Henry Ernest (Official Manager of the Sea Fire Society), - Appellant; Edwin Cox Nicholls (Official Manager of the Port of London Company), - Respondent
| Jurisdiction | England & Wales |
| Judgment Date | 15 August 1857 |
| Date | 15 August 1857 |
| Court | House of Lords |
English Reports Citation: 10 E.R. 1351
House of Lords
Mews' Dig. i. 476; iii. 772, 915, 938, 976, 1015, 1204; x. 508. S.C. 3 Jur. N.S. 919; 6 W.R. 24; and below, sub nom. Port of London Assurance Coy's Case, 5 De G. M. and G. 465. Adopted in regard to contracts of directors, in Fountaine v. Carmarthen Ry. Co., 1868, L.R. 5 Eq. 321; and Mahony v. East Holyford Mining Co., 1875, L.R. 7 H.L. 893. Distinguished in In re Norwich Equitable Fire Assurance Society, 1887, 58 L.T. 38; of. also Ex parte Liquidators of the British Nation Life Assurance Association, 1878, 8 Ch.D. 679.
Winding - up Act - Registered Company - Directors' Contract - 7 and 8 Vict. c. 110 - Costs.
HENRY ERNEST (Official Manager of the Sea Fire Society),-Appellant; EDWIN COX NICHOLLS (Official Manager of the Port of London Company),- Respondent [June 8, 9; August 15, 1857]. [Mews' Dig. i. 476; iii. 772, 915, 938, 976, 1015, 1204; x. 508. S.C. 3 Jur. N.S. 919 ; 6 W.R. 24; and below, sub nom. Port of London Assurance Coy's Case, 5 De G. M. and G. 465. Adopted in regard to contracts of directors, in Fountaine v. Carmarthen Ky. Co., 1868, L.R. 5 Eq. 321; and Mahony v. East Holyford Mining Co., 1875, L.R. 7 H.L. 893. Distinguished in In re Norwich Equitable Fire Assurance Society, 1887, 58 L.T. 38; of. also Ex parte Liquidators of the British Nation Life Assurance Association, 1878, 8 Ch.D. 679.] Winding-up Act-Registered Company-Directors' Contract-7 and 8 Viet. c. 110-Costs. A disallowance by the Master of a claim made under the Winding-up Acts is the subject of an appeal. There can be no remedy against a company registered under the 7 and 8 Viet. c. 110, on any contract, in which a director of the company was a party, and in which he was interested, unless the provisions of the 29th section of that statute have been strictly observed. A contract by the directors of one company to purchase the trade of another company is not binding, unless it is authorised by the deed of settlement of each company, and is made according to its provisions. Qu 1 Whether when directors have entered into a covenant which is void, their company can be liable for acts done in consequence of such covenant? What are the powers of directors? Each company was ordered to pay its own costs. This was an appeal against a decision of the Lords Justices, which had reversed 1351 * VI H.L.C., 402 ERNEST V. NICHOLLS [1857] one previously pronounced by Vice-Chancellor Stuart, in the matter of a claim under the Winding-up Acts, 1848 and 1849. The Appellant represented " The Sea Fire and Life Assurance Society," and th Respondent " The^Port of London Shipowners' Loan and Assurance Company." [402] The Port of London Company was completely registered in April 1847. By the deed of settlement of the company the business was to insure, against the perils of the seas, fire, and all such other risks as the directors should think fit, the ships, goods, freight, etc., of the shareholders, and likewise of others,'and all other matters which might lawfully be insured against such perils, and to advance money on bottomry and respondentia, and to carry on commission business, and all other matters connected with ships, or incidental thereto. There was no power in the deed to carry on the business of fire and life assurance. Mr. Augustus Collingridge was, by the 53d clause of the deed, appointed managing officer of the company. The managing officer might or might not be a director. His duties were (clause 54) to keep the books, to keep the common seal of the company, and when thereto required by the directors, and in the presence of any two of them, to countersign cheques on the company's bankers, and to affix the seal of the company to instruments requiring the same, and to receive and prepare, and if necessary present to the proper parties, all writings required in transacting the business of the company.. The 97th clause of the deed thus provided for the possible dissolution of the company: - If a resolution for that purpose should be reduced into writing, and should be twice read, and put to the vote, and should be carried by a majority of at least two-thirds in number of the shareholders present, holding among them at least two-thirds in number of the shares of the company, at an extraordinary general meeting, and if such resolution should be confirmed by a like majority at a subsequent extraordinary general meeting, to be held after the expiration of fourteen days, but before the expiration of three; calendar months next after the general meeting at which [403] such first resolution should have been passed, then the said company should be dissolved. There was no clause authorising the directors or the managing officer of the company to sell or dispose of its business. Mr. Collingridge and Mr. Bolton Peel, the treasurer, certified the deed, adding to their names the words " two of the directors." In February 1849 " The Sea Fire Life Assurance Society " (at first called " Company ") was formed, and was provisionally registered as the " Society" on the 16th of July in that year. The deed of settlement defined the business of the Society to be, to make insurances and advances on ships (as in the other deed), and also to make and effect all insurances on lives or survivorships, or on all or any contingencies, etc., relating to or connected with the lives or survivorships which might be effected according to law, and also' to grant and to purchase and sell endowments, annuities, either for lives or for years, or on survivorships, and either immediate, deferred, reversionary, or contingent, and also life, reversionary, and other estates and interests, real or personal, and to advance money by way of loan on mortgage or other security, and for these purposes to acquire and hold such lands, hereditaments, and real estates as. might be requisite, and to carry on the business of life assurance generally, and of any annuity, endowment, loan, and reversionary interest association, in all their respective branches and departments; and also to make or effect assurances against loss or damage by fire to all kinds and descriptions of property whatsoever, and to carry on the business generally of a fire insurance office, as far as the same might be done according to law; and also to make, issue, and effect policies of insurance needful for the purpose of securing the fidelity of persons in situations of [404] trust, and generally to carry on the business of a guarantie association in all its branches, so far as the same might be done according to law. It was declared that there should not be less than three nor more than ten directors of the society, and Alexander Davis, Sir William Ogilvie, Bart., Augustus Collingridge (the same person who was the secretary and a director of the London Port Company), and Howel Gwyn, were appointed the first directors. The directors were (clause 27) to meet at the society's office once a, month, or at any other time that two directors or the managing officer should by writing appoint; and every such meeting was to be called a Board of Directors. The managing 1352 ERNEST V. NICHOLLS4[1857] VI H.L.C., 406 officer (clause 28), whether director or not, was entitled to be present, but no other person not a director, and three or more were to constitute a meeting and exercise all the powers of the Board. By clause 31, the directors were to cause the society to be completely registered, and should thereon be entitled to all the powers conferred on directors by the Registration Act, except as thereinafter provided, and after complete registration, they should have full authority to purchase or lease, as might seem expedient, at such price and on such terms and conditions as might be lawfully imposed, the business of any other fire, life, or marine insurance company, and for that purpose to enter into, and rescind or modify contracts and agreements in the name of the Sea Fire Life Assurance Society, and of the shareholders thereof. A managing officer, who might or might not be a director, was (cl. 53) appointed, and Mr. Collingridge was thereby appointed the first managing officer of the company. His duties were described in much the same terms as in the other deed. The deed was certified by Mr. Davis and Mr. Collingridge, who were described as " directors." [405] In February 1849 Mr. Collingridge and Mr. Alands (the chairman of the Port of London Company) delivered to Mr. Chappie, the solicitor of that company, in writing, instructions, signed by them, to prepare a deed for the amalgamation" of the Port of London Company with the Sea Fire Company, which was then provisionally registered in that name. This registration appears never to have been completed, but a provisional registration of this company, under the name of " Society," took place in July 1849, and was completed on the 8th October 1849. No meeting of the...
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