The Judges who usually sat in Banc in this Term were:

HUMPHREY EWING MACLAE, FRANCIS SOMERVILLE and JOHN BLAIR v. JOHN WILLIAM SUTHERLAND, JOHN CONNELL, JAMES FARQUHAR, THOMAS NEWMAN FARQUHAR, PATRICK HADOW, and JAMES OCHTERLONY WALKER. Jan. 12.

The directors of an unincorporated and unregistered joint stock banking company, called the R. Bank of A., made and issued promissory notes in this form.

"R. Bank

"We, directors of the R. Bank of A., for ourselves and the other shareholders of the said Company, jointly and severally promise to pay," "for value received on account of the Company." (Signed) "A., Chairman, B. and C., Directors."

of A."

Held that, assuming that the parties signing were authorized to sign promissory notes on account of the partnership, this form of note showed sufficiently an intention to bind the partnership jointly; and that, though the attempt to bind the shareholders severally was ultra vires, and void, yet the shareholders were bound jointly.

An action was brought on the notes: they were at five years' date; attached to each were coupons for half-yearly interest at the rate of 5 per cent. till the principal sum would become due. They were issued through a broker, employed by the directors; and the plaintiffs paid him the full value. In the advice notes from the broker to the plaintiffs, the transaction was called a sale of debentures. The money thus raised was employed as capital, in starting branches of the Bank abroad. These facts being stated in a case, in which the Court had power to draw inferences of fact:

Held: that, though the transaction was called "a sale of debentures," yet it appeared to be in substance a loan on the security of the notes; and that, assuming that the directors had authority to borrow it for the partnership, the plaintiffs might recover against the shareholders fo money lent.

VOL. III.-4

C

Held also that the transaction appeared to be so much out of the ordinary course of banking transactions that the plaintiffs could not recover, merely on the implied authority given to the managers of a joint stock company to do all that was in the ordinary course of the business for which the Company was formed.

concern.

The deed of the Company authorized the establishment of branches of the bank in all places east of the Cape of Good Hope, and gave very full powers to the directors to manage the whole It also provided that, for the first four years, there should be no general meetings. It appeared that, in fact, the money raised on the notes was employed in establishing branches; that, during the first four years, dividends were paid by the directors; and that afterwards, at three successive general annual meetings, dividends were voted, on the supposition that they were derived from the profits of these branches and received by the shareholders.

Held that the deed authorized the directors to issue notes, and borrow money, as they had done, for the purpose of starting the branches.

Held also that, supposing it had not, the shareholders must, as an inference of fact, be taken to have ratified the means by which the directors had raised the capital for establishing the branches from which the dividends were derived: it appearing to the Court as a fact that they must have known that the capital was borrowed.

ASSUMPSIT. First count by plaintiffs as holders of a promissory note, dated on 1st August, 1846, made *by the defendants, and *2] payable to John Henry Wray or bearer at the Union Bank of London, on 1st August, 1851. Averments of presentment, and of nonpayment. Second, third, and fourth counts on other promissory notes. Fifth count for money lent, interest, and on an account stated. The defendants severed in their pleadings.

Pleas by defendant Sutherland, to each of the first four counts: 1. Non fecit. 2. That plaintiffs were not the holders. And, 3, a denial of the presentment. To the fifth count, Non assumpsit. Issues thereon.

There were similar pleadings by the defendant Connell, and by the other four defendants, who pleaded jointly.

On the trial, before Lord Campbell, C. J., at the Sittings at Guildhall after Trinity term, 1852, a verdict was taken for the plaintiffs, subject to a case, the substance of the more material parts of which is here stated.

*The action was brought to recover the amount of four instruments, with interest. The following is a copy of the first.

£200. (273)

The Royal Bank

£200.

London, 1st August, 1846.

We, directors of the Royal Bank of Australia, for ourselves and the other shareholders of the said company, jointly and severally promise to pay to George Henry Wray, or bearer, on the first day of August one thousand eight hundred and fifty-one, at the Union Bank of London, the sum of two hundred pounds, for value received on account of the Company.

Entered BENJAMIN WOOD,

Secretary.

J. W. SUTHERLAND, Chairman.

All of the above document was engraved, except the date, the number, and the signatures of the chairman, directors, and secretary.

The second and third were precisely similar. The fourth was dated 10th August, 1846, and payable 10th August, 1851, and was for 10007. In other respects it resembled the first.

Annexed to each of the instruments, and on the same sheet of paper, were other instruments, called coupons, payable at successive periods of half a year subsequent to the dates of those instruments respectively, until the sums in the said instruments mentioned should become payable, the sums mentioned in those coupons being respectively an amount equal to half a year's interest, at five per cent. per annum, on the sums mentioned in the respective instruments, which coupons were signed by *the same persons respectively who signed the said instruments. The interest sought to be recovered was that upon the four instruments, and also the arrears due upon the coupons.

[*4

The plaintiffs are the trustees of the marriage settlement of Major and Mrs. Brown, and became the holders of the instruments in question under the circumstances after mentioned. The defendants Sutherland and Connell were directors of a joint stock banking company, called "The Royal Bank of Australia," at the time of the making of the said instruments, and continued and were such directors at the time when the plaintiffs became holders of the instruments sued upon, in manner hereinafter mentioned; and the other defendants were during the same periods shareholders. Wray was the manager of the bank until its stoppage.

The case stated at length the preliminary meetings of the persons forming the Company. These were ratified by a clause in the deed of settlement of the Company subsequently executed; but nothing material turned upon them.

A deed of settlement of the Company, dated the 3d August, 1840, was executed shortly after its date by all the defendants, and various other persons. A copy of the deed was made part of the case. (a)

(a) The deed recited that the several parties thereto agreed to form a joint stock Company for the purpose of carrying on the trade or business of banking under the name or style of The Royal Bank of Australia; and the parties entered into covenants which (as is usual in such deeds) were numbered. The first declared that the name of the firm should be The Royal Bank of Australia. The following are the more important clauses.

6. "That the Court of Directors shall have full power and authority to carry on the business of the Company in the city of London and in such other cities, towns, or places within the United Kingdom, or within Her Majesty's colonies or settlements of New South Wales, Van Diemen's Land, Western Australia, Southern Australia, or any other part of New Holland, or within the islands of New Zealand, or within the territories of the Honourable the East India Company, or within the colony of the Cape of Good Hope, or within any other islands, countries, or territories to which Her Majesty's subjects may lawfully trade beyond the Cape of Good Hope to the Straits of Magellan, which to the Court of Directors may seem advisable: but the principal office of the Company shall at all times be in the city of London."

9. "That the trade or business of the Company shall be that of bankers or of banking, including the making and issuing of bank notes, and bills payable on demand, after sight, after date, or otherwise, and the making of loans and advances to customers and other persons, on open

*5]

*In August, 1840, the directors authorized the establishment of branches of the bank in Australia, the one *at Sydney being the *6] principal one. The rate of interest in Australia in 1840 was un

and current accounts, on real or personal estate, on choses in action or in equity, on bonds, covenants, or other personal security, on inland or foreign bills of exchange, or promissory notes, or letters of credit, on bills, on the deposit of bills of lading, dock warrants, or other muniments of title to goods, wares, or merchandises, on ships' bottomries, on lands and tenements, on sheep, cattle, and live stock, on wool, farm stock and produce, and on all and every other kind and description of property whatsoever, and including the discounting of inland or foreign bills of exchange or promissory notes, payable at or after sight, after date, or on demand, and including the borrowing or taking up money at interest on receipts, on inland or foreign bills of exchange or promissory notes, bonds, debentures, deposit receipts, or other obligations, as shall from time to time be deemed expedient, and including the keeping of the money or cash of individuals or other persons at interest or otherwise, and including the dealing in bullion, coins, specie, money, notes, bills, and other securities for money, and including purchased investments, dealings, sales, or advances in or upon the Government or Public Funds of Great Britain or Ireland, navy bills, exchequer bills, India bonds, turnpike bonds, the bonds, bills, or securities of any body of commissioners authorized by Act of Parliament, or charter of the Crown, to borrow money on bonds, bills, or securities, the bonds, bills, or securities of any Company authorized by Act of Parliament or charter of the Crown to borrow money on bonds, bills, or securities, the bonds, bills, stock, promissory notes, debentures, engagements, or other securities of any British Colonial Government of the East India Company, of the Bank of England, or of the Bank of Ireland, or of any of the Banks of England, Scotland, or Ireland, or other joint stock company, whether established by charter, letters patent, Act of Parliament, deed of settlement, or otherwise formed or constituted, or of any foreign or colonial bank, or other joint stock company, shares in the company hereby established, shares in any other joint stock banks carrying on business in the United Kingdom, the colonies or elsewhere, shares in or stock of any other joint stock company or society, or of any annuity or annuities for one or more life or lives, or of any other description ; or the stock or funds of any public foreign government or state, or of the stock or shares of or in any foreign public company, or in, upon, or of any freehold, copyhold, or leasehold estates, in the United Kingdom, the colonies and dependencies thereof, or elsewhere, or any securities affecting any such freehold, copyhold, or leasehold estates, or in, upon, or of any other properties, stocks, funds, or securities which the Court of Directors shall consider proper and approve of, with power to the Court of Directors to call in, convert into money, reinvest, and vary, such investments, property, stocks, funds, securities, and moneys, as occasion may require, and as the Court of Directors shall think proper; and the trade or business of the Company shall also include the acting as agents for joint stock or other banks, joint stock or other companies, and private individuals or other persons in the United Kingdom, the colonies and dependencies thereof, or in foreign parts, in ordering the purchase or sale of stocks, funds, or securities, and in receiving dividends, interest, pension, pay, rents, or other income, and in paying or honouring drafts, checks, bills, or notes, and in doing and performing any other business or acts of agency which the Court of Directors may direct or approve of; but the Company shall not, by the Court of Directors, or by any other persons, or in any manner, pretend or assume to be, or act as a corporate body, unless and except so far as the Company shall hereafter be duly incorporated." 10. "That the management of the Company, and the business and concerns thereof, and the regulation, investment, and application of the properties, funds, securities, and moneys for the time being, belonging to the Company, and the regulation and determination of the modes and terms of carrying on and transacting the business of the Company, and all other matters and things whatsoever connected with or relating to the business and concerns of the Company, shall be solely and exclusively vested and reposed in the Court of Directors, except as herein is excepted <r otherwise provided."

12. "That all the arrangements, acts, matters, and things which have been made or done, and all appointments made by the said present Directors, or any of them, on behalf of the Company, prior to the date of these presents, with regard to the formation of the Company, or in relation to the business or affairs of the Company prior to or since the said 19th day of February now last past, shall be, and the same are hereby respectively ratified and confirmed by the said parties hereto of the first part and every of them."

14. "That the Court of Directors shall nominate and appoint such directors, proprietors, or other persons, as they shall think fit to be trustees for and on behalf of the Company, of all or