The Sun.
London, England, 1845-12-18 00:00:00

"RAILWAY RESPONSIBILITY.
(From the Times.)
The railway drama approaches its denouement. Each day
developes some new effort of the actors to escape the toils
they have spread for each other. The more they struggle the
triore the plot thickens, and the deeper becomes the interest
of the scene. There is a strange peculiarity in the perform-
ance. It reverses the established order of things, and inverts
the common proportion of numbers between the players and
the audience. Here we have on one side a crowded stage and
a whole community for the dramatis perma, on the
other a beggarly account of empty boxes, dotted thinly here
and there with a few critical and unsympathising spectators.
For our own part we have but little pity for the sufferings of
disappointed speculators. They have not, for the most part,
any legitimate claim upon our feeling. Theirs is a common
case. A large adventure and great risk; enormous gains on
one side, ruin on the other. The throw of the dice has been
unlucky; but the gamester, though entitled by pre-
scription to accuse the fickle goddess he adores,
has no right to quarrel with the better fortune of
his fellow-worshippers, and certainly none to ask
assistance from the bystanders. We speak, of course, of
those only who have been playing with their eyes open. It
is a very different matter when the dice have been loaded
and the cards packed. Then all who see may interfere, and
it is the duty of all to expose the cheat. It cannot be
doubted that in the monster catalogue of railway schemes
there are many bubbles. Companies there must be which
never had an idea of proceeding beyond provisional registra-
tion, nor any object but to raise deposits and " rig" the
market. These are not bond fide associations. They have
flourished by false pretences, and are, in fact, fraudulent
and illegal. The public needs not to be informed, that the
promoters of such schemes can have no claims upon sub-
scribers which a court of law will enforce. Deposits that
have been paid to them may be recovered back; and de-
posits that are apparently due to them upon letters of al-
lotment, but which have not been paid, are safe in the
pockets of the holders. It is idle to talk of partner-
ship and liability to contribution and an equitable adjustment
of losses. There is no partnership where the contract has
been a fraud practised by some members upon the others,
and consequently there can be no claim to contribution. And
what equity is there in sharing losses where there never
would have been an account of profits? But unfortunately
it is often difficult to prove fraud. Thera is a strong rule of
law that it shall never be presumed, and the burden of proof
lies always on the party who makes it his defence. It may
thus happen that bubble companies who have laid their
plans well, and so cautiously worded their advertisements and
prospectuses that no false pretences can be shown, will be
bold enough even to assume the offensive and to take legal
steps for enforcing the payment of their deposits. This has
often been threatened, and sometimes, we fear, with success.
The form of the threat hitherto has been a simple demand of
payment on a certain day. One company, however, has gone
a step further, and holds forth the terrors of a Chancery suit
as the penalty of non-payment. The circular of the Great
Welsh Central Railway Company is in these words:—
" December 10, 1845.
" Sir,—Upwards of 400,000 shares were applied for in this
undertaking by yourself and others, persons of known sub-
stance and respectability. On the faith of such applications
the Committee of Management was induced to make very
considerable outlays, proportioned to the extent of the line
and the high estimation in which it was held by the public.
The deposits on a considerable number of the shares allotted
to other applicants, as well as on those allotted to you, have
not been paid.
" The expenses, considering the magnitude of the scheme,
will be but small, if borne rateably in proportion to all the
allotments, and as it would be manifestly unjust to throw
such expenses exclusively on those parties who have honour-
ably kept their engagements, the Committee have thought it
their duty to lay this case before high legal authority, and
are advised that every applicant to whom shares have been
alloted is legally compellable to pay the full amount of his
deposit.
"Acting under this advice, and with a view to a fair and
just apportionment of such expenses, the Committee have
directed me to request that you will, on or before Thursday
next, the 18th inst., either pay into the hands of one of the
undermentioned bankers the sum above specified, being at
the rate of 4s. per share on your allotment, and your average
ratable proportion of such expenses, or that you will forward
to me before that day the name of a solicitor who will under-
take to appear for you to a bill in Chancery at the suit of the
Company. Thus you may be spared the personal inconve-
nience and annoyance of being personally served with the
writ of subpoena."
The " high legal authority" which is here alluded to is
probably that of Sir Fitzroy Kelly, who has, we understand,
given an opinion to the effect that the application for shares
and letter of allotment constitute of themselves a complete
contract, by which the applicant binds himself to become
a partner, to the extent of the shares allotted to him,
in a copartnership recognized by law—namely, by the
Joint-Stock Companies Act. This opinion certainly appears
to be quite irrespective of the issuing of scrip or the signature
of the Parliamentary contract. Such, we believe, is the
general impression among the lawyers who have viewed it
favourably. If it be correct, we can only say it is most un-
fortunate; for the extent of liability it imposes upon thou-
sands of imprudent individuals cannot be viewed without
alarm. It is, however, to be remarked, that the Solicitor-
General's opinion does not touch the case of a party, who,
having paid his deposit, applies for his scrip and offers to
sign the contract, but is refused the one, and not allowed to
do the other. It would certainly appear reasonable that
the law should make a difference between such a per-
son and one who refuses altogether to pay his deposit,
because he finds there is no chance of premiums in
the market. If the former has been the case of the
Welsh Railway, we are strongly inclined to doubt
their having been well advised. At all events, there are
some crumbs of comfort still remaining for the victims, which
we are at all times ready to distribute to them ; but,
be it understood, more out of pity than from any acknow-
ledgment of their deserts. It may so happen that the ques-
tion will be, whether the contract is one of present or future
partnership —a question which, of course, depends very much
upon the terms of the prospectus, and the particular acts of
the parties. If the projected company be advertised to con-
sist of a certain number of shares, a part only of which are
allotted—a considerable portion being reserved—no matter
for what purpose, the individual who has agreed to take
shares in such a scheme may well be heard to say that the
partnership lie contracted to belong to has never been formed.
There is no doubt that the original projectors are the parties
liable to pay all expenses. In the absence of any express
promise on the part of the so-called shareholders, these are
not chargeable for contribution. It has been said that if
persons set a scheme afoot, and assume to be directors or
managers, all the expenses incurred before the scheme is in
actual operation must, in the first instance, be borne by them.
When it is in operation, the expenses and charges of manage-
ment will be borne by the concern ' • aid then it may be fair
that the preliminary expenses should be paid in the same
way, for then the subscribers have the benefit of them.
Thera is no lack of decisions on this point, and " Nickels v.
Crosby" may be worth an attentive perusal. It may, how-
ever, be urged that what the Committeeof Management seek
to establish in the case under consideration is not so much a
partnership, as a contract to pay an ascertained sum for the
purpose of carrying out a certain undertakiug, the specific
performance of which contract will be enforced by a court of
equity. This is probably the real state of the case. If so,
we advise all those who are sought to be charged to remain
perfectly quiet, and to keep their money in their pockets.
Let these projectors try their luck in Chancery. If they do,
we promise ourselves the sport of seeing "the engineer hoist
with his own petard."