Maccallum v Turton, Bart
| Jurisdiction | England & Wales |
| Judgment Date | 31 January 1828 |
| Date | 31 January 1828 |
| Court | Exchequer |
English Reports Citation: 148 E.R. 883
IN THE COURTS OF EXCHEQUER AND EXCHEQUER CHAMBER
[183] maccallttm i . turton, bart. Equit. Exch. Thursday, January 31st, 1828.-The Court will not compel a defendant to answer allegations which may subject him to penalties.-This protection extends not only to the question which directly may tend to criminate him, but to every link in the chain of proof.- Where the chairman of a joint stock company, with a knowledge that the company had been dissolved, and that the managing committee had determined to buy up the shares, sent his shares into the market and sold them as good and available shares ; the Court protected him from answering these allegations, upon the ground that there existed a reasonable probability that he might be indicted for the fraud. This was a bill filed by the plaintiff against the defendant for a discovery, in aid of an action at law. The bill stated that, in the year 1825, a prospectus was published and circulated with the knowledge and privity of the defendant, for the purpose of establishing a joint stock company, to be called the Egyptian Trading Company ; the prospectus, after stating the capital to be One Million, in five thousand shares of 2001. each, the names of the directors, auditors, bankers, counsel, solicitors, and secretaries, proceeded to set forth the object and nature of the company : that the defendant was chairman, and with others as a committee of the directors, conducted the affairs of the company, and was principally instrumental in setting it on foot: that transferable shares were issued by the authority of the directors, and sold at a considerable premium, the defendant himself being a large shareholder; that in June, 1S25, the major part of the directors, finding that the company could not be carried on to advantage, at a meeting held for that purpose, decided upon its dissolution ; and that certain funds in their hands should be employed, so far as they would extend, in purchasing out of the market the shares on which the deposits had been paid, and which did not belong to any of the directors, and that the remainder of the shares, which the funds of the company would not extend to purchase, should be bought up and got in at the expense of tbe directors who had chiefly caused the circulation of the shares, and that so the company1 should no longer exist, it being also determined that the directors should from that time refrain from selling or disposing of any shares : that the defendant was present and presided at the meeting when these resolutions were passed, which were not, however, made known to the public; that the defendant being aware that the company [184] would be forthwith dissolved, and that the shares would consequently become of no value, on the 7th July, 1825, fraudulently employed a broker to sell his shares, twenty-five of which were purchased at a premium by the plaintiff, who being ignorant of the circumstances of the company, and relying upon the respectability of the auditors, believed it to be in a flourishing condition ; that in consequence of the resolution the company was dissolved, and the shares thereby became of no value. To this bill the defendant demurred, for that the discovery sought by the bill might subject him to pains, penalties, forfeitures, and punishment. 8814 MAOCALLUM V. TDRTON 2 Y. & J. 183. Fonhlanque and Beames in support of the demurrer. The facts stated in the bill must, for the purposes of this argument, be assumed to be true, and if supported by evidence will subject the defendant to an indictment. Although the bubble act (6 Geo. 1, c. IS), has been repealed (6 Geo. 4, c. 91), that statute, according to the opinion of Lord Eldon, was but declaratory of the common law ; and in order to ascertain what that law is, it may be useful to refer to the provisions of that statute. Now every requisite to bring the members of this company within the penal enactment of that statute, exists in this case. Having associated themselves together, they hold themselves out to the public as a corporation ; create transferable shares, and assume to themselves an authority legally to carry the objects of the company into effect. So, this case is within the mischief contemplated by that act of Parliament. Their liabilities are not defined, and it would be impracticable for any individual member to sue the hotly ; and in the event of a suit by an indifferent person, each member must be brought before the Court. This, in the opinion of Lord Eldon, is an indictable offence at common law. The plain-[185]-tiff is particeps criminis, and although he may at law be entitled to recover back the money paid, a Court of equity will tint assist him. But independently of this general ground, the discovery sought would subject the defendant to an indictment under the statute 30 Geo. '2, c. 24; for the suppression of a fact within the knowledge of the defendant, is a false pretence, equally as if he had represented as true that which he knew to be untrue. In the case of Young v. The King (3 T. E. 98), Lord Keriyon observed, that when this statute was passed, it was considered to extend to every case where a party had obtained money by falsely representing himself to be in a situation in which he was not, or any occurrence which had not happened, to which persons of ordinary caution might give credit. This case clearly ranges itself within that general definition; for the defendant, by soiling the shares, represented that which was not the case, namely, that...
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