The Great Western Railway Company v Rushout
| Jurisdiction | England & Wales |
| Judgment Date | 24 February 1852 |
| Date | 24 February 1852 |
| Court | High Court of Chancery |
English Reports Citation: 64 E.R. 1121
HIGH COURT OF CHANCERY
S. C. 7 Rail. Cas. 991; 16 Jur. 238. See Great Western Railway Company v. Oxford, &c., Railway Company, 1853, 3 De G. M. & G. 354; Green v. Nixon, 1857, 23 Beav. 540.
[290] the great western railway company v. eushout. Feb. 12, 18, 20, 23, 24, 1852. [S. C. 7 Eail. Gas. 991; 16 Jur. 238. See Great Western Railway Company v. Oxford, &c., Railway Company, 1853, 3 De G. M. & G. 354; Green v. Nixon, 1857, 23 Beav. 540.] Parliament having created a company the power rests in Parliament to vary its constitution, or to control or to annihilate it; and it is not the function of a Court of Equity to decide on the propriety of an application to Parliament to vary the V.-C. IX.-36 1122 GREAT WESTERN RAILWAY COMPANY V, BUSHOUT 5 DE G. & SM. 291. original object contemplated by the Act. Such an application is not illegal if it be pursued by legal means. But it appearing in a suit by certain shareholders that a company bad resolved to use its funds, and to pledge its credit, and to make contracts, for the purpose of such an application to Parliament: Held, that such appropriation of funds and pledges and contracts were illegal; and, at the instance of the shareholders, an injunction was granted restraining the appropriation of funds, the pledging of the company's credit, and the entering into contracts in support of such an application to Parliament; but the Court declined to restrain the company from introducing or soliciting such bill, or using the name and seal of the company for those purposes. Certain of the directors of a railway company acting on the nomination of another railway company which was interested in certain shares in it, and which nominated those directors by virtue of the Act constituting the company, were excluded, by a resolution of the board of directors, from the meetings of the directors, and the majority delegated all the powers of the board to a managing committee. Held, that although in such a body the majority binds the minority, yet, that it is essential to the validity of their acts that the voice of the minority should have been heard ; and such exclusion of directors was restrained. A railway company was beneficially entitled to certain shares in another railway company, which, under the authority of the Act constituting the latter company, were vested in trustees for the former. The former company filed a bill against the directors and certain shareholders of the latter, and against the trustees of their own shares, complaining that certain dispositions of the trust funds and contracts, which were in contemplation, were illegal; and praying for an account and relief against the directors, and an injunction to restrain such disposition of funds and contracts. Held, that, as the equitable title of the Plaintiffs was executed, they, making their trustees Defendants, could sustain their suit, and were hot precluded from suing by the provisions of the Companies Clauses Consolidation Act, 1845, sect. 20, which exonerates companies from seeing to the execution of any trusts affecting shares. In this case a bill had been filed on the 9th of February 1852 in which the Great Western Railway Company, on behalf of themselves and all other shareholders in the Oxford, Worcester and Wolverhampton Eailway Company, except such of the Defendants as were shareholders therein, were Plaintiffs, against Mr. George Kushout and others, the directors of the Oxford, Worcester and Wolverhampton Eailway Company, and against the same company and Mr. Charles Kussell and three other gentlemen, the holders of certain shares in the same company in trust for the Great Western Eailway Company, were Defendants. This was a motion made on behalf of the Plaintiffs for an injunction to restrain the Oxford, Worcester and Wolverhampton Eailway Company, and the directors thereof, from using or applying the name, seal, funds and monies of the company towards the payment of any costs, charges or ex-[291]-pences of or relating to or in any manner occasioned by a scheme for an extension railway in the bill mentioned, or the soliciting or promotion thereof, or a bill introduced or about to be introduced into Parliament, as in the Plaintiffs' bill mentioned, or from or by reason of any other bill or scheme for the like purpose; and also from introducing or soliciting the bill or any other bill for the like purposes, or using the name or seal of the said Oxford, Worcester and Wolverhampton Railway Company for the introducing or soliciting of such bill in Parliament; and in particular from entering into any contracts, agreements or engagements in the name or on the behalf of the Oxford, Worcester and Wolverhampton Eailway Company, with reference to the proposed undertaking or any other scheme for the like purpose, or the promotion thereof, or with reference, to the bill or any other bill for the like purpose, or the soliciting or promotion of any such bill; and also from excluding Samuel Baker, Frederick Pratt Barlow, Thomas Bulkeley, Eichard Potter, Henry Symonds and Thomas Williams (who were directors of the company, acting as such on behalf of the Great Western Eailway Company, on their nomination, in pursuance of provisions in one of the Acts constituting the same company), or any other of the Great Western Railway Company's directors of 5 DE G. & SM. 292. GREAT WESTERN RAILWAY COMPANY V. RUSHOUT 1123 the Oxford, Worcester and Wolverhampton Railway Company, from full and free access to and inspection of, and obtaining full and complete information touching and concerning all agreements, contracts, reports, correspondence and proceedings by any of the directors, or officers, servants or agents of the said company relating to the proposed scheme or undertaking, or the solicitation or promotion of the bill or any matter preliminary thereto or connected therewith; and also from excluding Mr. Baker and the other Great Western Eailway Company's directors of the company from their full and free participation in and management of the affairs of the company, and from full and free access to [292] all books and papers and proceedings of the same company, and of the officers, servants and agents thereof, and from receiving full information in all respects as to the resolutions, deliberations and proceedings of all and every the committees of the same board of directors appointed and to be appointed. It appeared that, in the spring of 1844, the formation of a railway from Wolverhampton by Worcester, to unite with the Great Western Eailway at Oxford, was proposed; and that that company consented to concur with the original promoters in carrying out this scheme. A provisional agreement, dated the 15th August 1844, was entered into between the directors of the Great Western Eailway Company and the committee of management of the then proposed Oxford, Worcester and Wolverhampton Eailway Company, which was modified by another agreement between the same parties, dated the 20th September 1844, by which such a permanent rental of the proposed line by the Great Western Eailway Company was guaranteed by that company, as, upon a calculation of the costs, appeared to amount to a dividend of 3, 10s. per cent, per annum upon the estimated outlay, together with half of any surplus profits. The subscribers' agreement of the new company was afterwards executed; and it provided that the company might make further agreements with the Great Western Company to carry the above two agreements into effect, with such modifications as might be advisable. On the 4th of August 1845 " The Oxford, Worcester and Wolverhampton Eailway Act, 1845," was passed, by which the company was incorporated, with the usual powers to construct their railway. The following sections of the Act were referred to during the hearing :- Sect. 4 provided that the capital of the company should be 1,500,000. Sect. 5 provided that the number of shares should be [293] 30,000, of 50 each ; and by sect. 9 the company were authorised to borrow'not exceeding 500,000, when the whole of the 1,500,000 should have been subscribed for, and one-half paid up. Sect. 11 enacted that it should be lawful for the Great Western Eailway Company to subscribe towards and become shareholders in the undertaking to any extent not exceeding 750,000; and by sect. 12 the Great Western Eailway Company were authorised, out of their corporate funds, to guarantee interest after a rate not exceeding 5' per cent, on the shares they were empowered to subscribe for, to any persons in whose hands the shares might be placed by way of security. Sect. 13 provided that, at all general or special general meetings of the company, the Great Western Company might vote, in respect of the shares held by them, by any person being a shareholder, for that purpose deputed by them; but no director or nominee appointed by the Great Western Eailway Company was to vote as to any question of the sale or lease of the railway to the Great Western Eailway Company, or as to the working or using thereof by that company. Sect. 15 directed that the number of directors should be sixteen, of whom six were to be appointed by the Great Western Eailway Company, and the remainder by the shareholders at large. By sect. 16 the provisions of the Companies Clauses Consolidation Act, as to the election or removal of...
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