ti521 ON A P ~ ~ ~ ~ F~~~~ THE S ~ P ~ ~ ~ ~ ~ COTiECT OF NEW SOUTH WALES.

TEE BANK OF A U S T R A L A S I A , ~ ~ p p c i Z ~ ? ~ ~ s ; THOMAS CRAPLIN BREPLLAT,

Chairman of the Bank of Australia,-~espo72cilent* [Dee. 10, 11, 13, and

14, 18471.

If an instrument contains distinct engagements, by which a party binds himself

to do certain acts, some of which are legal, and some illegal a t c o ~ ~ ~ n ~ o ~ ~ law ;

the performance of those which are legal may be enforced, though those which

are illegal cannot [6 Moo. P.C. 2011.

By a Deed of Settlenieii~, a Joint Stock ~ a ~ ~ k i n ~ Company, called ‘‘ The Bank of

Australia,” was established as a Bank of issue and deposit, a$ Sydney. in

Sew South Wales. The deed contained clauses conferring powers uporl the

Directors, “For the better managen~ent of the concerns of the said Conk-

pany, etc.,” whereby it was declared that they shall have, a i d be expressly

invested with, ‘‘ full power and authority to superintend, order, conduct,

regulate, and manage all and singular the affairs and business of the said

Company, to the best of their discretion and judgment, under and subject

to the provisions thereinafter contained.” Such Board of Directors were

further empowered to (‘ devise and make such provisions, rules, orders and

regulations, touching the government, carrying on, and mazlnagement of the

affairs of the said Conipany, the sanie not being repugnant to the general

rules and regulations therein contained, as they should think expediei:t.)’

In the year 1843, the Bank of Australia becane invohed in pt‘ uiiiary diE-

culties, w ~ ~ e ~ e u p o n the Directors a t Sydney applied t>o the Bank of Australasia

for a loan, and borrowed from that Rank, a t Yarious times, t h sum of

&154,000, for which the Directors gsve their promissory note. Vpon the

negotiation of this loan, the Directors of the Bank of Australia entered into

an agreemeat with the Bank of A u s t r a l ~ i a , whereby they stipulated that the

Bank of Australia should cease to be %t. Bank of issue, deposit and discount,

and should become a Loaii C o ~ p a n y ; and that no transfer of shares or

stock should be made witliout the consent of the Bank of Australasia ; they

also agreed to wind up and get in their capital as a Loan Company. Pay-

ment of the note for 2154,000 was refused by the shareholders of the Bank

of Australia, on the ground that the stipulations contained in the agree-

ment were ultra ?:ires the Directors. On an action brought by the B a ~ k o f

A u s t r a ~ a s ~ a on the promissory note against the Chairman of the Bank of

Australia, the Supreme Court at 3e.m South Wales, a t a tr iaI at bar, found

for the D~fendaI~t . Upon appea~,-He~d by the Judicial C o r ~ ~ i t t e e { r e ~ e r s ~ n ~

the verdict and judgment of the Supreme Court),-

1st. That the Directors of the Bank o f Australia had the powers of managing

partners in an ordinary hanking partnership, and that, aniongst these, was

the power of borrowing money for the purpose of dischargin~ the existing

Iiabilities of the Bank till the assets should be realised, and Gf d i s c o ~ t ~ n u i n ~

the Bank if they thought such conduct essential to the interests of the share-

holders [6 Moo. P.C. 1951.

fndly. That the circumstances of the engagements of the Directors to repay the

loan being accompanied by other stipulations, some of which were ultra uii.es,

did not, discharge the Bank from liability to repay the loan, as the only

effect of those s t ipulat io~~s was, that they could not be enforced [ 6 Xicoo.

I-Teld also, that the proceeding before the Judicial Committee fronl the verdict of

the Supreme Court was in the nature of an appeal and not a writ of error,

and that this Court has power, under its common-law jur~sd~ct ion , to give

subsequent interest upon the judgment debt 16 Xoo. P.C. 2061.

Although no pover i s give11 by the Charter of Justice, 01- the Act of Parliaaierit

* Present : Lord Brougham, Lord Langdale, Lord Campbell, the Right Hon. Dr.

P.C. 2011.

-- I -~ ~

Lushiugton, and the Right Hon. T, Pemberton Leigh.

64%

creating the Supreme Court a t New South Wales, to aliow an appeal to the

Queen in Council from that Court; yet, to prevent a failure of justice, this

Court will, upon a special Petition for that purpose, grant leave to appeal

from a judgment of that Court [6 Yoo. P.C. 1691.

This was an Appeal from a judgment of the Supreme Court a t New South Wales,

in an action of assumpsit on three proniissory notes, and on the com-~l53]-nior~

money counts, on a t r ia l a t bar in that Court, in which the Appellai~ts were Plain-

tibs, and the ~~espondent , the C ~ i a i r ~ a n of the Bank of Australia, was sued as a

nominal Deferrrdant under the provisions of an Act of the Local Legislature (Col.

Act, 4th Will. IV., 28th Aug., 1533).

The A ~ p e l l a n ~ were partners, carrying on the business of bankers, at Sydney,

in New South Wales, under the title of ‘‘ The Bank of~Austi.alas~a.” The ~~espoI~den t

WSI the ~ a ~ r m a ~ ~ and partner of a joint stock company, who also carried on

business as bankers at Sydney, by the name of ‘‘ The Bank of Australia,” under the

provisions of a deed of settIement, dated the 1st of May, 1833.

This deed, after reciting 5 previous deed of settlement, of the 22nd of May, 1826,

recited, arneng other things, that it had been deemed ,expedient for pro-[154]-

moting the agriculture, trade and coninierce of the colony of Kew South Wales, that

a Bank should be established and founded in Sydney, as well for the purposes oE

discount and issuing of notes and bills, and lending monies on securities, and cask

accour~ts for the safe custody of monies and securities for monies, for tfie general

public a c c o m m ~ d a t i o ~ ~ and benefit, as also for transacting al-id ~ ~ ~ o ~ ~ a t i n g all suck

other matters and things as are usually done and perforaied, relating to, or connected

with, the ordinnry business of banking; axld that the several persons, parties thereto,

had agreed to establish such Bank, and bo raise up a joint stock or capital of

~ 1 Z O , O O O , in shares of 2100 each, and to carry on tfie same in co~artnership

together, under the name of “ The Bank of Australia,” for the term of seven years.

The Deed of Settlement further recite that the parties to the Deed were the holders

of the whole capital stock of the Bank, and that it: had been agreed to carry OD the

business for the further term of IO0 years, with a capital of ~200,0@0. I t was then

w ~ t n e s s ~ d that the parties to the Deed m u ~ u a l l ~ c o v e ~ a n t ~ d and agreed with each

other that tlicy and the persons a-ho should thereafter be or become parties thereto

should and would be, remain and continue, copartners and joint shok proprietars

of and in the said capital stock of ~ 2 ~ 0 , @ 0 0 , or so niuch thereof as should, from

time to time, be paid in or actually form the capital of the said Company, in pro-

portion to the number of shares set against their respective names and seals, for

the purpose of carry in^ on the business of the said Company, under the title,

denomination or firm of ‘‘ The Bank of Australia,” for the term of 100 years, deter-

minable, nevertheless, as tl~ereinafter-~i~entioned, and [155] subject to, and under

the rules and regulations, and covenants, cond~t~ons, clauses and agreements there-

inafter or t ~ ~ e ~ ~ e a f t e r to be a p e e d upon and establis~ed in the ~ a I i ~ ~ e r and form

there~nafter provided in that behalf.

The Deed contained seventy-three distinct clauses; but it is only materisl to

the present case‘to notice the following :-

Clause 2. That the business and concerns of the said ~ ~ ~ ~ a n y s ~ ~ o u l d cQ t,in~ie

to be carried on and conducted a t Sydney, where the same was then carried on,

and such other places as the Proprietors should thereafter agree upon.-C. 3 and

4. That the capital shouId be ~ Z O O , ~ O O , in shares of %I00 each.-C. 10. That the

eapitnl might be increased beyond ~ ~ ~ O , O @ @ , if the major par t of the ~ r o p r ~ e t o r s ,

for the time heing, should think fit, and be raised by the issue of new or addi t~o~ia l

slrares to the %embers, or in such 0l;her form and manner a8 the Proprietors at

a General Meeting should deem expedient.---C. 77. Tliat every shareholder sbould

have a distinct interest in his share of the stock, so as to be assignable and transfer-

able, under the restrictions and in manner therein mentioned.---C. 35. That for

the better m a n ~ ~ e n ~ e n t of the concerns of the said ~ o ~ p a n y , under and in c ~ n f o r z ~ i t y

to the provisioils t~ ie re~naf te r contained. or to be thereafter provided for, and for

securing the observance thereof, the same should be confided to the care, superin-

tendence, and managenieixt of eleven Directors, to be so qualified, elected and a g

pointed, and with such authorities and powers as are the i -e in~~ter declared, which

643

.

,

VI MOORE, 156 BANK O F AUSTRALASIA 0. BREILLAT [1847]

said Members should be and act as Directors of the concerns of the said Company.-

C. 48. That not less than four Directors should form a Board for the management

and direction of the affairs [I561 and business of the said Company.-C. 51. That

such Board of Directors should have, and they were thereby expressly invested with,

full power and authority to superintend, order, conduct, regulate, and manage, all

and singular the affairs and business of the said Company, t o the best of their

discretion and judgment, under and subject to the provisions thereinafter contained.

-C. 53. That such Board of Directors might make provisions, rules, orders, and

regulations touching the government, carrying on, and management of the affairs

of the Company, the same not being repugnant to the general rules and regulations

therein contained, as they shall think expedient.-C. 54. That suck Board of

Directors should have the entire management and control of the lending of money

on bills, notes, bonds, mortgages, and other securities, and of the purchase and sale

of bullion, gold and silver, arid such coins and monies as they might consider

necessary for carrying on the business of the said Company, or as they should think

advisable and advantageous f o r the general interests thereof, and should have

the uncontrolled right of calling in, receiving, and enforcing payment of all monies

due to the Company however secured.-C. 55. That such Board of Directors should,

from time to time, settle and determine in whose name or names all securities that

should be required to be entered into, by and on behalf of the said Company, or by

or on behalf of any person or persons transacting or negociating any matter or

business whatsoever therewith, should be taken and given, and by whom and in what

manner and form, and f o r what amount, the several cash notes of the said Company

should be drawn, signed, given and issued, and from time to time [I571 alter and

vary the same as they should think proper.-C. 56. That the Board of Directors

might call Special General Meetings of the Proprietors to consider the propriety of

making further calls.-C. 64. That a General Meeting of the Members of the

Company should be convened, and held at the house where the business of the Bank

should be carried on and managed for the purpose of transacting and considering

the general business and concerns of the said Company, on a day to be appointed

by the Board within three weeks after the first of January and first of July in each

year.-C. 67. That the Directors might call Special General Meetings by a news-

paper advertisement or by circular in case of emergency.-C. 68. That any eleven

Members entitled to vote might a t any time when they should see occasion or deem

the same expedient, by writing addressed to the Directors, and stating the reason

of such occasion or expediency, require a Special General Meeting to be convoked

upon the concerns of the Company, and that the Directors should within ten days or

as soon thereafter as circumstances would permit, convoke such meeting for coil-

sidering the subject mentioned in such notice.-C. 69. That fourteen days notice of

all General and Special General Meetings (except in emergencies) should be given in

one or more newspapers.-C. 73. That the term of 100 years thereby agreed upon,

might be determined by a General Meeting of the Members of the Company, not

being less than eleven, a t the expiration of the first ten years, and every succeeding

ten years of the said term.

The business of the Bank was managed by Directors, chosen from time to time, in

pursuance of the deed, and acting by Boards of not less than four.

[I581 I n the beginning of the year 1843, the Bank of Australia having become

involved in difficulties, the Directors resolved on applying to the Appellants for

assistance in the way of a loan, to enable them to meet the engagements of the Bank,

and to give them time for the realization of their assets without sacrifice; and

accordingly, on the 21st of February in that year, a deputation from the Board,

consisting of the Chairman and two other Directors, accompanied by the Secretary

and Cashier, waited upon the Superintendent and Sydney Manager of the Bank of

Australasia, for the purpose of negociating such loan on behalf of the Bank of

Australia, on which occasion they submitted a statement of their affairs to the

Appellants.

After some negociation, it was ultimately agreed by the Appellants’ Bank to

lend to the Respondents’ Bank, for the purpose of meeting its engagements, the

sum of gl50,OOO upon the direct engagements of the borrowing Bank; and by the

managing officers of the Union Bank of Australia, to lend for the same purpose the

644

,

BANE OF A U $ ~ R ~ L ~ ~ ~ A 21. B R I L L A ~ [1S47] VI MOORE, 159

sum of &60,@00, upon the endorsement by the Bank of Australia of bills i n their

hands. A resolution agreeing to the loan by the Appellants was passed by the

~espondents’ Board of Directors j and on the 27th of February, the Bank of Australia,

by their Secretary and Cashier, addressed to the Appellants’ Superintendent the

following letter :-

“ Bank of Australia, Sydney.-Sir, In reference to the communications which

have taken place between the Directors and Cashier of this Institution and the Bank

of Australasia, relative to the intended alteration in the business of this Bank, and

tho assistance it will require, for the purpose of meeting its immed~ate ~ iab i~ i t ies? 1

am directed by &e Board [lSQ] to communicate t o you their resolution of calling

a meeting of the Proprietors for the 16th of “larch next, for the purpose of making

the necessary arrangements for terminating the business of this Bank, and con-

verting i t into a Loan C o ~ ~ a n y , with a view to the security of its ou~standing debts,

and to enable tho Bank, in the m e ~ n t ~ ~ e , t.0 liquidate its e n ~ a g ~ ~ ~ e n t ~ withou in-

convenience to the public. 1 am dcsired by the Directors to acknowledge and lhank

you for your lender of assistance, and to accept of the advance of the Bank of

Australasia of the sum not exceeding ~ ~ 5 0 , 0 0 0 , in such sunis as may from time to

time be required on the security of the acceptances of t.his Bank, a t three months

date, at an interest of ten per cent. per annum, and subject to the following con-

ditions :-1st. That, on or before the 31st March, this Bank shall cease to be a Bank

of issue, and in winding up its affairs all future payments shall be made through

the Bank of Australasia. 2nd. That no bills shall be discounted by the Bank after

that date, except such as may be rcyuired to renew bills now held by the Bank. Yrd,

That no transfer of shares or stock shalI be made without the consent of the Bauk

of Australasia. 4th. That the liabilities incurred by this Bank for Messrs. Hughes

and Nosking, and for Mi-. J. T. Hughes, be covered by the execution by them of

such trusts to tho Bank of Australia~ as may be necessary to place the control of

the affairs of the firm and of Bfr. J. T. Hughes under this Bank, to meet their

existing cibligatbns, and to prevent them from contracting new onos without the

consent of this Bank, and that the whole of their future business during the con-

tinuance of the trusts be transacted through the Bank of ~ ~ s t r a ~ a s ~ a . 5th. That

the Bank of Australia shall not incur new liabilities without. the consent of the

Bank of Austra-fl601-lasia. I have the honour to be, Sir, your most obedient

servant, W. H. Mackenzie, Cashier. To the Superintendent of the Bank of Austra-

lasia, Sydney.”

On the 2nd of March, 1843, the AppcZlants’ Superilltendent addresged to the

~ e s p o ~ d e n t s ’ Cashier and Secretary, i he following answer :-

“ Bank of Australasia, S~~er i i i t e r~dent ’s OBce, Sydney, 2nd March, lS43.-Sir,

I beg to acbnowledge the receipt this morning of pour Ietter of the 27th ult.,

communicating the resolution of your Board to call a Meeting of Proprietors for

the 16th instant? for the purpose of making arrangements to terminate the transac-

tion of business by your ~ s t a b l i s ~ i ~ ~ n t as a Bank, and to convert it into a Loan

C o ~ i p a n ~ , and intimating We intention of your Directors to avail themselves of the

assistarice of the Bank of Australasia in liquidating their current engagemennts, to

a n extent not cmeeding S150,00@, in suck sunis as may, from t ime to time, be

required, on the security of the acceptances of the Bank of Australia, at three

months date, at an interest of ten per cent, per annum, and subject to the conditions

therein detailed. And, in reply, I beg to state that this establishment is prepared

to meet the requisitions of the Bank of Australia, to the extent and on the con-

ditions which you have specified. I ani, Sir, your most obedient servant, William

Earnilton Hart, Superintendent. ?IT. E. Mackenzie, Esq., Cashier of the Bank of

Australia, Sydney.”

In furtherance of the arrangements agreed to by these resolutions, not= were

accepted and discounted by the Bank of Australasia, in f a w u r of the Respondents’

Bank, between the 29th of March, 1843, and the 30th of October in the same year,

on which day, p ~ ~ r s ~ I a n t to a reso~iItion, the then existing securities [161] were can-

celled, and in Iieu of them the following p r o ~ ~ s s o r y note, signed by the Chairman,

Mi-. Norton, on &half of the Bank of Australia, was delivered by their Cashier and

Secretary to the Appellants’ manager :--“ Sydney, 30th October, 1543, ~ ~ ~ ~ , 0 0 0

sterling. On demand, I promise t o pay to the Bank of Australia, or order, the sum

645

V I ~OORE, 162 BANK OF ~ ~ S T R A L A S ~ ~ ~ V. ~R ~~~~ E18471

of ~ l 5 4 , 0 0 0 sterling, with interest from this daxe, for .iialue received, for and on

behalf of the Bank of Australia. Payable a t the Bank of

Austra~ia.”

The amo~int due for principal and interest on the existing notes, was cab

culated by the Cashier and Secretary, with the Mltaager, and found to be

.S154,480 19s. l ld . ; and upon the delivery of the last mentioned pro~issoi-y note,

the balance of 8480 19s. I ld. was settled between the two Banks in account, the

Bank of Australia being credited with the full sum of 8:154,000, upoia the new note.

In all the c o n ~ ~ ~ u n i c a t ~ o n s which took place between the Directors sild oscers

of the Bank of Australia and the officers of the Bank of Australasia, up to the inontli

of August,, 1844, the latter was treated tw an acknowledged creditor of the former

to the amount of the notes and acceptances of the Cashier or Chairman, for the

time being, in its favour.

At a Special general meeting of the ~’ropr~etors of the Bank of Australia, held

on the 6th of August, 1544, it was resolved, by a majority of the Proprietors there

present, as follows : ’‘ That the loan negociated between the Rank of A ~ ~ s t r a ~ a s ~ a ,

the former ~ ~ r e o t o r s of this Bank, and Messrs. Hughes and Hosking, i s not binding

on the proprietary of this Bank, and that the Board of Directors be hereby [162]

in~tructed to defend any action that the Bank of Australasia may bring for the

recovery of tho same.”

‘Upon the expiration of the twelve ~ n t h s from the 29th October, 1843, pay-

ment of the amount due for pr inc~pal and interest on the promissory note for

~ ~ 5 4 , 0 0 0 was d ~ ~ a n d e d a t the Bank of A ~ ~ ~ t ~ a l ~ a , on beh lf of the ~ ~ p e ~ ~ ~ ~ ~ , axid

ref used.

About this time Mr. Norton resigned the ofice of Chairman of the Bank of

Australia, and was succeeded by the ~~espondent , Thomas Chaplin Breillat, who

was duly appoi~ted and registered as such Chairnian.

On the 26th of-November, 1844, the Appellsnts coniluenced theix action in the

Supreim Court of Xew South Wa,lw, against Thomas Chaplin ~ ~ e ~ ~ a t , as the

n o ~ ~ n a l ~ e f e n d a n t , for and on behalf of the Company of the Bank of ~ u s ~ r a l ~ a ~

to 1-ecover the amount of the p r o ~ ~ s s o r y note for 2,154,000 and interest, and also

the a ~ ~ o u n t of two other promissory notes for the respective sums of 2,3180 12s.

and &2884 Os. 10d., which had been endorsed and delivered by the ~espondent’s

cashier to the Appellants, and had been d ~ s c o u ~ ~ t c d by the Appella~~ts for the Bsnk

of Austra~ia in the usual course of business.

The declaration contained seven counts: Ry the Erst and second counts, the

Appella~~ts claimed, upon the endor~ements of the cashier of the ~ ~ ~ o ~ i ~ s o r y notes

fox &348O and ;E2854 OS. 10d., ss upon the endorsements of the Bank of

Australia; by the third count, the Appellants charged the Bank of A ~ ~ s t r a l ~ a as

makers of the proinissory note for 8154,000 and interest; and by the fourth, fifth-

sixth, and seventh counts, the Appe~~ants charged the Bank of Atrstralia in the

nominal amount of 11632 32350,000, as for money lent, money paid, interest, and

on an account stated, in the u m d form.

The ~ e f e n d a n t pleaded to the Erst tvo couxts of the d e o ~ & ~ a t ~ o ~ , in the whole

six pleas, denying the material ~ l l ega t~ons contained in those counts. To the third

G G ~ ~ G , he pleaded, seventhly, that the Bank of Australia did not make the note

~ ~ e n t i ( ~ n ~ d in that count. And to the last four counts he pleaded, eighthly, that the

Bank did not p r ~ ~ s e m ~ d o et ~~~~~ and ninthly and tenthly, pleas of payment

and of set-OB.

The A~pc1~ants joined issue upoxl the erst eight pleas, and t raver~ed the ninth

axid tenth pleas. The Defendait joined issue on the replication to tha ninth and

tenth pleas.

The cause was set down for trial, and came on t o be heard before John Nodes

Dickinson, Esquire, one of the Judges of the Supreme Court, and a special jury, on

the 27th, 28th, 29th, 30th, and 31st days of March, and the lst, and, 3rd, 4th, Sth,

and 8th days of April, 1845. The jury being unable to agree to a verdict unani-

~ o u s l y , ~~~~~n six hours after the close of bhe Judge’s charge, or by a majority of

nine to three, within twelve hours after such charge, mere a t the end of tmelve hours

d ~ ~ c h a r ~ e d by tbe learned Judge from giT-ing any verdict, under tlze authority of

an Act of the Colonial ~eg i s~a tu re .

646

J. Xorton, ~ h a ~ r m a n .

BANK OF AUSTRALASIA t’. BREILLAT [1847] VI MOORE, 164

The cause was again set down for trial, and was ordered to be tried at the bar

of the Supreme Court, on the 23rd of June, in the same year, and so from day to

day until it should have been fully disposed of. It was accordingly heard on th -

23rd of June, and on various other days, ending on the 4th of -4ugust f01-[1643

lowing, before the Chief Justice, Alfred Stephen, and their Honors, John Nodes

Dickinson and William A’Beckett, Esquires, Puisne Judges of the Supreme Court.

The Plaintiffs a t the trial abandoned the first and second counts, and the evidence

cn both sides was confined to the issues on the seventh and eighth pleas. The effect

of the evidence on the trial, and the purport of the documents produced, so far a4

they affected tlhe point under consideration in the present appeal, are particularly

stated in the judgment of their Lordships.

The Defendants resisted the claim, on the ground that the sum demar,ded, was

for money borrowed by the Directors, without authority, and he contended that

the power of the Directors to bind the Company by borrowing money must depend

entirely upon the Deed of Settlement, and could only be supported by an express

authority to that effect, and that the Deed of Settlement of the Bank of Australia

gave the Directors no power to contract for the Company, as they had done in this

case, although he admitted that a borrowing by rediscount would have been legiti-

mate. And he further contended that, even i f such power existed, the contract was

so vitiated by the conditions stated in the letter of the 27th February, 1843, as to

disentitle the Plaintiffs to recover the money advanced. The Defendant also a t

tempted to show by evidence that the loan had been contracted for the purpose of

supporting the firm of Hughes and Hosking, and the individual members of that

firm, by the unfair procurement, and for the real benefit of the Plaintiffs, and he

contended that on this ground also the Plaintiffs could not recover.

[I651 Upon the evidence given a t the trial at bar, the two Puisne Judges were

of opinion that the Defendant was entitled to a verdict. The Chief Justice was of

a contrary opinion

The Chief Justice, in his charge, informed the jury, in substance, that the

Judges were all clearly satisfied by the evidence, that the loan made by the Plain-

tiffs was so made in order to enable the Bank of Australia to meet liabilities pre-

viously incurred, and with the contracting of which it did not appear that the

Plaintiffs had anything to do ; that the entire amount had been advanced for such

purposes, that no part of it had been applied in payment of engagements of Hughes

and Hosking, or J. T. Hughes, with the Plaintiffs, except such as the Bank of

Australia were previously liable for ; that the assets of the Bank, a t the time of the

loan, were supposed on all hands to be ample, and that there mas no ground for

imputing to the Plaintiffs or their officers an attempt to take an undue advantage of

the necessities of the Bank of Australia. The Jury were then informed that it was

open to thein either to find a general verdict for either party, or conipletely to

separate the fa,cts from the law by returniiig a special verdict. He proceeded to

state that, assuming the facts to be all found in favour of the Plaintiffs the other

Judges were of opinion, that they were not entitled to recover, by reason both

that the Deed of Settlement conferred no authority, in their opinion, on the Directors

t o borrow money on behalf of the Company, even for the above purposes, in the

manner in which the loan was effected in this case, and that, even if such authority

existed, the coinditions in the letter of the 27th February, 1843, so vitiated the

ccjntract, that the Plaintiffs could [1661 not recover the. money advanced under it ;

but that he waE himself of a contrary opinion, both as to the existence of authority

and the effect of the conditions. Upon the question of acquiescence by the pro-

prietary, the learned Judge informed the jury that, in the opinion of the Court,

the evidence to fix the proprietary with liability on the ground of having acquiesced

in the loan was so loose, scanty, and uncertain, as to be almost intangible. The jury

were then directed that the law of the case must be taken by them to be accordind

to the opinion of the majority of the Judges, and they were accordingly advised to

find for the Defendant, if they returned a general verdict.

At the close of his address, the Chief Justice told the jury that if they elected

to return a special verdict, he would, with the assistance of the other Judges (and

of the Counsel if they thought fit to assist), prepare the form and heads of such a

verdict, and put such questions to the jury for them to find on the facts in dispute

647

VI NOORE, 167

as it would be necessary for them to notice in their verdict. The jury, after some

time, intimated that they would comply with the suggestion of the Court, and find a

special verdict, whereupon the Chief Justice prepared a sheet of paper with the

formal commencement and conclusion of a special verdict, and with the body of it

containing several blanks preceded by thebe words, “ And we find that ’)-‘( And

also that”-and he explained to the jury that the blank spaces were to be filled

up with the leading facts of the case.

The jury retired, and shortly afterwards found the following verdict,-“ We find

a special verdict for the Plaintiffs, on the seventh and eighth issues, for the Note

S154,000, interest, 8 per cent. 221,703 18s. 7d., [I671 subject to the opinion of the

Court on the points of law. And a verdict for the Defendant on all the other issues.”

Some discussion having taken place as to the effect of this verdict, in respect of

the seventh and eighth issues, and it being admitted to be erroneous as to the ninth

and tenth issues, it was then proposed by the Chief Justice, with a view of putting

the whole case in train for an appeal to the Privy Council, that a form of verdict

which would leave the questions a t law directly open to the Court should be taken by

consent, and that the Judgment of the Court should be given iastanter and without

argument; and his Honor proposed for adoption by the Counsel on lboth sides, the

following form of consent, a t the same time stating, in reference to the proposal for

an immediate decision in the Colony without argument, that he thought few things

more iiiiprobable than that any further discussion or consideration of the legal

questions than had been already given to them, would alter the views taken either

by his learned brethren or himself. The proposed consent was given on both sides.

It was in these words,-“ The jury find for the Plaintiffs on the seventh and eighth

issues wi th &175,703 18s. 7d. damages, subject to the opinion of the Court, whether

upon the facts proved, the) Plaintiffs be entitled to recover. If the Court be of a con-

t ra ry opinion, the verdict t o be entered for the Defendant. The jury find f o r the

Plaintiffs, on the ninth and tenth issues, with one shilling damages, and for the

Defendant, on all the first six issues. This is assented t o by the Counsel on both

sides. The whole to be

without prejudice to either party’s right of appeal.”

[I681 The verdict, of the jury was then returned accordingly, and a motion

being made by the Defendants’ Counsel for the entry of a verdict for them on the

sei enth and eighth issues, and opposed, pro f o rma , by the Counsel for the I’lnintiffs,

aithout argument on either side, the majority of the Court decided in favour of the

motion, and a verdict was accordingly directed by the Court to be entered for the

Defendant, on the seventh and eighth issues. On the 8th of September, 1845, final

judgment was entered up by the Defendant on the several issues found for him, and

f o r the Plaintiffs on the issues found for then?, with one shilling damages.

The Plaintiffs, without applying to the Court below, presented a petition to Her

Majesty in Council, praying for leave to appeal from the above-mentioned Judg-

ment of the Supreme Court.

Sir T. Wilde, in support of the Petition.-This Court is the only jurisdiction

which can entertain the present application. The Charter of Justice of New South

Wales, of 1823, made in pursuance of the Act of Parliament, 4 Geo. IW., c. 96, gave

a right of appeal to the King in Council, from the judgment or decree of the Court

of Appeals in New South Wales. That Statute has expired, and the1 9th of Geo.

IV., c. 83, which was subsequently passed, contains no provisions for an appeal from

the Supreme Court, to the Queen in Council. So tha t a t present no right of appeal

exists, Flint v. Walker (5 Moore’s P.C. Cases, 179); and it can only be granted

[169] by this Court under its general jurisdiction, or by the powers con-

ferred by the Statute, 7th and 8th vict., c. 69.-[Lord Brougham: The

petitioners should have applied, in the first instance, to the Court below f o r

lelave to appeal, and i f that was refused, to have applied here for indulgence.]-In

Flint v. Walkey [5 Moo. P.C. 1791, application was made to the Supreme Court,

but they held that they had no power to grant leave to appeal. It cannot be required

to apply to the Court below toties quoties.

BANK OF AUSTRALASIA ?I. BREILLAT [1847]

The Judgment of the Court to be delivered immediately.

* Present: The Lord President (the Duke of Buccleuch), Lord Brougham, the

Right Hon. Dr. Lushington, and the Right Hon. T. Pemberton Leigh.

648

The ~ ~ l ~ c i t o r - ~ e n e r a l (Sir F. Kelly) opposed the Petition.

Lord Brougham:-We thirik. the prayer of this Petition. ottght to be granted,

and the appeal admitted upon giving the usual securities. The admission of the

appeal mill, of course, stay the proceedin~s in the Court below.

By an Order in Council, leave was given for the Corporation of the Bank of

Australasia to enter and prosecute their appeal from the Judgment of the Supreme

Court of New Sout,h Wales, and that the petitioners or their agents ought to be per-

mitted to take from the proper oEeei-s of the Supreme Court, copies properly

authenticated, of the records and proceedings wliich they may be advised are

~~ecessary to be laid before Her Majesty in Council, in support of the appeal, upon

payment of the usual fees for the same.

In pursuance of this Order, documents were transmitted, comprising the

record, the Chief Justice’s notes of the evidence taken. on tbe t r ia l at bar, and the

reasons of the Chief and Puisne Judges, in compliance with the general rule of the

Judicial Committee of the Y r i ~ Council of the 12th of February, 1845 (see Rule,

4 Xoore’s P.G. Cases, App. p. YXP.).

[l5’0] Upon these documents, the appeal ROW came on for hearing.

&Ir. Bethell, Q.C., and Mr. barj. Channell, (Mr. Serj. GazeLee, and Mr. E. Hill,

with them,) for the Appellants.

The question lies in a very narrow compass: &e sole inquiry is, had the

Directors of the Bank of Australia power, under the provisions of the Deed of

Settlement of 1st of May, 1833, to borrow, so as to bind the shareholders of tlie

Company? The authority of the Directors i s two-fold; first, under the Deed of

Settlenienk; secondly, as incident, by law, to the nature of their partnersh~p. The

first question ~ L I ~ D S upon the true consti-uctiun of the various clauses in the Deed

of Settlement., which either limit or define their power, or froin which their authority

is t o be inferred: these are principally the 38th, 48th, and 51st; by the latter

clause. the Directore are to order, conduck, regulate, and manage the aEairs of

the Conipany “ t o the best of their discretion and j u d ~ ~ ~ ~ t ~ ~ restrained onb by

such prorisions as are thereinafter contained. Then conie the 5Rrd, 54th, and 55th;

the 54th provides, that the Directors shall have the entire management and control

of the lending of money on bills, notes, etc., wbile the 55th, after stating that the

Directors are to settle and detcrniine in whose name all securities required by the

Company shali be taken and given, goes on, and i ~ y whom and in what nianner,

and from and for what amount, the several cash notes of the said Company-shall

be drawn, signed, given and issued.” Surely, these provisions are amply sufficient

to warrant the act; in question. But let us look a little further into the matter.

This is a Banking Company; the object is stated a t the very outset of the Deed

of Settlement; i t recites tliat [171] i t is deemed expedient for ~ r o i ~ i o t ~ n g the agri-

culture, trade and commerce of the colony of New South WaXes, that a Bank should be

established, as we11 for the purpose of discount and issuing of notes and bills, etc.,

as also fo r transacting and negotiating all suclx other matters and things, as are

usually done an& perfornied relating to, or connected with, the ordinary business

of banking. By the 54th clause the powers belonging to the partners are vested

in the Directors. Now, being a banking establishment, what are the duties of such

a pa~.tnership, except they be, the borrowing and Iendizig of money1 That i s the

very object of the p a r t n e ~ s h ~ p , and, therefore, whether the Deed of Settlement cow

ferred the power of borrowing and lending money specifically and in terms (as me

have shown it does here), or not, yet we contend, that such power exists from tlie

nature of the partnership, and is essential to it. K i ~ k v. Bliwtorz (9 Mee. aiid

mnh v. Eobei-ts (3 Bing. N.C. 963). Then as t o the circunistances

o n ; that the money was borrowed by the Directors of &he Bank

of Australia is iiot disputed : the Respondent, who represents the proprieta~.y,

resists the claim, on the ground that the money vas borrowed without the privity

or authority of the shareholders. He relies upon the Deed of Settlement, which,

we have already shown, conferred sufficient authority, even i f suck a u t ~ o r i t y was not

incident to the partners hi^ as a banking concern. But he further rested his

defence in the Court beIow, and he relies here, on the conditions contained in the

letter of the 27th of February, 1843, which, he says, vitiated the contract in this

instance, even if the Directors had power to enter into any E1723 such; but the

P.C. 11. 649. 2la

VX XQQEE, 173 BANK OF AUSTRALASIA 9. B:IlBILLAT L1847]

proposals in that letter mere not terms or conditions of the loan, xior did they form

any part of the contract; they were independent of the contract altogether, and

wrould not, even had they formed parts of it, have vitiated it altogether. The

Appellants' right to recover the money lent by them, would not be affected by the

Directors having, in part, exceeded their authority, if they were entitled to raise

funds in the way resorted to. Dobson P. &all ( 2

Phil. 023, note). But tlie acting of the Directors and their Cashier, and the appoint-

ment of new Directors by the proprietary, are all confirmations by Lhe proprietary

of tho acts of the Directors, and would, without other circumstances, we submit,

ihniount to 'a recognition and ~ d o p t i o n of their acts.

Sir k'. Kelly, Q.C., and Mr. M. D. Ell , Q.C., (Sir John Bayley and Mr. Bovill

with them,) fop. Respondent.

The rea1 queqtion has not been presented to your Lordships ; it is simply this,

whether each shareholder of the Bank of Australia is bound by the contract entered

into by the Directors. The ~ ~ s p o n d e n t represents, and is, in fact, the whole body of

shareholders ; many of them reside in this country, and other places very distant from

Australia : they neither knew, or could know, any of the transactions in question ;

having embarked their capital upon the faitk of the Deed of S e ~ t l e ~ e n t . The Appel-

lants had full notice of the nature of the C o ~ p a n y , and the contentsi of the Deed of

Settlement, a t the time the transaction in question took place. The rights and

liabilities of the shareholders [173] must, therefore, be governed by the terms of

this Settlement. Now, the Court, will not fix absent parties with a contract entered

into by other persons on their behalf, unless it be satisfied that the parties entering

into such contract had full legal authority to do so.--[lord Brougham: The

question is, not only whether they have conferred the au t~~or i t~y? but whether the law

does not necessarily confer or imply aathority from the nature of the transaction,]-

It is a question of agency or authority. The powers conferred by the Deed of

Settlement are to be exercised in strict c o n f ~ r ~ i t y with the Deed. The Deed con-

tains, in express terms, every power that i s necessary to carry on the concern ; a d

each of these powers are expressly declared to be subject to the provisions of the

Deed. We submit,

that neither under the express powers, o r under any implied powers. had the

Directors authority to bind the ahole body of s~iareholders by such a {contract as that

in question, nor had they pomer to borrow money at all, except in the sense as

provided for, namely, by receiving deposits or issuing notes. Brtnkers have no

power to borrow, strictly speaking, for the purpose of increasing their capital,

as distinguished Prom contracting debtfi. They cannot contract, a loan und0r

ordinary c i r c ~ m s ~ a n c e ~ , ven for the purpose of carrying on theii. business : but

here the borrowing was, not for that purpose, but for the very reverse, namely,

stopping the business. This was the first stipulation of the agreement.-[lord

CanipbeU: The nature of the business of Bankers is a par t of tlie law merchant,

and is to be judicially noticed by the Court. B r n n ~ a ~ v. Barnett. (12 Clk. and Fin,

78?).]--ft cannot be [I741 contended that to borrow money for the purpose o f

stopping a Rank, is par t of the business of a Bank. The next stipulation was,

the taking the liabilities of Eessrs. Eughes and Hosking. The Court below could

not reject, ail these considerations, and treat the case as a simple borrowing.---

[Lord C ~ ~ ~ p b e l l : ~ u ~ p o s e money, though borrowed for improper purposes, was

applied with the consent of the lender to proper purposes, what would he the effect

of that21-The application would not affect the original terms of the contract,

Gallway v. Mathew (10 East. 363). Eere the Appellants had notice of the Deed of

Settlement. The question then will narrow itself to this, whether the shareholders

have given an express or implied authority. The case of Tiirk v. Blurtom (9 Mee,

and Wels. 288) expressly decides, that there i s no iinplied authority in a partnership

to borrov money, except in the name and on behalf of the firm, for the purpose of

carrying on business. Huwtt iy?~ v. Bourme (7 Mee. and tl'els. 595) shows that even

where khere is urgency, as a distress being levied against the ~ a r t n ~ r s ~ ~ i ? property,

the Directors could not act beyond the authority conferred on them. I n Brown- p.

Byers (16 Xee. and Wels. 252) it was held, that the Xanaging Director of a mininx

association had not authority to draw or accept bills of exchange, even for

necessary purpose of tlre mine, without the express authority of the Directors. lit

was iimimbent upon the Appellaiits to prow that the Directors had power to bind

650

Glnscott v. Lcqq (2 Phil. 310).

If money was required it should have been raised by calls.

BANK O F AUSTRALBSIA V. BREILLAT [1847j VI MOORE, 116

the shareholders : Dickelason v. ~a~~ (10 Bar. and C. la$>, between whom and the

Appellants there was no privity of contract express or implied. Emily v. Lye

(15 East. 6). If this loan [175] was for the purpose of increasing the capital of the

~ a r t n e r s ~ i p , then the Directors had no implied authority to bind the s~a re~~o lde r s .

Fisher v. Tnplor (3 Hare, 218). The purposes of the loan were expressed i n the

articles o f agreement, and, aniong otliers, i t was to meet the liabilities of Messrs.

Hughes and Hoskings. Even if the banking business was to cease, the Directors

had no authority to borrow for the purpose of paying debts; they had no powers

except, to wind up the concern, and this loan was not necessary for winding up the

business. It i s well settled, that where parties subscribe capital for one particular

purpose, whatever the degree of responsibility that is marked out in the Deed may

be, that liability cannot be carried out one bit further; you cannot bind a sub-

scriber, except for the purpose8 of the joint undertak~ng. Golnznn v. The Eastera

Coulaties ~ u ~ ~ u ~ a ~ C o ~ ~ p ~ ~ y (16 Law Sourn. N.S.C. 73 ; S.C. 10 Bea. 2). W e admit,

that, in a Court of Equity, in taking the accounts, the Directors would be given

credit for part of the sums paid in satisfaction of Xessrs. Hughes and Hoskings’

liabilities, namely, t,hose parts which have been guaranteed by the Company ; but

here we are on an action upon a promissory note, and the terms of the loan

were, that some of Messrs. €lughes and Hoskings’ liabilities, which the

Company had not guaranteed, were to be paid thereout; i t was not bind-

ing on the proprietary. The remaining stipulation in the agreement, that

shareholders should not be at liberty to transfer their shares, was an

evident interference with the rights of the share~~olders. Suppose that before the

a~reement a sharel~older contracted to sell his shares, it is clear, that in conse-

quence of this stipula-[l76J-tion, the Directors would have refused to allovr the

transfer; and if this action is maintainable, the AppeIIants may recover the whole

demand against that individual shareholder, who, according to the Deed of Settle-

ment, had a right to have his shares traiis~erred to the purchaser. It is utterly

impossible to say what portion of the loan of S150,OOO was to be considered as the

consideration for the Bank of Australia ceasing to act as a Bank of issue and

deposit, and taking the business of a Loan Company. In Pulmer v. Gooch ( 2 Stark.

428), i t was held, that only for so much money as was proved to have been advanced

to a captain of a ship for the purposes of the ship, would a bottomry-bond bind tbe

So here, though the Shareholders of the Company might be liable to their own

Directors, as a matter of account for so much of the loan as they have applied to

partnership purposes, they are not liable on this promissory note. Thacker v.

iMoates (1 Mho. and Rob. 79). It is inimatcrial whether the contract i s a void

contract or not ; the ~ u e ~ t ~ o n is, whether it is a contract betweea the ~ ~ p e l l a ~ t s

and the ~oiiipany. It niay be a valid contract between the Ap~~elIants and the

four Directors who authorised it, and such of the shareboIders as may ratify it,

and a t the same time invalid as against the other shareholders: Ex parte, Emly

(I Rose, 61). In Card v. Hope (a Bar. and C. 661), the Court held, th& a l t ~ ~ ~ ~ ~

one covenant in a Deed was lawful, yet as the entire Deed was formed on an illegal

stipulation, the whole was illegal and void. TO the same effect as to the indivisi-

bility of contracts are the cases of iSymo s v. c a w (1 Campb. 361), ~ ~ o ~ - [ l ~ ~ - ~ ~

Y. Ha71 (1 Barn. and Bld. 53) , and Wi’lk on Y. ~ o z ~ ~ o l a ~ u c ~ (3 Mau. and Sei. 117).

If the application of the money was a necessary ingredient in the cause, that fact

ought to have been submitted to the Jury. There is no satisfactory evidence ab to

that fact.

MY. Bethell, in reply.-The grounds of the Respondents’ arguments in support

of the judgment of the Court below, are reduced to these several heads, First, they

say that there was no power in the Directors, either express or implied, to contract

this loan. As to the impI id power, they attempt to negative it by reason, because

tho Deed of Piartnership ennnzerates and conifers upon the Directom varjous

powers of an inferior order; therefore, the inference is, that this greater power

would have been given expre?Sdy, if i t had been the meaning of the ~ o n ~ p a n ~ that the

Directors should have such a power ; because the borrowing of the money was in

eEect, an increase of the capital, and that that ought to have been done in the mode

pointed out in the Deed ; because the Directors were agents, and that i t was 1vd1

settled in law, that whaterer might have been the powers of the ~ ~ i n c i ~ ~ l ~ , yet ! k t > ;

65 I

. ship.

VI IYIOORE, 178 BANK OF AUSTRALASIA V. BREILLA’C [1847]

committal of their concerns to an agent did not confer on such agent, the power of

borrowing money; and because of its consequences, the character of the Deed being,

that the Shareholders should only be liable to the amount of their shares. The

second main head of their argument is, that admitting the Directors’ authority

to borrow, yet the conditions upon which the loan was granted, vitiated the contract.

And thirdly, they say that no contract resulted [I781 from the mere application

of the money to the purposes of the Bank, and that there was no ratification, because

no person was capable of binding the parties. To the first ground, then, 1 submit

that there is express power given as an appendant power. It is given by the

Deed. What construction can be put upon the word “securities,” in the 55th

clause? The only explanation of the word is, that it means securities for money

borrowed by the Conipany. The very purposes of the Bank required that such

a power should exist somewhere. If a party be invested in an office, he becomes

clothed with the powers which belong to that office. Every power, therefore, that

was conferred on the partnership, from their niutual relationship as partners, was

vested in the Directors; they were, in effect, the sole partners of the ieoncern. The

very existence of the Company depended on the possession by the Directors of various

implied powers, besides those expressly given. It was absolutely necessary that the

Directors should have power to borrow money in a partnership of thiis description,

particularly as the shareholders were scattered all over the world. It is admitted

that the money was advanced, but the Respondent contends that the conditions

on which i t was advanced being illegal, the transaction is void. I submit, that if

those conditions were uTtru vires, they are innocuous. Secondly, if the Respondent

could make out that any par t of the loan was advanced f o r the purpose of paying

off the debts of Nessrs. Hughes and Co., to which the Company was in nowise liable.

it would taint the contract to that extent, but not vitiate the entire contract. It

has been held, that if par t of a condition be illegal, the contract is so fa r bad ab

ini t io , but the [JTg] other parts are good. Pigott’s case (6 Co. Rep. 26), iMosdel v.

Middleton (1 Ventr. 237), Norton. v. Simmes (Hob. 12). Lastly, I subinit that if a

contract is made by one partner, and the terms on which it is made are contrary

to his engagement with the other partner, yet if he adopt it he is bound by such

contract. Sandilands v. iMarsh (2 Barn. and Ald. 673).

The Right Hon. T. Pemberton Leigh (Feb. 15, 1848).-This case comes before

us on appeal from a judgment of the Supreme Court of New South Wales, in an

action brought by the Appellants against the Respondent. The Appellants are a

corporation carrying on the business of bankers, at Sydney, under the title of

“ The Bank of Australasia.” The Respondent is Chairman of a joint-stock company,

carrying on the same business, a t the same place, under the title of “ The Bank of

Australia.”

The Company (a term which we use as designating the Respondent’s Bank) w3s

established, and the management of its concerns regulated by a Deed, which we shall

have occasion particularly t o examine. For the present, it is sufficient t o slaw,

that the general management was vested in a number of shareholders termed

“ Directors.”

In the beginning of the year 1843, the Company was in great difficulties,-a

large portion of its liabilities had arisen from transactions with the firm of Messrs.

Hughes and Hosking. In February, 1843, the Directors thought it necessary to

borrow a large sun1 of money, and they applied t o the other Banks at Sydney, among

the rest t o the Appellants, f o r assistance. Upon this occasion, they prepared a state-

ment of their [I801 affairs, dated the 21st February, and submitted i t t o the Appel-

lants. The effect of this statement is, that the Company would require, to meet their

circulation and deposits, 2113,648 ; f o r their acceptances on the account of Hughes

and Hosking, and J. T. Hughes, 280,185; for Hughes and Hosking’s own accept-

ances, for the due payment of a large portion of which the Company had granted

letters of guarantee, viz., 272,387, making a total of 2266,220. In reduction of this

sum, it was estimated there would be recovered from bills in the Bank 275,000 in six

months, and on Hughes and Hosking’s estate 270.000 in twelve rnonths--in all

2145,000. Besides providing for these liabilities, the Directors were desirous of

continuing to pay a dividend of 2 8 per cent. on their capital to the Fhareholders of

652

BANK O F AUSTRALASIA V. BREILLAT [1847] VI MOORE, 181

the Company. Upon this statement i t appears to have been considered that an

advance of 22010,000. or 2250,000 would be necessary, and as this was a larger sum

than the Appidlants were willing to supply, it was agreed that the superintendent

of the Appelllants’ Bank should apply to the Union Bank to join them in the

transaction.

With a view to this application, a memorandum of the terms on which the

proposed loan was t o be made was drawn out by the superintendent of the Appellants’

Bank, and read over to the Directors of the Company. This memorandum is dated

the 1st of March, and is in these terms :-“ Memorandum. 1. Bank of Australia,

t o carry on their own concerns and those of Hughes and Hosking, J. T. Hughes and J.

Hosking, which they will now incorporate with their own, will require assistance to

the extent of, say 3250,000, of which 2120,000 will be called for immediately, and

the remainder will be spread over the five or six ensuing [I811 months. 2. These

sums they propose to borrow on the security of their own acceptances, a t the rate of

210 per cent. per annum, and consent to the following conditions :-‘ 1. To cease to

be a Bank of i~ssue, deposit, and discount, (except for the reduction of bills now held

by themselves,) and their future payments to be made on cheques on, or the notes of,

the Banks which may enter into the proposed arrangement with them. 2. To furnish

a copy of their share list, and to permit no transfers without the consent of the said

Banks. 3. Hughes and Hosking, and the individual partners, to execute a deed of

trust to the Blank of Australia, assigning all their property, and restricting them-

selves from iiicurring further liabilities of any description. 4. Bank of Australia

to incur no further liabilities without consent of said Banks, but to wind up and get

in their capital as a loan company.’ 3. The assets of the Bank of Australia consist

of-coin, 24860 ; bills receivable, 2346,082 ; and from these bills and the estate

of Hughes and Hosking, they anticipate that they wi l l recover before the end of the

year S140,000. 4. All sums which may be recovered from these and other sources,

the Bank of Australia engages to pay over to the Banks affording assistance. in

reduction of their debt, less a sufficient amount to pay dividends not exceeding 3 8

per cent. per annum on their paid-up capital of 2220,000, for which they will pass

their cheques on the said Banks.” We take these facts from a letter of the Bppel-

lants, put in evidence by the Respondent, and to which they referred us as evidencing

the real nature of the transaction.

Now, it was contended by the AppellantN, tha t this memorandum could not be

looked at, inasmuch as it was a mere treaty which resulted in a certain agreement.

Tire quite agree it cannot be looked a t f o r the [I821 purpose of construing the agree-

ment; but i t may be looked at as part of the r e s gestce, for the purpose of judging the

circumstances under which, and the objects for which, the loan was required, and of

seeing whether there is any ground to believe that the real agreement of the p:arties

was purposely concealed or misrepresented in the written contract. We feel bound,

however, to sa,y, that neither in the documents so referred to, nor in any other part of

the evidence, do we discover any trace of misrepresentation or concealment of facts,

or any ground for suspicion, that either the Appellants or the Directors of the

Company acted otherwise than w i t h perfect good faith towards the shareholders.

The Directors may have exceeded their authority; they may have entered into

stipulations contrary to the deed under which they acted, but we see no iuason to

doubt that they did what they considered Lest for the Company.

The agreement that was finally made between the Appellants and Respondent’s

Bank is contained in two letters, dated the 27th February, 1843, and the 2nd March,

1843. The first of these letters is addressed by Mr. M‘KenLie, the Cashier of the Bank

of the Company, t o Mr. Hart, the Superintendent of the Appellants’ Bank, and is as

follows :-“ Sir, In reference to the communications which have taken place between

the Directors and Cashier of this institution and the Bank of Australasia, relative

to the intended alteration in the business of this Bank, and the assistance it mill

require f o r the purpose of meeting its immediate liabilities, I am directed by the

Board to communicate to you their resolution of calling a meeting of the Proprietors

for the 16th of March next, for the purpose of making the necessary arrangements

for terminatiiig the business of this Bank, and converting i t into a loan company,

[183] with a view to the security of its outstanding debts, and to enable the Bank in

the meantime to liquidate its engagements Tithout inconvenience to the public. I

653

VI KOOEE, 184 BAKK OF AUSTRALASIA ‘0. BREILLAT [1847]

am desired by the Directors to acknowledge and thank you f o r your tender ol assist-

ance, and to accept of the advance of the Bank of Australasia of a sum iiot exceeding

&150,000, in such sums as inay from time to time be required, on the security of the

acceptances of this Bank, at three nzonths’ date, at an interest of $10 per cent. per

annuin, and subject to the following conditions :-First, that, on or before the 31st of

March next, this Bank shall cease t o be a Rank of issue, and, in winding up its affairs,

all future payments shall be made through the Bank of Australasia. Secondly, that

no bills shall be discounted by the Bank after that date, except. such as may be re-

quired to renew bills now held by the Bank. Thirdly, that no transfer of shares or

stock shall be made without the consent of the Bank of Australasia. Fourthly, that

the liabilities incurred by this Bank for Messrs. Ilughes and Hosking, and for Mr.

a. T. Hughes, be covered by the execution by them of such trusts to the Bank of

Australia as may be necessary to place the control of the affairs of the firm and of

Mr. J. T. Hughes under this Bank to meet their existing obligations, and to prevent

them from contracting new ones, without the consent of this Bank, and that the whole

of their future business during the continuance of the trusts be transacted through

the Bank of Australasia. Fifthly, that the Bank of Australia shall not incur new

liabilities without the consent of the Bank of Australasia:” Then there is the answer

of the 2nd March, 1843, in these tetrms :-‘‘ Sir,-I beg to acknowledge the receipt

this morning of your letter of the 27th ult., communicating the resolution of your

Board to call a meeting of proprietors for the e1841 16th instant, for the purpose of

making arrangements to terminate the transaction of business by your establish-

ment 8s a Bank, and to convert it into a loan company, and intimating the intention

of your Directors to avail themselves of the assistance of the Bank of Australasia,

in liquidati~ig their current engage men^ to an extent not exceeding &150,000, in

such sums as nray from time to time be required, on the security of the aoceptances

of the Bank of Australia, a t three n1onths’ date, a t an interest of &lo per cent. per

annum, and subject to the conditions tberein detailed; and in reply I beg t,o state,

that this establishment is prepared to meet the requisitions of the Bank o f Australia

to the extent and on the conditions which you have specified.” The effect of these

letters we shall have presently to consider.

The $150,000 were advanced by the Appellants, on the footing of these letters;

and aecording to the orders of the Directors of the Company, in the months o f

March and April, 1843, bills or notes, payable a t three months, appear to have been

given for the amount. The Appellants were dissatisfied with the mode in which the

Company acted with respect to that part of the arrangement which related to the

affairs of Hughes and Hosking, and some correspondence took place between the

parties on the subject. Into the details of this correspondence it i s unnecessary to

enter, though some passages of the letters are niaterial, and will be afterwards

referred to. It may, however, be observed upon this corresp~nde~~ce, that while it

contains suggestions on the par t of the Company, that, by nieans of the arrangement,

the Appellants Had obtained a great advantage, by securing the payment of their

debts from Hughes and Hosking, we find no suggestion of any unfairness or even

harshness 011 the part of the [I851 Appellants, o r reference to the stoppage of the:

banking business of the Company. When the securities originally give1.n for the

advances made by the Appellants became due, they were renewed for another period

of three months.

In October, 1843, a change having taken place in the direction of the Company,

and a new Chairnian (Mr. Norton) having been appointed, it was thought necessary

to apply to the Ranks which had rendered the required assistance, and amongst the

rest to the Appellants, for the further advance of $10,000, and an additional in-

dulgence of twelve months for the payment of the advances already made. On the

9th of October, 1893. the cashier of the Company addressed the following letter to

Mr. E’aleoirer, a t that time the n i a~~age r of the ilppellaiih’ Bank:--“ Dear Sir,--

Referring to my conversation with you this day, I am instructed to lay before you

the following statement and proposition :-You are aware that the Board have,

agreeably ta the recommendation of a public meeting, adopted such arrangements

as are most likely to lead to a satisfactory result ia winding up the aEairs of the

Bank. The m~nagement have carefully gone over the assets and liabilities, and

taken the general position of the 8ank under review ; and they are convinced that

654

BANK O F AUSTRALASIA V. BREILLAT [I8471 VI MOORE, 186

it is a duty they owe to your institution as well as to their own Proprietors, to request

from other institutions such temporary assistance as will enable tliein to devote the

whole of their energies to the realisation of the varied and valuable assets under their

management, and, a t the same time, t o accumulate an accession of capital by means

of calls upon the Proprietors. The sun1 which they conceive will be necessary for this

purpose they trust will be considerably less than, or a t all events will not exceed,

[I861 $10,000, and for this amount they a re desirous of opening credit with your

institution and the Union Bank of Australia in equal portions. If this can be ob-

tained, it is intended to obtain the consent of the other Banks to hold over the

obligations in their hands for the period of one year, and the realisations in the

interim will be applied, in the first instance, to the repayment of the sunis to be

drawn from the accounts now to be opened. I have most seriously to urge your

favourable consideration of tha proposition. That there are assets belonging to this

institution of the most valuable description is indisputable, and i f time is allowed

for their realisation, the most favourable results may be anticipated ; but if its affairs

are to be thrown into that chaos which must result from inability to meet present

pressure, the consequence will be, not only to this institution and its creditors, klut

to the colony, and more especially to the monied interests of the colony, fearful to

contemplate.”

After some negociation, the Appellants consented to allow a further term of

twelve months for the payment of their debt.

On the 30th of October, 1843, the existing securitiea held by the Appellants were

cancelled, and in lieu of them it promissory note was given for 2,154,000, payable on

demand, signed by Mr. Norton, the Chairman, on behalf of the Company.

It is upon this note that the action, in this case, is brought.

It appears that in the interval between the commencement of these transactions

in February, 1843, and the month of October, 1844, the period a t which the last-

mentioned proinissory note was to be paid, several meetings were held of the share-

holders of the Company who thought fit to attend. We have no very distinct [I871

evidence of what took place a t some of these meetings, but in a letter from Mr.

M‘Arthur, the then Chairman of the Company, dated the 18th of May,,1843, which

was written on the subject of the complaint against the Company, as to Hughes and

Hosking’s affairs, we find the following passage :-“ Could these objects be effected,

this Board does not apprehend that a further advance to an amount worthy of much

consideration would be required ; but, after the investigations which have taken,

place a t two meetings of the Proprietors of this Bank, held in pursuance of the pledge

contained in our letter to you, of the 27th of February last, and the resolutions of

the Proprietors thereon, they feel they are too much fettered to undertake the execu-

tion of the trust. The interest of this Bank is, however, too deeply concerned in the

stability of Messrs. Hughes and Hosking not to ensure their earnest co-operation in

its managerrent and execution.” We think the necessary inference is, that a t these

meetings, the arrangements intended to be made with the Appellants were com-

municated to the shareholders, and no step to prevent their completion appears to

have been taken either by any single shareholder, either by any legal proceeding,

or by any notice or communication either to the Directors, or t o the Appellants.

We have evidence of what passed at two subsequent meetings, one in the month of

September, 1843, and the other in the month of January, 1844. In the accounts

submitred to the shareholders at the first of these meetings, a full statement appears

to have been made of the debts and assets of the Company, including among the

debts, the acceptances on account of the Appellants’ Bank for S153,357 16s. 6d.

At the latter of these meetings, a statement was laid [1$8] before the parties present,

of the arrangement with the Bank in the preceding October, and among the other

liabilities of the Company the promissory note for 2,154,000 in favour of the Appel-

lants is mentioned.

At each of rhose meetings the Directors proposed calls to meet the ecxisting

liabilities of the Company, which included the debt of the Appellants, and a t both,

the reports of the Directors were adopted.

A further meeting seems t o have been held in June, 1844, thofugh it does not

appear what was the result. But on the 6th of August, 1844, a resolution was

passed by the shareliolders repudiating the debt. This resolution was conimuni-

655

VI MOORE, 189 RANK OF AUSTRALASIA v. BREILLAT [I8471

cated to the Appellants, and was in these terms :-“ That the loan negotiated between

the Bank of Australasia, the former Directors of this Bank, and Mescrrs. Hughes and

Hosking, is not binding on the proprietary of this Bank; and that the Board of

Directors be hereby instructed to defend any action that the Bank of Australasia

may bring for the recovery of the same.”

Payment of the note was demanded in October, 1844, and was refused; and on

the 2Gtli of November, 1844, the present action was commenced. It came on for

t r ia l on the 27th of March, 1845 ; and the jury, being unable to agree, were discharged,

according to the provisions ol a Colonial Act. It was afterwards tried at bar, the

t r ia l beginning on the 23rd of June, and terminating on the 4th of August, when,

after much discussion, the verdict was found for the Plaintiffs, subject to the opinion

of the Court, whether upon the facts proved the Plaintiffs were entitled to recover,

and the whole to be without prejudice to either party’s right to appeal. Of the

three Judges present, one, the Chief Justice, was of opinion in favour of the Plain-

tiffs ; the two other [I891 Judges were of a different opinion, and 1;he verdict and

judgment were accordingly entered for the Defendant (the Respondent) with costs

of the action, which appear to have been recovered froin the Sppellants. From this

judgment the present appeal is brought.

We intimated, during the argument of the appeal, a strong opinion that the

effect of the arrangement made at the t r ia l was to leave the whole matter to the

consideration of the Judges, who were to draw what they considered the proper

inference froin the evidence, and apply the law to the facts so proved; that the whole

matter was, in like manner, open to this Court, on the appeal, and tha t we had

sufficient materials t o enable us to deal with it. To that opinion we still adhere.

The question, therefore, is, whether, applying the law to the evidence in the cause,

the Court below has, o r has not, come to a right conclusion.

The Appellants have a clear prima f a c i e case : the note is signed on behalf of the

Company, by an officer who had authority to sign bills and notes on their behalf,

and the amount of the promissory note was advanced to persons professing to borrow

and receive it for the benefit of the Company.

The defence is, that the persons borrowing had no authority to borrow money

on behalf of the Company, under any circumstances, but, a t all events, not under

the circumstances, and for the purposes appearing in this case, and that the lenders

had notice of such want of authority when they made their advances.

Much discussion took place a t the bar, and many cases were cited with reference

to the power of the Directors of Joint Stock Companies to bind the Com-[lgO]-pany,

by borrowing money o r other acts ; and as to the distinction alleged to exist between

the powers of such Directors and the authority of partners in ordinary trading

partnerships.

It does not appear to us t o be necessary, in this case, t o enter into any consider-

ation of the general doctrine, and we think it better to abstain from making any

observations upon it. Here the shareholders of the Company had executed a Deed

defining the purposes of the partnership, and the mode in which it was to be carried

on. The corporation had notice of this Deed; and, indeed, had ~l copy of it in their

possession a t the time of the transaction in question; and we must, therefore, look

to this Deed, in order to collect the extent of the authority intended l o be conferred

on the Directors, and we must construe i t with reference t o the nature of the business

which was t o be transacted, and the purposes which it contemplated, in order to

judge what powers and authorities the law would imply from the nature of the office

conferred on the Directors, and how far those powers and authorities are enlarged

or restricted by any of the provisions of this instrument.

The Deed is dated the 1st of May, 1833. It recites a previous Deed dated in 1826, by

which a Company had been established for a term of seven years, which it was now

intended to continue, with increased capital, f o r a term of 100 years, “ as well f o r

the purpose of discount and issuing notes and bills, and lending monies on securities,

and cash accounts, fo r the receiving monies on deposit accounts, f o r tlie safe custody

of monies, and securities for monies, for the general public acconmodation and

benefit, as also for [191] transacting and negotiating all such other matters and

things as are usually done and performed, relating to or connected with the ordinary

business of banking.”

656

BANK O F AUSTRALASIA 21. BREILLAT [I8471 VI MOORE, 192

It is impossible to use language more general than this; the new or continuing

Company was to carry on tlie same business, and the Deed proceeds to declare the

rules by which the Company is, in future, t o be governed. The capital is to consist

of 2000 shares, a number which seems t o have been afterwards increased, of 2100

each, and 2 2 0 are to be paid on each share a t the time of signing the deed, and no

further call is t o be made unless the same should be deemed requisite by a majority

of the members present a t a general meeting of the Proprietors, to be convened for that

purpose under the provisions hereinafter contained. Provisions are then made as

to calls, which are not to exceed 5 per cent. a t any one time upon each share, nor to

be payable a t less distant periods than one month, at the least, from the time a t

which every such call shall have been notified in onel or more of the public news-

papers. Power is given to the majority of the Proprietors to increase the capital

either by the issue of new shares, or in such other manner as the Proprietors may

deem most expedient; and no Proprietor is t o hold above 100 shares, unless under

certain particular circumstances.

The effect of these provisions is, that the paid-up capital a t the commencement

of the partnership, supposing all the shares were taken, and all the nionies paid,

would be ;E40,000 ; that no further sum could be called in, except by the consent of

the majority of the menibers present a t a general meeting, t o be convened fo r the

purpose: that several weeks must elapse before any rnoiiey could be raised by any

calls, E1921 after a necessity for it should arise ; tha t the shareholders must consist

of a great number of persons mho might be mattered over different parts of the

world ; that great difficulty, therefore, would probably exist in enforcing payment

of calls, and that 210,000 would be the utmost sum that could be raised a t one time

by these means, supposing every shareholder to pay his quota.

Then follows the important clauses appointing and conferring powers on the

Directors. The 38th clause is as follows : “ That for the better management of the

concerns of the said Company, under and in conformity to the provisions herein-

before contained, o r t o be hereinafter provided for, and f o r securing the observance

thereof, the same shall be confided to the care, superintendence, and management

of eleven members, t o be so qualified, elected, and appointed, and with such authority

and powers as are hereinafter declared, which said members shall be and act as

Directors of the concerns of the said Company.” The 51st clause declares, “ that

such Board of Directors shall have, and they are hereby expressly invested with,

full power and authority to superintend, order, conduct, regulate and manage all

and siiigular tlie affairs and business of the said Company, to the best of their dis-

cretion and judgment, under and subject to the provisions hereinafter contained.”

The 53rd clause delclares, “ that such Board of Directors shall, or lawfully may, from

time to time, dlavise and make such provisions, rules, orders, and regulations, touch-

ing the government, carrying on, and management of the affairs of the said Com-

pany, the same not being repugnant to the general rules and regulations herein

contained, as they shall think expedient.”

[193] It would be difficult to devise a form of words conveying more extensive

powers of management, and a larger discretion in the Directors in the conduct

of any business, than is found in these clauses; the only restriction is, they are to

be subject to the provisions after contained. The effect, we think, is, to confer on

these Directors all the powers of managing partners in ordinary partnerships of

a similar charaxter, unless there is something ip the subsequent clauses of the Deed

restricting those powers.

First, then, is the power of borrowing money for the purposes of the partner-

ship, one of the powers which belong t o a partner in ordinary Banks? and, Secondly,

if so, is there any restriction expressed, or to be inferred, from the Deed?

The general power of partners in ordinary trading partnerships, and the

restrictions upon such powers, appear to us to be stated with great accuracy by

Mr. Justice Story, in his Treatises on Partnership, and on Agency, and we willingly

adopt his language. In the latter of these, works, chap. vi. sections 124 and 125,

the law is thus stated: S. 124. “Every partner is, in contemplation of law, the

general and accredited agent of the partnership ; or, as i t is sometimes expressed,

each partner id praepositus neyotiis soc ie ta t i s ; and may, consequently, bind all

the other partners by his acts, in all matters which are within the scope and objects

657

VI MOORE, is4

of the partnership. Hence, if the partnership be of a general commercial nature,

he may pledge or sell the partnership property; he may buy goods on account of

the partnership ; he may borrow money, contract debts, and pay debts on account

of the partnership ; he may draw, make, sign, indorse, accept, transfer, negotiate,

and procure to be discounted, promissory notes, bills [I941 of exchange, checks,

and other negotiable paper, in the name and on account of the partnership.” S.

125. ‘‘ The restrictions of this implied authority of partners to bind the partner-

ship are apparent from what has been already stated. Each partner is an agent

only in and for the business of the firm; and, therefore, his acts beyond that business

will not bind the firm. Neither will his acts done in violation of his duty to the

firm, bind it, when the other party to the transaction is cognizant of, or co-operates

in such breach of duty.”

That, in ordinary trading partnerships, the power of borrowing money for

partnership purposes exists, and that bills or notes given by one of the partners in

the partnership firm, for money so borrowed, will bind the firm, is too clear to

require any authority. It is treated as clear law from the case of Lane v. Williams

(2 Vern. 277) to that of Thicknesse v. Byornilow (2 Cromp. and Jer. 425).

Then, is the nature of a Banker’s business such as to exclude the power, from

want of occasion for its exercise? The nature of a Banker’s

business, especially if the Bank be one both of issue and deposit, necessarily exposes

him to sudden and immediate demands, which may be to the extent of a large pro-

portion of his debts, while his profits are to be made in employing his own monies

and those entrusted to him in discounting bills, in loans, and other modes of invest-

ment. It is impossible that he should always have his assets in such a state as to

be applicable immediately to the payment of all demands which may be made upon

him; and if a partner has no power, under such circumstances, to borrow money

€or the partnership, either the assent of each individual member must be obtained,

which [I951 may often be impracticable, or the concern must be ruined.

We have no doubt at all, therefore, that, in ordinary banking partnerships, such

power exists, and that the Directors, by the terms of their appointment, had all the

general powers, and among the rest, the power of borrowing, unless such power

is excluded by other provisions of the Deed. Is. there, then, anything in this Deed

which excludes i t ? We find nothing having such a tendency, but much to a

contrary effect. The Directors have the power of contracting debts and binding the

Company to any amount, by issuing notes, receiving deposits, drawing, accepting,

and endorsing bills; and they might, therefore, in these modes, subject the Company

to liabilities to any extent.

On the other hand, if, according to the Respondents’ argument, no monies could

be borrowed to meet those liabilities, the nioney must be raised by calls ; and yet

if they are to be raised by calls, i t is obvious, from the provisions before referred

to, that the Company might be ruined long before sufficient funds could be raised,

although it might have assets not immediately capable of being realised or con-

Terted, to a much larger amount than all its liabilities.

The 54th clause provides, “ tha t such Board of Directors shall have, amongst

other things, the entire management and control of the lending of monies on bills,

notes, bonds, mortgages, and other securities.” The 55th declares, ‘ I that such

Board of Directors shall, from time t o time, settle and determine, in whose name or

names, all securities that shall be entered into, by or on behalf of the Company, or

by or on behalf of any person o r persons transacting or negotiating any matter or

E1961 business whatever therewith, shall be taken and given.”

Now, this applies t o transactions in which the Company either receive or give

securities; the securities which they are to receive clearly extend to monies lent

by them; and the securities which they are to giue, may, we think, with equal

reason, be held t o extend to monies borrowed by them. Upon this part of the case,

we can entertain no doubt. The real question is, whether thetre is anything in the

circumstances under which the loan was made, which shows tha t i t was not borrowed

f o r partnership purposes, or was borrowed by the Directors in violation of their duty

t o the shareholders. It is contended by the Respondent, tha t this loan was made on

the condition of the Bank terminating its business, and for the purpose of enabling

the Directors to terminate and convert the Company into a partnership f o r a

658

BANK O F AUSTRALASIA V. BREILLAT [I8471

Quite the contrary.

BANK OF AUSTRALASIA 9. BREILLAT t184'l-J VI NOORE, 197

diEerent purpose ; that the Directors had n o authority to terminate the concern,

or to form such Company; that the money mas advanced to pay debts of Hughes

and Eosking, to which the ~ o m p a ~ i y were not liable, and that there were coi~di t~ons

attached to the loan, tB which the Directors had no authority to assent, viz., restraint

of the transfer of shares contrary to the terms of the deed, and the assL~r~~ption of

the affairs of Rughes and Eosking. It ia said that tlie ~ p p e l ~ a n t s imposed these

conditions, and are affected with notice of these purposes, and are, therefore, not

entitled (~r~iatever may have been their rights against i n d ~ ~ r i d u ~ s ) to recover f ropll

the Company the aniount of the monies which they have advanced. It is perfeatly

t rue, that if a person lends money to a partner, for purposes for which he has no

authority to borrow it on behalf of the partnership, [197] the lendelr having notice

of that want of authority, cannot sue tlie firm; and this is, in truth, the whole effect

of a decision, ~iiuch d i e d upon a t the bar, of Fisher v. T a y b r (2 Hare, 2B> . On

tbe other hand, if money be lent, to a partner for purposes for which be has au thor i~y

to borrow, it is a. very different question, whether it is a bar to the recovery of the

money xvhich has been applied to the use of the partnership, that the borrower has

entered into additioiial engage men^ on behalf of his partners, beyond his author~ty,

arid by which, therefore, they are not bound.

The q u ~ t i o ~ i here> then, is, what i s the rea1 nature of the transaction which has

taken place? It may be admitted that the Directors, without, or even mitli, the

consent of the majority of the shareholders, had no authority to convert the Banking

Company into a Company f m totally different purposes, and that money borrowed

for the purpose of such conversion, with notice on the par t of the Ieiider, would

not form a debt of the Company. It may be further admitted, that no restraint on

the transfer of shares in the Company could be lawfully irnposed by the Directors

~ v ~ t h o u t th0 assent of the majority of the shareholde~s. But it by no mems follows,

that the Directors had 1x0 authority at their discretion to discontinue the business

of the Bank, or to restrict it to certain portions of the business originally call

templated, if they thought such conduct essontial to the interests of the share~o~ders .

Such a power seems necessarily implied iu the exclusive power of m a i i a ~ e ~ i ~ n t , i

the power of d e t e r ~ ~ ~ i n i n g what transactions should be entered into, what notes

issued, what deposits received, what bills discounted, or loans made. A contrary

coastruetion wouId be attended with the most serious [EX37 eonseque~ices. It is said

that the business could only be d~scont~uued by the vote of the majority of the Pro-

prietors under the 73rd clause; so that, unless a majority of the Proprietors could

be brought together in person, or by their attornies, the business v a s to continue

for 100 years, and never could be concluded but by bankruptcy or insolvency. But

e ~ e n if the majority should be got together, it is only a t intervals of ten years that

the power of dissolution exists ; so that, except a t tlie decennial periods, the business

could not be d i s ~ o ~ t i n u e d so long as one individual s~~areholder refused h i s assent,

or was incapable: of consenting, or could not be found. The business must go on

till each individual shareholder might be ruined. For it is to be observed, that it

by no means fdliows, that the creditors would have recourse to a C o ~ ~ i s s i o ~ of

~ a n k r u p t c y ; they haxe a right to recover their debts from eaeh individual share-

holder.

We think, therefore, thaL the d i s c o I ~ t ~ n ~ a . ~ ~ c ~ of the business of the Bank, i f the

Directors thought it necessary or expedient, was within their authority ; and that

they had a u t ~ o r i t y to borrow money for the p-lirpose of d ~ s c h a r ~ ~ n g the existing

eiigageuieiits, and prolongiug the business till the assets could be realized, and the

concern wound up with the least injury to the Company.

If they had this authority, it i s quite unnecessary to consider whether they

exercised it discreetly or otherwise, whether the loan which they contracted was on

haid terms or otherwise.

The Appellants had a right to anxiex such terms as they thought proper to

their advance. If any of thom tebrms were tcEi% l i ir.es of the Directors, they could not

be enforced, and so far the lenders might lose the a d - ~ l ~ ~ ~ ~ v a r ~ t a g e for which they

had s t ~ p u l a t e ~ . The C o ~ . ~ o r a t ~ o n stood in no relation of trust or conficlence to

the shareholders of the Corngany. It had a right to niake the best bargain which it

could ; and the only question is, was the purpose for which the money was lent, a

legitimate purpose of the p a r t n e r s h ~ ~ ? I t appears to us, that the purposes for

659

V I MOOEE, 200 BANK OF AUSTRALASIA 21. BREILLAT [1847]

which the monoy vras borrowed, was not to increase the p e r ~ n a n e ~ ~ t capital of the

Compaxiy, not to enable the Directors to engaFe it in new concerxls beyond the pro-

visions of the Deed, and contract new liabilities, but to enable i t to discharge

liabilities already contracted, and to afford it time for the realiaatiori of its assets.

111 a letter of the AppeIlants, of the 15th of May, 1843, to the ~ e ~ p o n d e n t s ’ Bank,

put in evidence by the Defendant, the transaction is stated to have comxnenced in

represelntation by the Directors of the Company, of the evils which would result

to the camrnunity generally, and to an institution having so large a stake in its

prosperity, as the Bank of Australasia in particular, from a suspensio11 of the pay-

mezit, either by the Bank of Australia,” or by the firin of Hughes and Hosking. In

the statement on the 2Kst of February, already referred to, the advaxlce is stated

as asked to the extent of 2113,648, in order to meet the circulation and deposits of

the Bank of Australia; for its acceptances on behalf of Messrs. Isughes and Hoskixlg,

&80,145; for acceptances of Wuglies mid Hosking, for a great par t of which the

Bank had given guarantee, $72,38?,-in all ~ ~ 2 6 6 , 0 0 0 . The letter of the %7th

February, 1843, refers to the communications which had taken place between the

Dirmtors and Cashier of the institution and the Bank of Australasia, ‘‘ relative to

the intended alteration in the business of the Bank, and the assistance it Till

@OQ] r q u i r s for the purpose of meeting its ~ ~ e d ~ a t e ~ i a b i ~ i ~ ~ e ~ ~ ~ The answer

of the 2nd of March, speaks of this letter as “intimating the intention of your

Directors to avail themselves of the assistance of the Bank of Australinsia in liquidat-

ing their current engagements to an extent not exceeding S150,OOO.” These letters

show, very distinctly, for what purpose this rnoizey was borrowed, and they are con-

firmed by all the other documents in the case.

E t appears that this advaiice was not sufficient for the purpose, and it i s stated

in Mr. Macarthur’s letter of the 18th of Nay, 1843, that a committee OP the Directors

waited on Mr. Falconer, and “ explained to him the state of their affairs, and also

the d i ~ c u l t y this Bank laboured under in obtaining sufficient funds to meet its

deposits and notes in circulation, and re~uest ing a further advance.” This view of

the case i s strongly confirmed by the statement submitted to the shareholders in,

September., 1843, and January, 1844, and it is not opposed by any evidence whateser.

But then it is said, that if the money was advanced to discharge existing

liabjli~ies, a par t of those liabil~ties consisted cd obligations contracted for IXughes

and Basking, a par t of which the Coruipany was not liable to pay, and other part of

which consisted of debts to the Appellants, who by means of this transaction ob-

tained payment of demands which otherwise would have remained unsatisfied.

The Judges of the Court below appear t o have been unanimous, in the opinion,

that there was not.hing whatever in these objections ; that there was 110 proof of any

unfair dealing by the Appellants, or of improper adrances being obtained by them

in respect of the debts of Hughes and Eosking; ,and we are entirely of the same

opinion. E t is said, that a par t of the debts of [ Z O l j Hughes and Hosking were

guaranteed by the Directors on behalf of the Company, and that the Directors had

no power to give such gaaraatees; wlietlter they had or not, might depend on the

eircunzstances under which. they were given ; but it would be extravagant to hold,

that the Appellants, Iending their money to enable tho Company to meet its engage-

ments, were bound by this circumstance to pee to the nature of those engagements.

Then, i f the money was borrowed Form fide by the Directors, for the purposes of

the partnership and within the limits of their authority, and was advanced bonn fide

by the AppeIlants for those purposes, and applied to the legitimate purposes of the

yartnerahip, all of which facts, for the reasons already alleged, we consider as

proved; can the liability to repay the money be discharged, because to the engage-

ment to repay, are adjected other engagements by the Directors, some of which we

will assume to have been ultra virres? From Pigot’s case ( 6 Coke’s Rep. 26,) to the

latest authorities, it has always been held that, when there are coiitained in the same

instiwment distinct engagements by which a party binds himself to do certain acts,

some of which are legal, and some illegal, at, common-law, the performance of those

which are legal may be enforced, though the perfurmance of those whicb are illegal

cannot. Irere, in our opinion, the Directors had power t o borrow the money for tho

Company, and of course paver to bind the Company for the engagement. They

did so bind tlltrr*2, and they engaged thak the Company should do, in addition, certain

660

BANK O F A ~ ~ ~ ' R A L A S ~ A V. 3 R ~ ~ L ~ A T [I 847) VI ~ O O ~ ~ , 202

otlrler acts, and which we assume that, without their consent, the Company could not

be conipe~led to (10. Can the s~ lare~io~ders

say, because we crinriot be compelled to [$2023 perform those engagements to which the

flirectors had no authority to bind us, therefore, we will not perform those engage-

n~euts t o which they had a~ithority to bind us2 The ~ o n i p a n y cannot have all the

bellofit for which they agreed to advance the 3150,000, therefore they dial1 not

even have their money? We think not: the only consequence would be, that those

st,ipulat,ions which ave ultra w r e s of the Directors could not be enforced ; and i f the

object of the present action m r e to enforce then?, or to recover damages for a

breach of them, it would be necessary to examine them more pa r t~cu~ar ly than the

view which me take of the rase requires.

Upon the whole, therefore, we are of opinion, without reference to the questions

of acq~~~esceI~ce by the C o ~ p a n ~ , that the ~ ~ a i ~ i t i f f s n tbe action, the preserkt Appel-

lants, are entitled to recover, and that the verdict ought to be entered in their

faxrour. If we had come to a different conclusion, on this part of the case, as did

tlie ~najority of the Court below, we should have found it necessary to examine very

closely tlie eiridence in the cause with respect to G o ~ ~ ~ u n i c a t i o n s made to the sbare-

hoIders, both during the transaction aiid after its completion, and to consider very

carefully what might be the effect of tho conduct of the sharelio~ders, of what they

did and what they omitted to do, having regard to all the provisions of this Dead

and the rules of law which may be applicable to Companies of this description.

Vhile we cannot express too strongly our sense of the care, industry, and the Icarn-

ing which the Judges of the Court below have applied to the case generally, we think

it right to say, that they appear to have passed over this part of tbc case 1110ae

lightly tfnaiz its iniportance perhaps deserved.

@03] Our report to Ber Xajesty will be, that the verdid of the Court below

ought to be reversed, and that the j u d ~ i e ~ ~ t ougfiit to be entered in the Cotlrt below

fo r the PlaintiEs. The Appellants mi11 of course have the costs of the action below,

and there will be no costs given of the appeal here.

The ni~nute of the report of their L o ~ d ~ l i i p s having been drawn up, it WLS pro-

posed to '' reverse the Judgment of the Coourt below, and order that Judgineiii t o be

entered up, as of the date o f the original Judgment, for the amount found due by

the verdict and costs, and that the amount of ~ L ~ b s ~ ~ ~ u e n t interes , a t the sanie rate

a t which it i s calculated by the verdict, be paid by the Respondent to the Bpgellants."

The Respondent objected t o the proposed order, as t o the allowance of interest, and

their Lordships directed (15th April 1848 ") the case t o be argued upon that poinh,

by one counsel on each side.

Mr. M, D. frfilf, Q.C., for the ~espondent . -~he~e is no ~ i ~ ~ i ~ t i ( ~ ~ of su~sequent

interest being allowed, in the judgment of your Lordships. The proposed Order

involves two grounds for consideration. First, I conteiid that this Court has no

pomer to give interest, as proposed: and, Secondl~, if it has a discret io~ to allow

interest, accordiiig $0 the course and practice of the Court., it ought aot to be exer-

cised. I n the first place, this Coin%, as a Court of appeal, has no greater original

power than the Supreme Couft at Sydiiey had, E2041 and that Court could not order

the Judgment to bear interest. By the 1st and 2nd Vict., c. 110, j u d ~ e n t - d ~ b t s in

England carry interest; but that Statute has not been extended to o r adopted ixi

New South Wales, aad, therefore, cannot operate, as it forms no part of tlio law

of the Colony. There a re three Ixzkperial Statutes, by which the power of making

laws, in New South Wales, are regulated. First, by the 4th Geo. IV., c. 96, a Legis-

lative Council i s established, with power of makirig laws for the governnlent of the

Colony; secondly, by the Statute, 9 Geo. ZV., c. 83, all the laws of England, which

were tlron applica~le, are imported into the C O ~ O K L ~ ; and thirdly, the 5tI i and 6th

Vict., e. 76, shows what subseqrieut Acis of the Imperial Parliament are to be

adopted by the Legislature of New South Vl'ales.-[Lord CampbeU.-The proposed

Order r e s p ~ t i n ~ interest is not founded upon the notion, that the 1st alld 2xld Tict.,

e. 110, has been introduced into the Colony. Is it not founded upon tliat Statute

at all? The question is, whether this Court, as a Court of appellate jurisdiction,

has not power, under what may be called its co~~i~iion-law juris~?ict~on, t o grant

* Present : Lord Brougham, Lord Campbell, Lord Langdale, the Right HOD.

Dr. Lushingbn, and the Right Nan. T. Pemberton Leigh.

!&e e n g a ~ e n i e ~ ~ t s are entirely distinct.

_I-

661

Vi XOORE, 206 BANK OF AUSTRALASIA 2). BREILLAT E18471

~nterest in the form made by this Order.]-The s ~ ~ b ~ i s s i o n upon which the appea1

comes before the P r iq Council does not extend .to an$hing beyond an a ~ r ~ a n c e

or reversal. If this Court was to give interest, it would not be sittiting as a Court

of appeal, but it mould be exercising original jurisdiction.-[B’r. Pemberton Leigh.

-We have had a note from Nr. Currey, the clerk of the Eouse of Lords, and he

gives US a statement of several precedents before the Statrrte, 1st and 2nd Vict., C.

110. The House of Lords used to get at justice by giving the interest, and adding

it t o the costs. These were upon Writs of Error.J----No case can be found in [205]

which interest has been given by any C o ~ r t in England, except under the peculiar

powers conferred by Statutes. It mil l he found, Prom the Statute, 3 Hen. VIP., c.

10, down to the 3 and 4 Will., c. 42, that interest is confined to eases in which the

judgment i s aftirmed, and for the Plaintiff, and that is allowed for the delay whick

the Writ of Error interposes, by preventing the Plaintiff from obtainirzg the fruits

of the Judgnient. Lord ~ ~ a ~ s ~ e I d ) in bo^^^^ v.

~ e Z Z a ~ ~ (2 Burr. l095), ill~istrates the practice of the various Courts, with allow-

ance of costs.-[Mr. P ~ ~ i b e r t o n Leigh.-- -Our decision will depend very much upon

this, whether this case is to Be c o n s ~ d c ~ ~ d in the strict sense of a Writ of Error, or

whether it is not an Appeal. This Court, by the Charter of Justice, of the 13th o f

October, 1SC3, i s to make such order ~ ~ h i c h , a t the time of t he judgment, ought to

have been pronounced.]-StrictI-n speaking, tliere are no Writs of Error in this

Court, they are appeals.-[Lord CLinipbell.-Suppose a bill filed in the Court of

Chancery against a trustee, to make him pay a sum of trust-money, and the Court

dismiss the bill, and there is an apped to the Rouse of Lords, mho rewxse the judg-

ment of the Lord C~aneel~or , and say that the money ought to be decreed to be paid,

.cvou’fd not the House of Lords order interest to be paid, down to the time of the

reversal?]--This is a common-law case, and the principles whieh regulate Courts of

Equity do not apply. Ac-

cordingly, if interest is a necessary incideilt, the parties ouglit to 13% left to proceed

in the Court in the Colony, and [206] justice in the matter ~ o u l d be equally attain-

able by thtit course, and it. is the regular one. This is the practice which has ~ ~ t ~ ~ e r t o

been acted upon. ~ ~ ~ r ~ ? ~ ~ ~ v. 34odee ~ e s t ~ ~ ~ e e ~ f t ~ ~ ~ e ~ ~ e ~ (3 Moore’s Ind. Cases,

Baring Y. Ghr&st.ke (5 East a&)..

The present case is in the nature of a ’17tTrit of Error.

220).

Mr. Bethell, Q.C., for the ~ p p e ~ l a ~ ~ t s , contra.

The Rigfit Eon. T. Pemberton Zeigh.---We do not think this case can be ~ ~ o ~ p a ~ e ~

to 8. Writ of Ervor ; we think it must be considered as an appeal, and that the p o ~ e r

of giving interest 4s within the commoii-law jurisdiction of the Court, the Order,

&erefore, as t o interest, niust stand.

The r;iport of their Lordships was, by an Order in Council, bearing date the

15th of April, 1848, confirmed.

“ Eer Majesty having taken the said report into consideration, was pleased, by

and with the advice of Ear Privy Council, to ~ p p r o v e thereof, and to order, and

it i s hereby ordered, that the said ~ ~ ~ d g m e ~ t of the said Supreme Court of Sydney

be, and the same is, hereby reversed ; and that the J u d ~ ~ e n t be entered up, as of

the date of the original Judgme~t , for the a ~ ~ i o u n t found due by the verdict and

costs ; and that the amounr: of subsequent interest, at the same rate a t which it ir

cdculated by the verdict, be paid by the Respondent to the Appellants, together

with the costs paid by the Appellants to tlie ~ ~ p ~ ) i i d e n t , i the Court below ; and

that this Order be duIy obeyed, c o n ~ p ~ ~ ~ d with, and carried into execution, by the

Judges of the said Supreme Court of Sydney.”

[Mews’ Dig. tit. BANEER, 11. 2. DIRECTOXS, a. Powers; tit. COLONY, 111, APPBALB

TO PRIVY COUWCIL, 6. ~ r ~ ~ c t ~ ~ e , o. Other ~ ? z a ~ ~ ~ r ~ ; tit. C O ~ P A ~ Y , V. DEBEN-

TURW AND ~ o ~ T ~ ~ ~ E ~ , 1. ~ ~ r ~ o ~ ~ ~ ~ ~ ~ J’ooujer~ of ~ o ~ ~ ~ ~ ~ 7 ~ , a, GerzergQi; lit.

C O ~ ~ ~ A C ~ , C, 6. ILLEGAL CONTRACTS, a. Geizercrl Rules; tit. S ~ E C I ~ ~ C PER-

~ O ~ ~ A ~ C E , IE. DEFENCES, R. 2. J ~ ~ e ~ ~ ~ ~ ~ ~ . S.C. sah mm,. Bcznk of A u s $ &

or\.& 77. Bun& of’ Austrizlia, 12 Jur. 189. 011 point (i.1 as to appeals (6 Moo. P.C.

169), see note t o F17n8 Y. ~ ~ u ~ ~ ~ r , i846-47, 5 Moo. P.C. at p. 201: (ii,) as to

implied power of borrowing (6 Uoo. P.C, 195), see Macbae v. ~ ~ l l ~ ~ ~ e r ~ u n ~ ~ , 1858,

3 E. and B. 1; ~ ~ ~ ~ o ~ ~ ~ ~ ~ s Case, 1854, 18 Jpr. 885; ~~~[~~ Rf.ztisfc Bank 17%

This Order was as follows :-

662

CARD’S PATENT (I4%- RX) [ 1 8 4 81

Tuspuand, 1865-56, 5 E. and B. 248 ; 6 ib. 327; General B?hc.tiun Estate t m t i

Monetory Ca. 27. Smith (18911, 3 Ch. 432.1

12071 IN P,E CARD’S PATEKT* [Feb. 9, 18481.

To entitle a, Patentee to a conf i r~~at ion of Letters Patent, under the Statut *,

5 and 6 Will. IV., c. 83, s. 2, the F a ~ n t e e inust show, that he believed ~ ~ i ~ i s e l ~

the first and original inventor.

Upon an application for a confirmation of Letters Patent, it was proved that tbi.

patent article was not publicly and generally known prior t o the ]letters

Patent; but that some persons had syst~mat~cally used an article, identiea~

with the patent article, for several years prior to the grant of the Letters

Patent, and that the subject of the patent was little more than an appIication

of a well-known article in trade ; in such circumstances, held by the Judicial

Co~~mit tee , that it was not a case in which the Statute was intended to apply,

and their Lordships refused to recommend the confirmation of thc Letters

Patent.

This was a Petition, under the Statute, 6 and G Will. IT., c. 83, s. 2, presented

by Nathaniel Card, for confirmation of Letters Patent granted to him on the

8th of September, 1841, for certain i i~iprovei~ents in the rnanufacture of wicks for.

candles, lamps, and other similar purposes, and in the apparatus connected there-

with.

The Petitiori stated, that at the time of the application for the Letters Patent

and enrolment of the specification, the Petitioner believed himself to be the first

and original inventor of the invention, and of @08] every part thereof, and that

the same was a new invention within this realm, That he afterwards disclainled in

the title of the specification, the words (‘ Lamps, and other similar purposes.” That

the invention of improvements in the ~anufaetLIre of wicks for candles, and in the

apparatus connected therewith, was an invention of great public utility, arid eom-

prised the use of threads doubled and twisted in a particular manner, instead of

being twisted together as single threads in a mass ; and of a certain apparatus for

the manufacturta of the improved wicks into suitable lengths. That tlie article used

as candlewicks previous to the patent, was single threads of yarn. That the candlo-

wicks manufactured according to the iniprove~ents described in the specification,

possessed many advantages over those maiiufactL~~~ed from single threads, whiclr

were particu~arly described ; and that tlie improved candlewick was now generally

employed by the trade. That since t2he granting of the Letters Patent, the Peti-

tioner had discovered, that a certain description of yarn, lrnoron by the name of

double hosiery yam, had been used occasio~al~y, and to a limited extent, loefore

the date of his Letters Patent. That such double hosiery yarn had not been publicly

and generally used for such purposes before the date of the Letters Patont ; but oil

the contmry, that the use and advantage of the yarn double twisted, as described,

were unknown to the ~nanufacturers of candle and candlewicks. That such double

hosiery yarn o f the description and tho manner in which the same was used before

the date of the Letters Patent, resembled the use of yarn doubled and twisted, as

described by the Petitioners, in no respect, except that the yarn was doubled, and

the nianufacturers who alkged such [e091 prior use of the double hosiery yarn, 8 s

invalidating the Letters Patent of the k’etiiioner, did not then use double hosiery

yarn of the descr~ption. and in the ~ a r ~ i i e r p eviously used, but had adopted

the invention of the Petitioner, and refused nevertheless to pay the Petitioner any

royalty, OT patent right, in respect of their adoption of his invention. TIiat the

Petitioner had instituted proceedings a t law, agains2, Messrs. Waller, for an in-

f~ingement of the Letters Batent, and thatc such proceediiigs were c o ~ ~ p r o ~ n ~ s e d by

Erlessrs. Wa’ller paying the Petitioner a sum of money and costs, and talring a

-_

* Present : Lord Langdale, Lord Campbell, the ’t2ight Mon. Dr. Lushington, and

the Right Exon. T. Peniberton Leigh.

663