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![handle is hein.slavery/ssactsengr0827 and id is 1 raw text is: DENTON V. MACNEIL
the whole shares in the company had been subscribed for, the directors were not
justified in suing for calls. But when that case was heard in banc, though Baron
Martin adhered to that; opinion, yet, on that part of the case, the Court gave no
decision ; on the contrary, some of the other Judges hesitated on the subject. But I
have referred to the case of the Pyrographic Woodwork Company v. Brown (2 Hurl. &
Colt. 63), in which the full Court came to a contrary conclusion. I cannot, therefore,
hold that the fact of only 900 shares being taken is such a fraud as to invalidate
the application for shares. Directors might reasonably allot shares if they have a
reasonable expectation of the success of the undertaking, provided it is not done for
any fraudulent purpose. If a person applying for shares desires to make the sub-[651]
scription of the whole number of shares a condition, he ought to inquire. I cannot
hold that the fact of the directors allotting shares before they have a sufficient number
to carry on the concern is a sufficient ground for taking a contributory off the list,
especially if they have reasonable expectations of being able to carry on the concern.
I think, therefore, I cannot remove this gentleman from the list on the ground of
misrepresentation.
The second ground is this :-That there was an alteration in the objects of the
company between the application for the shares and their allotment. But really
there was no alteration in substance. They cancelled the articles of association and
executed new ones, which were quite'within the object stated in the prospectus, which
do not enable them to carry on a distinct and separate trade from that originally
intended.
The third ground is this :-Captain Lyons says that there was no sufficient quorum
of directors present when the shares were allotted to him. It appears that three
directors were present, but that it had not been then established how many should
form a quorum. It was afterwards determined that three should be a quorum, and
three were present upon the allotment to Captain Lyons, and the same was done as
to the other shareholders.
I am of opinion that a sufficient case is not made out to take Captain Lyons off
the list, and that he must remain a contributory.
[652] DENTON V. MACNEIL. May 23, June 1, 1866.
[S. C. L. R. 2 Eq. 352; 14 L. T. 721; 14 W. R. 813. See Sharpley v. South and
East Coast Railway Company, 1876, 2 Ch. D. 681; Bellairs v. Tucker, 1884,
13 Q. B. D. 577.]
Prospectuses of a company are always colored, but if a material fact is stated in them
which is untrue, and upon the faith of which a person takes shares, he is entitled
as against the company to require allotment of those shares to be cancelled and his
deposit repaid.
The remedy for recovering the deposit on shares is by action at law and not by bill
in equity.
A bill by one of several projectors of an abortive company against his co-projectors
for repayment of moneys expended by him in attempting to carry out the project
cannot be maintained; the bill should pray a general account of the expenditure
and a due adjustment between all the projectors.
Two patents had been granted in 1852 and 1854, respectively, to Dr. Smith for
converting scoriae, lava, slag and other refuse obtained from the smelting of iron, lead
and copper ores, into a material fit for paving, flagging, tiling and general building
purposes.
The Defendant Sir John Macneil and others thereupon attempted to establish a
company, called The British Slag Company, for the purpose of working these
patents, and in May 1855 they registered the company, provisionally, under the
Companies Act, 1844 (7 & 8 Vict. c. 110), but it was never completely registered.
They issued a prospectus which stated that they had purchased the patents for
1050
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