Disclaimer of transaction. A partner may, however, forfeit his share of profits by having disclaimed connection with the transaction or adventure out of which they arose. This not unfrequently happens where a partner, who considers a speculation proposed by his copartners to be more likely to result in loss than in remuneration, intimates to them that he will have no concern in carrying it out. In such a case he is indeed secure from all risk of loss in a question inter socios; but he forfeits all share of profit. Thus, where, during the continental war, a British subject and an American citizen were in partnership, and one of them made shipments of goods to the continent of Europe, he was held exclusively entitled to the profits arising on the transaction, in consequence of the other having written letters. disclaiming all connection with the goods, though he alleged that these letters had been written to deceive the enemy (a). In such cases, however, the disclaimer must be very unequivocal. Equality of shares in pub PUBLIC COMPANIES. In public companies, the interest of the members is determined lic companies. by the number of shares which they respectively hold; and where, as is usually the case, the shares are of equal value, there can be no difficulty in apportioning the amount of profits or dividends (as they are generally termed) to which the holders are respectively entitled. The shareholders, quoad the shares held by each, rank pari passu; and any attempt to give a preference or priority to some over others is illegal (b). Where, however, 'preference shares' have been issued under competent authority, the holders will be entitled to payment of dividends to the amount guaranteed, whatever that may be, before the other shareholders receive any share of the profits (c). No dividends should, as a rule, be paid until the existing be paid before debts and current expenses of the company have been either paid Preference shares. Debts should dividends. (a) Pollock's Reps. v. Buchanan, 1824, 2 S. 581, and 1825, 4 S. 39; aff. 1826, 2 W. and S. 143. See also Bayne v. Kyd, 1817, House of Lords, 5 Dow 151. (b) See Adley v. Whitstable Co., 17 Ves. 315. (c) See Corry v. Londonderry Ra. Co., 29 Beav. 263; Coates v. Notting- off or provided for; but when the company creditors agree to allow their claims to stand over while the interest is regularly paid, it does not appear to be incompetent to declare a dividend on such surplus of revenue as may arise after the current expenditure has been defrayed. The propriety of adopting this course ought to be determined according to the views of the majority of the shareholders (a). It is a most reprehensible, though it has hitherto been a too common practice, for those charged with the management of companies whose affairs are in an embarrassed condition, to declare dividends when no profits have been realized, and to pay them out of the proceeds of loans, or even out of the capital of the company. Such dishonourable and fraudulent proceedings are usually defended as being necessary expedients to maintain the credit of the concern, so as to tide over some temporary crisis in the money market or in the affairs of the company; but they are rarely if ever successful, and only plunge the company and its members in still greater embarrassments. Such practices are grossly illegal, and justly subject those who are concerned in their adoption in personal liability to the full amount of the dividends which have thus been fraudulently declared and paid away (b). Declaring divi dends where no profits have been realized. fully paid up. It frequently happens that there are several classes of shares Shares not on which unequal sums have been paid up. When this is so, the dividends should be apportioned not in proportion to the nominal value of the shares, but with reference to the sums actually paid up in each (c). transfers. Where a forged deed of transfer has been registered by the Forged company in ignorance of the forgery, the dividends must be paid to the true owner; and, from the analogy of the law of England, a multiplepoinding would not in such circumstances appear competent to the company (d). When shares are registered in the name of a married woman, Married the dividends can only be safely paid on the receipt of the husband women. Times of payment. Provisions of the Act of 1845. Observations or of both spouses; a receipt by the woman will only avail where the jus mariti has been excluded (a). The times at which dividends are to be paid are generally regulated by provisions in the instrument of formation. In the absence of such provisions, the will of a majority will govern. But it must be observed, that neither the board of directors nor a majority of the members will be allowed, contrary to the desires of a dissentient minority, to delay unduly to declare a dividend when free profits exist, or to apply them to other purposes than those contemplated by the instrument of formation (¿). The following are the provisions of the Companies' Clauses Consolidation (Scotland) Act in relation to dividends :—The company may pay dividends on the receipt of the party in whose name the shares stand in the company books; and if they stand in the names of more persons than one, then on the receipt of the party first named and surviving. No attention need be paid to trusts, though duly notified (c). Interest on mortgages or bonds must be paid in preference to dividends (d). No dividend shall be paid out of capital (e); and before apportioning the profits, the directors may set aside a fund for contingencies, or for repairs and improvements (f). Previously to every meeting at which a dividend is intended to be declared, a scheme must be prepared by the directors, showing the profits which have accrued since the last meeting at which a dividend was declared, and apportioning the same, or as much as they consider applicable to the purposes of dividend, among the shareholders, according to their respective shares, the amount paid thereon, and the periods during which the same has been paid. This scheme must be laid before the meeting; and if approved, the dividend is declared in accordance therewith (g). No dividend is payable in respect of any share until the calls payable on all shares held by the owner thereof have been paid (h). In relation to these provisions, it may be noticed that after a dividend has been declared, each shareholder entitled to participate has a separate and independent right to recover his proportion, and may (a) See Gardners v. Royal Bank, 1815, 18 F. C. 458. (b) York and North Midland Ra. Co. v. Hudson, 16 Beav. 485. (c) Sec. 21. (d) Sec. 51. (g) Sec. 123. the Act of 1862. make it good against the company by action at his own instance (a). The English courts have refused to restrain a company from paying a dividend on the mere ground that the directors had acted in violation of their duty to the public (6); and a lien on shares is supposed to give as an accessory a right to recover dividends accruing therefrom (c). If companies registered under the Act 1862 adopt Table A, Provisions of Schedule I., as their articles of association, the following will be the provisions applicable to dividends :-The directors may, with the company's sanction in general meeting, declare a dividend to be paid to the members in proportion to their shares (No. 72); dividends can be paid out of profits only (No. 73). Before recommending a dividend, the directors may set aside out of the profits a sum to meet contingencies, to equalize dividends, or to repair and maintain the company works; and they may invest this sum on such securities as they see fit (No. 74). The directors may deduct from the dividends payable to any member all sums due from him to the company in name of calls or otherwise (No. 75). Notice of any dividend that has been declared must be given to each member by personal service or transmission through the post, prepaid, and addressed to him at his registered place of abode (Nos. 76, 95, 96, 97). All dividends unclaimed for three years after having been declared, may be forfeited by the directors to the company (No. 76). No dividend bears interest against the company (No. 77). It is further provided by sec. 38, No. 7, as a rule applicable in General provisions. all cases, that in the event of the company being wound up, no sum, due a member as such by way of dividends or profits, shall be deemed to be a debt due by the company, payable to such member in a competition between himself and any other creditor who is not a member of the company; but every such sum may be taken into account in a final adjustment of the contributories among themselves (d). the Act of 1856. The provisions of the previous Act of 1856 are somewhat Provisions of similar. They will be seen by reference to Table B in the Schedule, Nos. 63 to 68. (a) See Carlisle v. South-East. Ra. Co., 6 Ra. Cas. 670; Hodges, p. 79. (b) Browne v. Monmouthshire Ra. Co., 20 Law Jour. (Chan.) 497. (c) Hague v. Dandeson, 2 Ex. 741. (d) See, in connection with this, sec. 101. CHAPTER V. management. RIGHT TO SHARE IN MANAGEMENT. Right to share THIS right is of such importance to protect the interests of the individual members, not merely against possible fraud on the part of their fellows, but against the consequences of their oversight, negligence, or dereliction of duty, that it is hard to conceive the existence of the partnership relation with any one who is not entitled to its exercise in some form or other. It is true that in a private firm the power of agency may be wholly or in part withdrawn from some of the copartners, and confided to others more fitted for its exercise; and that in public companies it never resides in the members generally, but is always committed to managing officials specially charged with the executive administration; yet this does not in the least degree affect the rights of a latent or dormant partner, or of a shareholder, to take part in the management of the concern of which he is a member, to discuss every proposed measure, to vote for or against its adoption, and to check any departure from the objects of the undertaking, and any abuse of power on the part of those charged with the active management, or of the members generally (a). Hence any attempt by some of the partners to exclude the others from taking part in the management, will at once be checked by the Court (b). It has been held in England, that though one of two partners mortgages all his share and interest in the concern to the other, the latter will not be permitted during the continuance of the partnership to (a) Dickson v. Dickson, 1823, 2 S. 413; and Paul v. Taylor, 1826, 4 S. 580. See also antea, p. 107, and Lloyd v. Loaring, 6 Ves. 777. (b) See Dickson v. Dickson, supra; Marshall v. Colman, 2 Jac. and W. 266; Goodman v. Whitcomb, 1 Jac. and W. 589. |