The Sun.
London, England, 1863-12-15 00:00:00

" THE SUN. LONDON, TUESDAY EVENING, DECEMBER 15, 1863.

COURT OF SESSION,

PTN.-F. R. Sat (SIRE'S FACTOR.)
This petition was presented last week by a judicial factor
appointed under the Pupils' Protection Act, for the pur.
pose of having his bond of caution cancelled, and a new
bond by the National Guarantee and Suretyship Associa-
tion taken in its stead. The case was reported by Lord
Barcaple, on account of the importance of the question
whether bonds by a company of limited liability could be
accepted by the Court.

Counsel was beard in support of the application. It was
maintained that, as this company was registered in terms
of the " Companies Act, 1862," it came under the provi-
sion of the 27th section of the Pupils' Pretection Act,
which provides that the Court shall authorise, if they deem
it expedient, " bonds or policies of the British Guarantee
Association, or other public company incorporated by act of
Parliament or Royal Charter, carrying on business within
Scotland, to be accepted and taken instead of bonds of cau-
tion by private individuals." Under the 18th section of the
Companies Act, this company must be held to be " incor-
porated by act of Parliament." This view has been taken
by the Parliamentary committees, who now deal
with banks registered under this act as in the
same position as " banks established by act of Parlia-
ment or Royal Charter." One object of the act
was to save companies the expense of obtaining a
private Act of Parliament for themselves ; and it is expressly
provided by sec. 18 that upon registration of the memoran-
dum of association the subscribers shall thereupon be "a
body corporate." Accordingly, Mr. Thomson argued, the
Court has power to take the bond of this company, the only
question remaining is—ls it expedient to do so ? Now, that
must be ascertained in the usual way, which is by remitting
to the accountant of court, and getting his report, In the
present case that has been done, and the report of the ac-
countant is in every way favourable to the application. He
is satisfied of the respectability and responsibility of the
company, and both he and the Lord Ordinary concur in
be safely taken. In the pre-
sent be only one element of difficulty
This is a company of limited liability. This is not thought
thinkinginstance that
there the lr
seems bond t
mayby the accountant to present any practical difficulty, and in
that view the Lord Ordinary concurs. In the case of a pri-
vate cautioner, the accountant can only satisfy himself from
the ostensible character or supposed circumstances of the
person at the time, and these must frequently prove
deceptive. Even where the sufficiency of the party is
at first undoubted, unfortunate circumstances too often
occur to alter his position. Again, where the circum-
stances of the party are positively known to be suffi-
cient for the obligation undertaken, and likely to
continue so, it remains unknown how many other
cautionary obligations he may have undertaken. None of
these objections apply to a public company, and accordingly,
so far as the question is one of general expediency, there
seems no doubt of the desirableness of substituting bonds by
a public company for those by private persons, The re-
sponsibility and sufficiency of a company may be judged of
and ascertained in the same way as that of a private person.
In the present case, the factory funds are not large, and
there seems no doubt that the association is amply sufficient
for the amount. Mr. Thomson also read to the Court sta-
tistics of the present financial condition of the company.
The Lord President said he had great difficulty about the
case. It was a novel one, and the whole system of com-
panies with limited liability was as yet untried. There was
here a cautioner already, and he thought that at present
the safe course was to refuse the application.

Lord Deas doubted whether a company merely incorpo-
rated under the Companies Act could be held to be "in-
corporated by Act of Parliament" in the sense of the Pupils'
Protection Act. There appears to be no doubt of the per-
fect respectability of this company, but the last-mentioned
Act seems to contemplate a company with a private Act of
its own, as to whose condition the Government has satis-
fied itself. Mr. Thompson has very properly admitted that
the British Guarantee Association had a private Act, con-
taining very express provisions, and its shareholders were
liable to the full extent of their fortunes. I do it with re-
luctance, but it seems to me that, looking to the whole cir-
cumstances of the case, we must refuse this application.
Lord Curriehill concurred, and observed that he was glad
that in this case they were able to decide on principle, with-
out suggesting any doubt as to the perfect respectability of
the company. He was unable to hold that where the liability
of the shareholders of a company was limited to the amount
of the shares, its bonds could be accepted by the Court,
Counsel for the petitioners, Mr. Comrie Thomson; agents,
Messrs. Duncan and Dewar, W.S.