Northern Times.
Liverpool, Merseyside, England, 1859-01-24 00:00:00

LAW INTELLIGENCE,

COURT OF CHANCERY-JAN. 22

(Before the Lord Chancellor, and Lords Justices Knight,
Bruce and Turner.)

• THE ROYAL BRITISH BANK.—MR. NICOL'S CASE.—
The Lord Chancellor and the Lords Justices this morning
delivered judgment in this case, which bad been fully
argued, and which has created considerable public atten-
tion, inasmuch as there are several similar cases which will
in all probability be bound by the present decision of the
court. The question was whether, in winding up the affairs
of the Royal British Bank, the name of Mr. Nicol should
be placed on the list of contributories. It bad been de-
cided before the Vice-Chancellor that Mr. Nicol ought not
to be put upon the list, inasmuch as 'ae had completed his
transfer, by means of which he had been completely
absolved. Mr. Nicol's representation was that he took
his shares in September, 185.5, namely, 20 new shares
in the bank, but it was proved by the evidence that he
bought them as early as the 6th of March, 1855, and this
was important, as it showed that certain doduments on
which Mr. Nichol relied, as showing that he purchased
his, shares under false and fraudulent representations,
were not, on account of the dates, applicable to the case
under consideration. Mr. Nicol, it had been shown,
paid for his shares and received the dividend, which
he retained. Afterwards the shares were bought
of Mr. Nicol for the. Royal British Bank by Cameron,
the general manager, through Mr. Empson, his broker,
and the transfer of the shares was duly executed. The
money which was paid to Mr. Nicol came out of the
funds of the bank, and Mr. Nicol received £l,OOO, namely,
£5O for each of his £2O shares, and this money he retained.
Three questions arose and had to be decided in this case.
1. Whether Mr. Nicol was induced to become a share-
holder in the bank by such fraudulent representations
as enabled • him to repudiate the contract. 2. If so,
whether by any lathes of his own lie had estopped him-
self from insisting upon the fraud ; and 3, Whether he
had divested himself of his liability by the complete
transfer of his shares. On the first point, it was neces-
sary to ascertain what were the false representations on
which Mr. Nicol relied. These were stated to be a
false report of the directors in December, 1854, and
a circular letter from the directors in March, 1855,
as well as the importunities of Mr. Alderman Kennedy,
who, being one of the directors, misrepresented
the affairs of the bank to Mr. Nicol and prevailed upon
him to take the shares. He (the Lord Chancellor) did
not think that companies must be held liable for the
misrepresentations of the directors, but that the true
principle to be maintained between directors and
shareholders was this—if directors made fraudulent
representations, by means of false reports- in the news-
papers, which they circulated through the country,
or by other means, and thus deceived the public, a
stranger who took shares relying upon those false
representations must either submit to them, or go against
the directors as one of the public. But Mr. Nicol's

case fell very short of this, and showed that he was not
deceived by the directors generally, but on the repre-
sentation of Alderman Kennedy. If it had not been for
this, he might never have seen the report and the cir-
cular letter, and it was not right to say that this was
the act of the directors, or that they gave Kennedy
authority to make these false representations to Nicol.
He did not think that, upon these grounds, Mr. Nicol
was entitied to have his name tf,ken off the list
of contributories. Moreover, Mr. Nicol never repudiated
his bargain. On the contrary, he received his dividend,
and when the petition for winding-up the affairs of the
bank was presented he did nothing. It was not not until
there was an attempt to put him on the list of contribu-
tories that he set up his plea of false representation,
which he had so long allowed to lie dormant. On the
second point, therefore, he (the Lord Chancellor)
considering that Mr. Nicol had estopped himself
from saying anything about the fraud, for what
he ought to have done was to have paid back
his dividend, and to have repudiated the con-
tract ab initio. He was, therefore, liable to have
his name retained on the list of contributories unless he
had made an effectual transfer of his shares, and this
was the last question to be decided. It was clear that
Mr. Nicol knew nothing of the private arrangement
between • Empson and the directors, and the transfer
was therefore, no doubt, bona fide completed. To
render the transfer effectual, it was only necessary
that the consent of the directors Aould• be
obtained. He entertained no doubt that the evidence
supplied ample proof of the consent of the directors,
and at the time of the stoppage of the affairs of
the bank Mr. Nicol had ceased to be a shareholder. On
this ground alone he was of opinion that his name ought not
to be placed upon the list of contributories. The appeal
from the decision of the Vice-Chancellor must therefore
be dismissed. Lord Justice Knight Bruce said that the
evidence satisfied him that Mr. Nicol had ceased to be a
shareholder before the winding-up, and that the direc-
fors had consented to the transfer of his shares. Under
the circumstances, *he thought that the order under the
appeal ought not to be disturbed. Lord Justice Turner
was of the same opinion, and reviewed the whole of the
proceedings in a very elaborate j udgment. The Lord
Chancellor then said the appeal from the Vice Chamcellor's
decision must be dismissed, and that the name of Mr.
Nicol must not be inserted in the list of contributories.
The learned counsel for the respondent applied that the
costs of Mr. Nicol should be paid out of the estate. The
Lord Chancellor : Certainly ; and also those of the
official manager.