Chambers against The Manchester and Milford Railway Company
| Jurisdiction | England & Wales |
| Judgment Date | 22 June 1864 |
| Date | 22 June 1864 |
| Court | Court of the Queen's Bench |
English Reports Citation: 122 E.R. 951
IN THE COURT OF QUEEN'S BENCH AND THE EXCHEQUER CHAMBER
S. C. 33 L. J. Q. B. 268; 10 L. T. 715; 10 Jur. N. S. 700; 12 W. R. 980. Referred to, Raskdall v. Ford, 1866, L. R. 2 Eq. 755; Taylor v. Chichester and Midhurst Railway, 1867-70, L. R. 2 Ex. 384; L. R. 4 H. L. 628. Applied, Fountains v. Carmarffien and Cardigan Railway, 1868, L. R. 5 Eq. 325. Approved, In re Cork and Youghal Railway, 1869, L. R. 4 Ch. 753, n.; Landowners' West of England and South Wales Land Drainage and Indosare Company v. Ashford, 1880, 16 Ch. D. 437. Referred to, Yorkshire Railway Wagon Company v. Madure, 1881-82, 19 Ch. D. 484; 21 Ch. D 309. Discussed, Wenluck v. River Dee, Company, 1885-87, 10 App. Gas, 354; 36 Ch. D. 691. In re Wresdtam, Mold and Connah's Quay Railway, [1899] 1 Ch. 458. Adopted, Payne v. Cork Company, [1900] 1 Ch. 316.
[588] chambers against the manchester and milford railway company, Wednesday, June 22nd, 1864. - Railway Company. 7 & 8 Viet. c. 85. Companies Clauses Consolidation Act, 1845, 8 & 9 Viet, c. 16. Borrowing powers. Lloyd's bonds. - A railway Company were empowered by their special Act to raise a capital of 555,0001., and to raise by mortgage any further sum not exceeding 185,0001. ; but no part of such further sum was to be raised until the whole of the capital had been subscribed for and one half paid up. Part only of the capital was subscribed for ; but the Company, being in want of money, determined to borrow 10,0001. to enable them to pay debts due to the contractor, engineer, solicitors, and for land, and also to meet a claim made by W. C. for travelling expenses and loss of time. The directors applied to tlieir bankers, and obtained the sum required on the security of the joint and several promissory note of W. C. the then chairman of the Company, and of B., one of the directors. B. having been compelled to pay the money, brought an action against W. C. for contribution. The board of directors resolved that, " in order to discharge the liability of the chairman in the action of B. against him, the secretary be authorized to seal Lloyd's bonds to the extent of," &c. Bonds were accordingly sealed with the common seal of the Company, by each of which the Company "acknowledge that they stand indebted to W. C. in the sum of 10001. for money due and owing from the said Company to the said W. C. ; and the said Company, for themselves, their successors and assigns, hereby covenant with the said W. C., his executors and administrators, to pay to him, his executors, administrators or assigns, the said sum of 10001. &c." These bonds^were delivered to W. C. and he assigned them to one D. to secure money advanced by him, and with which money the action brought by B. against W. C. was settled. Subsequently, the directors resolved that the bonds should be redeemed, and that the expenses incurred by the chairman should be paid by the Company out of the first moneys in their hands. In an action brought by W. C. upon one of these bonds, held that, taking into consideration stat. 7 & 8 Viet. o. 85, The Companies Clauses Consolidation Act, 1845, 8 & 9 Viet. c. 16, and the special Act, the bond was illegal, and that he could not recover. [S. C. 33 L. J. Q. B. 268 ; 10 L. T. 715 ; 10 Jur. N. S. 700 ; 12 W. R. 980. Referred to, Raskdall v. Ford, 1866, L. R. 2 Eq. 755; Taylor v. Chichester and Midhurst Railway, 1867-70, L. R. 2 Ex. 384 ; L. R. 4 H. L. 628. Applied, Fountains v. Carmarffien and Cardigan Railway, 1868, L. R. 5 Eq. 325. Approved, In re Cork and Youghal Railway, 18Q9, L. R. 4 Ch. 753, n. ; Landowners' West of England and South Wales Land Drainage and Indosare Company v. Ashford, 1880, 16 Ch. D. 437. Referred to, Yorkshire Railway Wagon Company v. Madure, 1881-82, 19 Ch. D. 484; 21 Ch. L . 309. Discussed, IVenluck v. River Dee, Company, 1885-87, 10 App. Gas, 354 ; 36 Ch. D. 691. In re Wresdtam, Mold and Connah's Quay Railway, [1899] 1 Ch. 458. Adopted, Payne v. Cork Company, [1900] 1 Ch. 316.] The first count of the declaration stated that the defendants, by deed under their common seal bearing date the 28th May, 1863, acknowledged that they stood indebted to the plaintiff in the sum of 10001. for money due and owing from the defendants to the plaintiff, and the defendants thereby covenanted with the plaintiff to pay to him, his executors, administrators or assigns, that sum upon the 28th May, 1866, and also interest at the rate of 5 par cent, per annum from the date thereof [589] until payment, such interest to be payable half-yearly upon the 28th November and the 28th May in each year, and of which interest one half-year was due and unpaid. The second, third, fourth, fifth and sixth counts were for interest upon five other deeds of the same date and for the same amount. There were also counts for interest and on accounts stated. The defendants pleaded, amongst other pleas, first, to the first, second, third, 952 CHAMBERS V. THE MANCHESTER AND MILFORD RLY. CO. 6 B. & S. 590. fourth, fifth and sixth counts respectively, non est factum ; and to the residue of the declaration, never indebted. Issues thereon. The defendants had also pleaded to the first, second, third, fourth, fifth and sixth counts, a plea by way of defence on equitable grounds, an abstract of which was as follows:-That the alleged deeds were made and entered into by the defendants, throagh the plaintiff and other directors for the time being of the Company, for the purpose of raising and borrowing the moneys therein respectively mentioned, and that at the time of the making of the said deeds respectively the defendants had not any power whatever to raise or borrow the said moneys. But, by order of Mellor J., thii plea was disallowed upon the plaintiff undertaking to admit on the trial evidence of the matters stated in the abstract of it to be given in evidence under the plea of non eat factum or never indebted. On the trial, before Erie C.J., at the Spring Assizes for the county of Surrey, it appeared lhat the defendants were incorporated under The Manchester and Milford Railway Act, I860, 23 & 24 Viet. c. clxxv., and that in 1861, being in want of money for the payment of debts due to the contractor, engineer, solicitors, and for land, and also to meet a claim made by the plaintiff for [590] 14001. due to him for travelling expenses and loss of time, applied to their bankers, The Union Bank of London, for the loan of a sum of money, who ultimately agreed to advance the sum of 10,0001. on the promissory note of the directors. At a meeting of the board of directors held on March 7th, 1861, the plaintiff, who was then chairman of the Company, and Barrow a co-director and the present chairman of the Company, were authorized to sign the necessary notes for the amount of 10,0001. on behalf of the Company, on the condition that the proceeds of the calls made on the shareholders be first applied in liquidation of that sura. The plaintiff and Barrow thereupon signed a joint and several promissory note, which was handed to the bankers on the advance of the money, and they afterwards renewed the note more than once. la April, 1863, the bank required payment of the note, and Barrow, in order to prevent legal proceedings which they threatened to take against him, paid the balance of 95001. and interest due upon it, and sued the plaintiff for contribution. At a meeting of the board of directors held on the 5th May, 1863, the board discussed the question as to the issue of Lloyd's bonds as security for a loan to pay off the liability of the plaintiff, and it was resolved that counsel's opinion be taken as to whether they could be legally issued. At a meeting of the board on the 26th May, "It was resolved, that in order to discharge the liability of the chairman in the action of Mr. Barrow against him, the secretary be authorized to seal Lloyd's bonds to the extent of 70001., to be deposited for twelve months, together with the chairman's promissory note for securing 50001. and interest at 6 per cent., and commission at 5 per cent." The plaintiff as chairman of the Company was a party to all the pro-[591]-eeedirigs. Pursuant to this resolution the bonds to that amount, which according to their value in the market would be equivalent to 50001., were sealed and delivered to the plaintiff, and he afterwards assigned them to one Denham as security for a loan of S0001. and interest: the assignment containing a covenant that the assignee might sue in the name of the plaintiff in case of non-payment. On the 5th June, 1863, the plaintiff paid Barrow the debt and costs due to the latter under a Judge's order to stay proceedings. At a meeting of the board held on the 5th August, 1863, it was resolved, "that the Lloyd's bonds amounting to 70001. given as a security for the liability of the chairman under the bill for 95001. held by the Union Bank, be redeemed, and that his expenses in raising that money be paid by the Company out of the first moneys in the hands of the Company." The bonds were never redeemed pursuant to this resolution. The following is a copy of one of the bonds on which the action was brought.! " The Manchester and Milford Railway Company. Bond for 10001. "Stamp 11. 5s. "No. 1. "The Manchester and Milford Railway Company do hereby acknowledge that they stand indebted to William Chambers, of, &c., in the sum of 10001. for money due 6 B. & 8. 592. CHAMBERS V. THE MANCHESTER AND MILFORD RLY. CO. 953 aad owing from the said Company to the said William Chambers. And the said Company, for themselves, their successors and assigns, hereby covenant with the said William Chambers, his executors and administrators, to pay to him, his executors, administrators or assigns, the said sum of 10001. upon the 28th day of May, 1866, and also interest thereon at the rate of 51. [692] per cent, per annum from the date hereof until payment, such interest to be payable...
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