Horn v The Kilkenny and Great Southern and Western Railway Company
| Jurisdiction | England & Wales |
| Judgment Date | 26 January 1855 |
| Date | 26 January 1855 |
| Court | High Court of Chancery |
English Reports Citation: 69 E.R. 514
HIGH COURT OF CHANCERY
S. C. 24 L. J. Ch. 241; 3 W. R. 226. See Lee v. Bude and Torrington Junction Railway Company, 1871, L. R. 6 C. P. 581; Escott v. Grey, 1878, 47 L. J. C. P. 607.
Pleading. Amendment. Injunction. Construction Fraud.
[399] horn v. the kilkenny and great southern and western eailway company. Jan. 25, 26, 1855. [S. C. 24 L. J. Ch. 241 ; 3 W. E. 226. See Lee v. Bide and Torrington Junction Railway Company, 1871, L. E. 6 C. P. 581 ; Escott v. Grey, 1878, 47 L. J. C. P. 607.] Pleading. Amendment. Injunction. Constructive Fraud. Pending a suit by shareholders of a company, on behalf of thenfselves and all other shareholders except the Defendants, against the company and its directors, seeking to be relieved from calls as improperly made, and after an interim injunction restraining further proceedings for such calls upon payment of their amount into Court, the solicitors of the company and of the directors in the suit who were cognisant of the transactions of which the bill complained commenced an action against the company, and allowed them to submit to judgment by default for the balance of their bill of costs, and Upon a return of nulla bond proceeded by sci. fa. against the Plaintiffs. Held, that the solicitors were properly made Defendants by amendment; and the Court, inferring from the evidence that it was an object of the action to prevent the prosecution of the suit, restrained them, until the hearing of the cause, from proceeding on the sci. fa. against the Plaintiffs, or any other person on whose behalf the bill was filed; and refused to put Plaintiffs upon terms of giving judgment to the extent of their debt. Such conduct on the part of a creditor is an improper exercise of his rights, and amounts to constructive fraud within the principle of Taylor v. Hughes (2 J. & L. 24). The Court will not allow a person, claiming to be a creditor, to proceed on behalf of one of the parties litigant in a suit to determine, as between such parties, by hostile proceedings dehors the suit, the rights which are the subject of the original litigation. The original bill was filed in 1854 by three of the shareholders of the company, on behalf of themselves and all other shareholders, except the Defendants, against the company and its directors. It stated that, by the company's Act, the number of shares into which the capital was to be divided was limited to 11,250, and the amount of each share to 20; but, at the time of the passing of the Act, the Parliamentary contract had been executed for 440,000 capital, or 17,600 shares of 25 each ; that the directors, of their own authority, and without the knowledge of the Plaintiffs and the general body of the subscribers, withdrew the whole of 6350 shares, being the excess of the 17,600 shares over the 11,250 shares limited by the Act, exclusively, from the shares originally subscribed for by themselves, and only entered themselves in the register as shareholders for the remaining number of their shares, each reduced in amount from 25 to 20, upon which alone the deposit of 1, 10s. was paid, the 1K. & J, 400. GREAT SOUTHERN AND WESTERN RAILWAY COMPANY 515 deposit upon the withdrawn shares either not having been paid, or being returned at the time when the shares were withdrawn; whereas the Plaintiffs and the other subscribers not so favoured were all entered in the register as shareholders [400] for the whole of the original shares, reduced, however, from 25 to 20. The bill further stated that the directors having, as they alleged, expended nearly 22,000 on behalf of the company, which, in consequence of the deposit of 1, 10s. having been only paid on 11,250 shares, and not also on the 6350 withdrawn shares they were unable to meet, had made three calls on the 11,250 shares; and it charged that the making such calls was, under the circumstances, an improper exercise of the powers of the directors, inasmuch as, if they had discharged their duty in enforcing the payment, or not returning the deposit of 1, 10s. per share upon all the original shares, no call would have been necessary. The bill further charged that the directors threatened to sue the Plaintiffs and many of the other subscribers for the amount of all the three calls upon the whole number of the shares originallj subscribed for by them, and prayed that it might be declared that, on the passing of the Act, not only ought the shares subscribed for in the Parliamentary contract to have been reduced in amount from 25 to 20 each, but the njumber of shares for which each subscriber signed the contract ought to have been reduced in the proportion of 17,600 to 11,250, so that the benefit of the reduction effected by the Act might be shared by all the subscribers, as near as possible, pro raid, in proportion to the number of shares originally subscribed for by them; and that it might be declared that the calls were illegal and void, or that they ought not to be enforced until the deposits upon the withdrawn shares had been paid to the company with interest; and that the company and the directors might be restrained from enforcing the payment of such calls; and from making any new call upon the shareholders until the deposits upon the withdrawn shares had been paid. The bill also prayed that the directors might be decreed to make good part of the funds of the company, expended as [401] the bill alleged, in unsuccessful applications to Parliament, against the wishes of the Plaintiffs and the great body of the shareholders, who had been excluded by the directors from taking part in the transactions of the company, and to indemnify the company against the unpaid portion of the expenses incidental to such applications. The company having commenced actions against the Plaintiffs for the amount of the calls, in respect of...
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Gill v Rayner
...of course had been refused after a notice of motion for a decree has been given. This could V.-C. xiv.-17 514 HORN V. THE KILKENNY AND 1K.&J.399. hardly be so, for no application for an order of course could be made personally to the Judge. I have communicated with the learned Judge referre......