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Upon the second question, between whom must the contract be taken to have been entered into, I take it to have been entirely a contract between the plt. and the company. Whether the directors had or had not power to make the contract, the contract, as I understand it, was meant and was intended to be, and was in fact, a contract between the plt. and the company, the company acting, or intending to act, through the directors in entering into that contract, because the advance is an advance which is clearly to be made to the company, and the repay

Malins, Q. C. and Karslake contending that the plt. had the option as to the mode of repayment, and he had elected in time to take shares. If the company had disposed of all the shares, so as to deprive him of his right, he was entitled to damages as to which this court ought, under Sir Hugh Cairns' Act, now to direct an inquiry.

assets of the company, and by the company. It between the plt. and the other directors of the comcannot, therefore, be considered as a case of contract pany, nor is it a case of contract between all the directors of the company, including the plt., and the plt. in his individual character. It is simply a case, and was intended to be a case, of contract between the plt. and the company. The directors were in truth to advance the money. There were five or six of them who concurred in advancing the money, and the company was to give the directors the right of electing to take shares.

Then the question arises, which is, in my opinion, the only important question in this case, whether the remedy upon that contract is in equity or not? Now, I take it to be quite clear that this court can only deal with a contract by way of specific performance, and that question, therefore, resolves itself into this, whether, under the circumstances of this case, there can be a specific performance of the tract, it would be necessary that the directors of the contract? Now, specifically to perform the con

referred to

Durell v. Pritchard, 13 L. T. Rep. N. S. 545; Davenport v. Rylands, 14 L. T. Rep. N. S. 53; Howe v. Hunt, 31 Beav. 420; 7 L. T Rep. N. S. 124. Karslake having replied,

Lord Justice TURNER said (after stating the resolution, the nature of the plt.'s contention, and the prayer of his bill):-Questions have been raised whether the resolution of the 15th June was or was not binding on the company. It has been also argued what has been the effect of the conduct of the plt. with reference to the resolution, whether he has or not bound himself to abide by the terms of the resolution, and other points have been raised, many of which seem to me to be entirely immaterial to the real question which we have in this case to consider. The questions in this case which are material to be considered seem to me to be these: What was the contract created by that resolution? Between whom was that contract entered into? And whether the remedy upon that contract is, under the circumstances of the case, properly to be asserted or claimed in this court?

Now, upon the first of these points, what was the contract between these parties, I will take the view of that contract most favourable to the plt.'s case, and I will assume that he had a right of election to be paid the moneys which he advanced, either in money or in shares, and was entitled to say, "I am not bound to take payment of the money which I have advanced and the interest upon it at 6 per cent. in money, but I am entitled to have shares in the company allotted to me to the amount in value of the money." I will assume that the company had no right to pay him the money without giving him that election. I say no more on that point than that I assume it in favour of the plt.

they were entitled to do, should allot shares to the plt. according to the claim which has been made by him, and which I have assumed to be a just and proper claim. Could or could not this have been done at the time of the filing of this bill? For reasons which I shall presently advert to, the question how the matter stood at the filing of the bill is that which is material to be considered. Now at that time, according to the evidence before us, all the shares in this company had been allotted, and it was impossible that the claim of the plt. to have shares allotted to him according to the title which he had set up could have effect given to it by this court. Not only was this so, but it is clear that before the filing of this bill the plt. had been told that it was so, for it appears that on the 19th Dec. 1864 the secretary of the company, by the direction of the company, wrote to the plt. informing him that all the shares in the company had been allotted, and by the plt.'s own affidavit it appears that he received that letter (I think the expression in his affidavit is) "on or about the 19th Dec. 1864," and this bill was not filed until the 21st Dec. 1864, two days after that allotment was made. But when the answer came in to this bill it appeared that in truth, according to the allegation of the defts., all the shares in the company had been allotted, and there were no shares which could be allotted to the plt., and then this bill was amended and prayed that in that event the directors might out of the shares which had been allotted to them individually make good to the plt. the shares to which he claimed to be entitled, or that they might pay damages in respect of their being unable to fulfil what the bill insists was the contract on their part to allot in favour of the plt. Now that wholly varies the character of the bill, and the fact that the shares had been disposed of before the bill was filed, to the extent which disabled the allotment, wholly altered the position of the plt. with respect to his right to file a

bill in equity; because if, as a matter of fact, | before the filing of the bill all the shares were gone beyond the reach of these parties so that no allotment could be made in favour of the plt., then there could be no specific performance of the agreement, and no right to come into equity upon any other ground, unless, indeed, it were a case for damages, as to which I shall have to say a word presently. [His Lordship considered the pleadings and the evidence and came to the conclusion that all the shares had been allotted previously to the filing of the bill, and he continued:] Therefore, in that state of the evidence before us, it seems to me that a specific performance of this agreement is entirely out of the question. The agreement cannot be specifically performed unless the shares can be allotted to the plt., and the shares cannot be allotted to the plt. if those shares have been already validly allotted in favour of other shareholders in the company.

Putting the case of specific performance out of the question, this bill prays damages in, I may say, a double form. It prays that the directors of the company may, out of the shares which have been allotted to them, transfer to the plt. those shares which, according to his contention, should have been allotted to him. What, in truth, is that but to ask for the payment of damages by the directors of the company in the shape of a sacrifice of the shares which have been allotted to them instead of in moneys numbered? It is just the same thing to a man who has got to make good a certain claim whether he makes good that claim by putting a sum of money in moneys numbered, or whether he makes it good by parting with property to which he has become validly entitled. In truth, therefore, that part of the prayer which seeks the transfer by the directors of shares) is no other than a prayer for damages.

Now, I am quite aware that there may be cases in which in the case of a trust relation subsisting between A. and B., it may well be that if B. has taken property under the trust which is belonging to A., or ought to have been appropriated to A., the court may, at the instance of A., compel B. out of the property he has so taken to make good that which A. ought to have had. But this is not a case of trust; this is a simple case of contract, as I think, between the plt. and the company. But if it goes further it is a case of contract between the plt. and the other directors; and looking at it as a case of contract as distinguished from a case of trust, I am not aware that there is any law of this court which, in the case of contract not raising any question of trust, would put upon the deft. in the suit the obligation of satisfying the claim in the mode in which the plt. contends that his ought to be satisfied.

There then remains the question of damages, and that depends entirely on the effect of that very valuable Act which my learned brother passed through Parliament, commonly known as Sir Hugh Cairns' Act. I understand that Act to mean this, that there was before the passing of the Act in cases of specific performance and in cases of injunction very great difficulty arising in this state of circumstances, that there were many cases where a court of equity would decline to grant specific performance, and yet the plt. might be entitled to damages at law, and great complaints were constantly made by the public, that when plts. come into a court of equity for specific performance, the Court of Equity sent them to a court of law in order to recover damages, so that the parties were bandied about, as it was said, from one court to another, and the very proper object of the Act of Parliament was to prevent parties from being so sent from one court to another. Accordingly the Act provides that the court may, either in addition

[CHAN.

to, or in substitution for, the relief which is prayed, grant that relief which would otherwise be proper to be granted by another court. But that Act never was intended, as I conceive, to transfer the jurisdiction of a court of law to a court of equity. It would be quite different if there had been an equitable right at the time of the filing of the bill, and it had been defeated between the time of the filing of the bill and the hearing of the cause; but if the plt. had no equitable right at the time of filing the bill, so that his bill was altogether improperly filed in equity, then I apprehend that that Act has no sort of application, because this court cannot grant damages to a party who comes here without any equitable case at all; if it were otherwise the effect would necessarily be this, that every person who had a doubtful case at law would come into equity for specific performance, and then it appearing that he had no sort of case in equity at all, he would say, "Then give me damages;" and the consequence would be that almost every action of contract would be transferred from a court of law to this court. That view was never entertained. I have had occasion to consider the Act in many cases, and I have always entertained the same opinion upon it. There being, therefore, according to my judgment, no case in equity on the part of the plt. at the time when this bill was filed, it being a mere case of contract between the plt. and the company, the remedy on that contract was at law and not in equity, and the shares having been transferred so that the equitable relief was precluded before the filing of the bill, this bill was improperly filed in equity, and was properly dismissed by the V. C., and accordingly I think this appeal from the V. C.'s judgment cannot be maintained. At the same time, as we have other evidence before us than that which was before the V. C., and as we do not proceed altogether, or mainly perhaps, upon the same grounds as those on which the V. C. proceeded, I think that it is a case in which the appeal should be dismissed without costs, and I think it would be right to add to the decree dismissing the appeal, that it should be without prejudice to any proceedings at law which the plt. may be advised to take.

Lord Justice CAIRNS said:-I am of the same opinion. I will take first the case of the directors, the first nine defts. on the record. I own I am of opinion that it ought to be very clearly understood upon what principle and to what extent directors in suits of this kind are liable to the jurisdiction of this court. This is a bill filed upon a contract. With whom is the contract made? The bill alleges throughout that the contract is made with, and binds, the company. What is the position of directors of a public company? They are merely the agents of the company. The company itself cannot act in its own person, for it is no person; it can only act through directors, and the case as regards those directors is merely the ordinary case of principal and agent. Wherever an agent is liable, those directors would be liable. Where the liability would attach to the principal, and the principal only, the liability is the liability of the company. This being a contract alleged to be made by the company, I own I have not been able to see in any way how it can be maintained that an agent can be brought into this court, or into any other court, upon a proceeding which simply alleges that his principal has violated and broken a contract which he has entered into. The agent in that state of things would not be the person liable, but the principal would be the person liable. Now, I rather imagine that any confusion which has arisen upon this point arises in this way. There is no doubt whatever that it is a pro per course, when you come into the Court of

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Ch. to restrain the doing of an unlawful act by a company, to make parties to your bill the directors, because the company must act through the directors, and the injunction will operate upon the consciences, of the directors if an injunction is ordered by the court. It is quite proper therefore in a case of that kind, when you ask for an injunction, to make the directors parties to the suit; but it is altogether a different matter when you come to the hearing, and it no longer is a question of an injunction, but a question to ascertain what liability has been sustained by reason of the breach of the contract.

Again, we must distinguish the case altogether from those cases very familiar to the court where a shareholder files a bill against the company and against the directors, treating the directors as his trustees which in point of law they are, and seeking redress against them and against the company for a breach of trust. That kind of case is exactly the converse of the present case. There the shareholders who file the bill in point of fact allege that the company has done no wrong whatever, that it is theexecutive which has committed the wrong, and they the shareholders file a bill to protect as it were the company from the unlawful act of the directors. There the directors, being in the position of trustees, are of course liable in this court. I think therefore that, as regards the directors the first nine defts. to this suit, it being admitted that there is no case for an injunction, there is no case whatever for a decree against them personally.

Then I take the case of the company. Now, upon the questions which have been argued as to the construction of this resolution, I will not say more than this, that nothing which I have heard has convinced me that the view of the plt. as to the construction of the resolution is an erroneous view. As at present advised, I am inclined to think that the plt. had a right under this resolution to exercise the option of taking shares, and that he has been deprived of that right. That is my impression, but it is unnecessary for other reasons to decide it in the suit. But what is the suit for? It is a bill for specific performance of a contract. We all know that this is not the court, as a general rule, to entertain suits for damages for a breach of contract, whereas it is a court to entertain suits for specific performance of a contract. What is asked to be performed is a contract which is to give to the plt. certain unallotted shares in this company. He asks that the contract may be performed. [His Lordship stated his conclusion that the fact upon the pleadings and evidence was that there were no unallotted shares when the bill was filed. And he continued thus:] Now there can be no controversy but that before that Act (20 & 21 Vict. c. 27), a bill filed in the Court of Ch. stating a contract, and alleging that the subject-matter of the contract no longer was in existence, and no longer could be made over to the plt., must of necessity be dismissed. The Court of Ch. could have no jurisdiction for specific performance.

Does the Act of 1858 make any difference? Now, as I remember the important words of the Act, they are these: "Where the Court of Ch. has jurisdiction to entertain a suit for specific performance;" that, of course, means where there are all those ingredients which would enable the court, if it thought fit, to exercise its power of decreeing specific performance, among other things where there is the subject-matter upon which the decree of the court could act for specific performance-in a case of that kind, when it occurs, the court has discretionary power to award in certain cases damages, either in substitution of or in addition to the decree for specific performance. The object obviously was to enable the Court of Ch. to do, as it was called, complete justice; a phrase which assumed that there was the

power in the Court of Ch. to make a decree to some extent, but not to make a decree to the whole extent the case required. There the power of giving damages was placed in the court. That seems to me not in any way to give to the court power, where it has no jurisdiction to decree specific performance for want of the subject-matter on which its decree would operate, to give damages by reason of some antecedent breach of contract. For these reasons I think the bill fails as against the company, as it does against the directors.

I

Now the question of costs remains. I must say entertain a very strong opinion that, as a general rule, the costs ought to follow the result of the litigation, both in the court below and in the Court of Appeal, and that when we depart from that rule reasons ought to be assigned for the departure. I think there are two reasons in this case which are perfectly sufficient. One is this. I cannot altogether think that the directors here took exactly the proper course with regard to the claim of the plt. They knew before the shares were allotted that the plt. was asserting his claim to retain unallotted shares, and they knew that he had never abandoned that claim. I think it would have been better if they had put aside the number of shares that would have answered his claim for a reasonable length of time until they had either ascertained that he had abandoned his claim, or had ascertained what upon the result of the litigation the claim would be. I think, therefore, although for the reasons which I have given he has been deprived of his right to relief in this court, it would have been more satisfactory if the defts. had not been so precipitate in removing that which was the subject-matter of controversy between them and the plt. That is the first reason. The second reason is that which has been adverted to by my learned brother-that our decision, though it arrives at the same conclusion that his Honour in the court below arrived at, does not proceed exactly on the same ground; and under those circumstances I think we may well and safely dismiss the appeal without costs.

Solicitors for the plt., Stephens and Son.

Solicitor for the directors and the company, Richardson.

The plt. in this case having set down the cause for hearing on motion for a decree before the time for closing the evidence had arrived, the deft. moved before Stuart, V. C. that such entry might be struck out for irregularity, on the ground that it was not in accordance with an order, purporting to be an order of the court, dated Oct. 6, 1866, made by the L. C., with the advice and assistance of the M. R. and Kindersley, V. C., which altered the practice as to setting down causes and motions for decrees. The order was to the effect that a plt. who had served a notice of motion for a decree or decretal order should set down such motion within one week after the expiration of the time allowed to him by rule 7 of Order 33 to file his affidavits in reply in case the deft. should have filed any affidavit, or within one week after the expiration of the time allowed to the deft. by rule 6 of Order 33

to file his affidavits in answer in case the deft.

should not have filed any affidavit. But in case the time allowed for either of the purposes aforesaid