Foss v Harbottle

JurisdictionEngland & Wales
Judgment Date25 March 1843
Date25 March 1843
CourtHigh Court of Chancery
Foss
and
Harbottle

English Reports Citation: 67 E.R. 189

HIGH COURT OF CHANCERY

See Hallows v. Fernie, 1867-68, L. R. 3 Eq. 532; L. R. 3 Ch. 467; Hoole v. Great Western Railway Company, 1867, L. R. 3 Ch. 274; Seaton v. Grant, 1867, 36 L. J. Ch. 642; Clinch v. Financial Corporation, 1868, L. R. 5 Eq. 482; L. R. 4 Ch. 117; Atwood v. Merryweather, 1868, L. R. 5 Eq. 467, n.; Turquand v. Marshall, 1869, L. R. 4 Ch. 386; Gray v. Lewis (No. 1), 1869-73, L. R. 8 Eq. 541; L. R. 8 Ch. 1050; Pickering v. Stephenson, 1872, L. R. 14 Eq. 339; Menier v. Hooper's Telegraph Works, 1874, L. R. 9 Ch. 353; Ward v. Sittingbourne and Sheerness Railway Company, 1874, L. R. 9 Ch. 492, n.; Macdougall v. Gardiner (No. 1), 1875, L. R. 20 Eq. 393; L. R. 10 Ch. 606; Macdougall v. Gardiner (No, 2), 1875, 1 Ch. D. 13; Russell v. Wakefield Waterworks Company, 1875, L. R. 20 Eq. 480; Duckett v. Gover, 1877, 25 W. R. 554; Pender v. Lushington, 1877, 6 Ch. D. 80; Isle of Wight Railway Company v. Tahourdin, 1883, 25 Ch. D. 333; Studdert v. Grosvenor, 1886, 33 Ch. D. 535; La Compagnie de Mayville v. Whitley [1896], 1 Ch. 807; Tiessen v. Henderson [1899], 1 Ch. 866; Alexander v. Automatic Telephone Company [1900], 2 Ch. 69; Burland v. Earle [1902], A. C. 93; Punt v. Symons & Company Ltd. [1903], 2 Ch. 516.

[461] 'Foss v. maebottle. March 4, 6, 7, 8, 25, 1843. [See Hallmas v: Fernie, 1867-68, L. E. 3 Eq. 532 ; L. E. 3 Ch. 467 ; Hoole v. "Great Western. Railway Company, 1867, L. E. 3 Ch. 274; Seaton v. Grant, 1867, 36 L. J. Ch. 64,2,; Clinch v. Financial Corporation, 1868, L. E. 5 Eq. 482; L. E. 4 Ch. 117; Atwoom. Merryweather, 1868, L. E. 5 Eq. 467, n.; Turquand v. Marshall, 1869, L. E. 4 Ch. 386; Gray v. Lewis (No. 1), 1869-73, L. E. 8 Eq. 541; L. E. 8 Ch. 1050; Pickering v. Stephenson, 1872, L. E. 14 Eq. 339; Menier v. Hooper's Telegraph Works, 1874, L. E. 9 Ch. 353 ; Ward v. Sittingbourne and Sheerness Railway Company, 1874, L. E. 9 Ch. 492, n.'; Macdowgall v. Gardiner (No. 1), 1875, L. E. 20 Eq. 393 ; L. E. 10 Ch. 606; Macdwgall v. Gardiner (No, 2), 1875, 1 Ch. D. 13; Russell v. Wakefield Waterworks Company, ,1875, L. E. 20 Eq. 480; Duckett v. Gover, 1877, 25 W. E. 554;. Pender v. Lushington, 1877, 6 Ch. D. 80; Isle of Wight Railway Company v. Tahourdin, 1883, 25 Ch. D. 333; Studdert v. Grosvenor, 1886, 33 Ch. D. 535; La Compagnie de Mayville v. Whitley [1896], 1 Ch. 807; Tiessen v. Henderson [1899], 1 Ch. 866; Alexander v. Automatic Telephone Company [1900], 2 Ch. 69 ; Burland v. Earle [1902],. A. C. 93; Punt v. Symons & Company Ltd. [1903], 2 Ch. 516.] Bill by two of the proprietors of shares in a company incorporated by Act of Parliament, on behalf of themselves and all other the proprietors of shares except the Defendants,, 190 FOSS V. HARBOTTLE 2 HARE, 462. against the five directors (three of whom had become bankrupt), and against a proprietor who was not a director, and the solicitor and architect of the company, charging the Defendants with concerting and effecting various fraudulent and illegal transactions, whereby the property of the company was misapplied, aliened and wasted; that there had ceased to be a sufficient number of qualified directors to constitute a board ; that the company had no clerk or office; that in such circumstances the proprietors had no power to take the property out of the hands of the Defendants, or satisfy the liabilities or wind up the affairs of the company ; praying that the Defendants might be decreed to make good to the company the losses and expenses occasioned by the acts complained of; and praying the appointment of a receiver to take and apply the property of the company in discharge of its liabilities, and secure the surplus : the Defendants demurred. Held, that, upon the facts stated, the continued existence of a board of directors de facto must be intended; that the possibility of convening a general meeting of proprietors capable of controlling the acts of the existing board was not excluded by the allegations of the bill; that in such circumstances there was nothing to prevent the company from obtaining redress in its corporate character in respect of the matters complained of; that therefore the Plaintiffs could not sue in a form of pleading which assumed the practical dissolution of the corporation; and that the demurrers must be allowed. When the relation of trustee and cestui gue trust begins, as between the projectors of public companies and such companies. Some forms prescribed for the government of a corporation may be imperative, and others directory only. On argument of a demurrer, facts not averred in the bill, and which might possibly have been denied by plea, if they had been averred, intended against the pleader. The bill was filed in October 1842 by Eichard Foss and Edward Starkie Turton, on behalf of themselves and all other the shareholders or proprietors of shares in the company called "The Victoria Park Company," except such of the same shareholders or proprietors of shares as were Defendants thereto, against Thomas Harbottle, Joseph Adshead, Henry Byrom, John Westhead, Richard Bealey, Joseph Denison, Thomas Bunting and Eichard Lane; and also against H. Eotton, E. Lloyd, T. Peet, J. Biggs and S. Brooks, the several assignees of Byrom, Adshead and Westhead, who had become bankrupts. The bill stated, in effect, that in September 1835 certain persons conceived the design of associating for the purchase of about 180 acres of land, situated in the parish of Manchester, belonging to the Defendant, Joseph Denison, and others, and of enclosing and planting the same in an ornamental and park-like manner, and erecting houses thereon with attached gardens and pleasure-grounds, and selling, letting or otherwise disposing thereof; and the Defendants, Harbottle, Adshead, Byrom, West-head, Bealey, Denison, Bunting and Lane, agreed to form a joint stock company, to consist of themselves and others, for the said purpose : that in October 1835 [462] plans of the land, and a design for laying it out, were prepared ; that, after the undertaking had been projected and agreed upon, Denison purchased a considerable portion of the said land of the other original owners with the object of reselling it at a profit, and Harbottle, Adshead, Byrom, Westhead, Bunting and Lane, and one P. Leicester, and several other persons, not members of the association, purchased the said land in parcels of Denison and the other owners, so that at the time of passing the Act of Incorporation Harbottle, Adshead, Byrom, Westhead, Bunting and Lane owned more than half of the land in question, the remainder being the property of persons who were not shareholders : that Denison and the last-named five Defendants made considerable profits by reselling parts of the said land at increased chief rents before the Act was passed. The bill stated that, between September 1835 and the beginning of 1836, various preliminary steps were taken for enabling the projectors of. the said company to set it on foot: that in April 1836 advertisements, describing the objects of the proposed company and the probabilities of its profitable result, were published, in which it was proposed to form the association on the principle of a tontine: that the first eight 2 HARE, 163. POSS V. HARBOTTLE 191 named Defendants and several other persons subscribed for shares in the proposed company, and, among others, the Plaintiff, Eoss, subscribed for two shares, and the Plaintiff, Turton, for twelve shares of £100 each, and signed the contract, and paid the deposit of £5 per share: that at a public meeting of the subscribers called in May 1836 it was resolved that the report of the provisional committee should be received, and the various suggestions therein contained be adopted, subject to the approval of the directors, who were requested to complete such purchases of land, and also such other acts as they might [463] consider necessary for carrying the objects of the undertaking into effect; and it also resolved that Harbottle, Adshead, Byrom, Westhead and Bealey should be appointed directors, with power to do such acts as they might consider necessary or desirable for the interests of the company; and Westhead, W. Grant and J. Lees were appointed auditors, Lane architect, and Bunting solicitor: that, in order to avoid the responsibilities of an ordinary partnership, the .Defendants Harbottle and others suggested to the subscribers the propriety of applying for an Act of Incorporation, which was accordingly done: that in compliance with such application, by an Act, intituled " An Act for Establishing a Company for the Purpose of Laying Out and Maintaining an Ornamental Park within the Townships of Rusholme, Charlton-upon-Medlock and Moss Side, in the County of Lancaster," which received the Royal assent on the 5th of May 1837 (7 Will. 4), it was enacted that certain persons named in the Act, including Harbottle, Adshead, Bealey, Westhead, Bunting and Denison and others, and all and every such other persons or person, bodies or body politic, corporate or collegiate, as had already subscribed or should thereafter from time to time become subscribers or a subscriber to the said undertaking, and be duly admitted proprietors or a proprietor as thereinafter mentioned, and their respective successors, executors, administrators and assigns, should be and they were thereby united into a company for the purposes of the said Act, and should be and they were thereby declared to be one body politic and corporate by the name of " The Victoria Park Company," and by that name should have perpetual succession and a common seal, and by that name should and might sue and be sued, plead or be impleaded, at law or in equity, and should and might prefer and prosecute any bill or bills of indictment or information against any person or [464] persons who should commit any felony, misdemeaour, or other offence indictable or punishable by the laws of this realm, and...

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