incorporation, or 
 other act for granting the authority of Parliament to 
 execute such work),’’ to borrow money, to declare 
 dividends, and finally except the general power to 
 perform all acts necessary for carrying on the busi- 
 ness of the company, except such acts as may be 
 necessary for obtaining an Act of Incorporation, or 
 other act for obtaining the authority of Parliament 
 to execute the works. Upon obtaining such an act, 
 or at a time to be appointed by it, the provisions and 
 regulations of the Joint Stock Companies Act are to 
 cease as to such a company, except so far as the 
 
JOINT STOCK companies’ ACT. 
 
 53 
 
 act so obtained shall otherwise provide. The direc- 
 tors appointed are authorized (sec. 27) to conduct 
 and manage the affairs of the company, according to 
 the provisions of the act, and the Deed of Settlement 
 and bye-laws of the company, and for that purpose to 
 enter into all such contracts, and do and execute such 
 acts and deeds as circumstances may require. In 
 addition to the companies already mentioned as being 
 within the provisions of this Statute, its provisions 
 have a partial operation upon other companies, for it 
 enacts (sec. 60) that so much of the provisions of 
 this act as are applicable to companies formed after 
 the 1st day of November next” (1844) shall apply 
 to companies begun or formed since the passing of 
 this act,” (5th September, 1844) so far as such 
 provisions shall, on or after the said 1st day of 
 November be applicable {{. e. with reference to their 
 stage of advancement) to such last-mentioned com- 
 panies,” and (sec. 58) with regard to Joint Stock 
 Companies similar to those to which the act applies, 
 and which existed on the 1st November, 1844, whether 
 incorporated by Act of Parliament, by Charter, or 
 privileged by Letters Patent, or established by virtue 
 of a Deed of Settlement, or otherwise, they, on com- 
 plying with certain provisions not necessary to men- 
 tion, are entitled to a certificate of complete registra- 
 tion, on the granting of which, such companies, as to 
 their future position and proceedings, are placed on 
 the same footing with companies formed after 1st 
 November, 1844, and completely registered, but in 
 either case not so (sec. 61) as to affect the rights of 
 others against such companies, or their members or 
 
54 
 
 OF COMPANIES UNDER THE 
 
 officers, upon any valid obligation incurred previous 
 to the time of such complete registration, which will 
 therefore remain, as if the act did not apply to those 
 companies. This latter provision is in no way com- 
 pulsory on such existing companies, but merely 
 optional for them to accept or refuse its terms. In 
 the case of all these last mentioned companies, as all 
 their engagements and proceedings prior to the time 
 of the act’s operation applying to them are excluded 
 from its provisions, it is only necessary to refer the 
 reader to the former part of the w'ork, which contains 
 the law relating to Joint Stock Companies not within 
 those provisions. 
 
 We have now stated sufficiently, though cursorily, 
 so mucb of the recent statute as will assist to a clear 
 understanding of the respective liabilities of pro- 
 moters, subscribers, directors, and shareholders of 
 companies under its regulation, and in order to that 
 we propose to divide our consideration of the subject 
 into three parts, corresponding with the different 
 stages through which a Joint Stock Company must 
 pass; namely, first, before Provisional Registration; 
 secondly, after Provisional Registration and before 
 Complete Registration ; and thirdly, after Complete 
 Registration, and (as to Railway and other companies 
 for executing works) before obtaining an Act of 
 Parliament. It will of course be understood that 
 the discussions under these different headings, as to 
 such companies as are either partly or altogether 
 formed at the time the provisions of the act apply to 
 them, only have reference to such acts, engagements, 
 or proceedings as occur subsequently to that time. 
 
JOINT STOCK companies’ ACT. 
 
 55 
 
 Part I. Before Provisional Registration o^ the in- 
 tended Company, 
 
 In order to the carrying forward of a project to the 
 extent of a Provisional Registration of an intended 
 company, and the issuing of a prospectus to the 
 world asking for subscribers, there must necessarily 
 be heavy expenses incurred, and it is needful to 
 inquire upon whom they are to fall. The question 
 would seem likely to arise only in a case where the 
 existence of the project is of so short a duration as not 
 to reach that stage, for it would naturally be sup- 
 posed that these preliminary expenses w^ould be 
 borne by the persons who subsequently derived the 
 benefit. It is, however, a matter of doubt whether 
 the payments of these expenses is a legal obligation 
 upon the persons interested in the company either 
 after Provisional or Complete Registration, for it will 
 have been observed that the Statute declares that 
 it shall not be lawful foi\ the promoters before Pro- 
 visional Registration to make any contract whatso- 
 ever for or in the name, or in behalf of, such 
 intended company.” Therefore, in order to avoid 
 any dispute upon the point, the promoters, who, as 
 we shall see, are liable in their own persons, should 
 make the payment of those expenses a condition in 
 the prospectus and letter of allotment. But suppos- 
 ing the project so utterly to fail as not to be provision- 
 ally registered, it remains to inquire upon whom the 
 responsibility rests. It may be stated generally that 
 the position of the persons here styled the pro- 
 moters” is the same as that of the projectors of a 
 company under the old system. Now, in a former 
 part, we have seen that between these projectors 
 
56 
 
 OF COMPANIES UNDER THE • 
 
 there might either be an actual or only an ostensible 
 partnership, the actual partnership resting upon a 
 contract inter' se ; the ostensible partnership, upon the 
 appearances they assumed before the world. This 
 latter character cannot, consistently with the pro- 
 visions of the act (not to issue any prospectus, hand- 
 bill, 8oc.), very well occur in future, but still it may 
 in dealings with individuals. For instance, the act of 
 several persons joining in one order, will make them all 
 liable, though there be no partnership between them ; 
 and that act of joining in an order may be either 
 personally or by agreement. Therefore, it may be that 
 one promoter will be liable upon an agreement made 
 by another under his authority, which may be given 
 either in express terms or be inferred from circum- 
 stances. We have in a former page (3,) sufficiently 
 explained the nature of an actual partnership, and the 
 power of one partner to bind the others. Upon the 
 whole, then, it appears that the promoters are liable 
 for these preliminary expenses in one of two charac- 
 ters, either jointly as partners, or individually upon 
 contracts made by them in person or by their authority. 
 It is almost impossible, for reasons stated before, to 
 define what, in the absence of a written document, 
 will suffice to create a partnership or a contract, as 
 regards an individual sought to be charged; or, in 
 other words, by what acts he may become a Pro- 
 moter;” but it is certain, that interference in the getting 
 up of a Company may, and therefore a cautious man 
 will act as if the slightest interference would suffice to 
 throw upon him the whole liabilities. In the absence 
 of a partnership, only those who have interfered in, 
 or authorized, by themselves or their agents, the trans- 
 
JOINT STOCK companies’ ACT. 
 
 57 
 
 action upon which the claim is founded, will be liable 
 to its discharge. It is to them alone that the persons 
 employed have a right to look ; and the persons 
 liable have no claim, as in the case of partnerships, 
 to be refunded a portion. This latter principle has 
 been already discussed. The words of Lord Tenter- 
 den, in an action on a building contract, will show the 
 liability the law attaches to persons authorizing or 
 confirming acts done. — “The plaintiffs had a right to 
 be paid by those who employed them, and the defen- 
 dants, having joined in a resolution to build the- 
 houses, authorized the employment of the workmen.. 
 That circumstance, without reference to the title to the 
 land upon which the houses were built, is sufficient 
 to make the defendants liable to this action.” (Braith- 
 waite Shofield, 9 B. Sc C. 401.) This is but an 
 example of the various ways in which such an implied 
 authority may be shown. If the promoters wish to 
 save themselves harmless in case of a failure in the 
 scheme, they may do so by incurring every liability only 
 upon an express condition that the persons employed 
 are not to be paid in case the company should fail to be 
 completely registered. The condition will thus be 
 made a part of the contract, and prevent proceedings 
 in the event of its non-performance. This condition 
 may be inferred from circumstances, as well as ex- 
 pressly made, and it is in that case followed by the same 
 result. Thus in the case of Kerridge v, Hesse (9 C.& P. 
 200), the projectors were relieved from liability upon 
 a condition of this kind so inferred. The jury, acting 
 under the direction of the learned judge, Mr. Baron 
 Alderson, who left it to them to say, whether the 
 plaintiff agreed that he was not to look for payment 
 from the members of the Committee individually, but 
 
 D o 
 
58 
 
 OF COMPANIES UNDER THE 
 
 was only to be paid from the deposits and instal- 
 ments, in case the Company was formed.” But what- 
 ever the liability of the promoters, whether as part- 
 ners or otherwise, there is of course no other body 
 of persons to whom they can look for reimbursement, as 
 the circumstances of the case prevent the existence 
 of shareholders and payment of deposits. And now 
 we come to consider the liabilities incurred at the 
 next stage of a Company’s existence. 
 
 Part II. Afler the Provisional Pegistration of the 
 Company y and before its establishment by Complete Re-- 
 gistration, Charter, Letters Patent, or Act of Parlia- 
 ment, 
 
 The promoters are now entitled to use the name of 
 the intended Company, to publish a prospectus, to 
 receive subscribers and deposits, and to allot shares. 
 The expenses which they are at liberty to incur on be- 
 half of the Company are, in performing all acts neces- 
 sary for constituting the Company, or for obtaining 
 Letters Patent, or a Charter, or an Act of Parliament, 
 and they may enter into such contracts for any ser- 
 vices, or for the execution of any works, and for the 
 supply of any stores, or other things as are neces- 
 sarily required for the establishing of the Company ; 
 but they may not make any contract to purchase 
 lands, or for other purposes, except it be conditional 
 on the completion of the Company, and to take effect 
 after the Complete Registration, or obtaining an Act 
 of Parliament, Charter, or Letters Patent. And 
 Railway and other Companies for executing w’orks by 
 the authority of Parliament, may contract for services 
 in making surveys, and performing all other acts 
 necessary for obtaining an Act of Incorporation, or 
 
JOINT STOCK companies’ ACT. 
 
 59 
 
 other act for enabling the company to execute such 
 works. To this extent, then, it appears that the 
 credit of the future company may be pledged, — 
 that is, if it be eventually completely registered, 
 or neglecting to obtain complete registration (for it 
 does not seem to be compulsory in this case) is 
 formed by an Act of Parliament, or a Charter, or 
 Letters Patent, then its funds and members will be 
 bound to answer those engagements made in its 
 incipient state. When it was observed that it is not 
 compulsory on Railway and other companies intend- 
 ing to obtain an Act of Parliament, or Charter, 
 or Letters Patent, to obtain Complete Registra- 
 tion under the Joint Stock Companies’ Act, it was 
 not intended to convey an idea that it is either 
 unadvisable or unnecessary. For, not only when 
 we come to consider the provisions as to trans- 
 ferring shares, shall w^e see the advisableness of doing 
 so, but it may be also necessary for making calls to 
 defray expenses which can only be done after Com- 
 plete Registration; and many other reasons might 
 in addition be given. But, to return to the sub- 
 ject of Liability, if the Company fails to be estab- 
 lished by some one of these several modes, those en- 
 gagements w'hich have been mentioned must be met 
 by some persons individually. Who those persons are, 
 is now to be inquired. If there be no managing 
 body appointed for conducting the concerns of the 
 intended Company, then the responsibility vi^ill still 
 remain upon the original Promoters, in the same 
 manner as before the Provisional Registration ; and 
 with reference to such a case, it is unnecessary to 
 say more than to refer to the previous pages, on the 
 
60 
 
 OF COMPANIES UNDER THE 
 
 liability of those persons, and to the subsequent 
 statements as to the liabilities of the subscribers to 
 meet those engagements. In the ordinary case, 
 however, there is a governing body of some descrip- 
 tion, usually styled the Provisional Committee.” 
 The recent statute requires that, upon the appoint- 
 ment of such a Committee or body, the Company 
 shall make a return to the Register Office of the 
 names of the members of the committee or other 
 body acting in the formation of the Company,” their 
 occupations and addresses, ^‘together with a written 
 consent on the part of every such member or pro- 
 moter to become such also a written agreement on 
 his part to take one or more shares in the company, 
 which must be signed by him. Therefore, unless the 
 provisions of the statute are eluded, it may be in 
 general assumed that the persons named, in fact are 
 members of the Company, and constitute the com- 
 mittee for its mana2:ement. Therefore these indi- 
 viduals have jointly undertaken to conduct the affairs 
 of the company, and have so stated to the world in 
 the prospectus, advertisements, and otherwise. This 
 constitutes, then, without doubt, an ostensible part- 
 nership, as before explained ; and an actual partner- 
 ship may also be inferred from the fact, that the 
 members of the committee are required by the Act 
 to be subscribers to the company. In either view of 
 the case, reference to the principles stated in the 
 earlier part of these pages, will show that whatever 
 liabilities are incurred in the concerns of the com- 
 pany, will, in the event of a failure to establish it, fall 
 upon the committee individually, each being liable to 
 the whole extent of his fortune. To use the name of 
 
JOINT STOCK companies’ ACT. 
 
 61 
 
 a person as a member of the Committee without his 
 consent, is made a statutable offence by the Act ; 
 but it is clear that in such case, in order to relieve 
 himself from liability, he should give the most direct 
 contradiction to the circumstance, and that with the 
 utmost possible publicity. Silence implies consent 
 in the most weighty manner, and the slightest act of 
 confirmation will certainly be attended with the full 
 liability of the position. It requires the same steps 
 to be taken as hitherto for a committee-man to divest 
 himself of that character, and relieve himself of lia- 
 bility on future engagements. The liability of a mem- 
 ber of the committee commences with his becoming 
 so, and terminates with his ceasing to fill the office, 
 provided he gives such public information of it as 
 last referred to; and it extends to all engagements 
 entered into or ratified by the committee during his 
 membership. 
 
 The liabilities of subscribers may be disposed of in 
 a few words, after the discussion already entered into 
 in the previous pages. A subscriber may still render 
 himself equally or partially liable with the committee 
 by acts of interference, and by signing the Deed of 
 Settlement, upon the same principles as have been 
 already stated, and need only to be referred to. His 
 right to a return of the deposit, with or without deduc- 
 tion for expenses, is also to be ascertained, as before. 
 In short, with reference to the position of members of 
 committee and subscribers after the provisional registra- 
 tion, but before the establishment of the company 
 under the present system, it is only necessary to say, 
 that their rights and disabilities are exactly the same 
 as the ccrresponding bodies under the old system, for 
 which the reader is referred to the earlier part of 
 
62 
 
 OF COMPANIES UNDER THE 
 
 these pages. But it is necessary to observe, with 
 regard to the liabilities of committees acting under the 
 provisions of the statute, that their right to indemnify 
 themselves from the deposits of the subscribers can 
 only at the utmost extend to such expenses and 
 contracts as they are empowered by the act to incur 
 and enter into. It is quite clear that all other en- 
 gagements will, ;vhether the company is established 
 or not, be personal charges upon themselves, and 
 that they will have no legal right to an indemnity 
 from the company if established, or the subscribers if 
 not ; but of course, either of these bodies is at liberty to 
 relieve them from the engagements, such a course how- 
 ever being perfectly optional. Therefore, if the provi- 
 sional committee of a Railway Company, for instance, 
 make an agreement for purchase of lands, bridges, 
 canals, or other property, wdiich agreement is not 
 conditional on obtaining the Act of Parliament, 
 whether in the actual event it is so obtained or 
 not, the burden of it will fall on them indi- 
 vidually, if the company or the subscribers do 
 not relieve them. And no condition in the Pro- 
 spectus, Letter of Allotment, or Deed of Settle- 
 ment will avoid this responsibility, because any 
 such condition would be illegal, as contrary to the 
 terms of the act. But individual subscribers may make 
 themselves liable by interference, as in other cases. 
 As to such engagements as the committee are autho- 
 rized to make for the future company, it will of course 
 be advisable to guard against personal loss, by a con- 
 dition in the allotment of shares subjecting the de- 
 posits to their discharge. We now pass on to the 
 liabilities incurred after the establishment of the 
 company. 
 
JOINT STOCK companies’ ACT. 
 
 63 
 
 Part III. After the Complete Registration of the Com- 
 pany^ and in the case of Railway and other Companies^ 
 for executing public works, until obtaining an Act of 
 Parliament. 
 
 When a company that does not require an Act of 
 Parliament is established by complete registration, 
 it is then in the position of a company under the old 
 system when completely formed by Deed of Settle- 
 ment. It has been noticed, that the incorporation ob- 
 tained by the complete registration does not restrict 
 the extent of the personal liability of the members. 
 The company, on its establishment, becomes charged 
 with all the engagements which the promoters or pro- 
 visional committee are by the act authorized to make 
 for it, and may take upon itself such other engagements 
 as the committee has made without that authority. 
 The directors are empowered to bind the company by 
 their contracts in conducting its business, subject to 
 the provisions of the Joint Stock Companies’ act and 
 the Deed of Settlement of the company. Wehaveonly 
 to refer to the previous pages which state the respec- 
 tive positions of the managers and shareholders of a 
 companyjcompletely formed, under the old s)^stem, 
 to show the position of directors and shareholders of a 
 company completely registered, under thepresent sys- 
 tem. The act, however, contains a provision as to the 
 duty of shareholders to sign the Deed of Settlement; 
 for it declares (sec. 26) that no shareholder of any 
 company completely registered, shall be entitled to 
 receive any dividends or profits, or be entitled to the 
 remedies or powers thereby given to shareholders, 
 until he shall have executed the Deed of Settlement, 
 
64 
 
 OF COMPANIES TINDER THE 
 
 and also have paid up all instalments and calls due 
 by him, and shall have been registered in the Registry 
 Office of Joint Stock Companies. 
 
 As to Companies, such as Railway Companies, which 
 require an Act of Parliament, it is necessary to oh^ 
 serve, that, though Complete Registration establishes 
 the Company, yet its operations are much more re- 
 stricted than those of others, until it obtains an Act 
 of Parliament (see p. 52). Its operations are, in 
 fact, confined to doing such acts as are necessary for 
 obtaining an Act of Incorporation, and to making 
 calls on the shares to meet the expenses necessary to 
 that end, but it may appoint directors and other offi- 
 cers, and hold general and special meetings. In other 
 respects^, it has no more power than it obtained by 
 Provisional Registration. The same remarks, therefore, 
 in that place, as to contracts not authorized by the 
 statute for regulating Joint Stock Companies, will apply 
 in the present stage of such a Company’s existence. 
 If the Company fails to obtain an Act of Parliament, 
 the shareholders are liable to pay the whole of the 
 expenditure incurred in the fruitless attempts; and 
 for that purpose calls may be made on the shares. 
 But, irrespective of this liability of the shareholders 
 to the Company, they are liable to the persons em- 
 ployed by the company, and therefore the burden 
 may fall unequally ; leaving the persons paying more 
 than their proportion to the right of having contribu- 
 tion from their co-partners. This power to make 
 calls upon the shares for expenses, shows the neces- 
 sity, as a means of protecting the Promoters and Pro- 
 visional Committee, of obtaining complete registration, 
 though an act is subsequently to be obtained. For, 
 
JOINT STOCK companies’ ACT. 
 
 65 
 
 without so doing, the Company has no power to com- 
 pel the subscribers to sign the Deed of Settlement ; 
 and unless they do so they incur no liability on the 
 shares allotted them, except to the extent of the de- 
 posit. On the other hand, those who honourably sign 
 the deed are liable to be unfairly charged with more 
 than their share of the loss, and no calls could be 
 made for their reimbursement. It appears therefore 
 that the extreme limit of liability which a shareholder 
 in these companies incurs, cannot, in the event of fail- 
 ure to obtain an Act of Parliament, extend farther than 
 the lawful expenses incurred in the endeavours to obtain 
 it. All other expenditure must be the individual bur- 
 den of those who make or authorize it, or subsequently 
 confirm it. When the Act is obtained, the liabilities of 
 the shareholders depend upon its provisions ; if the, 
 company is absolutely incorporated, then their liability 
 is confined, as we have seen, to the amount of their 
 separate shares. 
 
 Part IV. Of the Transfer of Shares in Companies 
 within the Operation of the Joint Stock Companies' Act. 
 
 It has been stated that the Act makes it unlawful, 
 before the Provisional Registration of a Company, to 
 allot shares or issue scrip ; but that, after Provisional 
 Registration, the managers of the intended Company 
 may do so in the name of the Company. We have 
 also seen what, under the old law, was the position of 
 the original applicant for shares in point of liability 
 to the Company, and to the persons to whom he trans- 
 ferred his right in shares, before the formation of the 
 Company. The liberty which then existed of selling 
 the Letter of Allotment, or other document showing 
 the right to shares, before the Certificates of Shares 
 
66 
 
 OF COMPANIES UNDER THE 
 
 are issued, has been taken away,* it being declared 
 (sec. 26 ) that it shall not be lawful until Complete 
 Registration, and until the subscriber or person having 
 the right to the share shall have been duly registered 
 as a shareholder in the Registry Office, for such person 
 to dispose, by sale or mortgage, of the share, or any 
 interest therein. And that every contract for a sale 
 or disposal of such share or interest shall be void, 
 and that every person entering into such contract, 
 shall forfeit a sum not exceeding lOZ.’’ The very 
 extensive traffic that has for some time past been, 
 and is now going on in the sale of letters of allot- 
 ment, and banker’s receipts before the issueof scrip, and 
 also of scrip, without inquiring whether the Company 
 is conijiletely registered, renders it necessary to show 
 ^the possible consequences arising from the positions 
 of the buyers and sellers in these transactions. In 
 this particular alone will be seen the obvious advan- 
 tage of, if not necessity for. Railway Companies ob- 
 taining Complete Registration, notwithstanding their 
 intended establishment by Act of Parliament. The 
 position of the original applicant for shares, is that 
 of a person contracting to become a partner in a future 
 company; and until he does so become a partner, by 
 signing the deed and being registered as a share- 
 holder, he is not entitled to the benefit of his shares 
 in the Company, nor can he transfer that benefit to 
 
 * The writer is aware of the doubts that have been raised upon the 
 application of this section of the Act to shares in Railway and other 
 Companies seeking to obtain an Act of Parliament. But as these doubts 
 have yet to receive a judicial solution ; and may (and most probably, 
 as the writer thinks, will) be determined to be groundless, it is 
 obvious that the unqualified statements in the text will be a safer guide 
 to the non-professional public than if expressed wdth doubts. 
 
JOINT STOCK companies’ ACT. 
 
 67 
 
 another, but, at the same time, he is liable to the 
 Company, upon his agreement to become a partner, 
 and may be sued for deposits, calls, and other claims 
 which his agreement (according to the terms of the 
 Allotment) entails upon him. Further, we have seen 
 that any contract for sale of shares, by such original 
 applicant, before he be registered as a shareholder, is 
 declared to be void • therefore, according to the usual 
 legal interpretation of those words, neither does the 
 seller part with his interest, nor the buyer acquire 
 any legal rights by the agreement, and neither party 
 w'ould have a right to enforce the performance of it 
 by any action for damages or otherwise, nor could 
 the buyer recover from the seller, the purchase money 
 paid, if the seller refused to be bound by the bargain. 
 And the same rule which makes a sale void as be- 
 tween the original applicant and his purchaser, will 
 make all subsequent sales void, and the last pur- 
 chaser would have no more right to the shares, or 
 against his vendor, than had the first purchaser ,* nor 
 would the intermediate buyers and sellers have any 
 legal rights against each other, upon the sales between 
 them. Further, the contract being entirely void, the 
 Company would not be entitled to grant the shares to 
 the holder of the Letter of Allotment, and if they did, 
 would be liable for breach of agreement to the origi- 
 nal applicant, who, until he parts with his shares in a 
 legal manner, will remain liable to the Company and 
 to the world, as if no transfer of the Allotment or Scrip 
 had been made. Before we proceed to show how a 
 legal transfer may be made, it will be well to put a 
 few cases in illustration of the foregoing principles : 
 — If A, an original applicant, sells an allotment of 10 
 shares to B for 5/., A may retain the money and also 
 
68 
 
 OF COMPANIES UNDER THE 
 
 claim the shares from the company; B has no remedy 
 for either money or shares. In the same case, B may 
 refuse to take the shares, and A will have to pay 
 deposits, calls, and liabilities attaching upon them ; 
 A may retain the purchase money, but has no remedy 
 against B. 2. If B sells the allotment to C, A may 
 still claim the shares, and B retain the purchase money ; 
 C has no remedy against either A or B. In the same 
 case both B and C may refuse to take the shares ; A 
 and B may both keep their purchase-moneys, but have 
 no remedy against either B or C, nor B against C, or C 
 against B, and A is liable to the Company upon the 
 shares, but B and C are not. The circumstance that 
 B sells the Letter of Allotment to C after the Complete 
 Registration of the Company would seem to make no 
 difference. B had nothing to sell, and C knows it. 
 The original sale from A to B was void, and A may 
 claim the shares. Perhaps it may be questionable 
 whether the rights of the parties may not be some- 
 what different if the sale be of Certificates of Shares 
 instead of Lettersof Allotments, for in that case the date 
 of Complete Registration is stated in the Certificate, and 
 the only question is whether the sale is void because 
 the original shareholder has not been registered, the 
 decision which may depend on the knowledge or igno- 
 ranceofthe purchaser that he is unregistered. In such 
 a case, although the sale from A to B is void, yet it 
 may be good from B to C, so far as to give C a 
 remedy against B for non-performance of the agree- 
 ment, in case A should refuse to adhere to his agree- 
 ment. This observation is made from the circum- 
 stance that the wording of the clause in the act does 
 not extend to more than the original contract, and 
 that on the sale of a Certificate of Shares there is no 
 
JOINT STOCK companies’ ACT. 
 
 69 
 
 necessary information to the purchaser, as in that 
 of a mere Letter of Allotment, that the provisions of 
 the Act have not been complied with. It follows from 
 the preceding observations, that all purchasers of 
 Letters of Allotment are entirely at the mercy of the 
 original applicant for shares, and the original appli- 
 cant at the mercy of the subsequent holders of the 
 Letter. In neither case can the party wronged have a 
 remedy, and it is difficult to suggest any security for 
 the performance of the Agreement for Sale. The 
 Agreement itself being illegal and void, all security 
 for its performance would be illegal and void also. 
 One only mode of conducting these transactions 
 safely, occurs to the writer, and that is, by making the 
 sales conditional instead of absolute. The Act re- 
 stricts the disposal of shares by sale or mortgage 
 before compliance with its provisions. Now if A 
 sold to B, and B to C, on condition that A complied 
 with the terms of the Act, it would in fact be a disposal 
 after compliance with those provisions, for whether 
 the transaction is a disposal or not, is to be deter- 
 mined only by the compliance or non-compliance of 
 A with the provisions of the Act. Neither would it 
 seem that the declaration of the Act annulling con- 
 tracts for sale affects such a transaction, for the words 
 contract for sale or disposal,^’ must necessarily refer 
 to the foregoing part, and mean contract for such 
 sale or disposal.^’ Such a condition will also avoid 
 the penalty of 10/. which the Act inflicts for such a 
 prohibited sale. The plan suggested will indemnify 
 not only the purchasers, but A, the original applicant, 
 so far as giving him a remedy against B upon A’s com- 
 pliance with the condition of the sale. So also B 
 would have a remedy against A, if A broke the con- 
 
70 
 
 OF COMPANIES UNDER THE 
 
 tract, and C against B, if either A or B broke the 
 contract, and B against C, if A perform the condition 
 and C broke the contract. It will be prudent for all 
 present holders of Allotment Letters to see that the 
 original applicant, at the earliest moment, signs the 
 Deed, and is registered as a shareholder, and other- 
 wise complies with the requisitions of the Act, and 
 Deed of Settlement of the Company, and then, after 
 he has done so, to procure from him a transfer to 
 the holder of the letter as a sale direct from the one 
 to the other,* which may then be completed in the 
 form required by the Act of Parliament, to the con- 
 sideration of which we now proceed. — Supposing an 
 original applicant for shares to have become a share- 
 holder^ duly registered, desirous of transferring his 
 shares in the Company, he is (sec. 54) authorized to 
 do so, subject to the regulations of the Act, and the 
 Deed of Settlement of the Company, by deed duly 
 stamped, stating the full amount of consideration, 
 and in the form annexed to schedule K of the Act. 
 The transfer must be produced at the Company’s 
 office, and the directors are required to enter it in a 
 book to be kept by them, called the Register of 
 Transfers, and to make an indorsement of such entry 
 on the instant of transfer. A return of the transfer 
 is then to be made to the Joint Stock Companies’ 
 Register Office. The return is to be made upon the 
 request, in writing, of any party to a transfer of a 
 share, therefore either the seller or buyer, by the 
 directors of the Company, and upon making such 
 
 * As the Act requires the consideration for the sale to be stated 
 truly, it would he requisite for the intermediate sales to be stated, or 
 possibly A might appear to be receiving more money for the transfer 
 than was the fact, which might occasion difficulties to him. 
 
JOINT STOCK companies’ ACT. 
 
 71 
 
 return the party may produce it at the Register Office 
 and require it to be registered, which legally com- 
 pletes the transaction. It seems that (sec. 54), 
 unless otherwise provided by the Company’s Deed of 
 Settlement, a shareholder is not entitled to transfer 
 any share held by him until he has paid up the calls 
 on all the shares held by him in the same Company ; 
 and therefore in such a case the directors may refuse 
 to make the requisite return of the transfer, and it 
 cannot be completed, and the seller must either pay 
 up the calls or refund the purchase-money. Then, 
 upon a transfer of shares made in the requisite 
 method, the purchaser will be entitled to the profits 
 arising from them from the time of the Deed of 
 Transfer (sec. 54) being produced at the office of the 
 Company for Registry; but the directors may not pay 
 them to him, nor can he sue for them (sec. IS) until 
 the transfer of the share be registered at the Register 
 Office. The liabilities of shareholders may be stated 
 shortly. The original shareholders are clearly liable, 
 both to the Company and its creditors, for every 
 claim arising from the time of the Provisional Registra- 
 tion of the company, and only cease to be liable as 
 to future engagements when their shares have been 
 transferred and completed by a return to the Joint 
 Stock Companies’ Register Office, as before men- 
 tioned : for it is enacted (sec. 13) that until such 
 return, the person whose share shall have been trans- 
 ferred, shall, so far as respects his liability to the 
 debts and engagements of the Company, and also 
 as respects his reimbursements of any loss he may 
 sustain thereby, be deemed to continue a shareholder 
 of the Company, that is, he remains liable to the 
 Company’s creditors, but is entitled to be reimbursed 
 
72 
 
 OF COMPANIES UNDER THE 
 
 a proportionate part by the Company, as if he were still 
 a partner. It would seem also that he would be entitled 
 to repayment from the person to whom he had trans- 
 ferred his shares, of the portion of such loss or 
 payment which the shares are liable to bear, as was 
 incurred by him on account of the non-registry of 
 the transfer. The liability of a person taking a 
 transfer as to all claims of the Company, in respect 
 of the shares, commences upon the production and 
 registry of the transfer in the office of the Company, 
 and terminates with the similar production and 
 registry of a transfer by him to another; and as to 
 his liability to the Company’s creditors, it commences 
 with the registry of the transfer in the Registry 
 Office', and terminates with a similar registry of a 
 transfer by him to another, and extends in both cases 
 to all claims arising in the intervening periods, A 
 shareholder is liable to the Company only for such 
 calls as are made on the shares during the time of 
 his holding them, and not for any made previously 
 or subsequently to that time. But of course he 
 may be liable, by agreement with a previous holder, 
 to pay calls in arrear. This, however, is not, as we 
 have seen, a debt due from him to the Company, but 
 only an undertaking with the former holder, for 
 breach of which damages may be had. It is equally 
 clear that the Company has no claims upon a person 
 lately a shareholder, for calls made subsequently to 
 his ceasing to be so. A few cases by way of illus- 
 tration may be useful. — If A transfer to B, and 
 before production and registry of the Deed of Trans- 
 fer at the Company’s office, a call is made, A is liable 
 to the Company, and B must reimburse him. In the 
 
JOINT STOCK companies’ ACT. 
 
 73 
 
 same case, if a dividend is made, the Company wil^ 
 be safe in paying it to A, and B will be left to his 
 remedy against A for its recovery. If A transfer to B, 
 and before the transfer be properly returned to the 
 Register Office, the Company enters into large en- 
 gagements, A is liable upon them as a shareholder, 
 but B is entitled to any profits that may arise on the 
 shares between the transfer and return, and probably 
 will be bound to reimburse A the proportion of loss on 
 the supposed engagements which the shares are liable 
 for. A is entitled to be paid the residue (if he pay 
 more than the shares are liable for) by the other share- 
 holders of the Company by way of contribution. If A 
 transfer to B, and the deed is produced and registered 
 at the office of the Company, and afterwards, before a 
 return of the transfer to the Registry Office, a call is 
 made, B is liable, and not A. So if a dividend is made, 
 B is entitled, and not A. If B purchase of A shares 
 on which calls are in arrear, and the Company permit 
 the transfer to be registered (unless the Deed of 
 Settlement otherwise provide), B is not liable ; the 
 Company must look to A. So if, while B is entitled, 
 calls are made, and B make default in payment, A 
 is not liable, the Company can only sue B. If B on 
 purchasing from A agree to pay arrears of calls, and 
 the company register the transfer without requiring 
 payment of the arrears, A is liable to the Company, 
 and B must reimburse A the money paid by him. 
 From these illustrations it will be easily perceived, 
 that, upon transfer of shares, the vendor should im- 
 mediately, for his own security, require the purchaser 
 to produce the transfer at the office of the Company, 
 and obtain a return of it to the Register Office 
 
 E 
 
74 OF COMPANIES UNDER THE 7 & 8 VICT. 
 
 without delay. It is also essential, for the security of 
 the purchaser, that the Deed of Transfer should imme- 
 diately be produced, and registered at the Company’s 
 office. Therefore, it is suggested, that as the pur- 
 chaser will take this latter step for his own security, 
 so, when that is done, the seller, being a party to the 
 transfer, may immediately require the Company to 
 make a return to the Registry Office for his security, 
 and in this way a'difficulty is avoided which might 
 otherwise arise from the fact of the purchaser 
 holding, as of course he does, the Deed of Transfer, 
 which disables the seller from registering it in the 
 Company’s books, as he cannot produce the deed, 
 and would, therefore, prevent him from obtaining the 
 requisite return which is to remove his liability. 
 It may be as well to notice here, that besides the 
 liability of a shareholder upon engagements made 
 by the Company during the time he was a member 
 of it, he is also liable (sec. 66) upon judgments, 
 decrees, or orders for payment of money obtained 
 against the Company during the time he is a member, 
 notwithstanding the debts for which those judg- 
 ments, decrees, or orders were obtained were con- 
 tracted previously to the time of his becoming a 
 shareholder. For any other general principles rela- 
 tive to the transfers of shares, the reader has but 
 to refer to that division of the second chapter of 
 this work. It remains only to observe, that when 
 any Railway or other Company, previously completely 
 remstered, obtains an Act of Parliament or Charter, 
 its proceedings, and consequently the transfer of its 
 shares, will be subject to the provisions of the Act 
 of Parliament or Charter so obtained, and unless 
 otherwise provided, will cease to be under the regu- 
 lations of the Joint Stock Companies’ Act. 
 
75 
 
 CONCLUSION. 
 
 We propose to conclude these pages with a short 
 summary of the different sources from which a Joint 
 Stock Company (using the term in its unlimited 
 sense) may derive its authority and constitution, by 
 which means we shall provide a guide to the different 
 points of attention requisite on the transfer of every 
 species of shares for sale in the market. In the first 
 place, we will notice those Companies who are regu- 
 lated by Acts of Parliament, or rules of law peculiar 
 to themselves. Such are — 
 
 Banking Companies. 
 
 Companies for the Formation of Schools. 
 
 Companies for the Formation of Literary and 
 Scientific Institutions. 
 
 Friendly Societies (which do not insure lives to the 
 extent of 2007. for one life or person). 
 
 Loan Societies. 
 
 Benefit Building Societies. 
 
 Irish Anonymous Partnerships. 
 
 Partnerships upon the Cost Book Principle. 
 
 Joint Stock Companies authorized by Letters Pa- 
 tent under 7 W. 4, and 1 Vic. c. 73 (from the grant 
 of Letters Patent). 
 
76 
 
 CONCLUSION. 
 
 Railway and other Companies authorized by Act of 
 Parliament (from the passing of the Act), and lastly, 
 
 Companies established by Royal Charter granted 
 by virtue of the general authority of the Sovereign, 
 irrespective of any Act of Parliament (from the time 
 of the grant). 
 
 The proceedings in these Companies, and conse- 
 quently the liabilities of the projectors and share- 
 holders, and the mode of transferring shares in them 
 are subject to the provisions of the particular Acts of 
 Parliament, or other authorities by which they are 
 constituted. 
 
 In the next place, the Companies which are regu- 
 lated by the general law treated of in the second 
 chapter, irrespective of the Joint Stock Companies’ 
 Act, are, — 
 
 All Joint Stock Companies, not included in any 
 of the before-mentioned species, which were existing 
 on the 1st day of November, 1844, and have not 
 subsequently been completely registered under the 
 provisions of the Joint Stock Companies’ Act 
 (except companies established in Scotland, which are 
 subject to the Scotch law), and lastly. 
 
 All such Joint Stock Companies, though formed 
 subsequently to the 1st Nov. 1844, which at their 
 formation, or by subsequent admission, consist of not 
 more than twenty- five members. 
 
 In the last place, the Companies under the regula- 
 tion of the Joint Stock Companies’ Act, treated of 
 in the third chapter, are — 
 
 All Companies not comprised in the first division. 
 
CONCLUSION. 
 
 77 
 
 established in any part of the United Kingdom ex- 
 cept Scotland, which have been formed since the 1st 
 Nov. 1844 (except as presently mentioned). 
 
 AW such Companies as being formed before that 
 day have since been completely registered. 
 
 Also all Friendly Societies assuring to the extent 
 of 200Z. on one life, or on several lives to one person, 
 formed since that date. 
 
 All such Companies as were partly formed on that 
 day (from that day), and lastly, 
 
 All Companies authorized by Charter, Letters 
 Patent, or Act of Parliament (until the day of ob- 
 taining it). 
 
 It is necessary here to add a few observations as to 
 the applicability of the Joint Stock Companies’ Act to 
 Companies, for forming Railways, or for other pur- 
 poses of business in Scotland, the Colonies, or Foreign 
 States. It certainly applies (sec. 2) to all Companies 
 for such purposes in Scotland which have an office or 
 place of business in any other part of the United 
 Kingdom. But it seems a very questionable point 
 whether the Act has any reference to the other Com- 
 panies mentioned. The enactment is (sec. 2) to 
 apply to every Joint Stock Company established (in 
 the United Kingdom, except Scotland, or in Scotland, 
 having an office in another part of the United King- 
 dom), for any commercial purpose, or for any pur- 
 pose of profit.” A doubt has arisen whether this enact- 
 ment includes Foreign Companies established out of 
 the kingdom, but having an office in it for receiving 
 subscriptions and deposits. In a case within the 
 author’s knowledge, the opinion of two eminent 
 
78 
 
 CONCLUSION. 
 
 lawyers was taken on the point, and the effect of it 
 was, that if the branch of the Company in this king- 
 dom was merely for the receipt of subscriptions and 
 deposits, and payment of dividends, and not for the 
 purpose of carrying on the business of the Com- 
 pany here, then such a Company was not included 
 in the provisions of the Act. It may therefore 
 be argued with some reason, that a Company 
 formed for constructing a Railway out of the 
 United Kingdom, for instance, in a Foreign State or 
 Colony, is not within the Act, as the wdiole of its 
 business, the construction of the Railway, must be 
 carried on in the Foreign State or Colony. This doubt, 
 howeyer, like all others upon the subject in general, 
 must be treated by the non-professional public as 
 groundless, until it has received a judicial determina- 
 tion. Such of those Companies as originate in the 
 United Kingdom, and whose Committee of Manage- 
 ment and place of business are here and not abroad 
 seem more clearly to come within the words estab- 
 lished in the United Kingdom,’^ than those which 
 originate abroad and have only a branch committee 
 here for the purpose of receiving subscriptions and 
 deposits and paying dividends. Another incidental ob- 
 servation may be made here, that the Joint Stock Com- 
 panies’ Act in no way supersedes the power of the 
 Sovereign to grant a Charter or Letters Patent of 
 Incorporation by her general authority, or by virtue 
 of the Act of 7 William 4 and 1 Vic. c. 73, any more 
 than it does that of the Legislature to incorporate by 
 statute. Its effect as to such Companies is to place 
 them under control until they obtain their Charter, 
 Letters Patent, or Act of Parliament. It follows, 
 
CONCLUSION. 
 
 79 
 
 that there is nothing to prevent any number of 
 persons privately joining together for the purpose of 
 establishing a Company by one of those means, so 
 that they do not infringe the statute by publicly 
 asking for subscriptions, and allotting shares, 
 until the Company is established. Of course the 
 expense of any such proceedings must fall individu- 
 ally on the persons so joining together. In conclu- 
 sion, the writer would again earnestly urge the 
 readers of these pages not to rely upon the general 
 principles here stated, in cases even in the slightest 
 degree varying from the ordinary character. It is 
 well known to those acquainted with questions of 
 law, how fine a point of distinction will alter the 
 position of the parties concerned, and the legal cha- 
 racter of their transactions. The design of the writer 
 has been merely to give that useful information 
 which every non-professional man ought to have, to 
 make him aware of the general nature of the respon- 
 sibilities attaching to his acts, and to show him how to 
 avoid the serious consequences which often ensue 
 from his own ignorance or negligence, or from the 
 unscrupulous conduct of others. To carry out that 
 design necessarily occasioned an inquiry into the 
 law, but the writer trusts that it has been conducted 
 in such a manner as to be consistent with profes- 
 sional etiquette, and at the same time to give autho- 
 rity to the propositions which he has advanced for 
 public guidance and information. 
 
London : 
 
 Printed by Stewart and Murbat, 
 Old Bailey.