The Express.
London, England, 1867-05-17 00:00:00

HIGH WATER AT LONDON BRIDGE..
_ .

TOO DAY —Morning, lb. 14a Afternoon, lb. 36a.
TO4loittoir—btoralost. lb. Me Afternoon, at. l'a.

LONDON, FRIDAY, MAY 17.

TIII: House of Lords has just decided a case
which adds somewhat to the slowly accumulating
principles by which the morality of commercial
prospectuses must be judged in law. In 1862 a
company was established for constructing a railway
in Venezuela, under the name of the Central
Railway of that State. Its length was 54 miles,
the capital was to be 500,0001., and the prospectus
stated that the concession guaranteed interest at
the rate of 9 per cent. for 20 years, seemed by the
mortgage of the import duties at the port of La
Ouayra and Puerto Cabello, and that there was
the additional advantage of a free grant of all the
land required for the line and the stations, and of
30,000 acresbesides, in the provinces throughwhich
the railway was to pass, for which land warrants
were to he issued on completion of the line. The
prospectus further stated that a contract bad been
entered into with a responsible contractor,
who, in consideration of receiving the timber
on the line, guaranteed per cent.
on the paid up capital during the Pe-
riod of construction of the works. On the
faith of these statements a Mr. KWH applied for a
hundred shares, in a form by which he agreed to
be bound by the conditions contained in the me-
morandum and articles of association of the com-
pany. The whole number ho applied for were
allotted to him, somewhat to his inconvenience,
but the company insisted on his taking them all,
and he paid the allotment money upon them.
But when, two months after, a further call of 21.
per share was made, he began to make inquiries,
and in the course of two months more his soli-
citors obtained inspection at the company's office
of various documents, which induced him to
resist the demand, and to file a bill in Chancery to
restrain the proceedings that were instituted
against him at law. The grounds on which he
sought such relief were numerous. Among them,
he averred : 1. That the capital of the company
was utterly insufficient to construct the whole line.
2. That the company was bound by the conces-
sion to leposit 20,0001., which should be for-
feited if the railway was not commenced within a
certain period. 3. That the grant of 30,000
acres was not to apply to any private property.
4. That 50,0001. was to be paid to the National
Finance Company as the original concessionaires.
None of these facts or qualifications were stated
in the prospectus. Upon them all the Lords
Justices of the Court of Chancery decided
that, though the transaction was open to
suspicion in such respects, and they might in-
cline the court to look more strictly at the
other points, they would of themselves be in-
sufficient to entitle the plaintiff to relief. But
upon two further grounds they held that the con-
tract was void. The first was, that by an agreement
made subsequently to the issue of the prospectus,
but prior to the application for the shares, the
liability of the contractors fur the 2i per cent.
interest had been limited to 20,0001. The second
was, that the 9 per cent, interest guaranteed by the
Venezuelan Government was subject to the
condition that it should not be paid if the
company, by any fault of its own, failed to
earn so much.

In the House of Lords, however, while the de-
cision of the court below was upheld in the result,
a certain difference was made in the principles on
which it was left to rest. The House held that the
statement that the contract had been entered into
with a responsible contractor, when in point of
fact it appeared that he had been unable to pay up
shares which had been allotted to him, and that he
became insolvent within four months after signing
the contract, was deceptive, since the directors
ought to have known that such a man had not the
means of even commencing the works. They next
ruled that the omission of any reference to the
50,000 f. paid to the concessionaires was an im-
proper suppression of a material fact. Then they
decided that the statement that the contract was
considerably within the available capital, while in
point of fact it was for only a part of the line,
and left a wholly inadequate margin of capital
for the rest, " was calculated, if not in.
" tended, to deceive the public." Finally,
they agreed with the Lords Justices that
the suppression of any notice of the con-
tractors undertaking to pay 24 per cent, being
limited to 20,0001., was designed for the purpose
of deception. On all these points they laid it
down that, though the plaintiff might have ascer-
tained the truth by inquiry, he was not to be de-
barred from his remedy by his failure to inquire.
When once it was established that there had been
fraudidnt misrepresentation or concealment
inducing to a contract, the demand to have it
annulled was not to be answered by the assertion

that a nt..re carcit.l tui

the truth.

,re elicited

The ease is so far one of special circumstances
that it will, perhaps, not be very freipiently
available for an exact precedent b;• ‘..liich to decide
others. And the difference of oi between
such high authorities as the Louis Justices and
the House of Lords shows that in regard to each
particular transaction there will often be room for
dispute whether it falls on one side or the other of
the line of legal honesty. But the value of the
ea.ie lies in the breadth of the principles *tilde('
rder to arrive at the decision. By the
S:ipreine Court of Appeal, the rule stated
by Vice-Chancellor Kisroeitstry was distinctly
accepted. This lays down that the framers of
a prospectus "ought to state everything with
" strict and scrupulous accuracy, and not
" only to abstain from stating as fact that which
" is not so, but to omit no one fact within their
" knowledge the existence of which might in any
" degree affect the nature, or extent, or quality of
" the privileges and advantages which the pro-
" spectus holds out as au inducement to take
" shares." This is at least a very clear rule of
action for all who have honest intentions. Thome
who desire to sail as near the law as they can may
still find it vague enough to allow liolbt whether
any particular statement or suppression is so far
at once dishonest and material as to vitiate the
whole transaction. But the really new point oda-
Milled in the present instance, that the poasibility
of discovering such inaccuracy by inquiry is not
sufficient to justify it, clears away at least one
resource of subterfuge. lt may make applicants
more reckless, but it ought at least to make direc-
tors more cautious. And betsvem those whose
business it is to know and to state the truth, and
those whom only prudence counsels to inquire,
there is a very plain and wide distinction, which
the law, as now ascertained, justly recognises.

OUR CONTEMPORARIES.
(THIS DAY.)

THE NATIONAL DEBT HILL.

The adoption of the National Debt Bill by the
House of Commons last night, is described by the Times
as a victory won by Mr. Gladstone, to whom are alike due
the idea of applying part of the surplus towards the re-
ducat's' of the national debt, and the machinery for
carryiLz out the idea. There is, indeed, no obliga-
tion requiring us to pay on any of the national
debt, and the policy of redemption must be de-
termined by a comparison of the efforts which the
alternative courses of remitting taxation and paying off
debt produce. Confined within the narrow limits proposed
by the Chancellor of the Exchequer, the policy of applying
a surplus towards the reduction seems to the Taegu indis-
putable, and the propriety of the method adopted is still
lees open to doubt. If troubles come, if a deficiency arise,
if loans be necessary, the resolution may at any moment
be rescinded. The contract is between the right band and
the left, and the power which enacted it can undo it.
Meanwhile, there appears among the annual claims on the
nation a charge of • million, and a Pun which might be
otherwise 'a subject of contention is withdrawn from the
too greedy gate of the House of Commons.

The Port cordially supports the bill of the government,
and the Star congratulates its readers upon the conjunction
of authorities on this sub;ect, as it is most desirable that
the moral sanction which has lately been so strongly
urged upon the public mind in favour of national honesty
should be supported by a concurrence of practical men in
measures by which, even in a small degree. that bi•h.
toned financial policy may be carried out.
While approving of the bill, the Telegraph thinks that
Mr. Leine, who opposed it, did, nevertheless, good service
by fixing the attention of the house and the country on
the many blots in our fiscal arrangements that have yet to
be remedied. The duties on such articles as sugar might
be reduced with advantage to the revenue as well as to
the consumer. The licence duties on trading, a barbarous
and antiquated form of impost, await abolition, and the
mileage duties demand modification in connexion with
that railway reform which is the want of the day. The
duty on corn, to which Mr. Gladstone called attention,
must be abolished, not only because it is a tax on the
necessaries of life, but because it restricts what might
prove an important branch of commerce.

THE EXPRESS, FRIDAY EVENING, MAY 17, 1867.

the Court.

OSBORNE, MAY 16.
The Queen drove out yesterday afternoon, ac-
companied by Princess Louise and Prince Leopold.
Colonel Poosonby was in attendance on horst hack.
Her Majesty and Prince•. Beatrice walked and rode on
ponies in the grounds this morning, attended by the Coun-
tess of Caledon.

Princess Louise walked out this morning, attended by
the Hon. Emily ( athcart.
Prince Leopold also went out.
Her Majesty the Queen will hold a council at Osborne
to-day (Friday), at one o'clock.

A deputation consisting of Mr. T. A. Hankey, Mr.
George Alliston, Mr. F. A. Hankey, Mr. George Dodgson,
Mr. W. Gray, Mr. Henry Sewett, and Mr. W. Quitter had
an interview with the Duke of Richmond at the office of
the Board of Tra4e yesterday, on the subject of the claims
of the Harwich anal Woodbridge stockholders in the Great
Eastern Railway Company.

A deputation from the Danube and Black Sea Railway
and Kuatendjie Harbour Company (Limited), consisting of
Mr. W. P. Price, M.P. (deputy chairman), Sir E. Cunard,
Bart., Mews. Lewis, Newell, Liddell, Beale, Berkeley,
and the Secretary, lied an interview with Lord Stanley, at
the Foreignmilice, on Wednesday, to solicit the continued
support of her Majesty's government in their efforts to
obtain a settlement of their claims at the hands of the
Turkish government.

A deputation from the Jamaica Agency, introduced by
Mr. Tho... Hughes, ALP., and consisting of Messrs. Lud-
low, J. Woodin, Lloyd Jones, and Roberta bad an inter-
view with the Duke of Richmond, at the Aloe of the
Board of Trade yesterday.
Despatches were received yesterday at the Colonial-
°thee from the °overeats of Malta, Lagoa, sad Sierra
Leone. Despatches were sent to the Governors of the
West India Islands, British Honduras, British Columbia,
and Vancouver's Island.

Her Majesty the Queen will hold a council to-
day et ()theme, at 1 o'clock, when the seals of office will be
delivered up by Mr. Walpole, and Mr. Catherue Hardy
will be in attendance to receive them.

The Prince of Wales and suite visited the Palace
of the Universal Exhibition on Wednesday, arriving •
little before 2 o'clock. The prince was accompanied by
hie brother, the Duke of Edinburgh. So minutely do the
French register in their newspapers the movements of
illustrious personages that we find in the " Programme
Quotidien de l'Exposition Universeffe," published under
the authority of the Imperial Commission, of the date of
Wednesday, the 13th, the following paragraph :—" The
very pretty flower girl who borers about in the Restau-
rant Goueset, having been remarked by a foreign royal
highness, now a guest in Paris, the young lady in question
offered to plant a rose in the button-hole of his coat,
whereupon a fussy personage advanced and said, in very
indifferent French—' Prenez-y garde, c'est lc Prince de
—." Eh hien,' ' one femme ne doit pas lai
faire pear.' Non, Rana doute, ma belle enfant,' dit le
prince, quand elle • votre gentillesse.' "

La Liberte says :—" On Sunday last the Prince
of Wales honoured with his presence the theatre of the
Folies-Mari4ny. The day before yesterday his royal high-
ness witnessed a performance at the Varieties, on which
occasion he was accompanied by the Duchess of Man-
chester and the Marchioness de Galliffet."

The Prince of Wales's Theatre was honoured
last evening by the presence of the Grand Duke and
Grand Duchess of Mecklenburgh-Strelitz, Prince Adol-
phus of Mecklenburgh-Strelits, the Marchioness of Ely,
Lady Marion Loftus, and Lord Hamilton.

Ills Excellency the Lord Lieutenant of Ireland,
the Marquis of Aberoorn, arm ved at Chesterfield House on
Wednesday from Dublin.

Sir John Lister-Kaye has left his residence in
Cromwell-rosd for Ballyheigue Cootie, County Kerry.