BOOK II. CONSTITUTION AND MANAGEMENT OF CHAPTER I. GENERAL RULES. THE purposes for which a partnership or company is formed, the manner in which it is to be managed, and the machinery to be employed in the management, are generally laid down with tolerable clearness in the instrument of formation, whether this be partnership articles, deed of settlement, etc., or Act of Parliament, charter, or memorandum and articles of association. These must be rigidly adhered to while they remain in force; and every attempt to depart from them may be effectually resisted by any partner or shareholder who deems himself aggrieved (a). Unless it be otherwise provided in the contract, the powers of Private firms. the members of an ordinary partnership are in all respects equal; and therefore any attempt on the part of some of the partners to exclude others from the management will be at once checked on application to the Court (b). Indeed, so jealously are the rights of (a) See, as illustrative of this, Maxton v. Brown, 1839, 1 D. 367; Fleming v. Campbell, 1845, 7 D. 935; Williamson v. North Brit. Ra. Co., 1846, 9 D. 255; Brown v. Adam, 1848, 10D.744; Balfour's Trust v. Edin. and Northern Ra. Co., 1848, 10 D. 1240; Wedderburn v. Scot. Cent. Ra. Co., 1848, 10 D. 1317; National Ex. Co. v. Glasgow and Ard. Ra. Co., 1849, 11 D. 571; Hill v. Edin. and Glasgow (b) Dickson v. Dickson, 1323, 2 S. partners guarded in this respect, that when, by the provisions of the contract of copartnery, shareholders were prohibited from access to the books, the Court held that this did not prevent a shareholder from insisting on their exhibition when he accused the directors of fraud (a). Arrangements by which the management is exclusively entrusted to a few of the partners, receive effect only inter socios, and do not affect the public while they remain ignorant of such restrictions (¿). COMPANIES. In companies, as contradistinguished from private firms, the ordinary and executive management is entrusted exclusively to managers or directors, who are chosen by the body of shareholders or partners, while the latter retain only the right of general supervision, and the direction of such extraordinary acts of administration as require the approval of majorities. The shareholders or partners are therefore in no sense the agents of the company, nor is it bound by their acts or representations. Even when the company is not incorporated, the public are presumed to be aware of this feature in the management (c). When the company is unincorporate, the constitution and powers of the managing body are determined by the articles of association; when incorporate, they are regulated by the provisions of the incorporating instrument, whether special act, charter, or registered memorandum and articles of association. The regulations of the company generally prescribe the manner in which the directors or other managers are to be appointed, and also the qualifications necessary for the office. Any substantial infringement of these rules will invalidate the election, and entitle dissentient shareholders to have officials so appointed interdicted from acting, provided the irregular appointment has not been homologated by express or implied acquiescence (d). But the acts of 558; Goodman v. Whitcomb, 1 Jac. (a) Collins v. North British Bank, (b) See Powers of Partners. (c) Burnes v. Pennel, 1849, per Lord Campbell, 6 Bell's App. 562, and 2 (d) Blackburn v. Finlay, 1848, 10 D. 590; Blackburn v. Buchanan, 1848, 20 Jur. 199. such irregularly appointed office-bearers will bind the company in all contracts into which strangers have bona fide entered with them as the company's accredited agents (a). The number of those composing the managing body is also number of. generally fixed by the company's partnership articles, or by its incorporating instrument. And when this is so, the number cannot, as a general rule, be varied. When, however, the company is unincorporate, it would seem that an alteration may be made by a resolution of the shareholders, passed at a meeting specially convened. Yet it would appear the resolution must be unanimous (b). But where the number has been fixed by special act or royal charter, it will, it is thought, remain unalterable (c), unless the provision has been merely directory or permissive (d). Acts done by a less number of directors than that specially required by the company's regulations, will in general be held invalid (e), unless adoption or acquiescence can be established (ƒ). All duly appointed. directors are such, whether they choose to act or not. But whether they cease to be so in consequence of bankruptcy or other supervening disqualification, depends on the rules of the company (g). meetings. The body of shareholders exercise their right of controlling and Control by regulating the management of the company, by resolutions at meetings duly convened. The company contract, whatever it may be, usually contains provisions for the calling of such meetings; but if those who are entrusted with this function refuse to do so, the Court will on application interfere where this is necessary for the interests of the shareholders (h). To the validity of these resolutions it is in general necessary Resolutions. that due notice shall have been given to every one entitled to (a) Edin. and Leith Ra. Com. v. Hebblewhite, 6 M. and W. 707; Swansea Dock Co. v. Levien, 20 L. Jour. Ex. 447; Miles v. Bough, 3 Q. B. 845; Hill v. Edin. and Glasgow Ra. Co., 1849, 21 Jur. 455. (b) Smith v. Goldsworthy, 4 Q. B. 430; Davis v. Hawkins, 3 M. and S. 488. See Maxton, 1839, 1 D. 367. (c) Lindley 466. (d) Thames Haven Dock Co. v. Rose, 4 Man. and Gr. 552. (e) Bosanquet v. Shortridge, 4 Ex. 699; Ridley v. Plymouth Grinding Co., 2 Ex. 711; Brown v. Andrew, 13 E. Jur. 938, Q. B. (f) Thames Haven Dock Co. v. Rose, 4 Man. and Gr. 552. (g) Phelps v. Lyle, 10 A. and E. 113; Wilson v. Wilson, 1839, 6 Scott 540. (h) Foss v. Harbottle, 2 Ha. 461. Meetings, ordinary and extraordinary. Majorities rule. Minutes of meeting. attend (a); and what amounts to due notice will be determined by the provisions to that effect contained in the company's regulations. Nothing can, without notice, be transacted at an adjourned meeting, except what was left unfinished at the previous one (b); but those present at the original meeting do not require to receive notice of the adjournment (c); and shareholders de facto attending a meeting cannot afterwards object to its proceedings, on the ground that the notice they received was informal or insufficient (d). Meetings are either ordinary or extraordinary. Ordinary meetings are for the transaction of general business, and are held at stated times; extraordinary meetings are held pro re nata, and the matter to be considered should be specified in the notice. Resolutions passed at extraordinary meetings, in relation to matters for which they were not convened, are mere nullities; and they cannot be validated by subsequent ordinary meetings, unless the latter might have dealt with the subject-matter of the resolution in the first instance (e). The same meeting may be both ordinary and extraordinary (ƒ); but if an ordinary meeting is held and adjourned, it still continues to be an ordinary meeting, though notice is given that special business will be transacted at it (g). The resolution of the majority of those present at a meeting duly called, is in general the resolution of the company; except where it affects matters which, by the company's constitution, it is beyond the province of majorities to deal with, e.g. a change in the purposes for which the company was formed (h). Vote by proxy is not allowed, unless the company's contract contain a special provision to that effect (i). Voluntary absentees are bound by the resolutions of a meeting duly convened and acting within the sphere of its competency (k). Minutes of meeting are generally required, by the special act, (a) R. v. Langhorn, 4 A. and E. 538. (b) R. v. Grimshaw, 10 Q. B. 747. (c) Wills v. Murray, 4 Ex. 843, 862. (d) British Sugar Co., 3 K. and I. 408. (e) Lawes's case, 1 De G. M'N. and G. 421. (f) Graham v. Van Diemen's Land Co., 1 H. and N. 541; Cutbill v. Kingdom, 1 Ex. 494. (g) Wills v. Murray, 4 Ex. 843. (h) See Chapter on Powers of Majorities; and Phonix Life Association, 2 J. and H. 441; Ernest v. Nicholls, 6 H. of L. Ca. 401. (i) Grant on Corporations 256, n. 9; Lindley, p. 471. (k) Norwich Yarn Co., 22 Beav. 165. It is a to be entered in a book and signed by the chairman. books. Partnership books are usually evidence against every partner; Partnership for all have access to them, and do or may take part in their formation. But the books kept by the office-bearers of companies are no evidence against ordinary members, who are excluded from any share in their preparation (b). This is sometimes declared to be otherwise by the special act. Minutes of meetings and the books of the company are not evidence for the company as against third parties, unless expressly declared to be so by statute (c). (a) Miles v. Bough, 3 Q. B. 845; Lindley, p. 472; Cornwall Consolidated Mining Co., 5 H. and N. 423. See Great Nor. Ra. Co. v. Inglis, 1851, 13 D. 1315; aff. 1 Macq. 112. (b) Per Lord Justice Turner in Longworth's case, 1 De G. F. and I. 32; (c) Hill v. Manchester Water Works, |