The Sun.
London, England, 1857-11-11 00:00:00

LAW IiNTELLIG-ENCE.—Nov. 10. I

EQUITY COURTS.

(Before the Lord Chancellor and the Lords Justices.)
)lENRY V. THE GREAT NORTHERN RAILWAY COlll-
- GREAT NORTHERN PREFERENCE
SITAREHOLDERS.

This appeal from the decision of Vice-Chancellor
Wcod, by which he held that the preference share-
holders of the Great Northern Railway Company
were entitled to their dividends irrespective of an
act of parliament authorising the payment of the
losses caused by the frauds of Leopold Redpath,
was resumed.
The Attorney-General, for the defendants, urged
whereas the ordinary share capital of the company
was something over 4,000,0001., the preference
share capital was above 3,000,0001. ; and the ques-
tion was whether so large a portion of the share-
holders should not contribute to the reparation of
that which was a misfortune common to the whole
company. The whole difficulty had arisen from a
confusion in the use of the terms "dividend" and
" interest." The construction he put on the Acts
of Parliament by which the company was governed
was, that the guarantee to preference share-
holders was limited to a priority of those share-
holders, and to the rate and amount of the divi-
dend; but they left the existence of profits contin-
gent and unsecured. The preference shareholders
were therefore left to the chance of their being any
profits in common with the ordinary shareholders.
The dividend was determinable by the length of
time for which it was declared. It was the aliquot
part of the profits of each half-year, to a share of
which all the shareholders were entitled. It was
s question whether or not the guarantee was satis-
fied by the payment of each half-yearly dividend,
and whether the profits of 1856 were applicable to
;he fulfilment of the guarantee of 1857. He would
contend that the guarantee was sati.fied by the
payment of each dividend. In none of the Acts of
Parliament was anything more provided than that
there should be a priority of payment to the pre-
ference shareholders out of the profits of the com-
pany, if there were any profits. By the Act of
last session the preference shareholders could not,
under the circumstances, be entitled to receive any-
thing out of the profits from January in this year ;
they could not have received any dividend irrespec-
tive of that act, and its provisions were prospective,
and not retrospective. The 243,923/. 5s Bd., which
were the half-year's profits of the company, were,
in fact, at the time of the passing of that act, no-
body's money ; for, owing to the quantity of forged
stock which had been issued, it was not possible to
say who was entitled to that money. The act was
intended to apply to that sum; it disposed of it
absolutely, and it was the plain meaning of the
act that the common loss which had been sus-
tained by the company in consequence of these
frauds should be borne by all the shareholders in
proportion to their respective interests. The pre-
ference shareholders were not creditors, but part-
ners, of the company, and were, therefore, liable
to bear a due share of its losses and. misfortunes.
Without the authority of this act no dividend could
have been declared, and the act gave the preference
shareholders no rights previous to the beginning of
the present year. The 3d section of the act was a
disposition by Parliament of the 243,923/. ss. Bd.
which the company had in hand, and it was bind-
ing on all parties interested in it. The legislature
was aware that that sum was quite sufficient to
meet all the claims of the preference shareholders,
and yet by the act in question they directed it to
be applied to a totally different object. [n the face
of that act, how could the preference shareholders
base their rights on this and the former Acts of
Parliament 7 Whatever might be the construction
of the act of August last, with reference to the
future, it was certain that with respect to the half-
year's dividend from July to December, 1856, the
claims of the preference shareholders were wholly
taken away by that act.
Lord Justice Knight Bruce—lt seems to me that
the remedy in this case is worse than the disease.
The Act of Parliament appears to we to be no more
nor less than a dreadful thing, construe it which
way you may, if construed it can be.

.The Attorney-General—The question Lefore the
court was simply whether they could restrain the
directors of the company from declaring a divi-
dend, unless they were prepared to pay the pre-
ference shareholders the whole twelve months'
dividend divisible from Ist July, 1856. It was im-
possible that they could claim that dividend, and
yet be entitled to the benefits provided by the 3d
section of the act of last session. If the claims of
the preference sharaholders were allowed it would
bs, in fact, treating them as creditors, and the
whole of the loss arising from the frauds which had
been committed would have to he borne by the
ordinary shareholders. He would however contend
that it was impossible, looking to the whole facts of
the case, that such a decision could be come to, or
that the claims of preference shareholders on the
dividend for the half-year ending Dec. 1, 1856,
could be allowed ; nor could it be held that the loss
which had been incurred was not provided for and
satisfied by the provisions of the act of the present
year.
Mr. Rolt and Mr. Denison followed, but the lat-
ter learned gentleman had not concluded when the
court rose.

(Before the Master of the Rolls.)
SWINFEN V. SWINFEN".
On the conclusion of the arguments of the Attor-
ney-General, Mr. Palmer, and Mr. Hobhouse, who
appeared for the plaintiff, Capt. Swinfen, in support
of the compromise effected on the trial of the issue,
his Honour cane judgment without hearing the
other side. He said that he had come to the con-
clusion that the compromise was not binding on
Mrs. Patience Swinfen, and that there must be a
new trial. The question of principle resolvedit-
self into this, whether an attorney or solicitor is at
liberty to compromise a suit without express au-
thority for the purpose. It had been argued on
two grounds—one on principle, the other founded
on the practice of the court. His Honour said that
as a matter of principle he could not understand
how it could be contended. The principle of the
doctrine of principal and agent was that the agent
has full authority to do all which falls within the im-
plied scope of his authority. But an attorney is em-
ployed to conduct a suit, and I think it clear that
the effecting of a compromise is no part of the con-
duct of a suit. There is, therefore, no general im-
plied authority to support a compromise by an
attorney. If there is, what is its extent ? Does
an authority to recover property by legal proceed-
ings extend to empower the attorney to sell the
subject-matter of the suit ! Can he sell to a
stranger? And, if not, can he sell to the other
side ? And what is a compromise but a sale to the
other side ? Could Mr. Simpson have said to a
stranger, "You secure us an annuity of 1,000/. and
aou shall have the benefit of this suit if we succeed ?"
And if he obviously had no authority to bind his
client by such an arrangement with a stranger, how
could he do so by a similar arrangement with the
defendant 1 Unless, therefore, it could be shown
to be necessary for the due administration of jus-
tiee, the authority of the attorney could not extend
to enable him to dispose of the subject-matter of
the suit. The authorities cited appear to me to
support this view, and, in particular, I concur fully
in the observation of Lord Langdale, that it would
be impossible to carry on the business of the court,
unless reliance could be placed on the statements of
solicitors and counsel. It is of the utmost impor-
tance in this court, which deals daily with consents
to a very large extent, and the court is in the habit
of making consent orders not only so as to affect
adults, but married women and infants also. But
the practice in these respects throws groat light
oa the general principle. The court will not
allow any one to consent for a married woman,
but takes her consent personally in court. In
the case of infants it only deals with their pro-
perty by consent after an inquiry whether the
arrangement is beneficial for them. When elm-l-
ed says, "I consent," the court assumes that
counsel has been so instructed by a solicitor,
duly autherisel fir the purpose. If the client could
be bound without having given authority it w 0.1.1
be the duty of the court to make an inquiry into
'the circumAances of each cas°, slid to ascertain
'whether authority had b crt givee. So far, th,ne-
fore, from the principle contended for befnz
nacessary for the administration of justice, it would
be productive of the greatest inconvenience. His
Honour then discussedthe evidec cc which had been
read, and stated that there was not in his opini.,n
enough to show that amount of acqui-sc snce
the part of Mr.+. Swinfe!i by which the plaintiff's
p ra ft,
counsel lr-td. argued that she was eutol
resisting the compromise. A. d-cree was arorclitr,,Ldray
made dismissing the bill for specific prsrformatic
and directing a new trial, Mrs. Swinfen
allowed to remain in pos?.estion of till property oil
giving security to ace .)unt for the rents.

(Before Vice-Chancellor Wood.)
HANSON V. REECE.

This was a question of Wm. The facts were
slice,ly these. A cheque was placed in the hands
of a solicitor, it being ztgrced in writing that it
should be made applicable to what might be n -
covered by another party in an action, and the
residue to the costs. The client obtained a verdict,
subject to a reference. The award was in favour
of the client. He became bankrupt, and on taking
the accounts between him and the defendant in the
action, the latter, it appeared, was entitled to a
balance.
The case was argnod by Mr. Cairn, Mr. Eddie,
and Mr. C. Barber.
The Vice-Chancellor decided in favour of the