PARTNERSHIP LOAN IN CONSIDERATION OF SHARE OF PROFITS-POSTPONE

MENT TO OTHER CREDITORS ON BANKRUPTCY OF PARTNERSHIP.

In re Fort, (1897) 2 Q.B. 495, although turning upon the construction of the English Partnership Act (53 & 54 Vict., c. 39) may probably be nevertheless an authority in Ontario -that Act being regarded in the main as merely declaratory of the common law. The Court of Appeal (Lord Esher, M.R., and Smith and Rigby, L.JJ.) determine that under the Act where one person advances money to another upon an agree ment that the lender shall share in the profits of the business of the borrower, in the event of the borrower becoming bankrupt the lender is postponed to the other creditors of the borrower. The agreement in question was by parol, and an argument was made that under the Act it was only where such contracts are in writing that the postponement takes place. Such a question, however, is obviously not open under Ontario law, and the provisions of the English statute requir ing such agreements to be in writing in order to protect them from being regarded as constituting the lender a partner, goes beyond the common law and cannot be considered as authoritative here.

CONSENT ORDER, ACTION TO SET ASIDE-MISTAKE-UNILATERAL MISTAKE INDUCED BY OPPOSITE PARTY-SETTING ASIDE CONSENT ORDER

Wilding v. Sanderson, (1897) 2 Ch. 534, was an action to set aside a consent order made in a case of Ainsworth v. Wilding. An unsuccessful motion in that action to set aside the order in question is reported (1896) I Ch. 673, (noted ante vol. 32, P. 471.) The Court of Appeal (Lindley, Lopes and Chitty, L.JJ.) affirming Bryne, J., held that an order made on consent in an action may be set aside even after being entered, and partially acted on, and construed by the Court on the same. grounds that an agreement inter partes can be set aside. And in the present case the order was set aside on the ground of a mistake by the plaintiff, innocently induced by the opposite party, as to the meaning of its terms, such unilateral mistake constituting an exception to the general rule of equity that a contract cannot be set aside on the ground of mistake where the mistake is unilateral.

PARTITION

-

- OCCUPATION RENT DUE FROM CO-OWNER- SET OFF MORT

GAGEE OF CO-OWNER'S SHARE.

Hill v. Hickin, (1897) 2 Ch. 579, was a partition action in which a sale was ordered. One of the co-owners who had mortgaged his share was liable to account for an occupation rent, and in the distribution of the purchase money realized by the sale, the question arose whether this occupation rent could be set off pro tanto as against the mortgagee. Stirling, J., was of opinion that it could not, although it might have been set off against any part of the purchase money payable to the co-owner personally. The ground of the decision is that the liability of a co-owner to be charged with an occupation rent is not a liability which could be enforced at common law, and even if it were it is a claim personal to the co-owner, and does not create any charge or lien on his share, or against his mortgagee, who was held to be a purchaser pro tanto. The learned Judge, we see, throws doubt on the correctness of his own previous decision in Heckles v. Heckles, 2 W.N. (1892) 188.

TRUSTEE-BREACH OF TRUST-IMPROPER INVESTMENT.

In re Stuart, Smith v. Stuart, (1897) 2 Ch. 583, Stirling, J., held that where a trustee invested the trust funds on the faith of a valuation of a valuer appointed by a solicitor who acted for the mortgagor, and which merely stated the amount for which the property was a good security, without giving the value of the property, and the advance made was more than two-thirds of the value stated in the valuation, such an act could not be relieved against under the Judicial Trustees Act, 1893, which enables the Court to relieve trustees against breaches of trust when it appears they have "acted honestly and reasonably, and ought to be excused."

COMPANY-WINDING UP, GROUNDS FOR "JUST AND EQUITABLE "—ULTRA VIRES-COMPANIES ACT, 1862 (25 & 26 VICT., c. 89) s. 79-(52 VICT., c. 32, s. 4, D.)

In re Amalgamated Syndicate, (1897) 2 Ch. 600, a shareholder presented a petition to wind up a company. The company had been formed with the primary and principal object of taking over the undertakings, assets and liabilities

of three other companies, each of which had as its principal object an adventure in seats for the Diamond Jubilee. A loss had been made on this adventure, and all that remained to be done was to pay debts and distribute the surplus assets among the shareholders. The directors were contemplating embarking on other business which the Court (Williams, J.) held to be ultra vires. Under the circumstances it was held to be "just and equitable" to make the order, as the business for which the company was formed had come to an end. The rule laid down in some of the earlier cases that the Court must restrict the general words in s. 79. (52 Vict., c. 32, s. 4 (e) D.) to cases ejusdem generis with those mentioned in the previous part of the action (see per Lord Macnaghten, 12 App. Cas. 502, and Re Spackman, 1 McN. & G. 170) is said by Williams, J., to have been very much relaxed by more recent decisions; e.g., see Re Brinsmead, (1897) I Ch. 45.

MORTGAGE-MORTGAGOR AND

MORTGAGEE-Deed-DelIVERY TO ONE OF SEVERAL GRANTEES ESCROW FRAUD - SOLICITOR ΤΟ BOTH PARTIES AGENCY-REPRESENTATION BY AGENT.

London Freehold & L. Co. v. Suffeld, (1897) 2 Ch. 608, is a case arising out of the fraud of a solicitor. The solicitor was banker and managing director of the plaintiff company. He was also one of four trustees of a settlement, and solicitor of the trust. In 1892 a sum or £9,000 of the trust funds was received by him and paid into his own account at his private bank pending re-investment. The plaintiff company afterwards on advice of the solicitor decided to take up certain mortgages outstanding on its property; by contracting a new loan. at a lower rate of interest, and entrusted to the solicitor the mode of raising the money and carrying out the details of the necessary transactions to effect this object. The solicitor then caused to be prepared and executed by the company a mort gage of the company's property to the trustees of the settlement, which was delivered to the solicitor and remained in his possession, but was never registered in the company's register of mortgages, nor in the registry office of deeds. The solicitor caused an entry to be made in his books purporting

to transfer the £9,000 above referred to to the credit of the company, but the money was never actually paid over to the company, he also notified his co-trustees that the £9,000 had been invested on the security of a mortgage made by the plaintiff company. In 1895 the solicitor absconded and was adjudicated bankrupt, and it was then discovered that he had misappropriated the £9,000, and that the mortgages of the company which that £9,000 should have been used to discharge were still unpaid. The company brought the present action claiming a cancellation of the mortgage on the ground that the mortgage was delivered as an escrow, and not intended to become operative until the money purported to be secured thereby was actually advanced, and because the mortgagors never gave, and the mortgagees never got, the mortgage consideration. But the Court of Appeal (Lindley, M.R., and Ludlow and Chitty, L.JJ.) affirmed the judgment of Kekewich, J., dismissing the action, and although conceding that a deed may be validly delivered as an escrow to a party who is to take under it, and that evidence is admissible to show the character in which a solicitor acting for both parties received the deed, and the terms on which it was delivered to him, yet that the circumstances of this case precluded the deed from being regarded as delivered as an escrow, and that the mortgage was valid and binding on the company, because it was sealed, and delivered to the solicitor as a perfect deed, and was immediately operative, and because the company had by its conduct put it into the power of the solicitor, as their manager and banker, to represent to his co-mortgagees that the trust money was invested on the security of the company's property, and the company was therefore now disentitled in equity to dispute the validity of the mortgage.

DISCOVERY-PENALTY, LIABILITY TO-Privilege.

In Derby v. Derbyshire (1897) A. C. 550, the House of Lords (Lords Herschell, Watson, Shand and Davey), have affirmed the judgment of the Court of Appeal in Re County Council of Derbyshire v. Derby (1896) 2 Q. B. 297, (noted ante vol. 32, p. 669). The proceedings in question were taken

under a statute to prevent the pollution of a river, and the Act provided that a penalty might be imposed by the Court in case of disobedience of its order made thereunder. The plaintiffs in aid of their proceedings sought to examine the defendants' officers for discovery, and the defendants contended that they were not liable to discovery because the action was penal in its character by reason of the abovementioned provision in the Statute. The House of Lords, however, agreed with the Court of Appeal that a power to impose a penalty for disobedience of the order of the Court did not in any way constitute the action a penal proceeding. As Lord Herschell in effect observes, if a power in a Court to punish for disobedience of its order constituted an action a penal action, then every action would be a penal proceeding.

COMPANY-DEBENTURES-TRUSTEE FOR DEBENTURE HOlders-ReceiverPRINCIPAL AND AGENT-LIABILITY FOR CONTRACTS OF receiver.

Gosling v. Gaskell (1897) A. C. 575, was an appeal from the Court of Appeal in Gaskell v. Gosling (1896) 1 Q.B. 669, (noted ante vol. 32, p. 539). It may be remembered that the action was brought against the defendants, who were mortgagees in trust for the benefit of certain debenture holders of a joint stock company. The mortgage deed empowered the defendants to appoint a receiver of the property of the company, who should carry on the business of the company, and that the receiver so appointed should be the agent of the company, who alone should be liable for his acts or defaults, but the net proceeds received by him were to be applied in payment of the debentures. A receiver was appointed by the defendants who carried on the business until a winding up order was pronounced, and also after it had been pronounced, and in so carrying on the business of the company the receiver incurred a debt to the plaintiffs, which the plaintiffs sought to recover from the defendants as being the undisclosed principals of the receiver. The case was tried before the Lord Chief Justice, who gave judgment in favour of the plaintiffs, which was affirmed by Esher, M.R., and Lopes, L. J., in the Court of Appeal, Rigby, L.J., dissenting. This judgment, the House of Lords (Lords Halsbury,