Conybeare v The New Brunswick and Canada Railway and Land Company Ltd

[578] conybeare v. the new brunswick and canada railway and land company, limited. Before the Lords Justices. Feb. 27, 28, 29, March I, 2, 5, April 26, I860. [S. C. 1 Giff. 339; 29 L. J. Ch. 435; 1 L. T. 360; 6 Jur. (N. S.), 104; 8 W. R 231; 29 L. J. Ch. 442 ; 2 L. T. 314 ; 6 Jur. (N. H.), 518 ; 31 L. J. Ch. 297 ; 6 L. T. 109 ; 8 Jur. (N. S.), 575 ; 10 W. R. 305 ; 9 H. L. C. 711 ; 11 . R. 907. See Western Bank of Scotland v. Addie, 1867, L. R. 1 Sc. App. 157. Attorney-General v. May, 1874, L. B. 9 Ch. 403 (n.); Graver's case, 1875, L. R. 20 Eq. 125; Houldswyrth v. City of Glasgow Bank, 1880, 5 App. Gas. 326.] The Plaintiff being desirous of purchasing from the directors of a colonial company some forfeited shares, applied at the office for information about the company. Grants of land, appearing on the face of them to be absolute, had been made by the Colonial Government to the company. The secretary shewed these grants to the Plaintiff, and handed him the last two reports of the company, both of which proposed dealing with the land in a way which assumed it to belong absolutely to the company. An Act had been passed containing a clause defeating the title of the company to the land, if the railway, which was still unfinished, was not completed by a given time. There was some question whether later Acts did not control the operation of this clause, but the company had been advised by counsel that they did not. This opinion was not communicated to the Plaintiff, nor was he informed of there being any question whether the title was defeasible. The secretary handed him a complete bound-up copy of the Acts relating to the company, which he there and then cursorily looked at, but did not notice the Act containing the divesting clause. He proposer! to return and look at the Acts more carefully, but the secretary gave him another bound-up copy of the Acts to take away, and he therefore made no further examination of the set first shewn him. The copy which he took away did not contain the Act in question. The Plaintiff some days afterwards made, through the secretary, a proposal to purchase shares, which was accepted by the directors, and the purchase was duly completed. After this the Plaintiff discovered the imperfection of the title. Held, that the shewing to the Plaintiff these reports and grants amounted to a representation that the title of the company to the land was indefeasible, and that having regard to these representations, and to the omission of the divesting Act from the set which the Plaintiff took away, he was not to be considered as furnished with sufficient means of discovering the truth. Held also, that the purchase being a purchase from the directors, and the secretary 486 CONYBEARE V. NEW BBUNSVVICK, ETC., CO. 1 DE O. P. fc J. 579. being the agent of the directors in the matter of the sale, the company were liable for the misrepresentations, and that the Plaintiff' was entitled to have the contract rescinded. Held, that such right was riot lost by the fact that the Plaintiff, before the bill was h'led, rested his right to rescind solely upon another ground, upon which the Court did not decide in his favour. The reports shewn to the Plaintiff stated .the monthly traffic returns from tho completed part of the line to exceed the expenditure. This was true at the time of the raport, but since that time the expenditure had almost always exceeded the returns. This fact was not mentioned to the Plaintiff'. Whether this suppression would not have entitled him to relief, This was an appeal by the Plaintiff from a decree of Vice-Chancellor Stuart dismissing his bill, which was h'led for the purpose of setting aside a purchase made l y him of 200 Class (A) shares in the New Bruns-[579]-wick and Canada Railway and Land Company, and of recovering his purchase-money with interest. The New Brunswick and Canada .Railway and Land Company was formed in 1856, on the principle of limited liability. Its object was to take a transfer of the undertaking and rights of the St. Andrews and Quebec Railway Company, and of the rights of the (A) shareholders in that company. The St. Andrews and Quebec Railway Company was a company formed under an Act of the New Brunswick Legislature for making a railway from St. Andrews to Quebec, but by a later Act it was declared to be entitled to the privileges mentioned in its original Act upon completion of the line from St. Andrews to Woodstock, those privileges having originally been conditional upon its completion to Quebec. Certain grants of land were made to the company at different times by the New Brunswick Government, and the Government also guaranteed a dividend of 0 per cent, on .100,000, part of the capital, for twenty-five years from the completion of the line to Woodstock. The (A) shareholders in the company were entitled to the benefit of the grants and of the guarantee. The grants, which were produced in Court on the hearing of the appeal, were on the face of them absolute grants, reserving to the Crown all mines of gold, silver and coal, but not in any way conditional or defeasible. A subsequent Act, 19 Viet. c. f 9, s. 1 (New Brunswick), contained the following clause : - "If the part of the contemplated St. Andrews and Quebec Railroad, which may be between St. Andrews and Woodstock, and also a branch thereof to the river St. Croix, at or near the ' ledge ' (so called), in the parish of St. Stephen, in the county of Charlotte, be not completed and in full operation within the space of four years from [580] the time (21st August 185C) when this Act comes into operation, all arid every the grants of land and the rights and privileges conferred by the several facility Acts relating to the company shall be utterly null and void, and the land and privileges shall revert to and vest in Her Majesty as if no grant had been made or rights and privileges conferred." In 1856 the Canada and New Brunswick Company was formed as stated above. The memorandum of association stated its objects in the following terms : - "The objects for which the company is established are, to accept a transfer of the undertaking of the St. Andrews and Quebec Railroad Company, and to purchase all the lauds, property, rights and expectancies of the said railroad company, and the lands, rights and expectancies of the Class (A) shareholders of the St. Andrews and Quebec Railroad Company ; and to carry the said undertaking, or any part thereof, or any branches or deviations or extensions of the said railroad, into execution ; and to appropriate the said lands amongst the shareholder's in the company hereby established, or otherwise dispose thereof ; and to acquire and appropriate and dispose of any other lands in the province of New Brunswick ; and to advance funds or to take shares in the said railway company and Class (A) to enable such company to carry on their undertaking until the same shall be transferred as aforesaid to the company hereby established ; and to obtain Acts of the Imperial Parliament and of the Legislative Council and Assembly of New Brunswick in that behalf." The articles of association provided for the division of [581] the capital into Class (A), Class (B) and Class (C) shares, and proceeded as follows : - " The capital shares herein referred to shall be of .20 each, and the land shares shall specify the number 1DEQ.F.&J.B82. CONYBEARE V. NEW BRUNSWICK, ETC., CO. 487 of acres to which each share relates, and such number shall, with reference to the whole quantity of land which the company shall receive, be read to specify the proportionate quantity to be received on division, and not the positive quantity to be claimed. Class (A) shall consist of 4000 shares, and shall be entitled to the guarantee of G per cent, interest thereon for twenty-five years, pursuant to the above-recited act of the Legislative Council and Assembly in that behalf. The company shall allow interest at 6 per cent, per annum on the first payment and calls on Class (A) shares front the time of payment until the opening of the railroad from St. Andrews to Woodstock for traffic. Each Class (A) share shall be entitled to a certificate for an allotment and appropriation of four acres of the lands of the company, as hereinafter mentioned." The Class (B) shares were to have interest at 5 per cent, upon the payments which were made upon those shares, and they were to have fifteen acres of the land of the company. 'Class (C) shares were to comprise such part of the remaining capital of the company as the directors should think fit; and the 4000 original Class (A) shares in the St. Andrews and Quebec Railroad Company were provided for by the articles in this manner :-" 4000 shares of this class " (that is, (C) V "are to be allotted to the Class (A) shareholders of the St. Andrews and Quebec Railroad Company in exchange for the 4000 of the original (A) shares now held by them, but not to be entitled to interest during construction. The last-named 4000 shares are to be entitled to an allotment and...