The Sun.
London, England, 1846-09-04 00:00:00

" 1. RIGHTS AND LIABILITIES 014 ALLOTTEES IN ABAN-

DONED SCHEMES.
" it is now clearly established that an allottee who
has paid his deposit upon shares in a scheme which is
abandoned without applying to Parliament, can recover
back his deposit from the promoters of the scheme,
without any deduction for preliminary expenses. • Thus,
where the promoters have failed to allot the requisite
number of shares, or having allotted them, have aban-
doned the scheme without applying to Parliament, or
have induced the public to apply for allotments by
means of fraudulent representations, in all these cases
the entire deposit may be recovered back, and the ex-
penses must fall upon the managers. In most of them
the allottee may bring an action at law, or file a bill in
Chancery, against any one of the promoters who has
acted, or held himself out to the world as acting, in the
formation and carrying out of the scheme.
" The allottee of shares in such an abandoned scheme
cannot be sued for the payment of the deposit, if he have
not paid it, nor can he be compelled to contribute
towards the payment of the debts and expenses which
the promoters have incurred.
"2. RIGHTS AND LIABILITIES OF ALLOTTEES IN
SCHEMES WHICH ARE NOT ABANDONED BY THE
PROMOTERS.
"The position of an allottee who applies for shares
in a scheme which the projectors do not abandon,
but parry out so far as by the prospectus they may have
contracted to do, or so far as.the conduct of the allottees
will enable them to do, is somewhat different to the po-
sition of those who have formed the subject of our first
division. These allottees, if they make default, may
probably be liable to an action to recover damages from
them for the breach of their contract with the pro-
moters, or to a suit in Chancery for the double purpose
of recovering the deposit, and enforcing the execution
by them of the parliamentary contract and subscribers'
agreement.
"3. RIGHTS AND LIABILITIES OF ALLOTTESS IN SCHEMES
WHICH ARE REJECTED BY PARLIAMENT.
" Before a scheme is brought into Parliament, the
usual deeds are invariably signed by the allottees, and
these deeds confer upon the promoters ample powers to
carry on or abandon the scheme, and to pay all necessary
expenses attending the same. Therefore, in cases where
the promoters have done all that is necessary to place
the merits of the scheme before Parliament, but Par-
liament rejects it, the allottees must submit to the terms
of the deed they have signed ; and probably the only
power they possess is that of checking the promoters in
any improper payment or dealing with the funds of the
company.
" But where the allottee has signed the usual deeds,
but the proper number of shares are not subscribed, or
auy fraud was practised upon him by the promoters, or
the scheme is abandoned in an unauthorised manner, he
will have the same remedies against the promoters as if
no deed had been signed by him.
" 4. RIGHTS AND LIABILITIES OF sCRLPHOLDERs.
" A mere purchaser of scrip, or of letters of allotment,
or of bankers' receipts, has no rights against, and in-
curs no liabilities to the promoters. If the scheme in
which he has acquired an interest be abandoned, he
must look to the party from whom he bought, and it is
very doubtful whether he has any implied rights against
him. The case of Thomson v. Sanders, which appears
to establish such rights, is not relied upon by lawyers,
although it has not yet been expressly overruled. It is,
however, possible that the holder of these documents
may have a right to use the name of the original allottee
for the purpose of proceeding against the promoters, but
there are many difficulties in the way of such a step, and
the point has yet to be decided.
" RIGHTS OF CREDITORS TO SUE THE PROMOTERS, EN-
GINEER, SOLICITOR, OR OTHER OFFICER OF A SCHEME.
" The creditors, like the allottees, may sue any of the
promoters who has acted, or held himself out to the
world as acting, in the formation and carrying out of
the scheme. These parties constitute the company, or
project, or scheme ; and each and all of them is or are
liable for all debts properly incurred for the advance-
ment of the common design.
" The engineer, solicitor, secretary, or other officer of
the company, may, by their conduct, render themselves
personally liable ; but the mere circumstance of their
holding office in the company, that is to say, being the
servants of the company, cannot render them responsible
for the debts of the company, their employers.
" Ott the other hand, they have no power to bind the
company by virtue of their offices alone ; such a power
must be expressly conferred upon them. Therefore,
the engineers' assistants, or the solicitors' clerks, or any
other sub-contractors, cannot sue the projectors or com-
pany. If this were suffered the confusion it would
cause would be indescribable. It would be just as
absurd as to allow all a tailor's workmen to sue a cus-
tomer who had ordered a coat from their master for
wages due to them from him for making the coat.
"6. RIGHTS OF DIRECTORS OR PROMOTERS.
" The directors or promoters may recover contribu-
tion from each other for all expenses connected with the
scheme which they are called upon to pay. At law
they may recover the proportionate part of each, with
reference to the whole number of promoters, but with-
out any regard to the solvency of the others : thus, if
there are ten, and one pays a debt, only a tenth can be
recovered from each of the others ; but in equity an
eual contribution can be enforced from all the solvent
pqarties, without any regard to the original number of
promoters.
" The promoters are the parties with whom all the
contracts connected with the scheme are entered into.
They must all of them sue for any breach of contract
on the part of allottees, engineers, or others. As the
promoters are generally very numereus, and have in
most cases undergone changes, it will be difficult to
maintain proceedings on such contracts ; because the
same pies must Bile with whoa the contract was