A. Farrell to John Ginger were signed by James Sadleir, Robert Keating, and John Sadleir; the latter two not being directors at all. Then it will be contended on the other side, that James Sadleir acted as the court of directors of the bank, and that his signature alone was sufficient; but if so,

equity, either upon or against the society, or any of the proprietors thereof for the time being, other than the person so approved as a proprietor, his or her executors or administrators, for or on account of or in any wise relating to such shares, except in respect of the dividends or other profits which may have been declared previously to the time when such entry, erasure, or other alteration shall have been made, and also shall from the time of such entry, erasure, or other alteration, and on payment of any further instalment or instalments which may then have been previously called for on such share or shares, be for ever acquitted and discharged from all further liabilities and obligations in respect of such share or shares, and from all further claims and demands on account of the same, and the certificate of such entry, erasure, or other alteration to be given by the Court of Directors as hereinbefore required shall at all times be evidence of such acquittance and discharge as aforesaid in respect of such

share or shares.

158. That every entry, erasure, transfer, or other alteration, which, under any of the provisions herein contained, shall have been made by the Court of Directors in the Share Register Book, shall as between the society and

the last proprietor of such share or shares, and all persons claiming by, from, or under him or her, and he, she, or they shall not be at liberty to dispute or call in question the validity of such entry, erasure, or other alteration, or for the purpose of disputing or calling in question the validity of such entry, erasure, or other alteration, to inquire whether all the rules and regulations hereby required to he observed and attended to previously to the making of duly observed and attended to or not; but if such rules and regulations have not been observed and attended to, the last proprietor of such share or shares, or any person or persons claiming by, from, or under him or her, may maintain any action or suit to which he, she, or they may be entitled, against any person or persons for any act, neglect, or default through or by reason of which such entry, erasure, transfer, or other alteration may have been improperly made and provided, nevertheless that no action or suit shall be commenced against any director or other officer of the society for any such neglect or default after the expiration of two years from the time when such entry, erasure, or other alteration shall have been made.

such entry, erasure, transfer, or other alteration have been

161. That previously to the entry in the Share Register Book of the society of the name of any person as a new proprietor of any share or shares in the capital of the society, it shall not be necessary for the Court of Directors to inquire whether such share or shares hath or have been effectually vested in such person or not, it being the true intent and meaning of these presents that if the name of any person shall have been improperly entered in the Share Register Book as a proprietor of any share or shares, such person shall, as between him or her, and other the proprietor for the time being of the society, be a proprietor of the society to all purposes in respect of such share or shares, and neither the last proprietor of such share or shares, nor any person of persons claiming by, from, or under him or her, shall have any claim whatever upon the society in respect of such share or shares except for dividends or other profits previously declared in respect thereof, and all claims which the last proprietor of such share or shares, or any person or persons claiming by, from, or under him or her, may have in respect of such share or shares, shall (except as to dividends or other profits previously declared in respect thereof) be made wholly and exclusively upon or against the new proprietor of such share or shares, or his or her executors or administrators.

they should have been signed only by him. Robert
Keating, though a shareholder at the time, swears
he never was a director, and yet he signed the
certificates as a director, at the request of John
Sadleir. But under the 6 Geo. 4, c. 42, s. 22,
there could be no valid transfer without the sane-
tion of the court of directors, and there could be
no court of directors unless three directors were
present. The Irish law differs in this respect from
the English, as there is no section like the 22nd
in the English Act. This suit is in the nature of
a bill in equity between parties, and no creditor of
the bank has a right to interfere except under the
78th section of the Winding-up Act of 1848. In
order to make a party liable as a contributory, he
must be bound either by a legal or equitable con-
tract, neither of which exist here. The result of
the cases on this subject seem to be this, that if,
in the transfer of shares, the substance of the
company's deed be observed, and if the transferee
act as a shareholder, and accept a transfer how-
and is treated as such, then the transfer is not void,
ever informal, and accept benefits as a shareholder,
or rendered invalid by neglect of some formal
matter either of the deed or of the transfer.-
Taylor v. Hughes, (2 Jo. & Lat. 24); Walter's
case, (3 De G. & Sm. 149, 157); Ex parte Bagge,
(13 Beav. 162); Bosanquet v. Shortridge, (16
Beav. 84); s. c. at law, (4 Ex. 699); Bargate v.
Shortridge, (5 H. L. case, 299); Straffon's Ex
(1 De G. M. & G. 576); In re Royal Bank of
Australia, Ex parte Cockburne, (20 L.J.C. 137);
Morgan's case, (1 De G & Sm. 750); same, (I
H. & Tw. 324). Counsel for the official manager
rely on Coust v. Harris, (Tur. & Rus. 496, 523),
and say that the mode of acting in the bank was

162. That the Share Register Book shall, as between the society and every person claiming to be a proprietor thereof in respect of any share or shares in the capital thereof, be conclusive evidence on behalf of the society that he or she is a proprietor of the society in respect of such share or shares, and in the case of every purchaser of any share or shares in the capital of the society, the entry of his or her name in the Share Register Book shall be conclusive evidence both at law and in equity of his and her right and title to the share or shares which he or she shall have purchased.

163. That the certificate or certificates to be delivered by the Court of Directors to every present and future proprietor of shares in the capital of the society shall, as between the society and such proprietor, be conclusive evidence on behalf of such proprietor that he or she is a proprietor of the society in respect of the share or shares mentioned in such certificate or certificates, and such certificate or certificates shall continue to be such conclusive evidence until entry, erasure, or transfer, or other alteration shall, as hereinbefore mentioned, have been made by the Court of Directors in the Share Register Book for the purpose of making it appear therein that the proprietor of the share or shares mentioned in such certificate or certificates is no longer entitled to such share or shares.

176. That any proprietor of the society, his or her executors, administrators, and assigns, as between him, her, and them, and all or any of the other proprietors of the society, and their respective executors, administrators, and assigns, shall be answerable and liable for or in respect of the debts, losses, and demands of or upon the society, in proportion to his or her share or interest for the time being in the funds or property of the society, but not further or otherwise.

changed by consent, and that James Sadleir had the power of the board of directors, but they have never been able to answer the question, who had power to sell these shares? Ex parte Lawes, (the books of the company as shareholders, were De G. M & G. 421); Burnes v. Pennell, (2 H. I.. 515, 518); 2 Weekly Reporter, 338. The original shareholders should not now be allowed to take advantage of their own neglect. It was they who trusted Sadleir, and put into his hands the power to commit these frauds.

other parties to whom his shares were transferred, are liable as transferors (leaving out of view at present the question of fraud). They were entered in treated as such, received the dividends, and could get all the benefits to be derived from the shares. The other shareholders could not object to their right. If the several acts had been done by a court of directors, they would have been perfectly conclusive. But most of the acts in the transfer of these shares having been done by James Sadleir as director, it would not now be open to JamesSadleir nor to the original shareholders now to dispute the rights of the English shareholders, on account of the several acts having been done by rectors, and, therefore, they must stand in the same position as the other shareholders, and be put upon the list. When the provisions of the company's deed, as to the mode of transfer, have been habitually neglected or disused, the court will not allow parties taking transfers in this way, to get rid afterwards of their liability on account of the nonperformance of any formal matter required by the company's deed, Straffon's Exors. (1 De G. M. & G. 576); Bargate v. Shortridge, (5 H. L. C. 297); Walter's case, (3 De G. & Sin. 149); Bernard's case, (16 E. Ju.)

McDonagh, Q. C., with Deasy, Q. C., and Lawless, for the official manager, cited the follow. ing cases: Cheltenham and Great Western Union Railway Company v. Daniel, (2 Q. B. Rep. 291); Addison on Contracts (1856 Ed.), 774, 775, 792, 793, 856; Sheffield and Manchester Railway Com-him as one director, instead of by a board of dipany v. Woodcock, (7 M. & W. 580; Walter's cuse, (3 De G. & Sin. 156); Moguire's case, (3 De G. & Sm. 35); Bargate v. Shortridge, (5 H. L. 299); Wordsworth's Law of Mining, Banking, Insurance, and Joint Stock Companys, 372; Morgan's case, (1 De G. & Sm. 750, 758). Where, by the dealing of the parties, the whole duties of the directors were permitted to be carried on by one, the contract entered into by him must be binding. There was no full board of directors from 1848. The 28th clause of the deed provided that James Sadleir, James Scully, and Wilson | Kennedy, should not be removed without a general meeting of the shareholders. Then, by the 57th clause, if a vacancy occurred it was to be filled up at a general meeting of the shareholders; so that, if two directors died, it would appear that James Sadleir was to have power to appoint two directors. [Master of the Rolls.-The court of directors was not necessarily restricted to three directors, nor do I think that under the deed it was intended that James Sadleir should have power to appoint a court of directors, nor that he himself should constitute the court of directors.] Taking the 57th and 96th clauses of the deed together, it would appear that James Sadleir was sole director, and had power to issue all the extra shares. In order to get the English shareholders off the list, it will be necessary to show them they were deceived by plain fraud, and that they acted on the fraud. Austin Farrell was a trustee for the company of the shares, and was owner of them, but not beneficially-Stainbank v. Fernley, (9 Sim. 556, 560); Hitchcock's case, (13 E. J. 1023); Hitchcock's case, (8 De G. & Sm. 92); Shrewsbury v. Blount, (2 Man. & Gr. 475); Burnes v. Pennell, (2 H. L. 497); Davidson, (13 Ju. 728); Dodgson's case, (3 De G. & Sm. 90); Reeveley's cuse, (1 De G. & Sm. 550); Bernard's case, (5 Ďe G. & Sm. 283, s. c. 16 Jur. 810); Sharpus's case, (3 De G. & Sm. 56.)

June 2.-Deasy, Q.C., for the official manager.By reason of the acts done, though not strictly regular, Austin Farrell did become, as against the other shareholders, entitled to a share of the profits, and is, therefore, liable to the creditors, and had a valid claim to participate in the profits of the concern. And further, even if Austin Farrell was only a trustee, and was never a shareholder, and never had any right to the profits, yet the

June 3.-G. May in reply. The different inatters on which counsel rely for the purpose of making J. Ginger chargeable as a shareholder seem to be these: first, the deed of transfer from Austin Farrell to him; second, the certificate of transfer (but which it now appears was never issued); third, the entry in the book of the bank containing the names of all the shareholders-" Austin Farrell, M.P., 500 shares;" fifth, the supplemental return to the Stamp Office of the names of the shareholders. Now the account which Austin Farrell gives of these shares in his affidavit is this, that in 1849 he received a letter from Johr. Sadleir asking him to let his name be used for some shares for a lady friend of his, which he consented to do, but heard no more of it; that he never signed any paper except three or four dividend receipts, and never received any sum of money; that he wrote to Mr. Morrough in April, 1855, to know if any shares stood in his name, and received an answer from him saying he did not know whether he, Farrell, was trustee for John or James Sadleir. He then says he signed a great many transfers of shares to parties in Eng. land, and thought he was ridding himself of liability; that he always thought they were old shares, and not original, and never received any certificate, and now it appears that the certificate of these shares comes out of possession of the bank, though the words "certificate issued" is opposite the names in the bank book. Now the 101st section of the deed provides that no person is to be a shareholder until he has paid the price of the shares, and ás no price was paid for these shares by Austin Farrell, he never could be a shareholder, and the directors had no power to issue shares unless upon sale. Counsel then referred to the facts connected with the preparation of the fraudulent balance sheets, and contended that no party could be bound as a

|

contribution between the members of the partnership, and to have their rights and liabilities ascertained inter se. The creditors have nothing to do with this, and they may have execution against the company in any way they may think fit." Sir J. Romilly adds "I assisted in framing the Act of Parliament, and I certainly know that it was not the object to delay the creditors until the rights of the parties had been ascertained. The object of the Winding-up Act was only to settle equities between the parties, in order that when the partnership was wound up, they might obtain contribution from each other." In the case of Terrell v. Hutton, (4 House of Lords Cases, 1,097,) Lord Cranworth stated that "the Winding-up Act of 1848 was made for the purpose of enabling such of those companies as, from altered circumstances, or from miscalculated probability of profit, should turn out to be incapable of being prosecuted with advantage, to be wound up. In order to do so, the Legislature meant to put them in a situation very nearly the same as if some partner of any ordinary partnership had filed a bill or got a decree for winding up the partnership, which would render it necessary to take the partnership accounts and settle the liabilities amongst the partners as well as the nature of the case would permit. Provision was therefore made for giving a summary proceeding of that sort by going to the Master's office. In order to enable the court to wind up a company, it is material to ascertain what are the debts due to the company. Until that is ascertained, it is impossible to find what sum of money the parties must respectively contribute in order to make up the proper and necessary fund. With that view the 73rd and other sections were enacted. To prevent delay and needless expense, any person commencing, or who has commenced, proceedings at law, is prohibited from

company, although these certificates to which Mr. the other English shareholders, but whether, havJames Sadleir, Mr. John Sadleir, and Mr Robert ing regard to the rights of the shareholders, inter Keating, affixed their names, represented that the se, the appellant was properly placed on the list. two latter were directors. A return was made to In the case of Ex parte Warkworth Dock Co., (18 the Stamp Office in the month of October, 1855, Beavan, 630,) Sir John Romilly stated-"The ob. under the provisions of the 8 & 9 Vic. c. 37, inject of the Winding-up Act was to obtain a proper which return John Ginger is returned as a shareholder in the bank-and a further return was made in Feb., 1856, also stating John Ginger to be a shareholder. On that state of facts the official manager placed the name of John Ginger on the list of contributories, and there is no doubt that it was his duty to do so, as the documents I have referred to made out a prima facie case that he was a contributory. The case, however, having been brought before the Master, several affidavits and documents were laid before him on the part of John Ginger, and of the official manager; and it was contended on the part of John Ginger, first, that the transfers from Austin Farrell to the said John Ginger were invalid, having regard to the facts of the case to which I shall hereafter advert, and to the provisions of the partnership deed; secondly, that these transfers were not binding on the appellant, John Ginger, he having been induced to purchase the shares in consequence of fraudulent representations made to him at the instance of John and James Sadleir, who had, as the appellant alleges, entered into a conspiracy, to dispose by fraud and misrepresentation of a vast number of the shares of the bank to certain persons, of whom the appellant is oue-and who are hereafter called the English shareholders. It has been argued on the part of the official manager, that the appellant, having accepted the transfers from Austin Ferrall, under his, the appellant's, hand and seal, and having been registered as a shareholder in the bank, and returned as a member in the Stamp Office returns of October, 1855, and January, 1856, would be liable at law to the creditors of the bank as an ostensible partner; and that being liable to the creditors of the bank, he should on that account be returned on the list of contributories. I doubt much that the appellant could be made liable to the creditors in any proceeding which they could institute, hav-recovering payment of any debt or demand he may ing regard to the facts of the case, the provisions have, without first coming and proving it before of the partnership deed, and the 22d section of the the Master, so that the Master may know what is 6 Gec. 4, c. 42; but it is not necessary that I the amount of the debts. What is the course which should decide that question, as I am of opinion is then taken? The Master is, by the subsequent that the proper test to apply in considering whe-sections, directed to raise a sufficient fund for windther the appellant should he retained on the list of contributories, is not whether he would be liable to the creditors of the bank, if proceedings were instituted by them, but whether, having regard to the rights of the shareholders, inter se, he ought to be on the list. A party may be liable at law to the creditors of the company, and yet it does not necessarily follow that he should be placed on the list of the contributories; so, on the other hand, a party may not be liable at law to the creditors of the company, and yet ought to be placed on the list. Straffon's case, (1 De Gex. M'N. & G. 587,) is an authority for the latter proposition. The question, therefore, which I have to decide is not whether the creditors of the bank have any rights which they can enforce against the appellant and

ing up the company's affairs, having regard inter alia to the amount of the debts proved. There is no doubt that there was no intention on the part of the Legislature to give the creditors any larger rights, or to give them any portion of an existing right for the enforcement of their debts." Observations to the same effect were made by Lord Cranworth in a case in the 21st Law Journal referred to in Terrell v. Hutton. The Lord Chief Baron and Baron Pennefather appear to have taken the same view of the statute in their very able judg ments in the recent case of Carroll v. Kennedy, (not yet reported,) and I believe that Baron Richards and Baron Greene concurred in respect to the construction of the Winding-up Acts with the Lord Chief Baron and Baron Pennefather. Ishall, therefore, pro

ceed to consider the question which properly arises whether Mr. Vincent Scully and Mr. Wilson Kenbefore me, viz., the rights of the shareholders and al-nedy were or were not directors in 1855, as Mr. leged shareholders inter se. There are three classes of persons who are shareholders, or are alleged to be so, namely, first-Those who became such prior to the 9th of May, 1855, who, for the sake of distinction, I shall call the Irish shareholders; secondly-Those (of whom the appellant is one) who purchased shares in the bank on or after the 9th of May, 1855, in consequence of the fraudulent representations made to them, to which I shall hereafter advert, and who I shall call the English shareholders; thirdly-A very few persons, to whom transfers were made subsequent to the 9th of May, 1855, but who can have no rights as against the English shareholders, as their transfers were either made to James Sadleir, or some trustee for him, and James Sadleir can have no colour of right to have any of the English shareholders retained on the list of contributories for the reasons which will hereafter appear. The question, therefore, is between the Irish shareholders, i. e., those who became shareholders prior to the 9th of May, 1855; and the English shareholders, who became such on and after the 9th May, 1855, of whom the appellant is one. The Tipperary Joint Stock Bank was established in the year 1842, and the partnership deed bears date the 5th of July in that year. A previous banking establishment had existed, and it appears from the recitals in that deed, that the capital of the Tipperary Joint Stock Bank was to be £500,000, in 10,000 shares, of £50 each, with a sum of £10 paid up on each share. [The Master of the Rolls bere referred to several sections of the partnership deed, and then proceeded as follows]:-I shall now state the facts of this important case. It will be recollected that the court of directors, appointed by the 37th section of the deed, were James Scully, James Sadleir, and Wilson Kennedy, and that Jas. Sadleir was the managing director. Mr. J. Scully died on the 31st of December, 1846. On the 8th February, 1848, a resolution was entered in the minute book of the company, that Mr.. Vincent Scully was appointed a director of the company in the place of James Scully. It appears from the entry that the resolution was adopted at a general meeting of the company, Jas. Sadleir in the chair. There is no evidence before the court that I amn aware of that Mr. Vincent Scully ever acted as director; and, in an appeal heard before me last week on his behalf, he insisted that he ceased to be director, at latest, in January, 1854. On the 29th of March, 1855, Mr. Wilson Kennedy, another of the directors, transferred his shares; and unless such transfer was invalid, he thereby ceased to be a director under the 79th section of the deed. No director appears to have been elected at the annual general meetings except Mr. Vincent Scully, and there were not three directors in existence after the 29th March, 1855, to constitute a court of directors if Mr. Wilson Kennedy's transfer was valid. H Mr. Vincent Scully ceased to be a director, as he alleges, in January, 1854, and if Mr. Wilson Kennedy ceased to be a director in March, 1855, the only director from that time was Jas. Sadleif. It does not, however, appear to me to be material

Vincent Scully did not act as such at any time, and Mr. Wilson Kennedy does not appear to have done so after he transferred his shares in March, 1855, and the 43rd section of the deed expressly requires that three directors should be necessary to constitute an ordinary, and five to constitute a special court of directors. Mr. James Sadlier alone acted, as if he constituted the court of directors, and the strange argument addressed to me in support of the Master's decision is, that he did in fact constitute such court of directors, notwithstanding the specific provisions in the deed to the contrary. An annual general meeting of the bank was held at Clonmel on the 1st of February, 1855. At that meeting "the directors" begged to lay before the shareholders their report, and amongst other matters they submitted "the usual detailed statement" of the accounts of the bank, and the assets and liabilities; and the report stated that after deducting all expenses, and making an allowance for the pay. ment of a dividend of 6 per cent. per annum, for the year ending the 31st of December, 1854, (free of income tax,) there remained a balance of £1,682 14s., which the directors recommended should be placed to the "rest fund." The report was signed by James Sadlier, as chairman. A balance sheet was laid before the meeting which, from the affidavits made on this motion, I presume was not fabri cated. About this period, that is to say, on the 30th of December, 1854, John Sadlier was under liabilities to the bank, including bills discounted, to the amount of £144,707 13s. 2d. The liabilities of John Sadleir to the bank were increasing, and on the 12th of May, 1855, he was indebted to the bank in the sum of £155,354 10s. 10d., and was under liability on foot of bills discounted to the amount of £38,364, making a total liability at that date of £193,716 4s. 8d. On the 31st December, 1855, he was indebted to the bank in the sum of £247,320 19s. 3d. He had at that time also bills under discount to the amount of £11,243, but those bills were paid in course. The liabilities of John Sadleir to the bank were still increasing, and at the period of the stoppage in February, 1856, his liabilities amounted to £287,588 2s. 3d., to which is to be added a bill discounted for £945, making a total liability at that date of £288,588 2s. 3d. It was, of course, necessary to meet the enormous drain upon the resources of the bank by John Sadleir (which has led, as appears by the books of the bank, to a vast decrease of the discounts), to adopt some plan by which funds could be realised, and the scheme, which I shall have now to explain, was determined upon between the two brothers, John and James. The capital of the bank, it will be recollected, consisted of 10,000 shares of £50 each. The number of shares which had been issued at the period of the annual meeting of the bank in February, 1855, was 4,055, on which £10 per cent. had been paid up, making the paid-up capital at that date £40,550. There thus remained in February, 1855, shares unappropriated to the amount of 5,945 James and John Sadleir determined to issue those unappropriated shares to parties in