due notice to all of the proposed arrangements. It is true, that it is said that articles agreed upon for the regulation of a partnership cannot be altered without the consent of all the partners. But on the other hand, it is considered, that in many cases the decision of a majority, when a fair exercise of the discretion of the whole body, may be binding, and that if alterations are made by some of the partners and acquiesced in by all, this will amount to the adoption of new terms.(ƒ) In cases unprovided for by any express stipulation, the decision of the majority will then be the ordinary and proper mode of deciding questions arising upon the partnership business, and this will hold good as well in the case of joint-stock companies as of partnerships where the number is limited; but in the case of the former these rules will be applied with great caution (if at all), so far as they may be supposed to authorise any variation in the provisions of the deed of settlement.(g) 5. The mode of taking the sense of the main body in such companies is provided for by appointing that general meetings shall be held at stated periods, and extraordinary general meetings upon any emergency, or when any important step appertaining to the constitution of the company *is to be taken. When the latter are to be held, notice is given [*138] to the members not only of the time and place but of the object of the meeting, such notice being in general directed to be given by advertisement in the newspapers, and which notice is thereby made such to the whole body. The acts and resolutions of such meetings must be strictly limited to the execution of the powers given to them by the deed. For it is said that the members of such company must be strictly held to the letter of their contract with each other; otherwise, when it is proposed to deal with its affairs in pursuance of resolutions passed at such general or extraordinary meetings, many of the partners who may be unwilling to attend may find themselves bound by proceedings directly opposed to the terms upon which they have entered into the partnership. Neither is it sufficient that a resolution should be passed by a general or even an extraordinary general meeting; the very form prescribed by the deed must be followed. Thus, when it directed that at ordinary general meetings regulations might be made consistent with the existing constitution of the company, and provision was made for fundamental changes by extraordinary meetings convened with certain prescribed formalities, and particularly with notice of the specific object of the meeting to each shareholder, a resolution passed by an ordinary general meeting making a radical change by altering the amount of the capital of the company was held to be invalid; and the case was not altered by the fact that the resolution had been previously sanctioned by an extraordinary meeting, which had, however, been convened without the necessary notice having been given.(h) In such a case the Court thought that the partnership could not be bound by what took place at a meeting which was ostensibly (f) Const. v. Harris, Tur. & Russ. 469. (9) Lawe's Case, 1 De Gex, Mac. & G. 429; Wood's Case, 17 Jur. 813. (Court of Appeal.) (h) Lawe's Case, 1 De Gex, Mac. & G. 421. called for a purpose different from that which was the conclusion to which they came.(i) 6. In any of such cases, where resolutions have been actually passed and bye-laws purported to be created, the question of acqui[*139] escence may be raised, and it has been held that a joint-stock company may be bound by acquiescence. But upon this point Lord Cottenham C., remarked: "As to acquiescence, I cannot enter into that, unless I have it proved that each individual member of the company was present at the meeting. Partners no doubt, however numerous, may, as other people may, depart from the general contract between them; but they cannot depart from it without the consent of every individual member composing the partnership: if what they do is not done within the limits of the partnership contract, it is not binding on their co-partners. Having entered into a partnership for certain purposes, and under certain conditions, they may undoubtedly, if they please, alter the contract and agree to enter into a new contract; but then they cannot bind any one individual not agreeing, and it cannot be said that the partnership as such is bound, unless individuals are bound."(k) And in another case of a banking company, the deed of settlement provided, that no person should be registered as a shareholder without the consent of the board of directors, who might testify the same by a certificate signed by three directors; a certificate thus signed was given upon a transfer, but there was no consent of the board, and the transfer was held ineffectual. The original body of shareholders having agreed for a stipulated mode, by which changes in the partnership should be made, the provision was binding upon all, unless it could be shown that all the partners had at any time assented to the adoption of a different mode of transfer.() 7. Such unauthorised resolutions are simply nugatory and inoperative, and cannot dissolve the partnership or otherwise affect it, except so far as when certain acts may have been done in pursuance of them, they quoad third persons, or in respect of any liability arising therefrom, *may be binding upon the members present and sanctioning them. [*140] The manner in which clauses containing powers of this nature will be construed, will be well explained by examining the leading case of Smith and Goldsworthy, (m) in which the deed of settlement of the British Iron Company was considered. By this deed it was ordained that the company's stock should consist of 2,000,0007. sterling, divided into 20,000 shares, of 1007. each, and that the affairs of the company should be conducted under and subject to the regulations therein-after contained; and a following clause (No. 29,) decreed, "That for the better conduct and management of the affairs of the company, a special general meeting, called for the purpose, might, from time to time, amend, alter, or annul, either wholly or in part, all or any of the clauses of the deed, or of the existing regulations and provisions of the company," and substitute others, provided that such amended or altered regulations or provisions should not extend to alter the regulations afterwards laid down in the (Ex parte Morgan, 1 Mac. & Gor. 235. (k) Ex parte Morgan, sup, deed confining the individual responsibility of each proprietor to the amount of his shares in the company for the time being. It was also provided, that the number of directors should never consist of more nor less than sixteen. By resolutions of general meetings, the original number of directors, as fixed by the deed, had been reduced from sixteen to six, and the shares from 1007. to 507. each, although again raised to 100%. It was observed by the Court: "It is contended that these resolutions are not within the authority of the 29th clause of the deed of settlement. Looking at the several clauses together, we are of opinion, that it was competent to two special general meetings, properly convened, to alter the number of directors, such an alteration being a regulation for the better conduct and management of the company. The second objection is of a more formidable description; the amount of the shares is properly part of the constitution of the company, and does [*141] not strictly depend on any clauses, regulations, or provisions of the deed. The alteration of the shares, therefore, seems not to come within the meaning of the 29th clause. If it did, we should hardly consider that the proviso in that clause forbade the alteration, because the reduction in the value of the shares could not have the effect of rendering any proprietor liable, as between himself and the other proprietors, beyond such reduced value, although it might, as was ingeniously argued, diminish the fund to which he had to look for indemnity in the event of being sued by third parties for the debts of the company." 8. In all cases of partnership, equity has a primary jurisdiction; but courts of equity will not in general interfere with the discretion vested in the majority of an incorporated company, or in the general meetings of an unincorporated company, when the acts complained of are within the powers of the corporation or partnership.(n) In the case of a corporation, when the object is to compel compliance with the terms of the charter, and the interests of the whole body are concerned, the course to be pursued will in general be by mandamus, and, when there is nothing to prevent the company from filing a bill in its corporate character, where there is ground for the prayer for relief, the bill of an individual shareholder will not be entertained.(o) But a court of equity will interfere by injunction to prevent an act contrary to the charter, and from which irreparable damage may ensue, as where it was proposed to surrender the charter, the powers of general meetings being inconsistent with the permission of such an act, (p) or to engage the company in undertakings not within its scope and object.(g) *9. When the directors in an unincorporated company commit [*142] a breach of trust or a fraud against the shareholders, equity will lso interfere at the instance of any number of them suing on behalf of themselves and their co-partners;(r) but when the prayer is for indivi (n) Lord v. The Governor and Company of Copper Miners, 2 Phil. 749; Inderwick v. Snell, 2 Mac. & Gor. 216. (0) Mozley v. Alston, 1 Phil. 802. (P) Ward v. The Society of Attorneys, 1 Coll. 378. Bagshaw v. The Eastern Union Railway Company, 2 Mac. & Gor. 389; Simp son v. Denison, 10 Hare, 51. (r) Hitchens v. Congreve, 4 Russ. 562; Lund v. Blanshard, 4 Hare, 9. dual relief, the separate interests must be fairly represented, which cannot be considered to be the case where the interests of the absent members are not identical with those who are parties to the bill.(s) 10. Public companies being thus strictly bound by the terms of their partnership contract, and differing from ordinary partnerships in the circumstance that the members are so numerous that it becomes almost impossible to obtain the assent of the whole body to any change in the constitution, however beneficial, great inconvenience would ensue were it not that the legislature, in the union of its judicial and legislative functions, entertains a remedial jurisdiction. Hence, we find, in searching the Statute Book, under the head of "Local and Personal Public Acts," a very considerable number of acts of parliament passed for the purpose of giving new powers to insurance offices, and enabling them to alter and amend the provisions of their deeds of settlement. Parliament possesses the power of altering and affecting pre-existent rights, whether arising by the tenure of property or by contract, exercising, nevertheless, a peculiar discretion in so doing, and invariably providing, or intending to provide compensation to the parties affected, or saving the rights of those who are unrepresented or unassenting. Thus, it will be observed, that the interests of policy holders in proprietary offices, who are not represented in any general meeting held prior to the application for the act, are invariably preserved unaffected, as well as those of any subsequent policy holder, as regards future changes, where powers are given authorising general *meetings to make material alterations in the distribution of the profits. Where, however, due notice has been [*143] given, and a general consent obtained, such as the approval of two or more general meetings, specially convened for the purpose, parliament has not scrupled to materially affect the interests of particular classes, without either requiring individual consents or providing any other compensation than the consequential benefit derived from an improvement in the constitution of the company. This appears to have been done in the act obtained, in 1850, by the Clerical, Medical, and General Life Office, 13 Vict. c. 9, (local and personal,) and again by the grant of powers to that effect to general meetings of the shareholders of the Globe Assurance Company, by the 7th Vict. c. 39. Every person has a right to seek the benefit of parliamentary interference, and to apply for a special law to supersede the rules of property, by which he finds himself bound, whether arising from contracts or otherwise, and hence the court will refuse to interfere by injunction to prevent an application of this nature, the success of which is altogether in the discretion of the legislature,() although it will interfere at the instance of a dissenting shareholder to prevent the application of the partnership funds for such a purpose, as inconsistent with the provisions of the deed of settlement.(u) 11. The construction of such an act is that of a supplementary deed of settlement, the enactments operating as contracts made by the legislature on behalf of every person interested in anything to be done under Macbride v. Lindsay, 9 Hare, 74; Clay v. Rufford, 8 Hare, 281. (t) Heathcote v. The North Staffordshire Railway Act, 2 Mac. & G. 110. (u) Simpson v. Denison, 10 Hare, 51. them. (v) But there is this distinction between joint-stock companies established by act of parliament, or when the agreement or contract of partnership takes the form of law under the authority of the legislature, and joint-stock companies established by deed, and unincorporated: [*144] *namely, that the specific provisions of the constitution in the case of the act of parliament become law, and will produce the effect specified; while the same, embodied in the deed of partnership, may not have the same effect(w)—in the one case actually changing the laws of property in favour of the company, while in the other the provisions may be binding only upon the parties to the deed; thus, for example, a declaration in a deed of settlement that policies should be assignable at law or payable to bearer, would be simply inoperative, but in an act of parliament would effectuate the intention. Private acts of parliament, it is said, do not bind strangers, unless by express words or necessary implication, the intention to affect the rights of strangers is apparent in the act; and whether an act is public or private does not depend upon any technical considerations (such as having a clause or declaration that the act shall be deemed a public act,) but upon the nature and substance of the case and the Vice-Chancellor Wigram considered that the fact, that an act was distinguished from the general public acts by being headed local and personal, was proof that it was a private act; and that a clause containing a declaration that the act should be deemed a public act, was immaterial.(x) In another case, however, the court considered that an act containing such a clause could not be treated and construed as a private assurance.(y) 12. Private acts of parliament, it will be remembered, never contain any limitation of the liability of the members of the company, where it is not intended to incorporate it; and to prevent the act from having this effect by implication, since no particular form of words is necessary to create a corporation,(z) it is always expressly declared *that nothing contained in the act shall extend to incorporate the com [*145] pany. With this exception, however, all the advantages given by an act of incorporation may be obtained. The company will be empowered to sue and be sued in the name of an officer or in its own name, and to be a party to any legal proceedings either as plaintiff or defendant, including proceedings as plaintiff in bankruptcy, and in any criminal proceedings in respect of any felony committed against its property, as if it were a corporation, and if in respect of any contracts with the company, notwithstanding they may have been taken in the name of any person in trust for the company and may be under seal. Suits may be entertained between the company and individual members, and provisions may be inserted similar to the machinery of the Joint-Stock Companies Registra tion Act for enforcing judgments against the company and its members, (v) Blakemore v. The Glamorganshire Railway Compay, 1 Myl. & K. 154-162. (w) Myers v. Perigal, 17 Jur. 145. L. C. (x) Dawson v. Paver, 5 Hare, 434; Sug. Vendors, 11th edit. 1044. (y) Hargreaves v. Lancaster and Preston Railway Comp. 1 Railway Cases, 416. (z) Co. Litt. 250; Re Newport Marsh Act, 16 Sim. 346. |