SECT. III.] JOINT STOCK COMPANIES. considered to be within the second branch of the distinction above adverted to, namely, as involving the interest of other parties besides those who are specially charged; for here all parties are equally accounting parties, or, at all events, equally interested in having the accounts taken. In cases, therefore, of this nature it has been held, that all the shareholders, however numerous, must be made parties to the suit. Upon these considerations the case of Long v. Yonge (a) was decided. There the bill was filed by forty-seven persons, on behalf of themselves and all other the members of and partners in the Norwich Equitable Insurance Company, against the survivors of the original directors and trustees of the company, and certain other members of the company who had been appointed by them in the room of the deceased directors and trustees, and also against the executors of the late secretary or registrar, praying for a dissolution of the establishment, in consequence of the misconduct of the trustees and secretary, and that the necessary accounts might be taken. Sir Lancelot Shadwell allowed the demurrer, on the ground that all the shareholders should have been made parties; and his Honour, in the course of the argument, distinguished the case before him from that of Cockburn v. Thompson; observing, that, in that case, the suit was, in effect, a suit against Thompson alone; and the question was, whether he could be heard to say that the society should not proceed against him, unless all the members were made parties: if the question had been boná fide raised, whether the partnership should be dissolved or not, and some members of the society had been made defendants, who insisted that it should not be dissolved, then the question which his Honour had to determine would have arisen in that case also. So in Evans v. Stokes (b), where the bill was brought by three persons, on behalf of themselves and all other members of the (a) 2 Sim. 369; and see Davis v. Fisk, Farren on Insurance, 128. (b) 1 Keen, 24. In Macmahon v. Upton, 2 Sim. 473, it was decided, that an act of Parliament, giving to a company very extensive rights of suing and being sued, and by which it was provided, "that in all pro ceedings in which it would have been before necessary to state the names of the partners, it should be sufficient to state the name of the chairman only," did not extend to suits between the partners themselves, and therefore did not affect the general rule as to parties. French Brandy Distillery Company, except the defendants, against the directors, and two shareholders who were not directors, suggesting that a dissolution had been brought about by the fraud of three of the defendants, and praying that the partnership affairs might be wound up, Lord Langdale, M. R., allowed an objection taken by the defendants, that all the shareholders were not partners; and his Lordship observed, that it was obvious that a suit where all the accounts of the partnership were to be taken, and the rights of all the partners were to be determined, as between themselves and under the various circumstances in which they stood in relation to each other, some of them for instance having paid their calls, and others having omitted to do so, could not be prosecuted in the absence of any of those partners. But notwithstanding these last-mentioned decisions, which are unquestionably founded on the true principles of Equity pleading, it is apprehended that the Court would be disposed to allow some relaxation in cases where an absolute failure of justice would otherwise ensue (a). And where a shareholder files a bill against his co-shareholders, for relief in respect of the joint contract between them, it is clear that he is not bound to make persons with whom he has no privity of contract parties to the bill, as for instance, persons who claim an interest in the concern by means of an irregular or fraudulent assignment. Nor, as it seems, is he bound to make those persons parties, who have assigned their shares, if he allege that they have duly accounted for the profits. These points seem to be decided by the case of Mare v. Malachy (b). There, a bill was filed by a person who claimed a certain definite interest in a mine and mining adventure, as one of a number of copartners, stating that the defendants, who were the legal owners of the mine, and also copartners in the adventure, had subsequently, unknown to the plaintiff, but with the consent of the other copartners, and after fully accounting to such copartners for the shares of the profits up to that time, sold and conveyed the mine to trustees for a joint stock company, the property of which was held by a numerous body of proprietors in transferable shares, and (a) See the observations of Lord Cottenham, 1 Myl. & C. 579; 4 Myl. & C. 141; and Mr. Baron Alderson, 3 You. & Coll. 221, 224. And see Story, Eq. Pl. sect. 97. (b) 1 Myl. & C. 559. SECT. III.] JOINT STOCK COMPANIES. had received the consideration, partly in money, and partly in shares in the joint stock company, and praying that the defendants might, at the plaintiff's election, either account to the plaintiff for his proportion of the profits derived from the sale, or, out of the shares of the joint stock company in their hands, might transfer to him such a number of shares as would be equivalent to the interest which the plaintiff had in the original adventure: Lord Cottenham, C., held, upon demurrer for want of parties, that it was unnecessary to make the other copartners in the original adventure, or the trustees or shareholders in the joint stock company, parties to the suit. In cases where a bill is permitted to be filed by some of the shareholders, on behalf of themselves and others, there should be an allegation in the bill that it is so filed (a), and it is usual to allege that the bill is filed on behalf of all the shareholders except the defendants (b); but the omission of the exception is immaterial, as the defendant in his character of shareholder has a joint interest with the plaintiff, and therefore, in that character, the bill may be filed on his behalf (c). Where, however, a bill is filed by the trustees of a company, such trustees, having, to a certain extent, distinct interests from the shareholders, it seems better, although the bill may be filed on behalf of the shareholders, to make the shareholders defendants; or, if they are very numerous, to make some of them defendants, and to allege that the plaintiffs do not know and are unable to ascertain the names of the other shareholders (d). (a) Baldwin v. Lawrence, 2 S. & S. 18; Douglas v. Horsfall, Id. 184. (b) Chancey v. May, Prec. Ch. 592; Gray v. Chaplin, 2 S. & S. 267. (c) Taylor v. Salmon, 4 Myl. & C. 142. (d) Fenn v. Craig, 2 You. & Coll. 216. SECTION IV. Of the relative Rights of Shareholders and Third Persons. THE law of England, unlike that of France, gives no power to unincorporated trading companies to limit the responsibility of any of their members. In France, a commanditaire, or partner en commandite, is not liable to creditors or other claimants upon the society, beyond the amount of the capital which he has contributed, or engaged to contribute, to the joint stock (a). In England, on the contrary, every member of an unincorporated trading company, no matter of what number of persons it consists, is answerable to the full extent of his private property for the whole of the debts of the company (b). This doctrine was strongly inculcated by Lord Eldon in the case of Carlen v. Drury (c). Some years afterwards, when joint stock companies became so prevalent, many cases materially affecting the interests of individuals were decided in conformity with the known rules of English law upon this subject (d). Of these cases, several of which will be found in the Annual Register as well as in the Reports, it will be sufficient for our purpose to notice the following. An action of assumpsit was The (a) Ante, p. 3. On the other hand, he is prohibited from acting for the partnership in its dealings with third persons. Its trade or business is exclusively conducted in the name or names, and by or under the controul of one or more of the partners, who are liable without limitation. name of a commanditaire is not permitted to appear in the name or firm of the society; and if he engage or intermeddle in any dealing with strangers, either in his character of partner, or as agent of the partners who are liable without limitation, he instantly loses his immunity, and is thenceforth responsible, to the same unlimited extent, for the partnership debts and engagements. Parl. Hist. 1825, p. 710. (b) Keasley v. Codd, 2 C. & P. 408, n. (c) 1 Ves. & Bea. 157. (d) In the Parliamentary History, to which we have more than once referred, there is an extremely able article, setting forth the advantages which would arise from the introduction of partnerships en commandite into this country. See Parl. Hist. 1825, p. 709, et seq. And see Mr. Bellenden Ker's Report on Partnership Law; Jurist, Vol. 1, p. 967. The stat. 1 Vict. c. 73, which gives power to the Crown to limit the responsibilities of partners, will be found in the Appendix. brought for goods sold and delivered. The plaintiff was a harness-maker, and the defendant one of the members of a company called the "London Carrier Company;" and the action was brought to recover a sum of 51. 8s. 6d., for articles delivered by the plaintiff at the premises of the company in Great Queen Street, Lincoln's Inn Fields. No evidence was adduced as to who gave the order for the goods. The company was insolvent, and the action was brought against the defendant alone. It was objected, on the part of the defendant, that the company was never regularly constituted. But, per Lord Tenterden, "that will make no difference. It is important that the public should know, that if persons connect themselves with a company of this description, they are every one of them liable to pay the demands upon it." Verdict for the plaintiff, damages, 51. 8s. 6d. (a). II. 1. However, though a man is answerable, to the full extent of his property, for the debts of an unincorporated company, to which he either actually or ostensibly belongs, yet, as we have already seen, he is not to be charged as a partner, on the mere ground of his having done acts shewing his assent to become a partner in case a projected company be carried into execution (b). And even after the formation of the company, there are some respects in which the shareholders stand in a different situation as to their liabilities, from that of ordinary partners. Thus, there is no implied authority in a member of a joint stock company to bind the company, or even the directors, by bills of exchange. A power to accept bills is sometimes given to the directors by the deed of settlement; but there is generally a provision in the deed, that, as far as is practicable, they shall pay the debts of the company in ready money. As between the company and third persons, it seems clear, that a bill negotiated in the name of the company by any one of the members, will, in the hands of a bona fide indorsee for value, be available against the whole body of the proprietors, provided there is nothing on the face of the bill to shew that it was drawn or accepted in an unauthorized manner. But if the bill itself appears objectionable in this respect, an indorsee cannot (a) Keasly v. Codd, 2 Car. & Payne, 408. (b) Ante, p. 735, et seq. |