720 shares in the company were subscribed for, and 21. per share paid on them. This money was spent, and the company not being in a position to complete their agreement with Butcher, the agreement was forfeited according to a clause in it, and Butcher retained possession of all that had been sold to the company, and which it appeared from the judgment of the learned Commissioner was subsequently sold under Butcher's bankruptcy, as his property, for about 4007. or 5007. The company was then ordered to be wound up, and the appellants were placed on the list for the 100 shares received from Butcher, the 21 shares for which they had signed the memorandum, and also for the shares taken in respect of their fees, there being no authority in the articles for the payment of any remuneration to the directors. An order for a call of 31. per share was, on the 12th of July last, made by the learned Commissioner on all the contributories, including the appellants, which order was the subject of the present appeal.

Mr. Daniel and Mr. Hardy, in support of the appeal, contended that, as to the 100 shares, they were free shares, upon which, according to the articles, no call could be made, and that they were only accepted as free shares, and, if the appellants were contributories in respect of those shares, it could only be upon the terms of being discharged from calls; that, as to the twentyone shares, they had, in fact, by means of the shares accepted by them in payment of their fees more than exhausted that number, and that, at all events, if they were to be liable upon the twenty-one shares, they were not so in respect of the shares taken for their fees, as they were fully paid-up shares, upon which no call could be made.

Mr. Bacon and Mr. Roxburgh, for the official liquidator, supported the Commissioner's order, and argued that as to the 100 shares taken from Butcher, that was a clear fraud and breach of trust. They affected to give Butcher 5,5007. in paid-up shares, whereas, in truth and in fact, 3,500. they kept themselves, taking 100 shares each to qualify them; that calling them paid-up shares was a mere sham, as nothing had ever been paid upon them; and that, even treating them as paid up, they were trustees for the shareholders to the extent

said to be paid up, and remained the owners of the shares denuded of any payment, and, consequently, liable to the call. As to the shares taken for their fees, there was no authority for any payment; they took those shares and paid for them with the company's money, which was in effect no payment; and to say that they could repudiate the shares unless they could have them as paid-up shares would be to countenance a course of proceeding which this Court would never uphold. They accepted those shares as well as the 100, and were registered as the owners of them. As to the twenty-one, the case was too plain for argument, the only question being whether they could set off the shares taken for fees against them; which, for the above reasons, it was contended they could not.

Mr. Daniel was heard in reply.

LORD JUSTICE TURNER (Nov. 13). This case has been argued before us so recently, that it is unnecessary to recapitulate the facts at length. There are in it three points to be considered: the first, as to the 100 shares held by the directors; the second, as to the shares taken by them in lieu of fees; and the third, the question of those shares for which the directors subscribed the memorandum of association. With respect to the 100 shares, I am of opinion-subject, however, to any further argument which may be addressed to the Court that the appellants are not liable to be called on to contribute; contribution must be made according to the liability of the parties at law or in equity. Those shares have not been issued to the directors, but have been allotted to Butcher as part of the agreement with him, as paid-up shares. That agreement with Butcher was either valid or invalid. If the agreement was valid, then neither Butcher himself nor any alienee from him can be called upon to contribute in respect of those shares. But if, on the other hand, that agreement is invalid, the transaction must be disregarded altogether. For it would not be possible for Court of law or of equity to alter the terms of the agreement itself, and to treat as shares not paid up, shares which had been issued expressly as paid up. Fraud, if established, would warrant the Court in treating the transaction as void, and setting

a

it altogether aside; but there can be no ground for substituting such terms for those which were actually employed. Then, with respect to the shares taken in lieu of attendance fees by the directors, I am again of opinion that the directors cannot be called upon to contribute. These also were taken as paid-up shares, and the same principle which applies to the 100 shares will apply to them also. The transaction might have been in itself void, and if so it might have been wholly set aside, but it cannot be altered or varied in its terms. It has been argued for the appellants that these shares taken by the directors for attendance fees, might be taken to be part of the shares for which they had subscribed the articles of association; but with this argument, seeming to me as it does to be a mere evasion, I cannot agree. I am of opinion that the appellants must be held liable for the twenty-one shares subscribed for by them under the articles of association, subject, however, as to those taken by Capt. Currie to his discharge with respect to such of them as have been transferred by him, which may be absolute as regards some of them, and contingent only as regards others. The case is thus entirely disposed of, so far as it has been argued before the Court; but on looking through the papers sent up to me, I find that, at a meeting held on the 10th of August 1860, at which these parties, or some of them, were present, a resolution had been adopted which was thus stated on the minutes: "Present-Mr. Longcluse, Mr. Parker, Capt. Currie, Mr. Fitzpatrick, Mr. Hacker, Mr. Pattison, Mr. Rochussen, Mr. Butcher. Resolved, that a company be incorporated to carry out the undertaking as detailed in the prospectus. Each of the gentlemen present agreed to hold 100 shares in the company, and also to execute the articles and memorandum of association when ready, and to act as directors of the company. (Signed) M. J. Currie." Now, nothing has been said in the course of the arguments as to the effect of this resolution. It may, however, admit of argument whether the resolution ought not to affect the decision of the Court as to the 100 shares, either on the ground that those shares, though nominally paid up, ought to be treated as not paid up, or on the ground

As to the third question,

that the above resolution, by the acceptance of the shares, would distinguish this case from that of The Marquis of Abercorn (1), and so make the appellants liable upon them. On either of these points, we shall be ready to hear further arguments.

LORD JUSTICE KNIGHT BRUCE Concurred.

On the 23rd of November, on referring to the following resolution-"Resolved, that a company be incorporated to carry out the undertaking as detailed in the prospectus; each of the gentlemen present agreed to hold 100 shares in the company, and also to execute the articles and memorandum of association when ready, and to act as directors of the company"

Mr. Rorburgh, on this point, argued that the case differed wholly from that of Lord Abercorn, inasmuch as his Lordship never acted as a director, and never took or intended to take any shares in the company; while in this case the directors, by the above resolution, took the shares as a qualification, and acted from the beginning to the end of the company.

Mr. Daniel (with Mr. Hardy) was heard in opposition.

Their LORDSHIPS thereupon discharged the order as to the directors' fee shares, and referred the matter back to the Commissioner as to the 100 shares, and retained the order as to the twenty-one shares (2).

(1) 31 Law J. Rep. (N.S.) Chanc. 828.

(2) The Commissioner, in giving judgment, which he pronounced on the 12th of July, said that there was no doubt that the present appellants were contributories for the twenty-one shares for which they had signed the memorandum of association, which was quite according to the form prescribed in the schedule to the Joint-Stock Companies Act, 1856. It was clear that, as to the 100 shares accepted by each of them from Butcher, they ought to be placed upon the list. It was not necessary to consider whether these were paid-up shares or not; there were cases which shewed that persons who held paid-up shares might be placed upon the list, although it might be contended that they could not be liable for calls-Ex parte Jones (3). His Honour thought, looking to the memorandum of association, which prohibited directors from being concerned with, or participating in, the profits of any contract entered into on behalf of the company, that there could be no doubt that this was a corrupt agreement with Butcher;

(3) 27 Law J. Rep. (N.S.) Chanc. 666.

Railway Company-Specific Performance-Contract with Promoters-Mutuality.

An agreement, by a landowner, with the promoters of a railway company, that in the event of their obtaining an act of parliament he will sell them such land as they require at a fixed rate, is binding upon him, although the company has no existence at the time of the contract; and it is no objection on the ground of want of mutuality that the company are not bound to take the land.

If, however, the company exercise their compulsory powers, and take proceedings under the sections in the Lands Clauses Consolidation Act relating to the purchase of lands otherwise than by agreement, they cannot afterwards enforce the agreement.

This bill was filed, by the Bedford and Cambridge Railway Company, and two of the promoters of the company, for specific performance of an agreement entered into by a landowner with the agent of the promoters before the formation of the company, by which he agreed that in the event of the company obtaining an act of parliament, he would sell them such land as might be required at the rate of thirty years' purchase upon the annual rental.

The bill stated that in the year 1858 William Henry Whitbread and William Ekin associated themselves together for the purpose of applying to parliament for an act incorporating the Bedford, Potton and Cambridge Railway Company, the proposed line of which would pass over certain lands

for they, being by their position trustees for the company, had taken upon themselves to receive back these shares from him. In respect of those shares, then, they must be included as contributories. Lastly, as to the fees; there was no authority in the articles of association to allow any fees to directors. They had, therefore, no right to take any shares as the equivalent of fees, and as they had chosen to do so, they must be made liable for them, and made liable for them as unpaid shares. His conclusion, therefore, was this: that each of the present appellants who had signed the memorandum would be entered on the list as a contributory for 121 shares, with so many more as each of them had accepted on account of his fees as a director.

in the parish of Long Stow, in Cambridgeshire, of which the defendant Sidney Stanley was the owner in fee; and the defendant and other landowners, being desirous of having the railway made, entered into and signed the following agreement with Mr. Trethewy as the agent for the proposed company:

"We, the undersigned, being desirous to obtain railway communication between Bedford and Cambridge, hereby agree with Henry Trethewy, as agent for the Bedford and Cambridge Railway Company, that in the event of an act being passed in the sessions of 1859 or of 1860 to enable the making of a railway from Bedford to Cambridge, we will sell, each one respectively, such land as may be required from us for its construction, at the rate of thirty years' purchase upon the annual rental, including all compensation of every kind, excepting tenants' compensation. We further agree to adjust the accommodation works necessary for our estates on the most moderate scale, in order in every way possible to assist the promoters of the undertaking in carrying it into effect."

In consideration, and on the faith of this undertaking, the plaintiff's Whitbread and Ekin incurred considerable expense in preparing parliamentary plans, &c., and they introduced a bill into parliament in the session of 1859; but it was strongly opposed by the Eastern Counties Railway Company, and rejected. In the session of 1860, however, the application to parliament was renewed; but, in order to meet the objections that had been made to the line of railway on the previous application, the course of parts of the proposed line, and, amongst others, of that part which passed through the defendants' lands, was slightly altered. The defendant was served with the usual notice of the proposed alteration, and he assented thereto, and executed the subscription contract on the renewed application, and ultimately the bill received the royal assent on the 6th of August 1860. The subscription contract recited, amongst other things, that the then proposed application to parliament was, in effect, a renewal of the former application for the Bedford, Potton and Cambridge Railway.

On the 2nd of May 1861 the company, in pursuance of the 18th section of the

Lands Clauses Act, caused the defendant to be served with a notice, dated the 30th of April, of their intention to purchase and take for the purposes of their act certain pieces of land therein described, and which by the act they were empowered to take, demanding from him a statement in writing of the particulars of his estate and interest therein, and of his claims in respect thereof; and on the 4th of June following they caused him to be served with another notice, that having adopted the agreement entered into by him with Mr. Trethewy they were willing to purchase the lands described in the former notice on the terms of that agreement.

The defendant, however, declined to treat on the footing of this agreement, and caused the company to be served with a counternotice, referring to the notice of the 30th of April, and appointing an arbitrator to treat on his behalf in the manner pointed out by the Lands Clauses Consolidation Act, 1845.

The bill was thereupon filed on the 20th of July by the company, joining Messrs. Whitbread and Ekin as co-plaintiffs, for specific performance of the agreement of October 1858, and to restrain the defendant from proceeding under his notice or taking any other proceedings under the Lands Clauses Act for determining the amount of purchase-money and compensation.

On the 22nd of July the company caused the defendant to be served with a notice that, subject to their right to insist on specific performance of their agreement, they had appointed an arbitrator under the 23rd section of the Lands Clauses Act; and in September following, having caused the land to be valued, and delivered a bond pursuant to the 85th section of the act, they entered into and took possession of the lands described in the notice of the 30th of April.

The defendant, by his answer, insisted upon the variation in the line as having rendered the agreement inapplicable. He also objected that it was void for want of mutuality, and that the giving the notice of the 30th of April, and the joining in the arbitration, and in particular the giving of the bond amounted to an abandonment of the agreement, if it were not otherwise void.

Mr. Rolt, Sir Hugh Cairns and Mr. Speed, for the plaintiffs.

Mr. W. M. James and Mr. Bovill, for the defendant, relied upon the grounds of defence stated in the answer. They also contended that no contract could be entered into with a company which was not in existence at the time; and that if any agreement had been entered into it was entirely superseded by the act; and the provisions of the agreement not having been inserted in the act, it must be considered as waived. Mr. Rolt replied.

The following authorities were cited: Hawkes v. the Eastern Counties Rail

way Company, 1 De Gex, M. & G.
737; s. c. 5 H.L. Cas. 331; 20 Law
J. Rep. (N.s.) Chanc. 243; 22 Ibid.
77; 24 Ibid. 601.

The Caledonian and Dumbartonshire
Railway Company v. the Magistrates
of Helensburgh, 2 Macq. H.L. Cas.
391.
Stuart v. the London and North-Western
Railway Company, 1 De Gex, M. & G.

721; s. c. 21 Law J. Rep. (N.S.)
Chanc. 450.

Webb v. the Direct London and Ports

mouth Railway Company, 9 Hare,

129; s. c. 1 De Gex, M. & G. 521; 20 Law J. Rep. (N.S.) Chanc. 566; 21 Ibid. 337.

Chesterman v. Mann, 9 Hare, 206; s. c. 22 Law J. Rep. (N.s.) Chanc. 151. Edwards v. the Grand Junction Railway Company, 1 Myl. & Cr 650; s. c. 1 Rail. Cas. 173; 6 Law J. Rep. (N.S.) Chanc. 47.

Lord Petre v. the Eastern Counties Rail

way Company, 1 Rail. Cas. 462. Stone v. the Commercial Railway Company, 9 Sim. 621.

The King v. the Hungerford Market
Company, 4 B. & Ad. 327.

WOOD, V.C. (Dec. 5.)-In this case the bill, which is filed, by the Bedford and Cambridge Railway Company and two private gentlemen, against Mr. Sidney Stanley, seeks the specific performance of an agreement averred in the bill to have been made between Mr. Stanley and the agent for the promoters of the undertaking before the formation of the company, by which Mr. Stanley is alleged to have agreed to

sell for the purposes of the railway such land as might be wanted by the company for the purposes of their act, as soon as that act should be passed, at a fixed price of thirty years' rental of the land.

The case was extremely well argued, on the part of the defendant, by Mr. James, who suggested every possible difficulty that could be urged, and I heard a remarkably able reply to those difficulties.

The first class of difficulties raised by Mr. James was of this description. He said, first, that Trethewy is described as agent for the Bedford and Cambridge Railway Company, which was not in existence at the time, and in reality, therefore, there was nobody with whom any contract could be entered into by the parties signing that agreement; that the plaintiff's had felt that difficulty, and had therefore joined Mr. Whitbread and Mr. Ekin, as being two of the promoters of the intended company; and yet Trethewy is not described as acting on their behalf in the form of agreement. It was further urged, that even if it were possible to consider it an agreement with the future body when it should be incorporated, such agreement, according to the recent dicta in the House of Lords on the subject, could not be considered as binding on the railway company when it should be incorporated. It was further said, that this agreement would be void in respect of there being no mutuality in it. It was further said, that there was no consideration for the agreement passing from any persons who might be considered the other parties to the contract with Stanley. It was further said, that it was too vague in its terms, and especially vague in the form of construction contended for by the plaintiffs, namely, that even when a change in the intended line had taken place, this agreement was to extend to the next session; and it was said, finally, that it was intended evidently as a mere guide to the assessment of compensation, for the assistance of any arbitrator or jury who should be called in to award compensation. That was one large sweeping class of objections which were urged; and I think those objections were satisfactorily answered. In the first place, as regards its not being an agreement on behalf of any existing body, it is averred in the bill, and indeed admitted by the

answer, that there was an intended company, (which was intended at one time to take a name a little different, but always consisting of the same persons,) called the Bedford, Potton and Cambridge Railway Company, of which Mr. Whitbread and Mr. Ekin were two of the promoters; that they had signed the subscription contract, and had agreed to do that which is a very serious thing to do, namely, to take upon themselves the expense of procuring the passing of a bill through parliament, with all the risk and consequential expense of failure. No doubt, when an act passes, there is always a clause providing for the payment of all the expenses incurred in obtaining the act; but anybody who undertakes the passing of an act through parliament at his own expense incurs a very great and serious responsibility in case of the bill being rejected. the bill being rejected. It appears to me, therefore, that when we speak of the agent for the Bedford and Cambridge Railway Company, everybody knowing what was the state of circumstances, he must be taken to be the agent for that body of men who had associated themselves together for the purpose of obtaining the sanction of the legislature to their undertaking, and that the agreement is made by Stanley with that body of men, through Trethewy, their agent. Neither do I think the matter at all falls within the observations of the Lord Chancellor, in The Caledonian and Dumbartonshire Railway Company v. the Magistrates of Helensburgh, tending in some degree to shake the judgment of Lord Cottenham in Edwards v. the Grand Junction Railway Company and similar cases, in which he held that a company, taking advantage of an agreement entered into by the promoters before the passing of the act, would itself be bound by the agreement. The case of Hawkes v. the Eastern Counties Railway Company really places the thing in its true light. If an agreement of this description is entered into before the passing of the act, which it would be competent to the directors of the company as soon as the act should be passed to enter into, it is known of necessity, from the character of acts of parliament governing these matters, that those powers will be included in the act when it is passed; and if the contract be beneficial and intra vires of