HISTORY OF CORPORATE LAW - Naimlawfirm.comnaimlawfirm.com/wp-content/uploads/2016/02/History_Corporate_Law... · history of corporate law: cases and materials volume i: the development

HISTORY OF CORPORATE LAW:

CASES AND MATERIALS

VOLUME I:

THE DEVELOPMENT OF CORPORATE LAW TO 1849

BY

MARIO NAIM, ESQ.

What is owed to the corporation is not owed to the individual members, and what the corporation owes the individual

members do not owe.

Ulpian, Digest of Justinian, 3.4.7.1

© 2013 by Mario Naim.

Published under the Creative Commons Attribution-NonCommercial 3.0 Unported license.

http://creativecommons.org/licenses/by-nc/3.0/

ISBN: 978-0-9919388-0-3

Volume I - Contents

Introduction

Part I. The Emergence of Company Law in the United Kingdom from 1503 to 1693.

Part II. The Bubble Act and its Aftermath: 1694 to 1843.

Part III. Corporate Law in the United States from 1776 to 1849.

Part II. The Bubble Act and its Aftermath: 1694 - 1843

VOLUME I

Detailed Part II Table of Contents

Chapter 1. Securities Intermediaries at the Beginning of the Period .............................................. 1

a. The Pernicious Art of Stock Jobbing (1696-7) ..................................................................................................... 1

b. Anderson on the Act of 1697 .................................................................................................................................. 5

c. Regulation of Brokers by the City of London (1707) ......................................................................................... 6

d. Nature of City of London Regulations Concerning Brokers (1723) .............................................................. 13

e. Regulation of Commissions and Rates of Interest (1711-3) ............................................................................ 14

Chapter 2. The South Sea Bubble and the so-called “Bubble Act”............................................... 17

a. Creation of the Bank of England (1694) ............................................................................................................. 17

b. Creation of the South Sea Company (1711) ....................................................................................................... 26

c. Defoe on the Nuisance of Stock-Jobbing (1719)............................................................................................... 32

d. Agreement with the South Sea Company to redeem the Public Debt (1720) .............................................. 34

e. Appointment and Report of a Parliamentary Committee (February - April 1720) ..................................... 44

f. The Bubble Act’s Legislative History (May-June 1720) .................................................................................... 69

g. The Bubble Act (11 June 1720) ............................................................................................................................. 75

h. Anderson on the South Sea Bubble ..................................................................................................................... 82

i. Dismissal of Petitions for Patents and Charters; List of Bubbles (12 July 1720) ......................................... 87

j. An Unsuccessful Proposal to Address Excessive Speculation in the Stock Market .................................... 92

k. Sentencing of a Defendant Convicted under the Bubble Act (1722) ............................................................. 93

l. Extension of the Bubble Act to the American Colonies (1741) ..................................................................... 94

Chapter 3. Regulation of Securities Intermediaries after the Bubble Period ............................... 97

a. Debates in the Lords on a Bill to Prevent the Infamous Practice of Stock Jobbing (1734) ...................... 97

b. Barnard’s Act (1734) ............................................................................................................................................. 101

c. Consequences of Barnard’s Act on Exchange Alley ....................................................................................... 105

d. Who is a Broker? .................................................................................................................................................... 106

e. Nature of City of London Regulation Concerning Brokers (1816) .............................................................. 117

Chapter 4. Deeds of Settlement ........................................................................................................125

a. The Deed of Settlement of the Society for Equitable Assurances (1762) ................................................... 125

b. Prospectuses of Mining Companies (1825)....................................................................................................... 131

c. Form of Provisional Agreement for Joint Stock Company (1842)............................................................... 135

Chapter 5. Canal Mania ......................................................................................................................137

a. MacPherson on Canal Mania ............................................................................................................................... 137

b. Acts for the Creation of Canal Corporations (1793-4) ................................................................................... 137

Chapter 6. Hostility to the Incorporation of Insurance Companies ...........................................143

a. Report on the Petition for a Charter for the Equitable Assurance (1761) .................................................. 143

b. Report on the Petition for the Globe Insurance Charter (1802)................................................................... 147

c. Unincorporated Joint Stock Companies with the Right to Sue and Be Sued (1807) ............................... 155

Chapter 7. Banking Laws and Joint Stock Banking Companies ..................................................159

a. An Act for establishing an Agreement with the Bank of England (1800)................................................... 159

b. Parliamentary Debates on the Bank Charter Amendment Bill (1826) ......................................................... 160

c. An Act for the better regulating Copartnerships of certain Bankers in England (1826) .......................... 167

Chapter 8. The Late and Unexpected Revival of the Bubble Act ...............................................173

a. Rex v. Dodd (1808) ............................................................................................................................................... 173

b. Rex v. Webb (1811) ............................................................................................................................................... 177

c. Pratt v. Hutchinson (1812) ................................................................................................................................... 184

d. Josephs v. Pebrer (1825) ....................................................................................................................................... 187

e. Nockels v. Crosby (1825) ..................................................................................................................................... 189

f. Kinder v Taylor (1825) ......................................................................................................................................... 194

Chapter 9. Repeal of the Bubble Act ...............................................................................................214

a. A comprehensive proposal for reform (1825) .................................................................................................. 214

b. Parliamentary debates on the repeal of the Bubble Act (1825) ..................................................................... 218

c. The Act to repeal the Bubble Act (1825) .......................................................................................................... 221

Chapter 10. A Period of Uncertainty in the Courts .......................................................................222

a. Van Sandau v Moore (1826). ............................................................................................................................... 222

b. Duvergier v. Fellows (1828). ................................................................................................................................ 236

c. Walburn v. Ingilby (1833)..................................................................................................................................... 246

d. Blundell v. Winsor (1837) ..................................................................................................................................... 254

e. Garrard v. Hardey (1843) ..................................................................................................................................... 257

f. Harrison v. Heathorn (1843) ............................................................................................................................... 263

Chapter 11. Parliamentary Resistance to Granting the Incidents of Corporateness.................292

a. Incorporation and Exclusive privileges (1810) ................................................................................................. 292

b. Control of the Affairs of a Partnership and Limited Liability (1819)........................................................... 307

c. Parliamentary Resistance to Legislative Incorporations (1824) ..................................................................... 308

d. Resistance to Incorporation and the Interests of Creditors (1824) .............................................................. 309

e. Shareholders’ Unlimited Liability as a Condition to Incorporation (1824) ................................................. 311

f. Except in Scotland, Partnerships Should not be Capable of Suing and Being Sued (1825) .................... 311

g. Fear of Granting Advantages that will Result in Monopoly (1833).............................................................. 313

Chapter 12. First Attempts at Reform of the Law Applicable to Companies ...........................316

a. Adoption of the First Trading Companies Bill (1834) .................................................................................... 316

b. Second Trading Companies Act (1837) ............................................................................................................. 319

c. Defeat of An Attempt to Amend the Trading Companies Act (1838) ........................................................ 328

Table of cases ..............................................................................................................................331

Table of statutes .........................................................................................................................332

Bibliography ................................................................................................................................333

Chapter 1. Securities Intermediaries at the Beginning of the Period

a. The Pernicious Art of Stock Jobbing (1696-7)

House Commission Report on the State of Trade (1696)1

“State of Trade.

Mr. Blathwaite, from the Commissioners appointed to look after the Trade of England, presented

the Answer of the said Commissioners, in Obedience to the Order of the House, requiring them to

lay before this House the present State of our Trade.

…

The pernicious Art of Stock-jobbing2 hath, of late, so wholly perverted the End and Design of

Companies and Corporations, erected for the introducing, or carrying on, of Manufactures, to the

private Profit of the first Projectors, that the Privileges granted to them have, commonly, been made

no other Use of, by the First Procurers and Subscribers, but to sell again, with Advantage, to ignorant

Men, drawn in by the Reputation, falsly raised, and artfully spread, concerning the thriving State of

their Stock: Thus the first Undertakers, getting quit of the Company, by selling their Shares for much

more than they are really worth, to Men allured by the Noise of great Profit, the Management of that

Trade and Stock comes to fall into unskilful Hands; whereby the Manufactures, intended to be

promoted by such Grants, and put into the Management of Companies, for their better Improvement,

come, from very promising Beginnings, to dwindle away to nothing, and be in a worse Condition than

if they were perfectly left free, and unassisted with such Laws, or Patents; an Instance whereof, we

humbly conceive, is to be found in the Paper and Linen Manufactures, which, we fear, feel the Effects

of this Stock-jobbing Management; and are not in so thriving a Condition, as they might have been,

had they not fallen under this kind of Misfortune.

This likewise is that, which seems to us to lay a mighty Obstacle in the Way to the Raising and

Recovering again of our Home-fishery; which is; with Reason, thought to require more than a private

Stock, and the scattered Endeavours of Men acting separately, to set it a going, and make it subsist:

If, therefore, that Part of our Trade be not in so good and stourishing an Estate, as it could be wished,

we are humbly of Opinion, it is in some Danger to remain so, till the Hands of the Poor be all brought

to Labour, and till a common Stock can be raised, and a Company erected, upon such Terms, as may

secure the Management of it from the destructive Shuffling of the Stock-jobbing.

1 From: 'House of Commons Journal Volume 11: 25 November 1696', Journal of the House of Commons: volume 11: 1693-1697 (1803), pp. 593-598. URL: http://www.british-history.ac.uk/report.aspx?compid=39333. 2 A “stock-jobber” or “jobber” is someone that buys and sells securities as a principal. Although the 1697 Act sought to prevent brokers from acting for their own account, many continued to openly do so. Cope, S. R., “The stock exchange revisited: a new look at the market in securities in London in the eighteenth century”, Economica, XLV (I978), p. 3. On this point see: Mortimer, Thomas, Every Man his own Broker, London, S. Hooper, 7th ed., 1769, pp. 136-7. URL: http://goo.gl/rKA3I.

http://www.british-history.ac.uk/report.aspx?compid=39333

http://goo.gl/rKA3I

Part 2: The Bubble Act and its Aftermath: 1694 to 1843.

2

…

Whitehall, November, 24th, 1696.”

__________________________________

Act to restrain the number and ill practice of brokers and stock-jobbers (1697)3

From 1 May 1697 no Person to as a Broker in London or Westminster, or Bills of Mortality, without

Licence of the Lord Mayor of London &c.

Broker on Admittance to take an Oath.

Lord Mayor, &c. to administer the Oath.

Broker in three Months after Admittance to take the Oaths 1 W. & M. ss. 1. c. 8. and subscribe the

Association, 7&8W. 3.C. 27. and enter into an Obligation.

Number of Brokers not to exceed 100.

Admittance Fees not to exceed 40 s.

Brokers Names and Places of Abode to be affixed on the Royal Exchange, and in Guildhall, London.

Penalty on Person acting as a Broker, if not admitted according to this Act, and on Persons

employing them.

Penalty on Person not being a Sworn Broker, who shall act, in discounting Tallies, Exchequer Bills,

&c.

Sworn Broker to keep a Register Book, and to enter all Contracts, &c. within three Days after

made, &c.

Broker shall not take more than 10 s. per Cent. Brokage.

Broker after Admittance to carry about him a Silver Medal of the King's Arms, &c. with the

Broker's Name, &c.

Penalty on Broker dealing for himself, &c. or making any Gain, &c. over and above the Brokage

allowed by this Act.

Policies, Contracts, &c, entred into, on which any Praemium shall be given to accept any Share, &c.

in Joint Stock, Tallies, &c. to be void; except such Policies, &c. as are to be performed in three Days.

Penalty on Sworn Broker not making Discovery of other Persons acting as such.

3 8 & 9 W. III c. 32. URL: http://goo.gl/hJZRE. Paragraphs added.

http://goo.gl/hJZRE

1. Regulation of Securities Intermediaries at the Beginning of the Period

3

This Act to continue for three Years.

Person buying or selling Cattle, Corn, &c. not to be esteemed a Broker.

Sworn Brokers from 1 May 1697, &c. not to drive any Bargain for Tallies, &c. on any Fund granted

by Parliament, unless licenced by the Treasury.

__________________________________

An Act for making good the Deficiencies of several Funds therein mentioned; and for

enlarging the Capital Stock of the Bank of England; and for raising the Publick Credit (1697)4

“XXXIV. And for preventing of clandestine or fraudulent Contracts for Bargains or Dealings in

Bank Stock for the future; Be it further enacted by the Authority aforesaid, That from and after the

be said five and twentieth Day of March, which shall be in the Year of our Lord One thousand six

hundred ninety seven, no Promise, Contract, Bargain, Covenant or Agreement, made either by Word

of Mouth, or in Writing, for the buying or selling of any Bank Stock, or for the transferring, changing

or altering the Property thereof, either in Trust, or otherwise however it be, may be good or valid in

Law or Equity, or adjudged to be legal, obligatory or binding to either or any of the Parties making

the same, or concerned therein, or for whose Use or Account the same is or shall be made, unless

such Promise, Contract, Bargain, Covenant or Agreement, shall be actually registered in Words at

Length, in the Book or Books of the Bank, by the Officer there, thereunto appointed, within seven

Days, and actually transferred within fourteen Days next after the making of such Promise, Contract,

Bargain, Covenant or Agreement.”

…

LX. And be it enacted by the Authority aforesaid, That all and every Person and Persons, who

shall be employed as a Broker or Brokers, Solicitor or Solicitors, or otherwise, in the Behalf of any

other Person or Persons, to make or drive any Bargain or Contract for the buying or selling of any of

the said Orders or Tallies, who shall, after the said tenth Day of June One thousand fix hundred ninety

seven, take or receive, directly or indirectly, any Sum or Sums of Money, or other Reward or Thing,

for Broakidge, soliciting, driving, procuring or making such Contract or Bargain, over and above the

Sum of two shillings and Six pence for the Broakidge, soliciting, driving or procuring such Contract

or Bargain for one hundred Pounds, and so rateably for a greater or lesser Sum, shall forfeit for every

such Offence twenty Pounds, to such Person or Persons as will sue for the same, by Action of Debt,

or of the Case as aforesaid; and if any Broker, Solicitor or Driver of any Bargain or Contract, for any

such Tallies or Orders, as aforesaid, shall, after the said tenth Day of June One thousand six hundred

ninety seven, drive or make any such Bargain or Contract for any Tally or Order, or any Money due

thereupon, in which Contract or Bargain there shall be any Premium or Allowance made, or agreed

4 8&9 W. III c. 20. URL: http://goo.gl/GwsMC.

http://goo.gl/GwsMC


4

to be made contrary to this Act, then he or they so offending, shall, for every such Offence, forfeit

the Sum of five hundred Pounds, to wit, one third Part thereof to the King, and the other two thirds

thereof to such Person or Persons who will sue for the same, to be recovered as aforesaid; and that

every such Broker, Solicitor or Driver of such Bargain, who shall be guilty of such Offence, and be

thereof convicted, shall be deemed, and is hereby adjudged to be a common Extortioner, and shall

suffer such further Pains and Penalties as by the Laws and Statutes of this Realm may be inflicted for

common Extortion.”

__________________________________

Daniel Defoe: The Villainy of Stock-Jobbers Detected (1701)5

“IT has more then once been foretold that Stock Jobbers and Brokers wou'd Ruine the Trade, and

several Times they have bid fair for the Performance.

But never was a greater Wound given to the Trade in General, than now; Never so unhappily Tim'd

to the Disadvantage both of the Publick Revenue and the Current Credit of the Nation, nor never

was there so much Bare fac'd Villany acted, in the Affairs of Publick Trade as their is now.

Trade in general is Built upon, and supported by two essential and principal Foundations, Viz.

Money and Credit, as the Sun and Moon in their Diurnal Motion alternately Enlighten and Envigorate

the World, so these two Essentials maintain and preserve our Trade; they are the Life and Soul of

Trade, and they are the support of one another too. Money raises Credit, and Credit in its turn is an

Equivalent to Money.

From hence it follows, That Trade always bears a proportion to Money and Credit ; and

consequently, they who by any methods Diminish the Stock of Cash or Credit, equally injure our

Trade.

Tho’ it would seem needless to go back to particular Cases for the proof of this Assertion,' [2]

yet it may not be amiss to lee a little from whence it comes to pass, That out Trade is less now the War

is over, than it was before it began.

The calling in our Coin visibly put a stop to Trade, because the Stream which drove the Mill, the Oil that

moved the Wheel, was ceas'd. The prodigious Paper-Credit which past in Lombard-street and which

supply’d more than twice the Quantity of the Coin, equally supported Trade with the Money, and

funk at once with the Coin.

The Merchants finding the sensible loss to Trade, for want both of that Money and Credit, put

their Invention on the tepters; and found out the Expedient of a Bank. The Exchequer also feeling,

5 Daniel Defoe, The villainy of stock-jobbers detected, and the causes of the late run upon the bank and bankers discovered and considered, London, 1701. URL: http://archive.org/details/villainyofstockj00defo.

http://archive.org/details/villainyofstockj00defo


5

the loss of the Coin supplied with an imaginary Species in Exchequer-Bills, and yet both these fail'd

in the Performance. So impossible it is to force Credit without Cash. For till the ready Money began

to appear again, the Brokers and Jobbers made a prey of all Mankind in the matter of Bills; and in

spight of the endeavours of the Bank or the Exchequer, they bought and sold their Notes at the

shameful Discount of 10, to 16 and 20 l. per Cent.

I shall not think it needful to view the ill effect this had upon our Trade; how the needy Trades-

men, who sold their Goods at common [3] rates, were sain to Discount more than their profit to get

their Money. How the Exchequer-Notes design'd for a currency in Payments were Jobb'd about the

Town; and by the Policy of these Gentlemen put upon the Trades-men, in order to be bought again

at high Discounts, and then Engrossed again by the Money’d Men, who obtained the Discount as a

Premio added to the Interest upon the Originals.

I could fill a large Volume with the relation of such Particulars, and easily make out the dammage

that befell our Trade in General; but I have instanc't this only to prove how fatal the sinking of Paper-

Credit has been to the Nation.

…

If that new Mistery or Machine of Trade we [5] call Stock-Jobbing, be first proved to be at the

bottom of all this mischief; I hope the Great Representative of the Nation, the Parliament, will need

very few Arguments to satisfie them of its being a Publick Grievance.

The Old East-India Stock by the arts of these unaccountable People, has within 10 Years or

thereabouts, without any material difference in the Intrinsick value, been Sold from 300l. per Cent. to

37l. per Cent, from thence with fluxes and refluxes, as frequent as the Tides, it has been up at 150l. per

Cent, again; during all which differences, It would puzzle a very good Artist to prove, That their real

Stock (if they have any) set loss and gain together, can have varied above 10 per Cent, upon the whole;

nor can any Reasons for the rise and fall of it be shown, but the Politick management of the Stock-

Jobbing Brokers; whereby, according to the Number of Buyers and Sellers, which ‘tis also in their

Power to make and manage at will, the Price shall dance attendance on their designs, and rise and fall

as they please, without any regard to the Intrinsick worth of the Stock.

b. Anderson on the Act of 16976

“King William's ministry had flattered themselves, from year to year, with the hope of a speedy

peace. Many of the funds, therefore, upon the credit of which money had, in different years, been

granted by Parliament, had, by this time, been found, or suffered to be, very deficient; the Treasury

gentlemen, though otherwise men of abilities, having, in various instances of appropriating the duties,

judged very widely of the true amount of those duties: as particularly might be instanced with respect

6 Adam Anderson, An Historical and Chronological Deduction of the Origin of Commerce, London, 1787 ed., v. 2, p. 630, URL: http://goo.gl/bLdZ1. Anderson was a clerk at the South Sea Company at the time of the 1720 Bubble.

http://goo.gl/bLdZ1


6

to glass-bottles, earthenware, tobacco-pipeclay, &c.—The deficiencies of which funds, for answering

the principal and interest charged thereon, were soon observed by the monied men who were creditors

of the public, and who also took advantage of the remoteness of the courses of payment of the tallies

and orders charged on some other funds. This had, since the revolution, given rise to a new trade of

dealing in government or national securities, very much to the damage of the public, as well as to such

proprietors of the funds as were under the necessity of parting with them, at the discount of from

forty to fifty per cent. Concerning which melancholy time, Dr. D'Avenant, in his Essay upon Loans,

printed in the year 1710, justly remarks,

“That the government appeared like a distressed debtor, who was daily squeezed to death

by the exorbitant greediness of the lender. The citizens began to decline trade and to turn

usurers. Foreign commerce, attended with the hazards of war, had infinite discouragement;

and people, in general, drew home their effects, to embrace the advantage of lending their

money to the government.”

To prevent the ill effects of this unhappy trade, a law was made in this same session of Parliament,

cap. xxxii. To restrain the number and ill practice of brokers and stock-jobbers; which premises, “That

sworn-brokers were anciently allowed in London, for the making of bargains between merchants and

traders, for merchandize and bills of exchange:—But, of late, divers such have carried on most unjust

practices, in selling and discounting of tallies, bank-stock, bank-bills, shares in joint-stocks, &c.

confederating themselves together to raise or sell, from time to time, the value thereof, as may most

suit their own private interest. Wherefore,” &c. they were now restrained from acting without a licence

from the lord mayor and court of aldermen.—To take also an oath of fidelity.—To be limited to one

hundred in number, whose names shall be written on the Royal Exchange.—To incur a penalty of two

hundred pounds is they deal for themselves in any merchandize, or in those tallies, stocks, &c—To

enter into an obligation for their faithful actings; and, on failure, to forfeit five hundred pounds, &c.”

c. Regulation of Brokers by the City of London (1707)

House Debates on the Further Renewal of the Act of 1697

January 177

“A Petition of several Merchants, and others, of the City of London, was presented to the House,

and read: setting forth, that Time out of mind, for the Conveniency of Trade, sworn Brokers have

been admitted in the City of London, and Liberties thereof, and in most foreign trading capital Cities;

but there having been many notorious Abuses committed by Stock-Jobbers, and pretended Brokers,

to prevent the same, an Act of Parliament passed in 1697, to ascertain the Number of Brokers, for

three Years; which was continued for seven Years longer, and expires at the End of this Session: That

the Petitioners think it necessary, that such Person should be employed, for the Conveniency of Trade:

7 Journals of the House of Commons: volume 15: 1705-1708 (1803), p. 502. URL: http://goo.gl/1Eiv9.

http://goo.gl/1Eiv9


7

And praying, that Leave may be given to bring in a Bill for continuing the said former Acts, and making

the same more effectual in such Matters, as shall be found necessary.

Ordered, That a Committee be appointed, to examine, what Laws are expired, or near expiring:

and to report, what are fit to be revived, and continued…”

3 February8

“A PETITION of divers Freemen of the City of London, bred up to Trade and Merchandize, in

behalf of themselves, and others, was presented to the House, and read; setting forth, that a Petition

is presented to the House, for continuing an Act of Parliament, for limiting the Number of Brokers

in London: That many of the Petitioners have been ruined by Losses in the late and this War, and

have no other Means of getting a Livelihood, but by the Employment of Brokers: That such a

Restraint not only prejudices Trade in general, but is a Detriment to particular Traders, Who are

thereby debarred from employing such Persons in their Business, as they judge best capable to serve

them; and other Employment in this Kingdom is limited to a certain Number: And praying, that the

Petitioners may enjoy an equal Freedom with the rest of their Fellow-subjects, in following such

Employments, as they find themselves most fit for, and that the said Act may not be continued.

Ordered, That the said Petition do lie upon the Table, until the Report shall be made from the

Committee, to whom it was referred to examine, what Laws were expired, or near expiring; and to

report, what were fit to be continued.”

4 February9

“A Petition of divers Merchants, and other Traders, in the City of London, was presented to the

House, and read; setting forth, that the Petitioners are informed, a Petition has been presented to the

House, praying, that an Act for limiting the Number of Brokers in the said City (now expiring) may

be continued: That the Petitioners conceive, such a limited Number is a Prejudice to Trade in general,

and to Traders in particular; for that they are necessitated, under a Penalty, to employ some of the

limited Number, ‘tho' others (not admitted) are more capable of serving the Traders in their several

Negociations; and such a Restraint is a great Hardship upon many Persons, who have been ruined by

the War, not to allow them a Liberty of getting a Livelihood by such Means, as they are versed in: And

praying, that the Number of Brokers may not be limited, but that every Trader may be at liberty to

employ such Persons, as they think fit.

Ordered, That the Petition do lie upon the Table, until the Report shall be made from the

Committee, to whom it was referred to examine, what Laws were expired, or near expiring, and to

report, what were fit to be revived, and continued.”

6 February10

8 Ibid., p. 523. 9 Ibid., p. 526. 10 Ibid., p. 530.


8

“Mr. Woollaston reported from the Committee, to whom it was referred to examine, what Laws

are expired, or near expiring, and to report, what are fit to be revived, and continued; that they had

come to a Resolution, which they had directed him to report to the House: And which he read in his

Place, and afterwards delivered in at the Clerk's Table; where the same was read, and is as followeth;

viz.

Resolved, That it is the Opinion of this Committee, That the Act, made in the eighth and ninth

Years of the Reign of the late King William the Third (intituled, An Act to restrain the Number, and

ill Practices, of Brokers and Stock-jobbers) which was to continue for three Years, and from thence

to the End of the next Sessions of Parliament; and which was further continued by an Act, made in

the eleventh and twelfth Years of the Reign of his said late Majesty, for seven Years, from the

Expiration thereof; which will expire at the End of this Session of Parliament, is fit to be continued.

Ordered, That the said Report, and the Petitions, which were ordered to lie upon the Table, till the

Report was made, be taken into Consideration Tomorrow Seven-night.”

14 February11

“Ordered, That the Consideration of the Report from the Committee, to whom it was referred to

enquire, what Laws were expired, or expiring, and to report what were fit to be revived, and continued,

and who reported, that the Acts to restrain the Number, and ill Practices, of Brokers and Stock-

jobbers, were fit to be continued, be adjourned till this Day Month.”

19 February12

“A Petition from William Stewart, present Garbler13 for the City of London, was presented to the

House, and read; setting forth, that in the Year 1686, the Petitioner was admitted by the Court of Lord

Mayor and Aldermen of London to the Office of Garbler of the said City, and had a Lease of that

Office for 61 years, be paying £.976. 10s. Fine, and £.300 per Annum Rent, for the same: That the said

Office hath been since confirmed to the Petitioner by the Act of Parliament, for reversing the Quo

Warranto against said City: That, if the House should pass the Bill now before them, for repealing the

Act, of the first of King James the First (for the well garbling of Spices) without any Recompense to

the Petitioner, he will be dispossessed of his Property in the said Office: And praying, that he may be

heard by Counsel, what he hath to offer against the said Bill, and that some Recompense may be made

the Petitioner, suitable to the Value of his present Interest in the said Office.

Ordered, that the Petition do lie upon the Table, until the Bill be read a Second time.

…

11 Ibid., p. 544. 12 Ibid., p. 553-4. 13 The Garbler is the official charged with inspecting shipments of spices. The Company of the Levant had presented a petition on 24 January 1707. For the House Committee report on the Petition from the Levant Company &c. against the Act for the well garbling of Spices, see: Ibid., p. 535-8.


9

A Bill for repealing the Act, of the first Year of King James the First, intituled, An Act, for the

well garbling of spices, was read a Second time.

Resolved, That the Bill be committed to Sir Robert Davers, [&c.] and all the Merchants of the

House; and all, that serve for London, and the Sea-Ports; And they are to meet this Afternoon, at Five

a Clock, in the Speaker’s Chamber; and have Power to send for Persons, Papers, and Records.

Ordered, That the Consideration of the Petition of William Stewart (this Day presented to the

House) be referred to the said Committee; and that he be heard by his Counsel before the Committee

thereupon, if he think fit.”

20 February14

“The House being informed, that the Sheriffs of the City of London attended, they were called in,

and, at the Bar, acquainted the House, that they were directed by the Lord Mayor, Aldermen, and

Common Council, to present to this House a Petition of the Lord Mayor, Aldermen, and Common

Council, of the City of London.

And they presented the same to the House accordingly.

And then they withdrew.

And the Petition was read; setting forth, that the House having given Leave to bring in a Bill for

regulating the Garbler’s Office within the said City, the Petitioners conceive the same will greatly

prejudice them, by so much as the Benefit, arising by the said Office, will in the Whole, or in Part, be

taken away, and lessened, because it is a Part of the City Revenue Time out of Mind, vested in them

by Charters for valuable Consideration, and settled by Act of Parliament, towards raising £.8,000

yearly, as a perpetual Fund of Interest to be paid to the Orphans of London: That the residue of the

Revenue belonging to the said City is not near sufficient to defray the Charges of the Government,

and publick Charges, thereof: And praying, that, in lieu of the Loss they may sustain (if the House

shall think fit to pass the said Bill) they may hace a reasonable Equivalent, or that the said Office and

Franchise of the City may be still continued.

Ordered, that the Consideration of the said Petition be referred to the Committee, to whom the

Bill for repealing the Act, of the first Year of King James the First, intituled, An Act for the well

garbling of Spices, is committed; and that they do examine the Matter thereof, and report the same to

the House.”

1 March15

“Mr. Ward (according to Order) reported from the Committee, to whom the Bill for the repealing

the Act, of the first Year of King James the first, intituled, An Act for the well garbling of Spices, was

committed; that they had heard the Counsel for the Petitioners, upon the Petitions to them referred;

and that the Committee had directed him to report the Bill to the House, Without any Amendment;

14 Ibid., p. 556. 15 Ibid., p. 582-3.


10

but that the Committee conceived, a Recompence to the Garbler was worthy the Consideration of

this House: And he delivered the said Report, and Bill, in at the Clerk's Table; where the Report was

read, and is as followeth:

That the Committee having heard the Counsel upon the several Petitions to them referred, and

gone through the Bill without making any Amendments thereto;

And that the Committee taking into their Consideration the Petitions of the Lord Mayor,

Aldermen, and Common Council of the City of London and of Mr. Wm. Stewart, the present Garbler,

whereby it is prayed, that, in lieu of such Loss, as they shall sustain by the Bill for repealing the Act,

of the first Year of King James the First, for the well garbling of Spices, they may have such an

Equivalent and Recompence, as to this House shall be thought fit:

And that the Committee apprehended, the Matter of such Equivalent and Recompence was not

proper before them; and thereupon came to the Resolution following; viz.

Resolved, That it is the Opinion of this Committee, That the Matter of such Equivalent and

Recompence to the said Petitioner is worthy the Consideration of this House.

A Clause was offered to be added to the Bill, That a Sum of £.976. 10s. should be paid to Wm.

Stewart, for a Compensation for his Interest.

And the Same was twice read, and amended; and, upon the Question put thereupon, agreed unto

by the House to be made part of the Bill.

…

Ordered, That the Bill, with the Amendments, be ingrossed.”

4 March16

“An Ingrossed Bill for repealing the Act of the first Year of King James the First, intituled, An

Act for the well garbling of Spices, was read the Third time.

Resolved, That the Bill do pass; and that the Title be, An Act for repealing the Act, of the first

Year of King James the First (intituled, An Act for the well garbling of Spices) and for granting an

Equivalent to the City of London, by admitting Brokers.

Ordered, that Mr. Ward do carry the Bill to the Lords, and desire their Concurrence thereunto.”

__________________________________

16 Ibid., p. 588.


11

An act for repealing the act of the first year of King James the First, intituled, An act for

the well garbling of spices; and for granting an equivalent to the city of London by admitting

brokers17

“WHEREAS by an act of parliament made in the first year if the reign of King James the First, intituled, An

act for the well garbling of spices, several drugs, wares, spices and merchandizes are to be garbled within the city of

London, and the liberties thereof, as therein is mentioned, under the penalties and forfeitures therein specified, and several

powers are thereby given to the garbler for the time being, for that purpose; which act for the garbling of spices, and other

wares and merchandizes, in many cases is now become useless, and in other cases would be prejudicial, and to the damage

of several wares and merchandizes so to be garbled, to the obstruction and discouragement of the trade of this kingdom,

and the foreign exportation, and to the vexation of the subjects, by unnecessary prosecutions in her Majesty's court of

Exchequer; be it therefore enacted by the Queen's most excellent majesty, by and with the advice and

consent of the lords spiritual and temporal, and commons, in this present parliament assembled, and

by the authority of the same, That the said act shall be, and from henceforth stands absolutely

repealed, and all powers, penalties, and forfeitures ed. therein mentioned or given, shall from

henceforth be null and void.

…

IV. And whereas the profits of the said office are part of the revenues and incomes of the city of London, and

are now lett by lease to William Stewart, under the rent of three hundred pounds per annum, the profits of which

office, and the right of the said William Stewart to the same, by repealing the said ad will be very much diminished;

be it enacted by the authority aforesaid, That from and after the determination of this present session

of parliament, all persons that shall act as brokers within the city of London and liberties thereof,

shall from time to time be admitted so to do by the court of mayor and aldermen of the said city for

the time being, under such restrictions and limitations for their honest and good behaviour as that

court shall think fit and reasonable, and shall upon such their admission pay to the chamberlain of the

said city for the time being, for the uses herein after mentioned, the sum of forty shillings, and shall

also yearly pay to the said uses the sum of forty shillings upon the nine and twentieth day of

September, in every year; all which monies yearly, shall in the first place be applied for and towards

the paying and satisfying to the said William Stewart the sum of nine hundred sixty seven pounds and

ten shillings, for a compensation for his interest in the said office; and that from and after the full

payment of the said sum of nine hundred sixty seven pounds and ten shillings to the said William

Stewart, all the monies arising by such admissions and yearly payments, shall go to, and be enjoyed by

the said mayor and commonalty and citizens of the city of London; and that from and after the

determination of this present sessions of parliament the said lease to the said William Stewart, and

every clause therein contained, shall cease, determine, and be absolutely void.

V. And be it further enacted by the authority aforesaid, That if any person or persons from and

after the determination of this present sessions of parliament, shall take upon him to act as a broker,

or employ any other under him to act as such, within the said city and liberties, not being admitted as

aforesaid, every such person so offending shall forfeit and pay to the use of the said mayor and

17 6 Anne, c. 16 (1707). URL: http://goo.gl/aK5Hm.

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12

commonalty and citizens of the said city, for every such offence, the sum of five and twenty pounds,

to be recovered by action of debt, in the name of the chamberlain of the said city, in any of her

Majesty's courts of record, in which no protection, essoin, or wager of law shall be allowed, or any

more than one imparlance.”

__________________________________

Regulations passed by the City of London (1708)18

“In 1708, the year after this act passed, the Court of Mayor and Aldermen made certain rules and

regulations for the government of brokers, which have ever since been, and still are in force, and by

virtue of which every person, previous to his being admitted a broker, is required to enter into a bond

to the Mayor, Commonalty and citizens of London, and also to take an oath, the forms of which are

prescribed by the same rules and regulations, and are, in substance, as follows:

Condition of the bond. “That the said A. B., for and during such time as he shall and doth continue

in the said office and employment, shall and do well and faithfully execute and perform the same

without fraud, covin, or deceit; and shall, upon every contract, bargain, or agreement by him made,

declare and make known to such person or persons with whom such agreement is made the name or

names of his principal or principals, either buyer or seller, if thereunto required, and shall keep a book

or register, and therein truly and fairly enter all such contracts, bargains, and agreements, within three

days at the farthest after making thereof, together with the names of all the respective principals for

whom he buys or sells, and shall upon demand made by any, or either of the parties buyer or seller

concerned therein, produce and shew such entry to them or either of them to manifest and prove the

truth and certainty of such contracts and agreements, and for satisfaction of all such persons as shall

doubt whether he is a lawful and sworn broker or not, shall, upon request, produce a medal of silver

with his Majesty's arms engraven on one side, and the arms of this city with his name on the other,

and shall not, directly or indirectly, by himself or any other, deal for himself or any other broker in

the exchange or remittance of money, or in buying any tally or tallies, order [157] or orders, bill or

bills, share or shares, or interest in any joint stock to be transferred or assigned to himself, or any

broker, or to any other in trust for him or them, or in buying any goods, wares, or merchandizes, to

barter and sell again upon his own account, or for his own or any other broker's benefit or advantage,

or to make any gain or profit in buying or selling any goods over and above the usual brokerage; and

shall and do discover and make known to the said Court of Mayor and Aldermen, in writing, the

names and places of abode of all and every person and persons, as he shall know to use and exercise

the said office or employment, not being thereunto duly authorized and empowered as aforesaid,

within thirty days after his knowledge thereof, and shall not employ any person under him to act as a

18 Taken from: Ex parte Dyster in the Matter of Moline, 1 Mer. 156 (1816). URL: http://goo.gl/EZfLc. See infra, p. for the full text of the opinion. See also: Mortimer, Thomas, Every Man his own Broker, London, S. Hooper, 7th ed., 1769, pp. 138-142. URL: http://goo.gl/0KWAW.

http://goo.gl/EZfLc

http://goo.gl/0KWAW


13

broker within the said city and liberties thereof, not being duly admitted as aforesaid, and shall not

presume to meet and assemble in Exchange-alley, or other public passage or passages within this city

and liberties thereof, other than upon the Royal Exchange, to negotiate his business and affairs of

exchange, to the annoyance or destruction of any of his Majesty's subjects, or any other, in their

business or passage about their occasions.”

Form of oath. “You shall sincerely promise and swear, that you will truly and faithfully execute and

perform the office and employment of a broker between party and party in all things appertaining to

the duty of the said office or employment, without fraud or collusion, to the best of your skill and

knowledge.”

d. Nature of City of London Regulations Concerning Brokers (1723)

Ludlam v. Lopez19

“BY the statute 6 Ann. c. 16. intitled “An act for repealing an act for the well garbling of spices,

and for granting an equivalent to the city of London by admitting brokers,” it is taken notice, that the

office of garbler of the spices is an inheritance of the city of London, and by them leased out for 300l.

per annum, which office and duty it was convenient to abolish, by which the revenues of the city would

be diminished; it was therefore enacted that every broker should on his admission pay 40 s. to the

chamberlain, and a yearly sum of 40 s. for the use of the city, and that every person acting as a broker

without such admittance should forfeit and pay to the use of the mayor, commonalty and citizens of

the said city, for every offence the sum of 25l. to be recovered by action of debt in the name of the

chamberlain.

The defendant acted as a broker without admittance; and in an action for the penalty the question

was, whether this forfeiture was pardoned by the last act of grace?

For the defendant it was insisted, that this is a statute offence of a publick nature, and the action

arises ex maleficio, like the case of exercising a trade contrary to 5 Eliz. which is always pardoned,, unless

it be excepted. Cro. Eliz. 632. In an appeal of murder the defendant was convicted of manslaughter;

and though this was the suit of a private person, yet it was held that the King might pardon the burning

in the hand. And as the penalty is but a consequence of the offence, if that be done away, the penalty

must fall: and it makes no difference that the penalty is given to the chamberlain, and not to a common

informer. 5 Co. 49.

Sed per curiam: This is not to be compared to the case of a common informer, who has no interest

vested in him till action brought, whereas here the city has an interest vested upon committing the

offense, and they may release the penalty without bringing any action. They are purchasers of this

revenue, and the laying a penalty does not make it a publick offense; it is only a security for the duty,

that if brokers do not take a licence, they shall pay so much; and if this penalty were not added, the

19 Ludlam v. Lopez, 1 Str. 529 (1723). URL: http://goo.gl/G44dt.

http://goo.gl/G44dt


14

revenue would be worth nothing. 3 Inst. 238. is express, that the King cannot pardon, where the action

is given to the party grieved; for that would be for him to discharge the interest of another. The

offense against 5 Eliz. is of a publick nature, and indictable, but this is not. Et per Eyre Justice, I much

question, whether that case of the appeal be law, for the burning the hand is part of the judgment.

This being upon a point saved at nisi prius, the plaintiff had judgment.”

e. Regulation of Commissions and Rates of Interest (1711-3)

The Cards and Dice Act20

“An act for laying several duties upon all sope and paper made in Great Britain, or imported into the same; and

upon chequered and striped linens imported; and. upon certain silks, callicoes, linens, and stuffs, printed, painted, or

stained; and upon several kinds of stampt vellum, parchment, and paper and upon certain printed papers, pamphlets,

and advertisements; for raising the sum of eighteen hundred thousand pounds by way of lottery towards her Majesty s

supply; and for licensing an additional number of hackney chairs; and for charging certain stocks of cards and dice; and

for better securing her Majesty’s duties to arise in the office for the stampt duties by licences for marriages and otherwise;

and for relief of persons who have not claimed their lottery tickets in due time, or have lost Exchequer bills, or lottery

tickets; and for borrowing money upon stock (part of the capital of the South Sea company) for the use of the publick.

…

CXXL And be it enacted by the authority aforesaid, That all and every person and persons, who

shall be imployed as a broker or brokers, sollicitor or sollicitors, or otherwise, in the behalf of any

other person or persons, to make any bargain or contract for the buying or selling of any tallies, orders,

Exchequer bills, Exchequer tickets, bank bills, or any share or interest in any joint stock erected by act

of parliament, or by letters patents under the great seal, or bonds of any company thereby erected,

who shall, after the first day of Augusts one thousand seven hundred and twelve, take or receive,

directly or indirectly, any sum or sums of money, or other reward, exceeding the sum of two shillings

and nine pence for every hundred pounds, and so in proportion for any greater or lesser sum, for his

or their service in soliciting or procuring such contract or bargain, shall forfeit for every such offence

twenty pounds, with full costs of suit, to such persons as shall sue for the same, by action of debt,

bill, plaint, or information, in any of her Majesty's courts of record at Westminster, in which no essoin,

protection, or wager of law, or more than one imparlance shall be allowed.”

__________________________________

20 10 Anne, c.19 (1711). URL: http://goo.gl/Njt7O.

http://goo.gl/Njt7O


15

An act to reduce the rate of interest, without any prejudice to parliamentary securities21.

“WHEREAS the reducing of interest to ten, and from thence to eight, and thence to fix in the hundred, hath,

from time to time, by experience been found very beneficial to the advancement of trade, and improvement of lands:

[A]nd whereas the heavy burden of the late long and expensive war hath been chiefly born by the owners of the

land of this kingdom, by reason whereof they have been necessitated to contract very large debts, and thereby, and by the

abatement in the value of their lands, are become greatly impoverished:

[A]nd whereas by reason of the great interest and profit which hath been made of money at home, the foreign trade

of this nation hath of late years been much neglected, and at this time there is a great abatement in the value of the

merchandizes, wares, and commodities of this kingdom, both at home and in foreign parts, whither they are transported:

[A]nd whereas for the redress of these mischiefs, and the preventing the encrease of the same, it is absolutely

necessary to reduce the high rate of interest of six pounds in the hundred pounds for a year to a nearer proportion with

the interest allowed for money in foreign states;

[B]e it therefore 'enacted by the Queen's most excellent majesty, by and with the advice and consent

of the lords spiritual and temporal, and commons, in this present parliament assembled, and by the

authority of the same, That no person or persons whatsoever, from and after the nine and twentieth

day of September in the year of our Lord one thousand seven hundred and fourteen, upon any

contract, which shall be made from and after the said nine and twentieth day of September, take, directly

or indirectly, for loan of any monies, wares, merchandize, or other commodities whatsoever, above

the value of five pounds for the forbearance of one hundred pounds for a year, and so after that rate

for a greater or lesser sum, or for a longer or shorter time; and that all bonds, contracts, and assurances

whatsoever, made after the time aforesaid, for payment of any principal, or money to be lent or

covenanted to be performed upon or for any usury, whereupon or whereby there shall be reserved or

taken above the rate of five pounds in the hundred, as aforesaid, shall be utterly void; and that all and

every person or persons whatsoever, which shall after the time aforesaid, upon any contract to be

made after the said nine and twentieth day of September, take, accept and receive, by way or means

of any corrupt bargain, loan, exchange, chevizance, shift, or interest of any wares, merchandizes or

other thing or things whatsoever, or by any deceitful way or means, or by any covin, engine, or deceitful

conveyance, for the forbearing or giving day of payment for one whole year, of and for their money

or other thing, above the sum of rive pounds for the forbearing of one hundred pounds for a year,

and so after that rate for a greater or lesser sum, or for a longer or shorter term, shall forfeit and lose

for every such offence the treble value of the monies, wares, merchandizes, and other things so lent,

bargained, exchanged or shifted.

II. And be it further enacted by the authority aforesaid, That all and every scrivener and scriveners,

broker and brokers, solicitor and solicitors, driver and drivers of bargains for contracts, who shall after

the said nine and twentieth day of September take or receive, directly or indirectly, any sum or sums of

money, or other reward or thing for brokage, soliciting, driving, or procuring the loan, or forbearing

of any sum or sums of money, over and above the rate or value of five shillings for the loan, sides

21 12 Anne Stat. 2, c.16 (1713). URL: http://goo.gl/jsbTu. Paragraphs added.

http://goo.gl/jsbTu


16

stamp or forbearing of one hundred pounds for a year, and so ratably, duties, for or above twelve

pence, over and above the stamp-duties, for making or renewing of the bond or bill for loan, or

forbearing thereof, or for any counterbond or bill concerning the same, shall forfeit for every such

offence twenty pounds, with costs of suit, and suffer imprisonment for half a year; the one moiety of

all which forfeitures to be to the Queen's most excellent majesty, her heirs and successors, and the

other moiety to him or them that will sue for the same in the same county where the several offences

are committed, and not elsewhere, by action of debt, bill, plaint or information, in which no essoin,

wager of law or protection shall be allowed.”

Chapter 2. The South Sea Bubble and the so-called “Bubble Act”

a. Creation of the Bank of England (1694)22

“An all for granting to their Majesties several rates and duties upon tunnage of ships and vessels, and upon beer,

ale, and other liquors, for securing certain recompences and advantages in the said act mentioned, to such persons as shall

voluntarily advance the sum of £ 1,500,000, towards the carrying on the war against France.

Most gracious sovereigns,

WE your majesties most dutiful and loyal subjects, the commons assembled in parliament, for the

further supply of your Majesties extraordinary occasions, for and towards the necessary defence of

your realms, do humbly present your Majesties with the further gift of the impositions, rates, and

duties herein after mentioned; and do beseech your Majesties that it may be enacted:

…

XVII. And be it further enacted by the authority aforesaid, That yearly and every year, reckoning

the first year to begin from the 1st day of June, which shall be in the year of our Lord 1694, the full

sum of £ 140,000, by or out of the monies to arise by the said several duties upon the tunnage of

ships and vessels, and by the said rates and duties of excise hereby granted, or any of them, and to be

brought into the receipt of the Exchequer by weekly payments as aforesaid, (in case the said weekly

payments shall extend thereunto) shall be the whole and entire yearly fund; and in case the said weekly

payments shall not amount to £ 140,000 per annum, then the said weekly monies or payments, so far

as the same will extend, shall be part of the yearly fund for and towards the answering and paying off

the several and respective annuities herein after mentioned, and for other the purposes hereafter in

this act expressed; and in case the said duties upon the tunnage of ships and vessels, and the said rates

and duties of excise by this act granted, or any of them, shall at any time or times appear to be so

deficient or low in the produce of the same, as that within any one year, to be reckoned as aforesaid,

the weekly payments upon the same rates or duties, or any of them, shall not amount to so much as

£ 140,000, or to so much as shall be sufficient to discharge and satisfy the said several and respective

annuities, and other benefits or advantages by this act appointed or intended to be paid, within or for

the same year respectively, that then and so often, and in every such case, the commissioners of their

Majesties treasury, and the under treasurer, of the Exchequer now being, and the treasurer and under

treasurer of the Exchequer, or commissioners of the treasury for the time being, are hereby straitly

enjoined and required by virtue of this act, and without any further or other warrant to be sued for,

had, or obtained from their Majesties, their heirs or successors in this behalf, to cause every such

deficiency to be 'made good, by applying, issuing, or paying so much of any treasure or revenue,

belonging or to belong to their Majesties, their heirs or successors, (not being appropriated to any

particular use or uses by any act or acts of parliament) towards the discharging or paying off the said

annuities or other benefits or advantages appointed to be paid by this act, as together with the monies

22 5 & 6 W. & M., c. 20. URL: http://goo.gl/CLJij.

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18

which shall have been brought into the said receipt, of or for the said several rates or duties hereby

granted, shall be sufficient to pay off and discharge, and shall compleatly pay off and discharge, all

the monies which within the same year respectively shall be grown due, or ought to be paid upon the

said annuities, or other benefits or advantages, according to the true intent and meaning of this present

act.

XVIII. And be it further enacted by the authority aforesaid, That for the better raising and paying

into the receipt of the Exchequer the sum of £ 1,200,000, part of the sum of £ 1,500,000, the yearly

sum of £ 140,000, arising by and out of the duties and impositions granted by this act, shall be kept

separate and apart in the said receipt of Exchequer, to be paid over from time to time unto such person

and persons, and in such manner, proportion, and form, as is herein after directed.

XIX. And be it further enacted by the authority aforesaid, That it shall and may be lawful to and

for their Majesties, by commission under the great seal of England, to authorize and appoint any

number of persons to take and receive all such voluntary subscriptions as shall be made on or before

the first day of August, which shall be in the year of our Lord one thousand six hundred ninety four,

by any person or persons, natives or foreigners, bodies politick or corporate, for and towards the

raising and paying into the receipt of Exchequer the said sum of £ 1,200,000, part of the sum of £

1,500,000, and that the yearly sum of £ 100,000, part of the said yearly sum of £ 140,000, arising by

and out of the said duties and impositions before mentioned, shall be applied, issued, and directed,

and is hereby appropriated, to the use and advantage of such person and persons, bodies politick and

corporate, as shall make such voluntary subscriptions and payments, their heirs, successors, or assigns

in the proportion hereafter mentioned (that is to fay) that each weekly or other payment arising by

and out of the duties and impositions granted by this act, shall, by the auditor of the receipt of

Exchequer, from time to time, as the same shall be paid in, be separated and divided into five seventh

parts and two seventh parts, which is according to the seventh parts proportion of the said yearly sum

of £ 100,000, to the said yearly sum of £ 140,000, which five seventh parts, of the said several

payments arising by and out of the duties and impositions granted by this act, and so set apart, is and

are hereby intended and appropriated for and towards the payment and satisfaction of the said yearly

sum of £ 100,000, and shall from time to time be issued and paid, as the same shall come into the

said receipt of Exchequer, to the uses and advantages of such subscribers and contributors, their heirs,

successors, or assigns, as shall subscribe and contribute for and towards the raising and paying into

the receipt of Exchequer the said sum of £ 1,200,000, part of the said sum of £ 1,500,000.

XX. And be it further enacted, That it shall and may be lawful to and for their Majesties, by letters

patents under the great seal of England, to limit, direct, and appoint, how and in what manner and

proportions, and under what rules and directions, the said sum of £ 1,200,000, part of the said sum

of £ 1,500,000, and the said yearly sum of £ 100,000, part of the said yearly sum of £ 140,000, and

every or any part or proportion thereof, may be assignable or transferrable, assigned or transferred,

to such person or persons only, as shall freely and voluntarily accept of the same, and not otherwise

and to incorporate all and every such subscribers and contributors, their heirs, successors, or assigns,

to be one body corporate, and politick, by the name of the governor and company of the bank of

England, and, by the same name of the governor and company of the bank of England, to have

2. The South Sea Bubble and the so-called “Bubble Act”

19

perpetual succession, and a common seal, and that they and their successors, by the name aforesaid,

shall be able and capable in law to have, purchase, receive, possess, enjoy, and retain to them and their

successors, lands, rents, tenements, and hereditaments, of what kind, nature, or quality soever; and

also to sell, grant, demise, aliene, or dispose of the same, and by the same name to sue and implead,

and be sued and impleaded, answer and be answered, in courts of record, or any other place

whatsoever, and to do and execute all and singular other matters and things by the name aforesaid,

that to them shall or may appertain to do; subject nevertheless to the proviso and condition of

redemption herein after mentioned.

…

XXII. And for the better and more speedy payment of the Officers of the said yearly sum of £

100,000, part of the said yearly sum of £ 140,000, in the proportions herein before mentioned and

appointed, the commissioners of their Majesties treasury, and the under treasurer of the Exchequer

now being, and the lord high treasurer, and under treasurer, or commissioners of the treasury for the

time being, are hereby strictly enjoined and required by virtue of this act, and without any further or

other warrant to be sued for, had or obtained from their Majesties, their heirs or successors, to direct

their warrants yearly for the payment of the said yearly sums of £ 100,000, to the contributors of the

said sum of £ 1,200,000, in the manner and proportions as is herein before directed and appointed;

and the auditor of the receipt of Exchequer, and all other officers of the Exchequer now and for the

time being, are hereby directed and enjoined to issue the said monies so set apart for the uses before

mentioned, from time to time, without any fee or reward, in the manner and proportions before

mentioned, and under the like penalties, forfeitures, and disabilities, as are hereafter inflicted upon any

officer for diverting any money appropriated or applied by this act.

XXIII. Provided always, and be it further enacted by the authority aforesaid, That no person or

persons, bodies politick or corporate, shall by themselves, or any other person or persons in trust for

him or them, subscribe or cause to be subscribed, for and towards the raising and paying the said sum

of £ 1,200,000, any sum or sums of money, exceeding the sum of £ 20,000; and that every such

subscriber shall, at the time of such subscription, pay or cause to be paid unto the commissioners who

shall be authorized and appointed for taking and receiving subscriptions as aforesaid, one full fourth

part of his, her, or their respective subscriptions, and in default of such payments as aforesaid, every

such subscription shall be utterly void and null: and that the residue of the said subscriptions shall be

paid into the receipt of their Majesties Exchequer, as their Majesties shall direct, before the said 1st day

of January next; and in default of such payments, that then the fourth part, first paid as aforesaid, shall

be forfeited to and for the benefit of their Majesties, their heirs and successors.

…

XXVI. And it is hereby enacted by the authority aforesaid, that the said corporation so to be made,

shall not borrow or give security by bill, bond, covenant or agreement under their common seal for

anymore, further or other sum or sums of money, exceeding in the whole the sum of £ 1,200,000, so

that they shall not owe at any one time more than the said sum, unless it be by act of parliament upon

funds agreed in parliament; and in such case only such further sums as shall be so directed and allowed


20

to be borrowed by parliament, and for such time only, until they shall be repaid such further sums as

they shall borrow by such authority: and if any more, or further or other sum or sums of money shall

be borrowed, taken up, lent, or advanced, under their common seal, or for payment of which any

bond, bill, covenant or agreement, or other writing shall be made, sealed or given, under the common

seal of the said corporation so to be made; then and in such case all and every person and persons

who shall be a member or members of the said corporation, his and their respective heirs, executors,

and administrators, shall in his and their respective private and personal capacities be chargeable with,

and liable in proportion to their several shares or subscriptions to the repayment of such monies

which shall be so borrowed, taken up or lent, with interest for the same, in such manner as if such

security had been a security for payment of so much money, and interest for the same, sealed by such

respective member or members of the said corporation, and delivered by him or them as their

respective acts and deeds, in proportion to their several shares or subscriptions as aforesaid; and that

in every such case an action of debt shall and may be brought, commenced, prosecuted and maintained

in any of their Majesties courts of record in Westminster, by the respective creditor or creditors, to

whom any such security under the common seal of the said corporation shall be made, or his or their

respective executors or administrators, against all and every, or any one or more of the persons who

shall be members of the said corporation, or any of their respective heirs, executors or administrators,

in proportion to their respective shares or subscriptions as aforesaid, and therein recover and have

judgment for him or them, in such and the like manner, as if such security were respectively sealed by

the respective person or persons who shall be so sued, or his or their respective ancestor, or testator,

or intestate, and by him and them executed and delivered, as his or their respective acts and deeds; any

condition, covenant, or agreement, to be made to the contrary thereof in any wise notwithstanding:

and if any condition, covenant, or agreement shall be made to the contrary, the same shall be, and is

hereby declared to be void; any thing herein contained, or any law or usage to the contrary

notwithstanding; and in such action or actions so to be brought, no privilege, protection, essoin, or

wager of law, nor any more than one imparlance shall be allowed.

XXVII. And to the intent that their Majesties subjects may corporation not be oppressed by the

said corporation, by their monopolizing or ingrossing any sort of goods, wares or merchandizes, be it

further declared and enacted by the authority aforesaid, That the said corporation to be made and

created by this act, shall not at any time, during the continuance thereof, deal or trade, or permit or

suffer any person or persons whatsoever either in trust or for the benefit of the same, to deal or trade

with any of the stock, monies or effects of or any ways belonging to the said corporation, in the

buying or selling of any goods, wares, or merchandizes whatsoever; and every person or persons, who

shall so deal or trade, or by whose order or directions such dealing or trading shall be made,

prosecuted, or managed, shall forfeit for every such dealing or trading, and every such order and

directions, treble the value of the goods and merchandize so traded for, to such person or persons

who shall sue for the same by action of debt, bill, plaint, or information, in any of their Majesties

courts of record at Westminster, wherein no essoin, protection, nor other privilege whatsoever, nor any

injunction, order of restraint, nor wager of law shall be allowed, nor any more than one imparlance.


21

XXVIII. Provided, That nothing herein contained shall any ways be construed to hinder the said

corporation from dealing in bills of exchange, or in buying or selling bullion, gold, or silver, or in

selling any goods, wares, or merchandize whatsoever, which shall really and bona fide be left or

deposited with the said corporation for money lent and advanced thereon, and which shall not be

redeemed at the time agreed on, or within three months after, or from selling such goods as shall or

may be the produce of lands purchased by the said corporation.

XXIX. Provided always, and be it enacted by the authority aforesaid, That all and every bill or bills

obligatory and of credit under the seal of the said corporation made or given to any person or persons,

shall and may, by indorsement thereon under the hand of such person or persons, be assignable and

assigned to any person or persons who shall voluntarily accept the same, and so by such assignee, toties

quoties by indorsement thereupon; and that such assignment and assignments, so to be made, shall

absolutely vest and transfer the right and property in and unto such bill or bills obligatory and of

credit, and the monies due upon the same; and that the assignee or assignees shall and may sue for,

and maintain an action thereupon in his own name.

XXX. Provided always, and it is hereby further enacted, That if the governor, deputy governor,

the directors, managers, assistants, or other members of the said corporation so to be established,

shall upon the account of the said corporation, at any time or times purchase any lands or revenues

belonging to the crown, or advance or lend to their Majesties, their heirs or successors, any sum or

sums of money, by way of loan or anticipation, on any part or parts, branch or branches, fund or

funds of the revenues now granted or belonging, or hereafter to be granted or belonging to their

Majesties, their heirs or successors, other than such fund or funds, part or parts, branch or branches

of the said revenues only, on which a credit of loan is or shall be granted by parliament; that then the

said governor, deputy governor, directors, managers, or assistants, or other members of the said

corporation, who shall consent, agree to, or approve of, the advancing or lending to their Majesties,

their heirs or successors, such sum or sums of money as aforesaid, and each and every of them so

agreeing, consenting, or approving, and being thereof lawfully convicted, shall for every such offence

forfeit treble the value of every such sum or sums of money so lent, whereof one fifth part shall be

to the informer, to be recovered in any of their Majesties courts of record at Westminster, by action of

debt, bill, plaint, or information, wherein no protection, wager of law, essoin, privilege of parliament,

or other privilege shall be allowed, nor any more than one imparlance; and the residue to be disposed

of towards publick uses, as shall be directed by parliament, and not otherwise.

XXXIII. And whereas by an act of this present session of parliament, intituled, An act for granting to their

Majesties certain rates and duties upon salt, and upon beer, ale and other liquors, for securing certain recompences and

advantages in the said act mentioned, to such persons as shall voluntarily advance the sum of £ 1,000,000 towards

carrying on the war against France, it is enacted, That no member of the house of commons shall at any time be

concerned in the farming, collecting, or managing any sum or sums of money, duties or other aids by the said act or any

other act of parliament granted or to be granted to their Majesties, except the persons in the said act excepted; and

whereas some doubts may arise, whether any member or members of parliament may be concerned in the corporation to

be erected in pursuance of this act; be it therefore declared and enacted by the authority aforesaid, That it

shall and may be lawful to and for any member or members of the house of commons, to be a member


22

or members of the said corporation for the purposes in this act mentioned; any thing in the said

recited act contained to the contrary in any wise notwithstanding.

XXXIV. And be it further enacted by the authority aforesaid, That it shall and may be lawful for

any persons, natives or foreigners, to contribute towards the advancing of the sum of £ 300,000, other

part of the said sum of £ 1,500,000, by paying into the receipt of their Majesties Exchequer, at any

time before the 29th day of September, 1694, any sum or sums of money, not exceeding in the whole

the sum of £ 300,000, upon the terms following (that is to fay) That every such person, his executors,

administrators or assigns, out of the rates and duties granted by this act, shall have and receive for

every sum of £ 100, so by them respectively advanced and paid, such yearly annuity, rent or payment,

as herein after is directed (that is to say) That if such contributor shall advance and pay his money

upon one life only, then he shall have and receive a yearly annuity, rent or payment of £ 14 of lawful

English money, for every £ 100, and so proportionably for a greater sum, for and during the life of

such person so advancing and paying the same, or during any other life to be nominated by the person

advancing or paying any such sum …which yearly annuities, rents, or payments, shall commence from

the said 29th day of September, 1694, and shall be paid and payable quarterly, at the four most usual

feasts of the year … and every person, on payment of any such sum or sums as aforesaid, shall

immediately have one or more tally or tallies importing the receipt of the consideration money, and

orders for the payment of the said annuities, bearing the same date with the tally; the said tallies to be

levied, and the said orders to be signed, in the same manner as in and by an act of this present

parliament, intituled, An act for granting to their Majesties certain rates and duties upon salt, and upon beer, ale

and other liquors, for securing certain recompences and advantages in the said act mentioned, to such persons as shall

voluntarily advance the sum of £ 1,000,000 towards carrying on the war against France, is mentioned and directed

touching tallies and orders to be given to the contributors for annuities upon the said act; and the said

orders not to be determinable, revocable or countermandable, as touching the afore mentioned orders

in the said recited act is enacted, which said orders shall be assignable and transferrable in such and

the same manner as is mentioned in the said recited act touching orders given to the contributors in

the said act mentioned; and all the rates and duties by this act granted, or so much thereof as are and

shall be sufficient for the purposes aforesaid, are and shall be appropriated to and for the payment of

the said annuities of inheritance, and annuities for lives, after the several and respective rates aforesaid,

according to the true intent and meaning of this act … and the said officers are hereby required to

keep books and registers, and make entries of the names of all persons who shall advance any monies

before the said 29th day of September, as aforesaid, and of the several sums so advanced, and the

times of paying in the same respectively, and the names of such persons for whose lives the several

annuities or yearly payments are to be payable, without fee or reward, in such manner as in the said

recited act is mentioned, to which books all persons concerned shall have access, as in the said act also

is directed … and every person who shall so advance and pay any such sum, as aforesaid, before the

said 29th day of September, as aforesaid, shall receive, out of the money granted by this act, for all

money so advanced by him and Paid, from the respective days of payment, unto the said 29th day of

September, as aforesaid, interest at the rate of ten pounds per centum per annum.


23

XXXV. And be it further enacted, That all monies payable to any person or persons, upon or by

virtue of this act, shall not be charged or chargeable with any rates, duties, or impositions whatsoever.

…

XL. And it is hereby enacted, That all and every sum and sums of money, so to be borrowed, not

exceeding as aforesaid, together with interest for the same not exceeding the rate of eight pounds per

centum per annum, to be paid every three months, until satisfaction of the principal, shall be payable and

satisfied unto the respective lender or lenders of the same, his, her, or their executors, administrators,

or assigns, out of the monies which shall afterward arise and be brought into the Exchequer by or for

contributions upon this act, so far as the same will extend; and in case the money so arising by this act

shall not be sufficient for the paying thereof, then the said loans, which shall remain unsatisfied, with

the interest for the same shall be repaid out of the next aids or supplies to be granted to their Majesties

in parliament, and shall be transferred and transferrable thereunto, as soon as any such aid or supply

shall be granted to their Majesties; and if no such aids or supplies shall be granted to their Majesties

before the 2nd day of February, 1694, then the said sum and sums of money, so to be borrowed, not

exceeding as aforesaid, and the interest thereof, shall be payable and be paid and satisfied to the lender

or lenders, his, her, or their executors, administrators, or assigns respectively, by and out of any their

Majesties treasure, which from thenceforth shall come into, be, or remain in the receipt of their

Majesties Exchequer, not being already appropriated to any particular uses by any act or acts or

parliament before this time made.”

__________________________________

An Act for making good the Deficiencies of several Funds therein mentioned; and for

enlarging the Capital Stock of the Bank of England; and for raising the Publick Credit (1697)23

XX. And for the better restoring of the credit of the nation and advancing the credit of the

corporation of the governor and company of the bank of England Be it enacted by the authority

aforesaid that the present common capital and principal stock of the said governor and company shall

be augmented and enlarged by the voluntary new subscriptions of all such person and persons natives

and foreigners bodies politick or corporate who shall be willing to subscribe any sum or sums of

money into the said present common capital and principal stock and to answer and make good the

same in manner as herein after is appointed.

XXIII. And for the better encouraging the said Subscriptions to be made; Be it further enacted by

the Authority aforesaid. That from and after the said 2nd Day of April it shall and may be lawful to

and for all and, every Person or Persons, Natives or Foreigners, Bodies Politick and Corporate, by and

for themselves, or any of them, or by themselves or any of them in Trust for any other Person or

Persons, Bodies Politick or Corporate, or any of them, freely to subscribe any Sum or Sums of Money,

23 8 & 9 W. III c. 20. URL: http://goo.gl/mqTvS.

http://goo.gl/mqTvS


24

into the Capital and Principal Stock of the said present Governor and Company, in order to the

augmenting and enlarging thereof as aforesaid; which said Subscriptions at the respective Times of

making the same, shall be answered and made good by the respective Subscribers thereof to the said

Capital and Principal Stock of the said present Governor and Company, in the Manner and Proportion

following; (that is to say) four fifth Parts of each respective and particular Subscription (the Value of

the said whole Subscriptions into five equal Parts being divided) shall be answered and made good to

the said Capital and Principal Stock of the said present Governor and Company, by assigning to them

the Principal and Interest whereunto such Subscribers respectively shall be then really intitled by Tallies

of Loan and Orders of Repayment, or by Tallies of Pro or Assignment, for Monies which were lent

or advanced, or are or shall be charged as aforesaid, upon some of the Aids, Supplies, Revenues,

Impositions or other Funds hereinafter mentioned, and by delivering up at the same Time to the said

Governor and Company, the Tallies and Orders so assigned … and the other fifth Part of each of the

said Subscriptions shall be answered and made good to the said Capital Stock of the said Governor

and Company in Bank Bills or Bank Notes, which have so much Money bona fide resting due

thereupon, as the said one fifth Part of the said respective Subscriptions shall fully amount to.

…

XXVI. And be it further enacted by the Authority aforesaid. That all and every the Person and

Persons, Natives and Foreigners, Bodies Politick and Corporate, who shall so subscribe, or for whom

such Subscriptions shall be made, to the said Capital Stock of the present Governor and Company of

the Bank of England by virtue of this Act, and who shall answer and make good their said

Subscriptions in the Proportion of Tallies, Orders, Bank Bills, and Bank Notes as aforesaid, and the

Executors, Administrators, Successors or Assigns of such Person or Persons, Bodies Politick or

Corporate as aforesaid, having any Title or Interest under any of the Subscribers by virtue of this Act,

at the Time of closing or shutting up of the said intended Book or Books of Subscriptions, on the

said 24th Day of June, shall immediately from and after the said 24th Day of June, be and shall be

deemed and reputed to be Members of, united to, and incorporated with the present Governor and

Company of the Bank of England, and their Successors, and shall at all Times from and after the said

24th Day of June, together with the present Governor and Company of the Bank of England, and

their Successors, be and be construed, reputed, accepted and taken to be one Body Politick and

Corporate, by the Name of The Governor and Company of the Bank of England, and by the same

Name of The Governor and Company of the Bank of England shall have a perpetual Succession,

and a Common Seal; and that they and their Successors, by the Name aforesaid, shall be able and

capable in Law to have, purchase, receive, possess, enjoy and retain to them and their Successors,

Lands, Rents, Tenements and Hereditaments, of what Kind, Nature or Quality soever; and also to sell,

grant, demise, aliene or dispose of the same, and by the same Name to sue and implead, be sued and

impleaded, answer and be answered, in Courts of Record, or any other Place whatsoever, and to do

and execute all and singular other Matters and Things, by the Name aforesaid, that to them shall or

may appertain to do; subject nevertheless to the Proviso or Condition of Redemption hereinafter

mentioned.

…


25

XXVIII. And be it further enacted, That during the Continuance of the Corporation of the

Governor and Company of the Bank of England, no other Bank, or any other Corporation, Society,

Fellowship, Company, or Constitution, in the Nature of a Bank, shall be erected or established,

permitted, suffered, countenanced or allowed by Act of Parliament within this Kingdom.

…

XXXI. And be it further enacted, That the Common Capital Stock and real and Principal Stock,

and also the real Fund of the Governor Fund and Company of the Bank of England, or any Profit

or Produce to be made thereof, or arising thereby, or the particular Share, Part, and Interest of any

Member of the said Corporation in the said Stock or Fund, or the Profit or Produce to be made

thereof, or arising thereby, shall be and is hereby exempted from any Taxes, Rates, Assessments or

Impositions whatsoever, during the Continuance of the said Bank.

…

XXXIII. And be it further enacted by the Authority aforesaid, That from and after the 25th Day

of March 1697, the Estate, Interest and Stock of the Money of the said Corporation of the Governor

and Company of the Bank of England, and of each and every particular Member thereof, shall be,

and be adjudged, taken and accepted, in Construction of Law, by all Judges in all Courts of Law and

Justice, and in all Courts and Places whatsoever within this Realm, to be a personal, and not a real

Estate, and shall go to the Executors or Administrators of the Person or Persons dying possessed

thereof, or intituled thereunto, and not to the Heirs of such Person or Persons; any Thing contained

in the said Act of Parliament for erecting the Bank, or in any other Act, or any other Law, Statute,

Usage or Custom, to the contrary in any wise notwithstanding.

…

XXXV. And be it further enacted by the Authority aforesaid, That no Act, Matter or Thing, Acts,

Matters or Things already done, or hereafter to be done, by the said Corporation of the Governor

and Company of the Bank of England, or by their Successors, or by the Court of Directors of the

said Corporation, or by any Sub-Committee appointed or to be appointed by the said Corporation,

shall forfeit or subject, or make liable to Forfeiture, the particular, private and personal Estate, Interest,

Stock and Property of any Member of the said Corporation; but that notwithstanding any Act or

Acts, Matter or Matters, Thing or Things, done or to be done by the said Governor and Company of

the Bank of England, or by the said Court of Directors or Sub-Committees as aforesaid, the Estate,

Stock, Interest and Property, with the whole Proceed, Benefit, Profit and Advantage thereof, belonging

to each and every Member of the said whole Corporation, and his particular Right, Claim, and Title

thereunto, and to every Part thereof, shall be and remain unforfeited, untouched, whole, safe and

intire, to the proper Use and Benefit of each and every of the said Members, subject nevertheless to

the Payment of all just Debts contracted by the said Corporation; any Law, Statute, Usage or Custom,

to the contrary notwithstanding.


26

b. Creation of the South Sea Company (1711)24

“An Act for making good Deficiencies and satisfying the public Debt and for erecting a corporation to carry on a

Trade to the South Sea and for the encouragement of the Fishery and for Liberty to trade in unwrought iron with the

subjects of Spain and to repeal the Acts for registering seamen.

…

XXV. And forasmuch as it will be for the great ease and advantage of the persons concerned in the said debts and

deficiencies, that they should be made one society or company, and that the payments from the Exchequer will be much

easier made to such society, or their cashiers for the use of, and to be by them distributed to the respective persons, interested

in the said debts, deficiencies, and other monies, intended to be charged on the said funds, than if the same were to be

paid in the usual forms of the Exchequer to every person concerned;

[A]nd to the end and intent that the trade to the South Seas, and other parts within the limits herein

after mentioned, may be carried on for the honour and increase of the wealth and riches of this realm;

[B]e it enacted by the authority aforesaid, That it shall and may be lawful for her Majesty, her heirs

and successors, by letters patents under the great seal of Great Britain, to incorporate all and every the

person and persons, natives and foreigners, bodies politick or corporate, who are and shall be

interested in or entitled unto any of the bills, tickets, debentures, or certificates, or other publick debts,

deficiencies, or sums of money, intended to be provided for by this act, and all and every person and

persons, bodies politick and corporate, who as executors, administrators, successors, or assigns, or by

any other lawful title, derived or to be derived from, by, or under the original proprietors, at any time

or times hereafter, shall have and be entitled to any part, share, or interest of or in the said yearly fund

by this act settled, as aforesaid, so long as they respectively shall have any such part, share, or interest

therein, to be one body politick or corporate, in deed and in name, and by such name as her Majesty,

her heirs or successors shall think fit, and by that name to have perpetual succession, and a common

seal, with power, from time to time, to choose their governors, directors, and other officers, in such

manner, and under such qualifications, as to the electors and elected, as shall be directed in such letters

patents;

[T]he first governor and directors to be nominated by her Majesty, her heirs and successors in the

said letters patents, the said first governor and directors being so qualified, as all subsequent governors

and directors shall be qualified, and to continue in their respective offices for one year only;

[A]nd that the persons so incorporated and their successors, by the same name, shall be able and

capable in law to have, purchase, receive, enjoy, possess, and retain, to them and their successors, lands,

rents, tenements, and hereditaments, not exceeding the yearly value of one thousand pounds, together

with such powers, capacities, privileges, immunities, and advantages, and subject to and under such

rules, conditions, limitations, and restrictions, as her Majesty, her heirs or successors, in her or their

24 9 Ann., c. 21. URL: http://goo.gl/wxvtv. Paragraphs added. See also concerning the South Sea Company, 10 Ann. c. 19, http://goo.gl/xB2IX; 10 Ann. c. 30, http://goo.gl/Fx3p6; 1 Geo. I, c. 21, http://goo.gl/An7QA; 3 Geo. I, c. 9, http://goo.gl/Beqwu; and 5 Geo. I, c. 19, http://goo.gl/yjOnB

http://goo.gl/wxvtv

http://goo.gl/xB2IX

http://goo.gl/Fx3p6

http://goo.gl/An7QA

http://goo.gl/Beqwu

http://goo.gl/yjOnB


27

great wisdom shall think fit, and to do and execute all and singular matters and things by the same

name that to them shall or may appertain to do.

XXVI. And it is hereby further enacted by the authority aforesaid, That it shall and may be lawful

to and for her Majesty, her heirs and successors, by the said letters patents of corporation, or by any

commission or commissions under the great seal of Great Britain, to be granted before or after the

said letters patents, to direct and appoint how and in what manner the tallies and orders, bills, tickets,

certificates, or debentures, intended to be provided for by this act, and also the money hereby intended

to be made part of the capital stock of the said corporation, upon account of the publick, shall or

may be subscribed, admitted, or taken into, or be made part of the said capital stock of the said

company or corporation;

[A]nd also to direct how and in what manner such part of the stock of the said corporation, which

is hereby intended to be for the use of the publick, shall and may be disposed and applied to the use

of the publick, and accounted for; and also how and in what manner the said tallies, orders, tickets,

certificates, bills, or debentures, intended to be taken into the joint stock of the said corporation, shall

or may be disposed of, discharged, and accounted for; and also how the property of all persons

interested in the said tallies, orders, tickets, certificates, bills, or debentures, shall or may be ascertained,

adjusted, and settled;

[A]nd also that her Majesty, her heirs and successors, shall and may, in and by such commission

and commissions as is last mentioned, direct the commissioners therein to be named, how and in what

manner to proceed in the execution of such commission or commissions; and also that it shall and

may be lawful to and for her Majesty, her heirs and successors, in and by the said letters patents of

incorporation, or by such commission or commissions, as aforesaid, to direct how and in what manner

the proper officers of the Exchequer for the time being may know and be informed how much the

capital stock of the said company doth, for the time being, consist of, and all other things requisite

thereunto, that so the proper officers of the Exchequer may know whether they are to pay to the

cashier of the said company, to the use of the said company, the said whole annual sum of £.568,279.

10s, or only a proportionable part thereof.

XXVII. And whereas great part of the debt of the navy and victualling, and for transport service, and of the

office of ordnance, is ascertained by bills or debentures payable in course, and other part of the debt of the navy is also

ascertained by tickets made out for wages to seamen, and others who served on board any of her Majesty's ships, but

great part of the said debt is for wages due to the seamen and workmen in her Majesty's docks and yards, for which the

respective persons, to whom the same is due, have no bills, tickets, or debentures to ascertain the same;

[B]e it therefore enacted by the authority aforesaid, That the commissioners of the navy for the

time being shall and are hereby required forthwith to cause an exact and true account to be made up

and delivered unto the commissioners of the treasury now being, or the lord high treasurer, or the

commissioners of the treasury for the time being, of the respective sums due from the said navy

office… and so much as shall remain of the total sum herein computed to be the debt of the said

offices… shall be, and be deemed and taken to be publick money, and shall be made part of the capital

stock of the company, to be erected by virtue of this act, for the use of the publick, in such manner


28

as her Majesty, her heirs or successors, by the letters patents of incorporation, or any commission or

commissions under the great seal of Great Britain, or by privy seal or sign manual, shall think fit and

direct; and the same, and the produce thereof, shall be disposed and applied, either for or towards

paying the residue of the said debts, or for or towards any other publick uses, for which a supply has

been, or shall be granted by parliament, and not otherwise; and the loss or discount (if any) by or

upon the said stock in the said company, for the use of the publick, shall be accounted for, and the

respective persons accountable for the same, or any part thereof, shall be discharged from such loss

or discount, in such manner as her Majesty, her heirs or successors, by the said letters patents of

incorporation, or by any commission under the great seal of Great Britain, or by privy seal or sign

manual, shall direct.

…

XXIX. And be it further enacted by the authority aforesaid, That all and every person and persons,

bodies politick or corporate, who shall be interested in, or entitled unto, any bills or debentures,

payable in course, out of her Majesty's several offices of the navy, victualling, transport, or ordnance,

which were dated made or received in those respective offices, on or before the 25th day of March,

1711, or to any certificates or debentures made out for the army, or for transport service for the late

war, shall and may be admitted into the joint stock of the said company, and be and become members

thereof, in proportion to such sum and sums as they shall be so entitled unto, to be computed, as

herein after is mentioned, in such manner and form as her Majesty, her heirs or successors, by the said

letters patents of incorporation, or by such commission or commissions, as aforesaid shall direct…

XXX. And be it further enacted by the authority aforesaid, That any person or persons, natives or

foreigners, who are or shall be possessed of, interested in, or entitled unto, any of the tallies or orders

made out in pursuance of the said acts of the ninth year of his late majesty King William the Third,

and of the first year of her said now Majesty's reign, for laying certain duties on coals, culm, and

cynders, shall, for so much as the principal and interest of such tallies and orders, to be computed in

such manner as is herein before directed, concerning the computation to be made of principal and

interest upon and for such of the navy and victualling bills as do carry interest, be admitted into, and

made members of the said intended corporation, and shall have and be entitled unto a proportionable

part of the yearly annuity or fund payable to the said corporation, and of all other privileges and

advantages granted to the said corporation, in such manner as her Majesty, her heirs or successors, by

the said letters patents of incorporation, or by such commission or commissions, as aforesaid, shall

direct or appoint.

…

XXXII. Provided always nevertheless, and be it further enacted by the authority aforesaid, That it

shall and may be lawful to and for the managers and directors of the said intended corporation, at any

time after the 25th day of December1711, if they shall so think fit, to admit into the joint stock of the

said corporation, or to purchase, payoff, and discharge, (in order to the admission into the joint stock

of the said corporation, and to admit the same accordingly into the said joint stock) all or any of the

tallies and orders made forth in pursuance of the said last mentioned act of the said eighth year of


29

her said Majesty's reign; and the said tallies and orders shall be taken and admitted into the said joint

stock, for such sum as the principal and interest, which shall be due upon the same respectively, shall

amount unto, at the time or times of their admission into the said joint stock; and all the tallies and

orders made forth in Pursuance of the said last-mentioned act of the eighth year of her said Majesty's

reign, which shall, as well before as after the said 25th day of December, 1711, be taken or admitted

into the said joint stock of the said corporation, shall from thenceforth be discharged from being

payable in course out of the funds settled by the said act; and the respective owners and proprietors

thereof shall from thenceforth, in lieu thereof, have and be entitled to an annuity, after the rate of six

pounds per centum per annum, for the respective sums they shall amount unto, and proportionably for a

lesser sum than one hundred pounds, to be paid out or the annual fund by this act made payable to

the said company, until the said fund shall be redeemed, as in this act is mentioned.

…

XXXIV. And be it further enacted by the authority aforesaid, That until the 25th day of December,

which shall be in the year of our Lord 1713, the whole and entire annual sum of £. 568,279. 10s shall

be paid to the said corporation in such manner as in and by this act is directed…

XXXV. Provided nevertheless, for as much as the said intended company cannot be carried on,

without a very great charge, which if the same be wholly born by the members of the company, would

lessen their annual interest, and may prove a great discouragement to them; be it therefore enacted by

the authority aforesaid, That over and above the said annual sum hereby settled, to be paid to the said

company, there shall be paid and payable to the said company, to be erected by virtue of this act, and

their successors, until the said annual sum herein before settled, shall be redeemed, as aforesaid, or to

such cashier or cashiers, person or persons, as shall be authorized under the common seal of the said

company to receive the same, for the use of the said company, the further annual sum of £. 8,000,

for and towards the charge of management of the said company; which annual sum of £. 8,000 is

hereby charged and chargeable upon, and made to be paid and payable by and out of the same funds,

and at such time and times, and in such manner, and by the same ways, means, and methods as is and

are herein and hereby prescribed, settled, or appointed for payment of the said annuities, after the rate

of six pounds per centum per annum, for the total amount of the said capital stock of the said company.

XXXVI. And be it further enacted, That it shall and may be lawful to and for her Majesty, her

heirs and successors, by any such commission, charter, or letters patents, as aforesaid, under the great

seal of Great Britain, to limit, direct, and appoint, how, and in what manner and proportions, and under

what rules and directions, the shares of all and every person and persons whatsoever, in the said yearly

fund, and of and in the stock of the said intended company or corporation, and every or any part or

proportion thereof, shall and may be assignable or transferable to such person or persons only, as shall

freely and voluntarily accept of the same, and not otherwise; and that all assignments and

transferrences made in such manner, and no other, shall be good and available in the law.

XXXVII. And be it further enacted by the authority aforesaid, That the estates, interests and stocks

of money of the said intended company or corporation, to be created or established in pursuance of

this act, and the share and interest of each and every particular member thereof, and therein, and of


30

and in the capital stock of the said company, shall be, and be adjudged, taken, and accepted, in

construction of law, by all judges, and in courts of law and justice, and in all courts and places

whatsoever, to be a personal, and not a real estate, and shall go to the executors or administrators of

the person or persons dying possessed thereof, or entitled thereunto, and not to the heirs of such

person or persons; any law, statute, usage, or custom to the contrary notwithstanding.

…

XLII. And be it enacted, That no member of the said intended company, to be erected in

pursuance of this act, shall, in respect of his or her being a member, governor, director, or manager

thereof, or having any stock therein only, or by reason of any other matter or thing in this act

contained, be disabled from being or continuing a member of parliament, nor shall be adjudged liable

to be a bankrupt within the intent or meaning of all or any of the statutes made against or concerning

bankrupts; and that no stock in the said intended company shall be subject or liable to any foreign

attachment, by the custom of the city of London, or otherwise.

XLIII. And for the better securing the privilege of the governor and company of the bank of

England, granted to them to borrow by parliament, be it enacted by the authority aforesaid, That it

shall not be lawful to or for the corporation to be erected in pursuance of this act, to borrow, owe, or

take up any sum or sums of money on their bills or notes payable at demand, or at any less time than

six months from the borrowing thereof; and that it shall not be lawful for the corporation to be erected

by virtue of this act, to discount any bills of exchange, or other bills of exchange, or other bills or

notes whatsoever, or to keep any books or cash for any person or persons, bodies politick or corporate

whatsoever, other than and only the proper books, money, and cash of the said corporation to be

erected by virtue of this act.

…

XLVI. And whereas it is of the greatest consequence to the honour and welfare of this kingdom, and for the

increase of the strength and riches thereof and for the vending the product and manufacture, goods and merchandizes

of or brought into this kingdom, and employment of the poor, that a trade should be carried on to the South Seas, and

other parts of America, within the limits herein after mentioned; which cannot so securely and successfully be begun and

carried on, as by a corporation with a joint stock, exclusive of all others:

[N]ow for the better encouragement of all and every the person and persons, bodies politick or

corporate, who shall be or become members of the said company or corporation, to be erected, as

aforesaid; and to the end and intent that a trade to the South Seas, and other parts of America within

the limits herein after mentioned, may be carried on and promoted, for the advantage and honour of

this kingdom; be it enacted by the authority aforesaid, That the corporation to be erected in pursuance

of this act, and their successors, shall have and be entitled unto, and they are hereby entitled unto and

vested, from the 1st day of August, 1711, for ever, in the sole trade and traffick into, unto, and from all

the kingdoms, lands, countries, territories, islands, cities, towns, ports, havens, creeks, and places of

America, on the east side thereof from the river of Aranoco, to the southermost part of the Terra del

Fuego; and on the west-side thereof, from the said southermost part of the said Terra del Fuego, through


31

the South Seas, to the northernmost part of America; and into, unto, and from all countries, islands,

and places within the said limits, which are reputed to belong to the crown of Spain, or which shall

hereafter be found out or discovered within the said limits, not exceeding 300 leagues from the

continent of America, between the southermost part of Terra del Fuego and the northermost part of

America, on the west-side thereof, (except the kingdom of Brazil, and such other places on the said

east-side of America, as are now in the actual possession of the crown of Portugal, and the country of

Surinam in the possession of the states general of the United Provinces;) it not being intended that the

sole trade to any part of the east-side of America, now in the actual possession of the crown of Portugal,

or the states general, shall be granted or construed to be granted by this act; but that it may be and

remain lawful for all, and every, or any the subjects of her Majesty, her heirs or successors, to trade

and traffick to any part of the east-side of America, now in the actual possession of the crown of

Portugal, or the states general, (but to no other part of America within the limits aforesaid) as fully and

freely, in all respects, as they might or could do if this act had not been made; any clause, proviso,

power, privilege, matter or thing, herein contained to the contrary thereof in any wise notwithstanding.

XLVII. And be it further enacted, That the said company to be erected in pursuance of this act,

and their successors for ever, and all and every person and persons, who from time to time may be

licensed by the said corporation, to be erected in pursuance of this act, to trade in the stead of them,

shall and lawfully may, for ever, from and after the said 1st day of August, 1711, or by such factors,

agents, or servants, as they shall think fit to intrust, and to and for no other person or persons

whatsoever, freely to traffick and use the trade of merchandize, into, unto, and from the said South

Seas, and other the parts within the limits aforesaid (except as aforesaid) and into, unto, and from all

or any the kingdoms, lands, territories, islands, cities, towns, forts, havens, creeks, and places of

America, or any of them, within the limits aforesaid (except before excepted) where any trade or

traffick of merchandize is or may be used or had, and to and from every of them.

XLVIII. And be it further enacted by the authority aforesaid, That it shall and may be lawful to

and for her Majesty, by her said charter or charters of incorporation, to impower the said company or

corporation, and their successors, to make for reasonable laws, constitutions, orders, and ordinances,

from time to time, for the good government of the said trade to the South Seas, and other the parts

within the limits aforesaid (except before excepted) and of the traders, factors, agents, officers, and

others concerned in the same, and to inflict reasonable penalties and punishments by imprisonments,

mulets, fines, and amerciaments for any breach or breaches thereof, and to levy such mulets, fines, and

amerciaments, to the use of the said company or corporation.

…

L. And for the better encouraging of the said company to be erected in pursuance of this act, to

drive and carry on the trade hereby granted to them; be it further enacted by the authority aforesaid,

That the said company, and their successors, for ever, shall and may have, hold, and enjoy, to their

own use, and for the benefit of the members of such company, in proportion to their stock, and

without any account to be rendered thereof to her Majesty, her heirs or successors, or to any other

person or persons whatsoever, all and every the islands, cities, forts, towns and places whatsoever,


32

which the said company, or their factors, agents or servants, or other persons, which shall be employed

or licensed by them to trade, as aforesaid, or such of the ships of her Majesty, her heirs or successors,

as she or they shall think fit to grant or allow for convoys, or otherwise, for the defence, security, or

carrying on the said trade, shall discover or find out, seize, or possess, in any manner whatsoever,

within the limits aforesaid, (except before excepted) and shall be for ever the sole owners and

proprietors of all and every such islands, forts, towns and places, and all their dependencies, to be

holden of her Majesty, her heirs and successors, successors, in free and common socage by fealty, and

rendring to her Majesty, her heirs and successors, the annual rent of one ounce of gold for the same

(if demanded) and the said company and their successors shall and may have and hold for ever the

sole trade to all such islands, forts, towns, and places, last mentioned.

…

LIX. And for as much as nothing can more conduce to the encrease of the strength and riches of this kingdom,

and the breeding able seamen to serve her Majesty, as well in time of war as peace than the preserving and enlarging the

fishery of this realm;

[B]e it therefore enacted by the authority aforesaid, That it shall and may be lawful for her Majesty,

her heirs and successors, in and by her said letters patents of incorporation, or by any other letters

patents under the great seal of Great Britain, to direct a stock to consist of twenty shillings upon every

hundred pounds of the capital stock of the said intended company, to be raised by the members

thereof, in proportion to their stock, at such times, and in such manner, as her Majesty, her heirs or

successors, by such letters patents shall think fit and direct, so as no other of her Majesty's subjects

be thereby excluded from the fishing trade; the said stock to be kept apart, and always employed in

the improving, enlarging, and carrying on the fishery of this realm, or other fishery, for the use and

benefit of the members of the said company, in proportion to their stock.”

c. Defoe on the Nuisance of Stock-Jobbing (1719)25

“THE General Cry against Stock-Jobbing has been such, and People have been so long, and so

justly Complaining of it as a publick Nusance; and which is still worse, have complained so long

without a Remedy, that the Jobbers, harden'd in Crime, are at last come to exceed all [2] bounds, and

now, if ever, sleeping Justice will awake, and take some Notice of them, and if it should not now, yet

the diligem Creatures are so steddy to themselves, that they will some time or other, make it absolutely

necessary to the Government to demolish them.

I know they upon all Occasions laugh at the Suggestion, and have the Pride to think it

impracticable to restrain them; and one of the top of the Function the other Day, when I casually told

him, That if they went on, they wou'd make it absolutely necessary to the Legislature, to suppress

25 Daniel Defoe, The anatomy of Exchange-Alley: or, a system of stock-jobbing, LONDON: Printed for E. Smith near Exchange-Alley. 1719. From the University of Michigan Eighteen Century Collections Online. URL: http://quod.lib.umich.edu/e/ecco/004843169.0001.000?rgn=main;view=fulltext.

http://quod.lib.umich.edu/e/ecco/004843169.0001.000?rgn=main;view=fulltext


33

them, return'd, That he believ'd it was as absolutely necessary for 'em to do it now, as ever it could be;

But how will they do it? Tis impossible, said he, but if the Government takes Credit, their Funds

should come to Market; and while there is a Market we will buy and sell; there is no effectual way in

the World, says he, to suppress us but this, viz. That the Government should first pay all the publick

Debts, redeem all the Funds, and dissolve all the Charters, viz. Bank, South-Sea, and East-India, and

buy nothing upon Trust, and then, indeed, says he, they need not hang the Stock-Jobbers, for they will

be apt to hang them selves … [3] But before I come to the needful ways for restraining those People,

I think 'twill be of some Service to expose their Practices to common view, that the People may see a

little what kind of Dealers they are… Coining false News, this way good, that way bad; whispering

imaginary Terrors, Frights, Hopes, Expectations, and then preying upon the Weakness of those, whose

Imaginations they have wrought upon, whom they have either elevated or depress'd. [4] If they meet

with a Cull, a young Dealer that has Money to lay out, they catch him at the Door, whisper to him,

Sir, here is a great piece of News, it is not yet publick, it is worth a Thousand Guineas but to mention

it: I am heartily glad I met you, but it must be as secret as the black side of your Soul, for they know

nothing of it yet in the Coffee-House, if they should, Stock would rise 10 per Cent. in a moment, and

I warrant you South-Sea will be 130 in a Week's Time, after it is known. Well, says the weak Creature,

prethee dear Tom what is it? Why really Sir I will let you into the Secret, upon your Honour to keep it

till you hear it from other Hands; why 'tis this, The Pretender is certainly taken and is carried Prisoner

to the Castle of Millan, there they have him fast; I assure you, the Government had an Express of it

from my Lord St----s within this Hour. Are you sure of it, says the Fish, who jumps eagerly into the

Net? Sure of it! why if you will take your Coach and go up to the Secretaries-Office, you may be

satisfied of it your self, and be down again in Two Hours, and in [5] the mean time I will be doing

something, tho' it is but little, till you return.

Away goes the Gudgeon with his Head full of Wildfire, and a Squib in his Brain, and coming to

the Place, meets a Croney at the Door, who ignorantly confirms the Report, and so sets fire to the

Mine; for indeed the Cheat came too far to be baulkt at home: So that without giving himself Time

to consider, he hurries back full of the Delusions, dreaming of nothing but of getting a Hundred

Thousand Pounds, or purchase Two; and even this Money was to be gotten only upon the Views of

his being before-hand with other People.

In this Elevation, he meets his Broker, who throws more Fire-works into the Mine, and blows him

up to so fierce an Inflamation, that he employs him instantly to take Guineas to accept Stock of any

Kind, and almost at any Price; for the News being now publick, the Artist made their Price upon him.

In a Word, having accepted them for Fifty Thousand Pounds more than he is able to pay, the Jobber

has got an Estate, the Broker 2 or 300 Guineas, and the Esquire remains at Leisure to sell his Coach

and Horses, his fine Seat and rich Furniture, to make good the Deficiency [6] of his Bear-Skins, and

at last, when all will not go through it, he must give them a Brush for the rest.

…

[24] Besides, I deny the Fact; these Men Friends to the Government! Jesu Maria! The Government

may be friendly to them in a manner they do not deserve; but as to their being Friends to the


34

Government, that is no more possible than the Cardinal Alberoni, or the Chevalier de St. George are

Friends to the Government; and therefore without reflecting upon Persons, naming Names, or the

like; there will be no need of Names, the Dress will describe them, I lay down this new fashion'd

Proposition, or Postulatum, take it which way you please, that I will make it out by the Consequences

of what I am going to say.

1. That Stock-jobbing, as it is now practised, and as is generally understood by the Word Stock-

jobbing, is neither less or more than High-Treason in its very Nature, and in its Consequences.

2. That the Stock-jobbers, who are guilty of the Practices I am going to detect, are eventually

Traytors to King George, and to his Government, Family and Interest, and to their Country, and

deserve to be used at least as Confederates with Traytors, when ever there are any alarms of Invasions,

Rebellions, [25] or any secret Practices against the Government, of what Kind soever.

…

[35] But it is needful, after having said thus much of the Crime, to say something of the Place,

and then a little of the Persons too; The Center of the Jobbing is in the Kingdom of Exchange-Alley,

and its Adjacencies; the Limits , are easily surrounded in about a Minute and a half (viz.) stepping out

of Jonathan's into the Alley, you turn your Face full South, moving on a few Paces, and then turning

Due East, you advance to Garraway's; from thence going out at the other Door, you go on still East

into Birchin-Lane, and then halting a little at the Sword-Blade Bank to do much Mischief in fewest

Words, you immediately face to the North, enter Cornhill, visit two or three petty Provinces there in

your way West: And thus having Box'd your Compass, and sail'd round the whole Stock-jobbing

Globe, you turn into Jonathan's again; and so, as most of the great Follies of Life oblige as to do, you

end just where you began.

d. Agreement with the South Sea Company to redeem the Public Debt (1720)

Debates in the House of Common on the South Sea Bill (March 23, 1720)26

“The Bill was warmly opposed by Walpole, who spoke in favour of the Bank. In vain he displayed

the fallacy of the South Sea Scheme, and the great difference between that and the Bank, by shewing,

that the company was not limited in the price they were to put on the Stock made over to them;

whereas the Bank entered a specific sum of 1,7001. stock, for every hundred pounds in the long

annuities, and the same proportion for the short annuities. In vain he urged, that it countenanced the

pernicious practice of stock jobbing, by diverting the genius of the nation from trade and industry;

that it held out a dangerous lure for decaying the unwary to their ruin by a false prospect of gain, and

to part with the gradual profits of their labour, for imaginary wealth. In vain he insisted, that if the

Proposal of the South Sea Company should be accepted, the rise of their stock ought to be limited.

In vain he dwelt on the miseries and confusion which then prevailed in France, from the adoption of

26 7 Cobb. Parl. Hist., pp. 644-5. URL: http://goo.gl/vdV9F.

http://goo.gl/vdV9F


35

similar measures. In vain he urged, that as the whole success of the scheme must chiefly depend on

the rise of the stock, the great principle of the project was an evil of the first magnitude; it was to

raise artificially the value of the stock, by exciting and keeping up a general infatuation, and by

promising dividends out of funds which would not be adequate to the purpose. In vain he predicted,

that if the establishment succeeded, the directors would become masters of the government, form an

absolute aristocracy in the kingdom, and control the resolutions of the legislature; or if it did not

succeed, the failure would cause a general discontent. He closed his speech by observing, that such

would be the delusive consequences, that the public would conceive it a dream His arguments and his

eloquence were of no avail. He was compared by his friends to Cassandra, predicting evils which

would only be believed when the event proved their reality, and only deprecated when they were felt;

and he whose speeches, in matters of finance, occupied the House with more’ than usual attention,

was now scarcely heard. The preference was given to the South Sea, and the bill was afterwards carried

by a majority of more than 3 so 1.”

Debates in the Lords on the South Sea Bill (April 4, 1720)27

“The Lords read that Bill the first time, and the question being put, That it be read a second time,

the same, after a small debate, was carried in the affirmative without dividing. The next day the Bill

was read a second time accordingly; and then it was moved, That it be committed to a Committee of

the whole House, which occasioned a great debate.

The Lord North and Grey spoke first against the Bill, and said, That in his judgment, it was unjust

in its nature, and might prove fatal in its consequences; since its seemed calculated for the enriching

of a few, and the impoverishment of a great many, and not only made way for, but countenanced and

authorised the fraudulent and pernicious practice of Stock-jobbing, which produced an irreparable

mischief, by diverting the genius of the people from trade and industry. His lordship was backed by

The Duke of Wharton, who endeavoured chiefly to evince, That the South-Sea project might prove

of infinite disadvantage to the nation; first, as it gave foreigners an opportunity to double and treble

the vast sums they had in our public funds, which could not but tempt them to withdraw their capital

stock, with their immense gains, to other countries, which might drain Great Britain of a considerable

part of its gold and silver. Secondly, that the artificial and prodigious rise of the South-Sea Stock was

a dangerous bait, which might decoy many unwary people to their ruin, and allure them by a false

prospect of gain, to part with what they had got by their labour and industry, to purchase imaginary

riches. And in the third place, That the addition of above thirty millions new capital, would give such

a vast power to the South-sea Company, as might endanger the liberties of the nation, and, in time,

subvert our excellent; constitution; since by their extensive interest they might influence most, if not

all the elections of the members, and consequently over-rule the Resolutions of the House of

Commons.

Earl Cowper spoke also against the Bill, and said, That like the Trojan horse, it was ushered in, and

received with great pomp and acclamations of joy; but was contrived for treachery and destruction.

27 Ibid.


36

His lordship urged in particular, That in all public bargains, it is a duty incumbent on them who are

intrusted with the administration, to cake care that the same be more advantageous to the state than

to private persons; but that a quite contrary method seemed to have been followed in the contract

made with the South Sea Company: for if the stocks were kept up to the advanced price to which they

had been raised up by the oblique arts of Stock-jobbing, either that company, or its principal members,

would gain above thirty millions sterling, of which they gave but one fourth part towards the discharge

of the national debts. That though this Scheme carried the face of public good, yet nothing could be

so, that was founded on injustice, as his lordship took this bill to be: that he apprehended, in particular,

that the main public intention of it, viz. the repurchase of annuities, would meet with insuperable

difficulties; and that, in such a case, none but a few persons, who are in the secret, and had early bought

stocks at a low rate., and afterwards sold them at a high price, would, in the end, be gainers by this

project.

The Duke of Buckingham, and some other Peers, spoke on the same side; but

The Earl of Sunderland answered most of their objections: and, among other things, said, That

they who encouraged and countenanced the scheme of the South-Sea Company, had nothing in their

view, but the easing the nation of part of that heavy load of debt it labours under; That on the other

hand, the managers for that Company had, undoubtedly, a prospect of private gain, either to

themselves, or to their corporation; but that, when that scheme was accepted, neither the one or the

other could foresee that the stocks would have risen to the price they were now advanced: That if they

had continued as they were at that time, the public would have had the far greater share of the

advantage accruing from that scheme; and if the stocks were kept up to the price they had been raised

to, which was not unlikely, it was but reasonable that the South Sea Company should enjoy the profit

procured to it by the wise management and industry of its directors, which would enable it both to

make large dividends among its members, and thereby to compass the ends intended by this scheme.

After this the question for committing the Bill being put, it was carried in the affirmative, by a majority

of 83 voices against 17.”

__________________________________

Excerpts from the Act to enable the South Sea Company to redeem the public debt with

its own stock (April 7, 1720)28

“An Act for enabling the South-Sea Company to increase their present capital stock and fund, by redeeming such

publick debts and incumbrances as are therein mentioned; and for raising money to be applied for lessening several of

the publick debts and incumbrances; and for calling in the present exchequer bills remaining uncancelled; and for making

forth new bills in lieu thereof, to be circulated and exchanged upon demand at or near the exchequer.

28 6 Geo. I, c. 4. URL: http://goo.gl/QmHkj. Paragraphs added to text.

http://goo.gl/QmHkj


37

…

[139] And whereas the governor and company of merchants of Great Britain trading to the South-Seas and other

parts of America, and for encouraging the fishery, are willing, at such time or times as they shall find convenient, before

the 1st day of March 1721, to take in, either by purchase or subscriptions, all or any the above-mentioned annuities,

payable during the respective remainders of the above-mentioned terms of 96 years, 89 years and 99 years, (in this act

before computed to amount in the whole to £. 666,821. 8s. 3d. per annum, or thereabouts) from the respective proprietors

thereof (and without any compulsion on any of the said proprietors) at such price and prices [140] as shall be agreed

between the said company and the respective proprietors of those annuities;

[A] nd where any of the annuities so payable during the remainder of any of the said long terms of 96 years, 89

years and 99 years, do or shall belong to several persons or corporations having particular estates or interest therein (in

possession, reversion or by way of future interest) who will voluntarily agree together to depart with such their particular

estates or interests, that so the said governor and company may lawfully take in such annuity or annuities during the

whole remainder of the said respective terms of 96 years, 89 years and 99 years, the said governor and company, in all

such cases, are willing, at such time or times as they shall find convenient, before the said 1st day of March 1721, to

take in, either by purchase or subscriptions, such particular estates or interests, whereby the said annuities for the whole

remainder of the said long terms respectively may effectually be taken in, according to the true meaning of this act, at

such price or prices as shall be agreed between the said company and those proprietors:

[P]rovided the said governor and company, for every annuity (part of the said annuities computed to amount in the

whole to £. 666,821. 8s. 3d. per annum, or thereabouts) so to be taken in by them, may, in lieu thereof, have an

addition made to their capital stock after the rate of twenty years purchase, and such respective additions (in respect

thereof) to their present annuity or yearly fund, secured to be paid for such time, and out of such duties and revenues as

are herein after prescribed and appointed, until the redemption thereof according to the tenor and true meaning of this

present act.

And the said governor and company are willing , at such time or times as they shall see convenient, before the said

1st day of March 1721, to take in, either by purchase or subscriptions, all or any of the abovementioned lottery-annuities

in this act computed to amount to £. 46,260. 6s. 1d. per annum, or thereabouts, for the term of twenty three years,

reckoned from Michaelmas 1719, and the pay-tickets for the same, from the respective proprietors thereof, at such price

or prices as shall be agreed between the said company and the respective proprietors of those annuities.

And where any of the lottery-annuities so payable during the said term of twenty three years, or the pay-tickets for

the same, do or shall belong to several persons or corporations, who will voluntarily agree together to depart with all the

pay-tickets for any such annuity for the said term of twenty three years, the said governor and company, in all and every

such case and cases, are willing, at such time or times as they shall see convenient, before the said 1st day of March

1721, to take in the same, either by purchase or subscriptions, at such price or prices as shall be agreed between the said

company and those proprietors: provided the said governor and company, for every such lottery-annuity so to be taken in,

may have an addition made to their capital stock after the rate of fourteen years purchase, and such respective additions

to their present annuity or yearly [141] fund secured to be paid for such time, and out of such duties and revenue as are

herein after prescribed and appointed in that behalf, until the redemption thereof according to the tenor and true meaning

of this present act.


38

And the said governor and company are also willing, at such time or times as they shall see convenient, before the

said 1st day of March 1721, to take in, either by purchase or subscriptions, all or any the above-mentioned annuities

(before in this act computed to amount to £. 81,000 per annum, or thereabouts) for the said term of twenty two years

and three quarters of a year, reckoned from Christmas 1719, or for the remainder of that term which shall be to come

and unexpired at the quarter-day next preceding the taking in the same from the respective proprietors thereof, without

any compulsion on any such proprietors, at such price or prices as shall be agreed between the said company and the

respective proprietors of those annuities.

And where any of the annuities so payable during the said term of twenty two years and three quarters of a year,

or such remainder thereof, do or shall belong to several persons or corporations having particular estates or interests

therein who, will voluntarily agree together to depart with such their particular estates or interests, so that such annuity

or annuities may effectually be taken in for the said whole time or term of twenty two years and three quarters of a year,

or such remainder thereof, the said governor and company in all and every such case and cases are willing, at such time

or times as they shall see convenient, before the said 1st day of March 1721, to take in the same, either by purchase or

voluntary subscriptions, at such price or prices as shall be agreed between the said company and those proprietors:

[P]rovided the said governor and company, for every such annuity so to be taken in, may have an addition made to

their capital stock after the like rate of fourteen years purchase, and such respective additions, in respect thereof to their

present annuity or yearly fund, secured to be paid for such time and out of such duties and revenues as are herein after

prescribed and appointed in that behalf, until the redemption thereof according to the tenor and true meaning of this

present act.

And the said governor and company are likewise willing, at such time or times as they shall see convenient, before

the 1st day of March 1721 (but subject to such notices for redemption as are herein after mentioned) to take in all and

every the said redeemable debts and annuities (the principal sums whereof are in this act before computed to amount to

£. 16,546,482 7s 1d, or thereabouts) either by purchases, taking subscriptions, or paying them off by the said governor

and company:

[P]rovided the said governor and company may have an addition of £. 100 to their present capital stock for every

£. 100 of the principal monies so taken in by them, and proportionally for greater or lesser sums, and so as such

additions be made to the present annuity or yearly fund of the said governor and company as shall be equal to the rates

now payable for the principal sums of those redeemable debts and annuities [142] which shall be so taken in, until the

redemption thereof according to this act.

And the said governor and company, for the liberty of increasing their capital stock and their annuity or yearly fund

by such means as aforesaid, have desired and consented, That their present annuities or yearly funds for their present

capital stock, and the annuities or yearly funds for their capital stocks, (to be increased pursuant to this act) be continued

at the respective rates herein after mentioned, till the feast of the nativity of Saint John Baptist which shall be in the

year of our Lord 1727 inclusively; and that from and after the same feast-day their then annuity or yearly fund for their

whole capital and increased capital stocks may be actually reduced to four pounds per centum per annum, and be likewise

from thenceforth redeemable by parliament;

[A]nd in consideration thereof, and of such other benefits and advantages as are hereafter in and by this act provided

and expressed, the said governor and company are willing to make such payments into the receipt of exchequer as are


39

herein after specified, for the use of the publick, to be applied for paying off the publick debts and incumbrances incurred

before Christmas 1716.

Now we your Majesty's most dutiful and loyal subjects, the commons of Great Britain in

parliament assembled, being desirous to have the said publick debts and incumbrances lessened as fast

as conveniently may be, with regard to justice and the publick faith, and that as well such publick

duties, revenues and incomes as are already settled for answering the present annuity or yearly fund

of the said governor and company, as also such other publick duties, revenues and incomes as are

specified in this act, may be settled in such manner, that the present annuities or yearly funds for the

present capital of the said governor and company, and the annuities or yearly funds which shall

become due and payable for their capital to be increased, pursuant to this act, may be continued at the

respective rates herein after mentioned, till the said feast of the nativity of Saint John Baptist which

shall be in the year of our Lord 1727 inclusive; and that from and after the same feast day their then

annuity or yearly fund for their whole capital and increased capital may be actually reduced to four

pounds per centum per annum, and likewise be thenceforth redeemable by parliament according to

the purport and true meaning of this act, have, for that end and purpose, given and granted, and do

by this present act give and grant to your Majesty, your heirs and successors, such rates, duties, revenues

and incomes as are herein after mentioned; and do humbly beseech your Majesty, That it may be

enacted;

[A]nd be it enacted by the King's most excellent majesty, by and with the advice and consent of

the lords spiritual and temporal and commons, in this present parliament assembled, and by the

authority of the same, That such or the like particular rates and duties of excise upon beer, ale, cyder

and other liquors, as by the said act of the eight year of the reign of Queen Anne were granted for the

term of thirty two years, which commenced from the feast of the annunciation of the blessed Virgin

Mary one thousand seven hundred and ten; and such new rates or duties upon pepper, raisins,

nutmegs, cinnamon, cloves, mace and snuff, as by the same act were granted for the term of thirty

two years, which commenced from the 6th day of February 1709, shall severally, by virtue of this act,

have continuance after the respective determinations of the several terms of thirty two years last

mentioned, and be paid and payable to his Majesty, his heirs and successors for ever …

IV. And be it enacted by the authority aforesaid, That all the monies to arise by the said rates,

duties, revenues and impositions by this act made perpetual, as aforesaid, as well before, as when and

as the same respectively (after the expiration of the respective terms formerly granted, as aforesaid)

shall take effect by virtue of this present act (the necessary charges of raising the same excepted) shall

from time to time be brought into the receipt of exchequer, to the intent and purpose that the said

governor and company of merchants of Great Britain trading to the South-Seas and other parts of

America, and for encouraging the fishery, and their successors, may out of the same be secured the

payment of such respective annuities or sums as shall or may become due or payable to them in

pursuance of this act, until the redemption thereof: nevertheless the said rates, duties, revenues and

impositions hereby made perpetual, and such annuities or sums as shall or may become due or payable

out of the same to the said governor and company, and their successors, shall be subject to redemption


40

by parliament, according to the proviso or condition of redemption hereafter in this act contained in

that behalf; any thing in this act contained to the contrary notwithstanding.

…

XLIV. And whereas the corporation of the said governor and company of merchants of Great Britain are willing,

in consideration of the liberty by this act given them of increasing their capital stock and their annuity or yearly fund in

respect of the same as aforesaid, by taking in or paying off all and every or any of the said redeemable debts and

incumbrances in this act before computed to amount to £.16,546,482 7s 1d, or thereabouts, to pay the full and intire

sum of £.4,156,306 4s 11d of good and lawful money of Great Britain, into the receipt of the exchequer, to be

applied towards discharging the principal and interest of such national debts and incumbrances as were incurred before

the 25th day of December 1716, declared to be national debts, and provided for by acts of parliament:

[B]e it further enacted by the authority aforesaid, That the same corporation shall pay into the

receipt of the exchequer, for the purposes last mentioned, the said sum of £.4,156,306 4s 11d, without

any deduction defalcation or abatement whatsoever for any cause, matter or thing whatsoever; the

same to be paid by such proportions and at such times as are herein after appointed for payment

thereof; that is to say, one full and equal fourth part thereof on or before the feast of the annunciation

of the blessed Virgin Mary which shall be in the year of our Lord 1721; one other full and equal

fourth part thereof on or before the feast of the nativity of Saint John the Baptist which shall be in

the said year of our Lord 1721; one other full and equal fourth part thereof on or before the feast of

Saint Michael the Archangel which shall be in the said year of our Lord 1721; and the remaining fourth

part of the said sum of £.4,156,306 4s 11d, and in full payment thereof, on or before the feast of the

birth of our Lord Christ which shall be in the said year of our Lord 1721.

XLV. And whereas the said corporation of the governor and company of merchants of Great Britain, in

consideration of the increase which, by virtue of this act, will be made as aforesaid of their capital stock and annuity

or yearly fund before-mentioned, by taking in by purchase or subscription at prices to be mutually agreed on with the

proprietors as aforesaid, the said annuities for the aforesaid remainders of the said several terms of 96 years, 89 years

and 99 years and 32 years, or such estates and interests therein as will compleatly make up the said several remainders

of the said several terms, which shall be to come and unexpired at the respective times of taking in the same annuities

respectively, are willing to pay such further sum and sums of good and lawful money of Great Britain, as the annuities

so purchased, or so many of them as shall be actually purchased and taken in within the time aforesaid, stall amount

unto at the rate of four years and an half ’s purchase; that is to fay, at the rate of 450 pounds for every such annuity,

amounting to 100 pounds per annum, and proportionally for any such greater or lesser annuities, which stall be taken

in for the said remainders of the said terms of years respectively; the money so arising to be also applied towards the

discharging the principal and interest of the said national debts and incumbrances which were incurred before the said

25th day of December 1716:

[B]e it further enacted by the authority aforesaid, That the same corporation shall pay into the said

receipt of the exchequer, for the purpose aforesaid, and without any deduction, defalcation or

abatement whatsoever, such further sums of good and lawful money of Great Britain, as the said rate

of four years and an half's purchase shall amount unto, upon all such of the annuities last mentioned

as shall be actually taken in by purchase or subscriptions pursuant to this act, on or before the said 1st


41

day of March 1721; the said sums, after the said rate of four years and an half ’s purchase, to be paid

into the said exchequer by four equal quarterly payments, as is herein after mentioned; that is to fay,

one full and equal fourth part thereof, of on or before the feast of the annunciation of the blessed

Virgin Mary which shall be in the year of our Lord 1722; one other full and equal fourth part thereof

on or before the feast of the nativity of St. John Baptist which shall be in the said year of our Lord

one thousand seven hundred and twenty two; one other full and equal fourth part thereof on or before

the feast of St. Michael the archangel which shall be in the said year of our Lord 1722; and the

remaining full and equal fourth part thereof on or before the feast of the birth of our Lord Christ

which shall be in the said year of our Lord 1722, in full payment and satisfaction of the said sums, to

be computed after the said rate of four years and an half's purchase.

XLVI. And whereas the said corporation of the said governor and company of merchants of Great Britain, to

manifest their sincere intention of using their best endeavours to take in, by purchase or subscription, and at prices to be

mutually agreed upon, as aforesaid, the said annuities now payable for and during the said residuary terms of 96 years,

89 years and 99 years, or such estates or interests therein as shall compleatly make up the remainders of the said terms

of 96 years, 89 years and 99 years, which shall be to come and unexpired at the respective times of taking in the same,

are willing to pay such further sum and sums of good and lawful money of Great Britain, as the rate of one year's

purchase to be computed upon such of the annuities last-mentioned, as shall not be actually purchased and be taken in

within the time limited, shall amount unto; that is to fay, 100 pounds for every such annuity, amounting to 100 pounds

per annum, and proportionally for every such greater or lesser annuity, which stall not be so taken in, by purchase or

subscription, within the time before limited; the monies so arising to be also applied towards the discharging the principal

and interest of the said national debts and incumbrances which were incurred before the said 25th day of December

1716:

[B]e it further enacted by the authority aforesaid, That the same corporation shall pay into the said

receipt of the exchequer for the purpose aforesaid, and without any deduction, defalcation or

abatement whatsoever, such further sums of good and lawful money of Great Britain, as the said rate

of one year's purchase shall amount unto, upon all such of the annuities last mentioned, as shall not

be actually taken in by purchase or subscriptions pursuant to this act, on or before the said 1st day of

March 1721; the said sums after the said rate of one year's purchase to be paid into the said exchequer,

at such times and in such proportions as are herein after mentioned; that is to say, one full and equal

fourth part thereof, on or before the feast or the annunciation of the blessed Virgin Mary which shall

be in the year of our Lord 1722; one other full and equal fourth part thereof on or before the feast

of the nativity of St. John the Baptist which shall be in the said year of our Lord 1722; one other full

and equal fourth part thereof on or before the feast of St. Michael the Archangel which shall be in the

said year of our Lord 1722; and the remaining full and equal fourth part thereof on or before the feast

of the birth of our Lord Christ which shall be in the said year of our Lord 1722, in full payment and

satisfaction of the said sums to be computed after the said rate of one year's purchase.

…

XLVIII. And for the better enabling the said governor and company of merchants of Great

Britain, and their successors, to raise money to be paid, for or in part of the said sum of £.4,156,306


42

4s 11d, or for or in part of the said sums to be paid after the said rates of four years and an half's

purchase and one year's purchase-respectively, or for purchasing or paying off all or any the annuities

and debts to be taken in or paid off in pursuance of this act, or for exchanging for ready money the

new exchequer-bills to be made forth, as hereafter in this act is mentioned, or for defraying the interest

thereof, or for carrying on their trade and other necessary occasions: be it further enacted by the

authority aforesaid, That it shall and may be lawful to and for the said governor and company of

merchants of Great Britain, and their successors, from time to time, as they shall see cause, to call in

or direct to be paid from and by their respective members for the time being, proportionably according

to their respective interests in the capital stock or stocks which do or shall belong to the said governor

and company of merchants of Great Britain, and which shall be increased, as aforesaid, or by opening

books of subscriptions, or by granting annuities redeemable by the same governor and company, and

their successors, or by any other method, ways and means as they shall think proper, to raise any sum

or sums of money, as in a general court of the same governor and company shall from time to time

be judged necessary, and ordered to be called in or raised; and that all executors, administrators,

guardians, trustees and mortgagees, shall be indemnified in paying, and are hereby impowered to pay

in their respective proportions of the money so called in or raised; and in case any such member or

members shall refuse or neglect to pay his, hers or their share of the said money so called for at the

time or times appointed for that purpose, by notice inserted in the London Gazette, and fixed upon the

Royal Exchange in London, it shall and may be lawful to and for the said governor and company of

merchants of Great Britain, and their successors, not only to stop the share, dividend, annuity and

profits, which shall from time to time become payable to such member or members so neglecting or

refusing, of the funds, stocks, annuities or profits of the said governor and company of merchants

of Great Britain, and to apply the same, from time to time, for or towards payment a the share of the

money so called for, and which ought to have been paid by such member or members so neglecting

or refusing, until the same shall be satisfied, but also to stop the transfers or assignments of the share

and shares of every such defaulter and defaulters, and to charge such defaulter and defaulters with

interest, after the rate of five pounds per centum per annum, for the money so by him, her or them

omitted to be paid, from the time the same was appointed to be paid until the payment thereof; and

that the share and stock, shares and stocks of such defaulter and defaulters shall be liable to make

good and answer the said monies so appointed to be paid, and the interest thereof, as aforesaid; and

in case the principal and interest, as aforesaid, shall be unpaid by the space of three months, then the

said governor and company of merchants of Great Britain, or their successors, or their court of

directors for the time being, shall have power to authorize such person or persons, as they shall think

fit, to sell, assign and transfer so much of the said stock or stocks of such defaulter or defaulters as

will satisfy and pay the same, rendring the overplus (if any be) to the proprietor: and the said governor

and company of merchants of Great Britain, or their successors, in a general court, from time to time,

when they shall judge their affairs will admit thereof, mall or may cause any sum or sums of money

which shall be so called in any part thereof, to be divided and distributed to and amongst the then

members of that corporation, according and in proportion to their respective interests in the capital

stock or stocks of the same; any former law or statute, restriction, or other matter or thing whatsoever

to the contrary notwithstanding.


43

XLIX. And for better enabling the said governor and company of merchants of Great Britain,

and their successors, to raise money to be advanced for or in part of the said sum of £.4,156,306 4s

11d … or for carrying on their trade, and other necessary occasions: it is also hereby enacted by the

authority aforesaid, That it shall and may be lawful to and for the said governor and company of

merchants of Great Britain, and their successors, from time to time (in case they shall think fit) to

borrow or take up money upon any contracts, bills, bonds or obligations under their common seal, or

upon credit of their capital stock or stocks, to be increased, as aforesaid, or any part their capita!

thereof, at such rate or rates of interest, for any time not less than six months from the borrowing

thereof, as they shall think fit, and to give security under their common seal, or by assigning or

transferring their stock or stocks, or any part thereof, or otherwise, as shall be to the satisfaction of

the lenders respectively.

…

LII. And it is hereby enacted by the authority aforesaid, That so much money as shall be called for

by the said governor and company of merchants of Great Britain from their respective members, for

or towards any the purposes before-mentioned; shall (if the said governor and company think proper)

be and be deemed an additional stock of the said governor and company, and shall be written into the

books of the said company, and each member thereof shall have credit in the said books for his or

her proportion or share thereof; and that the members of the said company, who shall have a share

or interest in the stock or additional stock of the same company, shall or may assign and transfer the

same in the books of the same company, in such or the like method, manner and form as are

prescribed by the act or acts of parliament and charter now in force, for assignments or transfers of

original stock to be made in the books of the same company; or may dispose or devise the same, or

any part thereof, by will, in such manner and form as any share in the original stock of the same

company is deviseable;

…

LIV. And it is hereby enacted by the authority aforesaid, That the respective members of the same

corporation, who shall have a share or interest in the present capital stock or the increased stock

thereof, shall and may assign and transfer such his, her or their share or interest, or any part thereof

(except as is otherwise provided in this act) in the books of the said corporation, in such or the like

method, manner and form as are prescribed in and by the act or acts of parliament and charter now

in force for assignments or transfers of original stock to be made in the books of the said corporation;

or shall or may dispose or devise the same, or any part thereof, by will, in such manner and form as

any share in the original stock of the said corporation is deviseable.

LV. And be it further enacted by the authority aforesaid … that no person, in respect of his being

governor or sub-governor, deputy-governor, director, manager or a member of the same corporation,

or for having any stock or share therein, or by reason of his being named or acting as a manager,

director or otherwise, for taking the said subscriptions, or for taking in orders and tickets, or for any

other matter or thing to be by him done or performed by or in pursuance of this act only, shall be

now or at any time hereafter disabled from being or continuing, or from being elected or serving as a


44

member of parliament, nor be liable or subject to any penalty, forfeiture or disability prescribed by

any other act or acts of parliament, for not qualifying himself to execute his trust upon or in pursuance

of this act, as persons who shall take or execute any office, or place of profit or trust, are subject and

liable unto by any of the laws now in force;”

e. Appointment and Report of a Parliamentary Committee (February - April 1720)

The Committee was appointed on February 22, 172029:

“A Complaint being made to the House of several publick and private Subscriptions, in and about

the Cities of London and Westminster, for several unjustifiable Projects and Undertakings, whereby great

Mischiefs may accrue to the Publick;

Ordered, That a Committee be appointed to inquire into, and examine, the several Subscriptions

for Fisheries, Insurances, Annuities for Lives, and all other Projects carried on by Subscription in and

about the Cities of London and Westminster; and to inquire into all Undertakings for purchasing Joint

Stocks, or obsolete Charters: And that they do report the same, with their Opinion thereupon, to the

House:

And it is referred to Mr. Hungerford…And have Power to send for Persons, Papers, and Records.”

________________________________

The Committee presents its report to the House on April 27, 172030:

“Mr. Hungerford reported from the Committee appointed to inquire into, and examine, the several

subscriptions for Fisheries, Insurances, Annuities for Lives, and all other Projects carried on by

Subscriptions in and about the Cities of London and Westminster; and to inquire into all Undertakings

for purchasing Joint Stocks, or obsolete Charters; the Matter, as it appeared to them, with the

Resolutions of the Committee thereupon; which they had directed him to report to the House; and

he read the same in his Place; and afterwards delivered the Report in at the Clerk's Table: Where the

Report and Resolutions were read; and are as follow: viz.

That the Committee, in pursuance of the Order of the House, of the 22d of February, have taken

into Consideration the several Matters to them referred; and inquired into the several Undertakings

following, carried on by Subscription; viz.

29 Journals of the House of Commons, v. 19, 1718-1721 (1803) (February 22, 1719), 274. URL: http://goo.gl/bMt3h 30 Journals of the House of Commons, v. 19, 1718-1721 (1803) (April 27, 1720), 341. URL: http://goo.gl/hs1mc

http://goo.gl/bMt3h

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45

A Subscription £. 1,500,00031 for carrying on a Fishing Trade, by the Name and Title of The

Company of the Grand Fishery, of Great Britain:

A Subscription of £. 1,200,000 for carrying on a Fishing Trade, by the Name of The Company

of the Royal Fishery of England:

A Subscription of £. 3,000,000 taken at Garraway’s Coffee-house32, for carrying on a Fishery, by

the Name of The British Fishery:

A Subscription of £. 1,500,000 taken at Robin’s Coffeehouse, for establishing another British

Fishery:

A Subscription of £. 1,500,000 as a Joint Stock, for the immediate and effectual carrying on the

Greenland Whale-fishery;

A Subscription of £. 1,152,000 for insuring Ships and Merchandize, kept at the Royal Exchange33:

A Subscription of £. 2,000,000 for insuring Ships and Merchandize, called Ram’s Insurance34:

A Subscription of £. 1,000,000 for insuring Ships and Merchandize, called Shales his Insurance:

A Subscription of £. 2,000,000 for insuring Goods and Houses from Fire, called Sadler’s-hall

Insurance:

A Subscription off £. 1,000,000 fora General Insurance from Fire, called Overall’s Insurance:

A Subscription of £. 2,000,000 taken at the Three Tun Tavern in Swithen’s Alley, near the Royal

Exchange, for a General Insurance on Houses and Merchandize ;

A Subscription of £. 1,500,000 for purchasing Government Securities; and lending Money upon

the same:

A Subscription opened at Garraway’s Coffee-house in Exchange-alley, for raising £. 1,200,000 to be

employed, by way of Loan, on Stocks, Annuities, Tallies, &c.:

A Subscription of £. 1,200,000 for granting Annuities, called Mr. Thomas Burgesse’s Subscription:

A Subscription of £. 1,000,000 taken by the Governor and Company for raising Thames Water, in

York Buildings:

31 For an order of reference, the Bank of England had been created in 1694 with nominal capital of £. 1,200,000. See: 5&6 W&M c. 20, URL: http://goo.gl/ka8WV. The South Sea Company’s capital in the spring of 1719 was £11,746,844. See: French, D. E., Early Speculative Bubbles and Increases in the Supply of Money, Ludwig von Mises Institute, 2009, p. 91. 32 In Exchange-Alley, where brokers (and stock-jobbers) plied their trade. 33 Subscription directed by Lord Onslow, in secret agreement with Lord Chetwynd, of Ram’s Insurance. These are the two companies which will obtain charters (under the respective names of Royal Exchange Assurance Corporation and London Assurance Corporation) as well as exclusive rights over maritime insurance after petitioning the King (See below, n.46). See Martin, Frederick, The History of Lloyd's and of Marine Insurance in Great Britain, Macmillan, London, 1876, pp. 93-95. URL: http://books.google.ca/books?id=8B8pAAAAYAAJ. 34 See note 44 above.

http://goo.gl/ka8WV

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46

Subscription of £. 2,000,000 taken in at Cooper’s Coffee-house in Cornhill, for preventing and

suppressing Thieves and Robbers both by Sea and Land; and insuring all Persons Goods from the

same, as also from Fire:

A Subscription of £. 1,200,000 for building or buying Ships to lett or freight:

A Subscription of £. 1,000,000 for a Joint Stock, to be employed in carrying on the Navigation

and Traffick of Coals from Newcastle to London:

A Subscription of £. 1,200,000 for raising a Joint Stock, to be employed in Undertaking and

Furnishing of Funerals:

[342] A Subscription of £. 1,200,000 Sterling, to be a Fund for establishing and carrying on a

trade to his Majesty’s German Dominions:

A Subscription taken to carry on the Undertaking or raising the Growth of raw Silk:

A Subscription of £. 10,000,000 taken at Sadler’s-hall, for raising a Joint Stock, in order to the

establishing the Fishery of Great Britain and Ireland.

That the Committee have examined the several Agents or Managers of the aforesaid

Subscriptions; and also have examined into the several Papers and Books relating to the same, as well

as the Papers referred to them by the House; and thereby do find the several Matters of Fact following;

viz.

That a Petition, signed by the Lords Stamford, Clarendon, and Yarmouth, with others, praying a

Charter of Incorporation for carrying on a Fishing Trade, by the Name of The Grand Fishery of

Great Britain, was presented to his Majesty; and referred, by Order of Council of the 2d of February

1717, to the present Attorney and late Solicitor General; who have made a Report thereupon to his

Majesty, dated the 12th November 1719; which sets forth, That they have examined the Allegations of

the said Petition; and likewise, Application being made to them by several Persons claiming to be

Members of a Corporation supposed to be erected by his late Majesty King Charles the Second, by his

Letters Patent under the Great Seal of England, bearing Date the 16th Day of September 1677, by

the Name of The Company of the Royal Fishery of England; who desired to be heard, on behalf of

the said Corporation, against the granting any such Charter as is prayed by the said Petition; have

several times heard Counsel thereupon; and, in the said Report, do certify to his Majesty, That the

Persons claiming to be Members of the said Corporation have not been able to make it appear to

them, that the Corporation so erected, as aforesaid, now is, or, for many Years last past, has had any

Existence; but, not having been successful in the said Undertaking, soon after the passing the said

Letters Patents, for aught appears to them, no Care has been taken to preserve the Succession of the

Members of the said Corporation, in the manner required by the said Letters Patents; so that the

Corporation is long since determined; nor have they been able to make it appear, that, for many Years

last past, any attempts or Endeavours have been made or used for the carrying on of the Fishing

Trade, by or under the Authorities or Rights granted by the said Letters Patents:


47

On which Considerations, it being most undoubted, that nothing can more conduce to the increase

of the Strength and Riches of his Majesty's Kingdoms, and the breeding able Seamen to serve his

Majesty as well in time of War as Peace, than the preserving the Fishery of this Realm; they are of

Opinion, That his Majesty has not only full Power legally to grant the Letters Patents prayed; but that

such Incorporation, being granted under proper Regulations and Restrictions, will be very beneficial

to the Nation.

The Committee do likewise find, That, on or about the 14th of October 1719, a Subscription of

£. 1,000,000. was opened for carrying on the said Fishing Trade, by the Name of The Grand Fishery;

and that £. 800,000. Part of the said £. 1,000,000. was designed for England, and £. 200,000. for

Scotland: That £. 175,000. of that Sum was subscribed here by the Gentlemen of that Country, who

insisted on it as their Right; but, when the Subscription Book was sent to Edinburgh, for the

Gentlemen residing there to subscribe, they complained, that the remaining Part of £. 200,000. was

not sufficient for them ; and thereupon, applying to the Managers, they enlarged the Subscription for

Scotland to £. 500,000. which makes the whole Subscription, £. 1,500,000.:

That, in the Preamble of the Subscription Book, the Subscribers agree to pay 2 s. 6d. per Cent, into

the Hands of Messieurs. Cox and Cleve, Goldsmiths in Cornhill, London, in Part of the said

Subscription, to be applied towards defraying the Charge of taking out a Patent, and other Expences,

as shall appear to be absolutely necessary for carrying on the said Undertaking; and that no Part

thereof be issued but by an Order under the Hands of Three of the Committee of Managers for the

said Undertaking.

It appeared to the Committee, by an Account delivered to them by the said Messieurs Cox and

Cleve, That there has been paid into their Hands, upon the said Subscription, £. 1,875.; whereof they

have disbursed £.527. to Mr. Phillips, Secretary to the said Subscribers, by Order of Three of the

Committee of Managers, as aforesaid; and that, by an Account delivered to the Committee by Mr.

Phillips, £. 509. appears to be expended, and £. 18. now remaining in his Hands:

That there has been several Plans formed for carrying on the said Undertaking, but none of them

intirely completed.

That the Committee do find, That King Charles the Second, by Letters Patents, bearing Date the

25th Day of September, in the 29th Year of his Reign, did constitute several Persons, therein named,

and such others as should thereafter be, from time to time, admitted into their Company, to be One

Body Politick and Corporate, by the Name of The Company of the Royal fishery of England: That

they should have perpetual Succession; and that they were to meet annually, to choose a Governor,

Sub Governor, Deputy Governor, and Committees: That they had Power to increase, contract, or

divide, their Stock; with a further Power for each Member to transfer and assign their Stock to any

Person or Persons whatsoever:

That it was represented to the Committee, by Mr. Mackburney, who has been Secretary to the said

Company 28 Years, That, soon after the granting the said Charter, a considerable Stock was raised,

laid out, and expended, in carrying on the said Fisheries; and several other great Sums, in the Time of


48

King Charles, raised and employed in the same manner; but, by Misfortunes and Accidents, the said

several Stocks were lost:

That afterwards, in 1694, there was laid open a Subscription Book for £. 300,000.; and that, 10 per

Cent, being called in, there was raised thereupon £. 10,000. which was laid out in building and buying

Doggers, and other Fishing Vessels, employed in Catching of Herrings and Cod; and that also, by the

Inconveniences occasioned by the War, was lost: And that then they borrowed Money upon Bottomre;

Part of which was repaid, by selling the Doggers, and other the Effects, of the Company: That, at that

time, the Government giving £. 14. per Cent, for Money, they could not raise any further Sums sufficient

to carry on that Undertaking; and, by that means, the Trade was in a declining Condition.

Upon further examining Mr. Mackburney, it appeared to the Committee, That, since that time,

there hath been many Meetings of the Company; and that, the Minutes taken at them being upon

loose Papers, most of them are mislaid and lost; but he did not pretend, or insist, that the Company

had continued to act as a Corporation for several Years; or that they had, for the Seven Years last past,

met every Year; but that, Four or Five Years before this new Subscription, the Company have had

several Meetings, and consulted how to set the Fishery on Foot; and, in order for that, a Subscription

was opened the 10th Day of February 1719 for £. 1,200,000. for a Joint Stock, to carry on the said

Fishery; and that the Conditions thereof are as follow; viz.

“That the present Proprietors shall have the Liberty to subscribe, by such Persons as they have

appointed in that behalf, under their Common Seal, the Sum of £. 100,000.: That no other Person

shall be admitted to subscribe above the Sum of £.5,000. or under the Sum of £. 500.: That every

Subscriber, except those who are to subscribe to the £. 100,000. shall pay into the Hands of

Messieurs Mead, and Company, One Pound per Cent.; 10s whereof for the sole Use of the present

Proprietors; and the other 10s. to be paid within Ten Days after publick Notice given; 5s. whereof

to [343] be applied for the joint Benefit of the new Subscribers to the £. 1,200,000. in order to

carry on this undertaking; and the other 5s. for the Use and Benefit of the said present Proprietors;

to be also paid into the Hands of Messieurs Mead, and Company: That, in Ten Days after the said

£. 1,200,000. or £. 500,000. at least, shall be subscribed, as aforesaid, public Notice shall be likewise

given for a general Meeting of the Subscribers; at which time every Subscriber, not already

admitted, shall and may be admitted a Member of the said Company; and, from that time, all and

every such Subscriber and Subscribers shall have a Vote or Votes for the choosing of a Governor,

Sub Governor, Deputy Governor, and Committee; and for making Rulers, Orders, and By-laws;

and in transacting all other Matters and Things which are to be transacted and done in and by a

General Court, according to the Tenors, Powers, and Directions, of the said Charter, and in

Proportion to their respective Interest in the said Stock; that is to say, for £. 1,000. in the said

Stock, One Vote; for £.2,000. Two Votes; for £.3,000. Three Votes; for £.4,000. Four Votes; and

for £.5,000. Five Votes: And. the Qualification of the Governor, Sub Governor, and Deputy

Governor, to be as follows; viz. The Governor to have £. 5,000.; the Sub Governor, £.4,000.; and

the Deputy Governor, £.4,000.; in the said Stock; and each of the Committees to have £. 3,000.

in the said Stock:”


49

That the said Company, called The Royal Fishery, have lodged a Petition to his Majesty, in the

Council Office; whereby they pray further Powers and Privileges; but nothing is yet done thereupon.

The Committee find, That the Subscription of £.1,500,000. taken in at Garraway’s Coffee-house

the 15th January 1719, for establishing the British Fishery, is on the following Terms, and transacted

in the following Manner; viz.

“That no Person be admitted to subscribe above £.5,000. in his own Name: That 2s. 6d. per

Cent. be paid into the Hands of Messieurs Mertins and Mitford, Goldsmiths in London, to be applied

towards procuring a Charter, and defraying other Charges:

That, in Fourteen Days after the Subscription is completed, a General Meeting of the

Subscribers be held, of which publick Notice shall be given, for choosing Seven Managers for

carrying on this Affair, in order for procuring a Charter; and that Three of the said Seven be a

Quorum:

That no Money be issued out of the said Goldsmiths Hands, but by Order under the Hands

of the said Managers:

That any Subscriber, or Bearer of a Receipt of the said Subscription, failing to pay

according to the Call of the Governor and Directors, when chose, the said 2 s. 6d. and both

Subscription and Receipt, to be void.”

It appeared to the Committee, by the Minute Book of the said Subscribers to £. 1,500,000. That

there was a Meeting of the said Subscribers, at Mercers-hall, the 4th of February 1719; and it was then,

and at other Meetings, agreed, That the Managers, or a Quorum have a Power to dispose of the Money

advanced for the Interest of the Proprietors; and, at the said Meeting, agreed to make an additional

Stock of £. 1,500,000.; and to invite into it the Fishing Towns of England and Scotland, as conducive

to the Advantage of the said Undertaking, and the Interest of the said Towns: And was further agreed,

That such of the said Towns in South Britain, by their Representatives in Parliament, in their behalf,

may subscribe a Sum, not exceeding £.10,000.; and that a Sum, not exceeding £. 500,000. in the Whole,

maybe subscribed for North Britain, paying 2s. 6d. per Cent. according to the Condition of the First

Subscription:

That, at another Meeting, it was agreed, That a Petition should be drawn up, in order to be

presented to his Majesty; praying his Majesty's Letters Patent to incorporate them to carry on the

Fishing Trade, by the Name of The British Fishery: Which was accordingly drawn up; as also a Scheme,

shewing the Advantages to the Nation, the Profits of the Company, and the Methods proposed in

carrying on the same.

It likewise appeared to the Committee, by the said Minute Book, That there has been paid into the

Hands of Messieurs Milford and Mertins, upon the Two Subscriptions, £.1,875. J whereof £. 50. has

been paid to Mr. Kinnier.

Resolved, That it is the Opinion of this Committee, That the said Undertaking, proposed to be

carried on by the Name of The British Fishery, wherein the Sea Ports and Royal Boroughs are


50

concerned, may be successfully carried on, and prevent great Sums going annually out of the Nation,

and secure a valuable Trade; and may, upon any Emergence, furnish Seamen to man the Royal Navy;

and therefore highly deserves Encouragement "

That the Committee find, That the Subscription of £. 1,500,000. taken in at Robins Coffee-house,

for carrying on a Fishing Trade, by the Name of The British Fishery, was opened the 14th of January

1719, on the following Conditions; viz.

“That the Subscribers thereunto are to pay 2s. 6d. per Cent, on their respective Subscriptions,

to be lodged in the Bank of England, subject to the Order and Direction of a Committee of

Managers, to be chosen by the Majority of the Subscribers, in a General Meeting to be held when

the said Subscription is completed.”

Col. Horsey, a Person concerned in the Management of the said Undertaking, being examined,

gave the Committee the following Account of the Proceedings in taking in the said Subscription; viz.

“That there was, some time since, a Subscription taken in at the Marine Coffee-house in Birchin-

lane, for erecting and carrying on a Fishery, under the Title of the Grand Fishery of Great Britain,

which being soon completed, several Gentlemen, who were desirous to be concerned in so useful

and beneficial an Undertaking, were prevented coming into the same.

Therefore it was thought proper to open a Book, for a Subscription of £. 1,500,000. for the

better carrying on so good a Design:

That, when the Subscription was near completed, an Offer was made to the Managers of the

said Grand Fishery, for an Union with them; it being judged, that the united Stock of both

Subscriptions would the better enable them to carry on the Fishing Trade, whenever his Majesty

should be pleased to grant a Charter for that Purpose.

That there has been several Meetings, in order to effect the said Union; but, this

Committee having under their Consideration the several Undertakings carried on by Subscription,

a Stop is put to any further Proceedings, till the Pleasure of the House shall be known:

That a Petition to his Majesty is signed by the Subscribers; praying his Majesty's Letters Patents,

to incorporate, and enable them to carry on the Fishing Trade; which was resolved not to be

presented to his Majesty, till the Proceedings towards a Union with the Grand Fishery were

determined:

That, in order to prevent the jobbing this Subscription, the Receipts for the Deposit-money

were not given out till Saturday the 20th of February last; and had not even then been delivered,

but upon Complaint of some of the Subscribers, who thought themselves injured by their being

withheld:

That, if the House does not think fit to allow Liberty for this Undertaking to go forward, the

said Deposit-money will be immediately repaid to the Subscribers.”


51

That the Committee do find, That a Subscription for £. 1,500,000. was taken for carrying on the

Greenland Whale Fishery, and recovering the Credit of the same, on the following Terms; viz.

[344] That every Subscriber do pay, at the Time of their subscribing, into the Hands of Messieurs

Jenkins and King, Bankers in Lombard-street the Sum of 5s. 6d. per Cent.; 5s thereof for the sole Use and

Benefit of the Subscribers; and the remaining 6d. per Cent, to be paid, by the said Messieurs Jenkins and

King, to the Proprietors, as satisfaction for their Trouble in the Management of this Affair:

That no Person shall subscribe above £. 10,000. or less than (£. 1,000.)

Jonathan Forward, One of the Managers of the said Undertaking, being examined, said, That

Receipts were issued; but that, if the Undertaking does not succeed, all the Money subscribed is to be

returned, except the 6d. per Cent. afore-mentioned:

That Whalebone, which was formerly sold for £.52. per Ton, is now sold for £. 550 and £600 per

Ton and that the Trade is now carried on by the Dutch and Germans; and that, last Year, the Dutch sent

30 Ships, and this Year 84, to Strait St. Davis, on Hudson’s Bay Coast.

That the Committee have also examined into the Undertaking carried on by Subscription, kept at

the Royal Exchange, as well as several others, for insuring Ships and Merchandize at Sea; and do find;

That the said Subscription was opened on or about the 14th of August 1717; for £. 1,000,000. or

upwards, not exceeding £. 2,000,000. under the Hands and Seals of the several Persons therein

mentioned, with several Agreements and Conditions therein contained, for carrying on the said

Undertaking: *

That another Subscription was taken on or about the 14th March 1717, for £. 1,000,000.; the

Subscribers whereof were to pay 10 per Cent. for each Hundred Pound they should Subscribe, to be

paid to the First Directors for the Management of the Affairs of the intended Corporation; and that

5 per Cent, should be paid to Sir Alexander Cairnes, Sir Justus Beck, and others, to defray the Charges in

forming the said intended Corporation, and obtaining and passing a Charter: That, if a Charter be

obtained, the remaining Part of the Quarter per Cent be Part 6f the 10 per Cent. in proportion to their

several Subscriptions, and be made Part of the Joint Stock:

That there was a Petition signed by Sir Justus Beck, John London Esquire, Sir Alexander Cairnes, and

several other Subscribers, presented to his Majesty; praying his Majesty's Letters Patents, to

incorporate them for insuring Ships and Merchandize at Sea; which referred, by Order of Council,

dated the 2d February 1717, to the late Attorney and Solicitor General: That there were also Two

Petitions presented to his Majesty, against the said Petition, for an Insurance by a Corporation; one

from the Merchants of London, and the other from the Merchants of Bristoll; which were likewise

referred, by Order of Council, of the 2d of February 1717, to the said Attorney and Solicitor General;

who, having considered the said Petition of Sir Justus Beck, and others, as also the said Petition of the

Merchants of London, made a Report thereupon to his Majesty, dated the 12th March 1717-18; in

which they give the following Opinion; viz.


52

“On the whole Matter, it is agreed on all Sides, That the Insuring of Ships is of absolute

Necessity for the Carrying on of foreign Trade; and that the same has been always managed in the

Method the same is now in; and it has not been made out, that there is any Corporation in Europe

for insuring Ships: That the Want of a good Method of Insuring will be very fatal to Trade; and

we are humbly of Opinion, That the making of an Experiment in a Thing of this Nature, if it

should prove amiss, would be of the utmost Consequence to the Trade of this Nation; and that it

so highly concerns Trade and Commerce, that it will be proper for the Consideration of the

Parliament: And therefore we cannot advise the erecting a Corporation for the insuring Ships and

Goods at Sea, against which these are so many and great Objections; especially the Method now

used being approved of both at home and abroad; and we are not able to determine of what

Consequence the erecting of another Corporation in London, with a Stock of a Million of Money,

may be to the Publick.”

The Committee do further find, That there is another Subscription for carrying on the said

Undertaking o£ £. 1,152,000. dated the 27th of August 1718, under the Charters for the Mines Royal,

the Mineral and Battery Works, on the following Conditions; viz.

“That 5 per Cent, be paid by the Subscribers, to make good what they are obliged to perform

towards the said Undertaking: That every Subscriber shall pay 5 per Cent, to the Governor and

Company within Thirty Days after the Subscription is closed; and Five per Cent, in Three Months

then next ensuing; and that the whole Money so subscribed, shall be the Joint Stock of the said

Governor and Company, for carrying on the said Insurance of Ships and Merchandize: That the

Profits arising from the said Joint Stock shall be divided half-yearly amongst the Subscribers, in

proportion to the Sums by them respectively subscribed; and that each Subscriber shall be

admitted a Member of the Societies of and for the Mines Royal, the Mineral and Battery Works,

when the Subscription shall be completed, and £. 5. per Cent. paid in.”

Sir John Williams, One of the Governors of the said. Company, being examined, said, That he

apprehended they were doing what was legal, and for the Advantage of Trade; for that, they had

consulted, and had the Opinions of, several eminent Counsel, that they might insure Ships by virtue

of the Charters for the Mines Royal, the Mineral and Battery Works: And that Two of the said Counsel

are Sir Robert Raymond and Mr. Reeves:

That they have affixed the Seal of the said Corporation to Policies, by virtue of the said Charter:

That no Man, as a Member of that Company, is liable to pay any Losses in his private Capacity; but,

as a Member of the Company, is obliged to pay in what Sums the Company shall think fit to call; and

that the Corporation can sue, and be sued:

The Witness, being asked what the Charters for the Mines Royal, the Mineral and Battery Works,

cost, said, That they did not buy the Charters; but that they had bought out the Shares of the old

Proprietors, in Number about 124, at £.23. 8s. 6d. per Share; and that there is riot above Two or Three

of the old Proprietors remaining:


53

That the Subscribers have paid in £. 10 per Cent.; and that the Company have already insured Ships

and Merchandize to the Value of £. 1,259,604. 10s.; and that no Man, that has dealt with them, can

say, but that they have had Satisfaction: And that it was a preliminary Agreement, That there should

be no Law-suits commenced against Persons assured, where the Difference could be decided by

Reference:

That, when they first applied for a Charter, they had great Opposition, and they were then advised

to make this Experiment; but that most of them that signed the First Petition against a Charter of

Incorporation, now petition for it, and desire it to be established:

That the Reason of Merchants coming to them, is, because they think themselves more secure;

for that there are Affidavits from abroad, That, before this Insurance, Business has been done at

Amsterdam for English Merchants, which are now done here;

That there is a great deal of foreign Money brought into this Kingdom by Merchants insuring

from Holland, and other foreign Parts.

Several Merchants desiring they might be heard against this Undertaking; the Committee did

accordingly examine,

Mr. Bernard, Merchant: Who said, That the Merchants of the City of London, being very much

alarmed [345] at an Attempt of a Body of People insuring as a Company, presented a Petition to his

Majesty, signed by 370 of the most eminent Merchants in London: And that Petition, as also the Petition

of the Merchants of Bristoll and the Petition tor a Charter, were referred to the Board of Trade, and

to his Majesty’s then Attorney and Solicitor General; That the Board of Trade have reported Matter

of Fact; but gave no Opinion: And the Attorney and Solicitor General reported to his Majesty, That

a Corporation for insuring would turn to a Monopoly, and be prejudicial:

That, notwithstanding the said Reports, all the old Subscribers signed a new Subscription, and

began to insure Ships:

That then the said Merchants of London and Bristoll petitioned to have the Charters of the Mines

Royal, the Mineral and Battery Works, set aside: That there were several Hearings thereupon before

the present Attorney General; and he believes the Report is in favour of them:

That it was the Business of the Company to bring the Merchants in to insure with them, by

insuring cheaper than the private Insurers; and by even paying when they had no Occasion, in order

to beat the private Insurers out of their business: And that there was a List, proved upon Oath, of

150 or 160 private Insurers, delivered in to Mr. Attorney General:

The Witness owned, That there were other Merchants and Gentlemen that had formed themselves

into a Body, and had taken in a Subscription for £. 2,000,000.; for that Two Corporations would, in

some measure, prevent a Monopoly, though it would effectually drive out the private Insurers:

That they had proved, before the Attorney General, That the private Insurers insure as cheap as

possible; but the Company insure cheaper, to make themselves acceptable: And that, as to foreign


54

Money, the greatest Part of it arose from the Ostend Traders, who were insured Two Guineas per Cent.

cheaper by the Company than the private Insurers could:

That Foreigners used to give One per Cent, for insuring the Insurers; and that it was allowed to the

English Merchants, for procuring good Insurers for the Foreigners:

That the private Insurers are sometimes under a Necessity of going to Law, when they meet with

unjust Demands:

That what Gentlemen aimed at by incorporating themselves, is, to get a great Estate at once; for

that the Company have blown their Stock up to a great Height: And that it was very few of those

Merchants that signed the First Petition against a Charter, that now signed the Petition for one.

The Committee further find, That a Petition of the Governor, Assistants, and Societies of the

City of London, of and for the Mines Royal, Mineral and Battery Works; and for assuring Ships and

Merchandize; praying his Majesty's Letters Patents, to insure Ships and Merchandize; has been

presented to his Majesty; and referred, by his Council, to the present Attorney General, the 9th of

May 1719: That a Petition of the most considerable Merchants of London and Bristoll; praying a

Resumption of the said Charters of and for the Mines Royal, the Mineral and Battery Works; was

presented to his Majesty; and likewise referred, the said 9th of May 1719, to Mr. Attorney General;

who has made a Report thereupon to his Majesty, dated the Third March 1719 and therein has given

the following Opinion; viz.

“Upon the whole Matter, I am humbly of Opinion, That the Transactions stated in the Report

to have been carried on for the Insurance of Ships and Merchandize under Colour or Pretence of

the Charters aforesaid, and in the Names of the supposed Corporations, are illegal and

unwarrantable; and, if drawn into Precedent, would be of dangerous Consequence to the Publick;

those Charters being granted for the particular Ends specified and limited therein; not giving

sufficient Authority to the Corporations thereby erected, if they are existing, to carry on a Business

or Employment of so publick a Nature as that of Insurance of Ships and Merchandize, and which

is wholly foreign to the Design of those Incorporations:

And it not having been made appear to me, that those Corporations, or either of them, are

now in being; or that any of the Persons who pretend and claim to be Members of the same, are

duly chosen or qualified to be Members of the said Corporations according to the Directions of

the Charters, or either of them; for these Reasons, if your Majesty shall be pleased, Writs of Scire

facias may be brought, for the repealing and cancelling the said Charters; and also Informations, in

Nature of Quo warranto against any Persons who have, and shall continue to act as in a Corporate

Capacity, in the Name, or under Colour, of the said supposed Corporations, or either for Insuring

of Ships and Merchandize: But I do humbly certify your Majesty, That it doth appear, that the

Design of the Petitioners for a Charter, in making use of the old Charters, was, to make the

Experiment of insuring Ships and Merchandize as a Corporation; and that they have carried on

that Undertaking, though, in that respect without legal Authority, yet without any Complaint from


55

the Persons with whom they have made Insurances, or any Objections to the Fairness of their

Proceedings.

As to the Matter chiefly contested between the Parties, that is to say, Whether it be fit for your

Majesty to grant a Charter for erecting a Corporation, with a large Joint Stock, for Insuring of

Ships and Merchandize; that, being a Matter of the greatest Moment to the general Trade of the

Kingdom, deserves the most mature Consideration: And it does appear, that Insurance of Ships

and Merchandize, being a publick and national Concern, has been, in some measure, under

Regulations by Two Acts of Parliament now in Force; the First made in the 43 Eliz. C. 12; the

Second in the 14 Car. II. C. 23.

But it is your Majesty's undoubted Prerogative, by Letters Patents under the Great Seal, if you

shall think fit, to create a Corporation for the Ends desired: And I am humbly of Opinion, That

such a Corporation, not being made in any Manner exclusive of others, and being granted under

such Regulations as are suitable to a Matter of so great Moment, may be of great Advantage to

Trade; but, whether it is adviseable to erect such a Corporation with so large a Joint Stock as is

mentioned in the Petition, may deserve particularly to be considered.”

The Committee do further find, That there was another Petition, signed by Lord Onslow, Sir John

Williams, John London Esquire, and others, Subscribers to the afore-mentioned Sum of £. 1,152,000. as

a Joint Stock, for insuring Ships and Merchandize; praying his Majesty's Letters Patents for

incorporating the Petitioners, and the other Subscribers to the said Joint Stock, for more effectual

carrying on the said Undertaking; which Petition was presented to his Majesty; and referred, by his

Order in Council, of the 8th January 1719, to the present Attorney General; who has made a Report

thereupon to his Majesty, dated March 5th 1719 by which it appears, that the Petitioners, as also divers

Merchants, and other Persons, who follow the Employment of private Insurers, who desired to be

heard against any Charter tor Insuring of Ships and Merchandize, have been severally heard, by their

Counsel:

And that the present Petition to his Majesty was occasioned by a Mistake which they had fallen

into, in the Stile and Prayer of a former Petition, humbly presented to his Majesty, in the Name of the

Governors, Assistants, and Societies of the City of London, of and for the Mines Royal, the Mineral

and Battery Works; and for assuring Ships and Merchandize: And praying, That the said Governors,

Assistants, and Societies may be incorporated [346] for the Insurance of Ships and Merchandize: On

Examination of which Petition it was objected, that was no such Corporation as the Governors,

Assistants, and Societies, of and for the Mines Royal, the Mineral and Battery Works; and for assuring

Ships and Merchandize: And the Prayer thereof being for a Charter to the Petitioners, in a corporate

Capacity; although his Majesty should think fit to grant a Charter for the Purposes aforesaid, yet the

Prayer of the said Petition, as the same was framed, could not be complied with:

That the Persons who are now Petitioners to his Majesty for the Charter aforesaid, are the same

Persons who preferred the said former Petition, though in a mistaken Form; and who, with others,

have carried on the Business of' Insurance as a Corporation, in order to prove and confirm, by

Experience, the Usefulness and Benefit that such an Incorporation will be of to the Trade of the


56

Kingdom: And it does appear, that the present Petitioners, with others, have subscribed £. 152,000. as

a Joint Stock, for the Purposes mentioned in their Petition:

That the Petitioners, having been fully heard as to the Merits of this, upon the said former,

Petition, refer themselves to the Arguments then made use of, and to fhe Memorials and Affidavits

then produced:

And that the Counsel of the private Insurers, having again insisted upon the several Matters

formerly objected to such an Incorporation, and which are fully stated in the former Report to his

Majesty of Mr. Attorney General, do likewise refer themselves to the several Affidavits and Papers

thereto annexed:

Which Report is herein before mentioned.

That the Committee do find, That the Subscription of £. 2,000,000. Sterling, for insuring Ships

and Merchandize, commonly called Ram's Insurance, was opened the 22d of December 1719; and

that it is taken on the following Terms; viz.

“That the Subscribers do agree to pay 17 s. 6 d. per Cent, in Money, together with a Receipt of

2s. 6d. of either Mr. Stephen Ram, or Mr. James Colebrooke: which Receipts are lately given by them,

for former Subscriptions; which, together, will make One Pound per Cent, and is in Part of each

Hundred by us now subscribed: That the Sums, so received, are to be lodged in the Bank of

England, under the Direction Sir William Chapman, Sir Jacob Jacobson, Joseph Eyles Esquire, and others;

who have agreed the Terms of a Coalition between the Two former Subscriptions, to be disposed

of by the Majority of them, for the sole Use of the Society, subject to the Direction of any General

Meeting of the Subscribers, or their Assigns: They further agree; it being the Intention of this

Society to endeavour to attain a Charter for the Purposes aforesaid;

That the Election of the Governor, shall be in such Manner as shall be directed in the said

Charter: But, until such Charter can be obtained, they agree to submit themselves, and their

Assigns, to such Rules, Orders and Regulations, as shall thereafter be made by any General

Meeting; who are fully impowered thereby to choose a Governor, Deputy Governor, and so many

Managers as they shall see fit, and to order any Call or Calls of Money as they shall judge expedient

for the giving an effectual Security to all such Persons as think proper to be assured by this Society,

and to make Rules and Orders necessary for the good Management of their Affairs:

It is likewise agreed, That all Questions in any General Meeting be determined by the Majority

of Votes; and that Three Days Notice, at least, should be given in publick Prints before any such

General Meeting:

It is agreed, That if any Subscriber shall refuse or neglect to pay, within the time limited for

such Payment, any Sum or Sums of Money which shall hereafter be called in by such Persons as

shall be thereto impowered by any General Meeting of the Subscribers, and their Assigns; which

Subscriber, or his Assigns, shall 1ose and forfeit, to the sole Use and Benefit of this Society, the

One per Cent. now paid in on this Subscription, together with such other Payment as shall have


57

been made at the time of Failure of Payment on such Call or Calls; and he and thev shall

thenceforth be no longer deemed a Member, or Members, of this Society:

In all Cases where a Ballot is demanded, which shall not be refused, if required by Seven or

more Members qualified to vote, by Writing under their Hands, every Subscriber, or his Assigns,

having, in his own Right, £. 2000. shall have One Vote; £. 5000. Two Votes; £8,000. Three Votes;

and £. 12,000. Four Votes; and no Person to have more than Four Votes.”

Sir William Chapman being examined, said, That they had petitioned his Majesty for a Charter of

Incorporation to carry on the Said Undertaking, within a Day or Two after the Subscription was taken:

That he can't tell whether any of the Stock is sold out, or whether it continues in the Name of the

First Subscribers; but that no Transfer was made of any of the Stock; for it was the chiefest Care of

the Persons concerned to think of Methods to prevent Stock-jobbing:

That the most cheap and expeditious Way of insuring is the most beneficial Manner to the

Merchants; and that £. 20,000. is as soon insured by a Corporation, as £.500. by private Insurers: And

that there has been a great Insufficiency in private Insurers; for that the Merchants have been Losers

by private Insurers, within 20 or 25 Years, the Sum of £. 2,000,000.: And that it concerned the Interest

of the Merchants, that the Premiums should be made easy:

That there has been several General Meetings of the Subscribers; and that there was a great

Appearance at the last; the Import of which was, to acquaint Gentlemen of the Progress they had

made; and to consult, in order to bring this Undertaking to effect; which was set up to prevent

Monopoly, and the too great Advantages that would accrue to One Company:

That they have received £. 20,000. and that £. 18,060. is deposited in South Sea Bonds: That there

is near £.1,000. in the Bank; and, in Mr. Baker’s Hands, about £. 146.; and that of the whole Money

there is about £. 150. expended: That if £. 10. per Cent, or any further Sum, were called in, they would

come into a Security for the Advantage of the Assured.

The Committee do find, That the Petition aforementioned, signed by Lord Chetwynd, Sir William

Chapman, and others; praying a Charter of Incorporation for insuring Ships and Merchandize; was

presented to his Majesty; and referred, by his Majesty's Order in Council, the 8th Day of January 1719,

to Mr. Attorney General; who made a Report thereupon to his Majesty, dated the 7th March 1719; by

which it appears, That he has been several times attended by Counsel, on behalf of this Petition; and

has also, at the Desire of private Insurers, heard them, by their Counsel, against this Petition: And that

his Opinion, upon the whole Matter, is, That it does appear, by the several Certificates and Memorials

which have been made, upon the Examination of the present Petition, That the Sense of the greater

Part of the Merchants of the City of London, who have concerned themselves on this Occasion, is

in Favour and Approbation of such an Incorporation as is prayed: But, as no satisfactory Reason has

been offered to me, for erecting such an Incorporation upon so large a Joint Stock as is prayed also in

this Petition, the Ends of Trade will, I think, be sufficiently served by a far less Joint Stock than is

therein proposed, in case his Majesty should think fit, that any such Charter should be granted; and

by a Reduction of such Joint Stock to a competent Sum, sufficient only for the Purposes aforesaid,


58

of Insurance, any Misapplication, which might otherwise be made of such Joint Stock, to Purposes

different from that of Insurance of Ships and Merchandizes, and which may be of great

Inconvenience to the Publick, will be prevented: But if his Majesty shall be graciously pleased to erect

such a Corporation under [347] proper Regulations, I am humbly of Opinion, That it is by no means

advisable to erect Two or more Corporations of that Nature. .

That the Committee do find, That the Subscription of £. 1,000,000. for insuring Ships and

Merchandizes, commonly called Shales his Insurance, was opened the 23d Day of December 1719: the

Preamble to which Subscription is to the Effect following; viz.

That the several Persons, whose Names are thereunto subscribed, are willing to engage themselves

in the said Subscription of £.1,000,000. Sterling for Insurance of Ships and Merchandize, under such

Regulations and Restrictions as his Majesty shall think fit to grant them, by his Royal Charter, for that

Purpose; do engage themselves severally one to another, to pay the several Sums set down against

their respective Names, in the Subscription Book, if there shall be Occasion; and, in the mean time,

to pay One Pound per Cent. as a Deposit, into the Hands of Mr .Charles Shales, in Lombard-street,

Goldsmith; and to make up the same, upon obtaining such Charter, as aforesaid, £. 10. per Cent. as a

present Fund, to answer all Engagements.

Mr. Shales, one of the Managers of the said Undertaking, being examined, said, That the whole

Money paid in is £. 10,000.; and that £. 100. is disbursed, some of which is laid out in purchasing their

Receipts, at Twelve Shillings and Six Pence Advance, in order to oblige some Persons, by letting them,

into the Subscription, whose Names are in the Subscription Book :

That Thirty or Forty Persons, private Insurers, went off about Twenty Years ago: That one Helbut,

a Jew, now a broken Merchant, proposed to have 12 d. per each £.100. subscribed for himself; that he

is in the Subscription, and believes he has sold out, and got some Money by it; and that the Advance

Price of the Stock is 10s. per Cent.:

That there has been several Meetings of the Subscribers; and that a Petition, signed by John Merrys,

George Pye, and others; praying a Charter of Incorporation for insuring Ships and Merchandize at Sea;

was presented to his Majesty; and referred, by Order of Council, 21st January 1719, to the present

Attorney General; who has made a Report thereupon to his Majesty, dated March 9th 1719; in which

he refers to former Reports upon Petitions, praying Charters for the same Purposes as this: Which

Reports are herein before-mentioned.

That the Committee have also examined into the several Undertakings, carried on by Subscription,

for insuring Houses and Goods from Fire; and do find, That the Subscription of £. 2,000,000. taken

at Sadlers-hall, for insuring Goods and Houses from Fire, is agreed to be disposed of, according to the

Preamble of the Subscription Book, under the Terms following; viz.

“The Subscribers agree to pay into the Hands of Mr. Stephen Rani, Goldsmith, in Lombard-street,

at the time of their respective subscribing, 5 s. per Cent, in Part thereof, for the sole Use and Benefit

of the intended Company:


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That, as soon as conveniently may be, publick Notice shall be given for the Subscribers to meet,

and elect such, and so many, Directors and Managers as the Majority present shall determine; at whose

Disposal the 5 s. per Cent, now paid, and under whose Direction the Affairs of the intended Company,

or Joint Stock, shall then be and remain: .

It is also agreed, if any Subscriber shall refuse or neglect, after publick Notice given, to pay in such

further Part of the Subscription as shall be ordered by the Directors or Managers, chosen as aforesaid,

and impowered thereto by the General Court, such Subscriber shall forfeit and lose, for the Benefit

of the Society, the 5s. per Cent. paid on Subscription, and be no longer deemed a Member of this

Society.”

Mr. Loome, a Manager in the said Undertaking, being examined, said, That £.4,095. is paid in of

the aforesaid Subscription; and, as yet, they have had no Meeting of the Subscribers: That what is

bought or sold of the said Subscription, is about 15s. per Cent, Advance;

That, the Persons wanting to subscribe crouding very much, Part of the Subscription was taken

at the Feathers; and that he has not made One Farthing Advantage by any the Letters for admitting

Persons to subscribe:

That One Person subscribed Four or Five hundred thousand Pounds in Mr. Overall's Subscription;

and that Mr. Overall got Six Pence per Cent. by all that subscribed; and that he had a Scheme long before

him.

Mr. Cooper, another Manager in the said Undertaking, was examined; and said, That each

Subscriber signed a Petition, to be presented to his Majesty, when they signed the Subscription Book:

And that the whole 2,000,000 is not subscribed; for that £. 300,000. is reserved for divers Persons in

England, distant from London; and that no Publication has been made, that the Subscription is full: And

said, That the Receipts delivered to the Subscribers were not transferrable.

Mr. Waters said, That he is called a Manager in the said Subscription for £. 2,000,000. at Sadlers-

hall: That one Mr. Thomas Brown, of Fish-street-hill, told him of the Subscription of Mr. Overall's, and

desired him to subscribe, and be concerned in it: That they thought themselves injured by Mr. Overall;

and thereupon sat up another Subscription, not thinking his good enough.

The Committee have also examined the Persons, following, who desired to be heard against the

said Undertaking; viz.

Mr. Walker said, That Letters were given out for Premiums, for Persons to be let into the aforesaid

Subscription: And that £. 20,000. has been got by this Stock, the Managers thereof filling the

Subscription with Letters of their own:

That Mr. Overall’s Insurance was first intended to be set up; and that the Purport of the said Letters

were, That if they could not come into Overall's Subscription, they should be admitted unto theirs:


60

That the Methods of proceeding by the said Managers were such, that the 2 s. 6 d. per Cent. paid

in, in Two or Three Days time, sold for 40 s.; and those Persons that the Managers intended should

subscribe, had Letters sent them, paying a Premium for them:

That when he found that all the City run into a Method of Stock-jobbing, he did subscribe in

some of them, and has been invited Three several times to be a Manager; which he refused: And that

no Trade has been minded since the several Subscriptions have been set on foot.

Mr. Overall said, That he had been concerned in the Fire Offices Four or Five Years; and that he

published Proposals for a Subscription for insuring Houses; which was set on foot the 15th Instant;

and that Mr. Loome ingrafted upon his Projection; and that the Agents of the Insurance at Sadlers-hall

took 20 and 30 Guineas from Gentlemen, to give them a Power to subscribe:

That the Lustring Company's Charter is in the Hands of Colonel Peter Racuise, Governor of that

Company; and that he has not contracted for that Charter; but that the present Proprietors have come

to a Resolution to enlarge their Capital:

That the Committee find the Subscription of £. 1,000,000. towards raising a Joint Stock for

insuring Houses and Goods from Loss by Fire, called Overall's Insurance, was opened the 15th of

February 1719-20; and that the Preamble to the said Subscription is as follows; viz.

“That the Subscribers agree to pay into the Hands of Mr. William Smith, Linen-draper, Three

Shillings per Cent. on the said Million, under such Regulations as shall hereafter be agreed upon

by such Directors as shall be chosen at the General Meeting; which shall be within 30 Days after

the Subscription is completed; and approved of by them, at a subsequent General Meeting

And do further agree, That Six Pence per Cent. Part of the afore-mentioned Three Shillings

per Cent. shall be paid, by Mr. William Smith, to Mr. Edmond Overall, for his Expence and Trouble in

procuring this [348] Subscription; and that they will answer all such further Calls upon them as shall be

made by the Consent of the first General Meeting, within such a time as they shall order; or forfeit their

Money now paid in, and all further Interest which they might have by this Undertaking; provided Notice

of such General Meeting be given in some publick Paper, and Three Days, at least, be appointed for the

Payment thereof.”

Mr. Overall, being examined, said, that what hath been transacted with the Lustring Company is,

that they have agreed to inlarge their Capital, and thereby let in several Persons into their Company:

That he had made several Inquiries about the Letters that were sold for Premiums, to admit

Persons to subscribe in Sadlers-hall Insurance; and had found several Persons who had sold those

letters; and that it was transacted in Change-alley, by Mr. Mertin, Mr. Edwards, Mr. Rogers, Mr. Samuel

Butler, and Mr. Blackwell.

Colonel Peter Racuise, Governor of the Lustring Company, produced their Charter to the

Committee; and said, That the Company had no Dealings with Mr. Overall; but that Mr. Loome,

concerned in the Subscription taken at Sadlers-hall, had been up and down with them, about buying

the Lustring Charter ; but that it was not sold:


61

That they have enlarged their Capital, in Order, for the more effectual carrying on the Lustring

Trade, not to carry on an Insurance.

That the Committee do find, That a Subscription of £. 2,000,000. was opened the 16th Day of

February 1719, at the Three Tons, in Swithin’s Alley, as a Fund for insuring Houses and Goods, in any

Part of England, from Loss by Fire; and that the Subscribers were to pay no Money as a Deposit, till a

Goldsmith is appointed, and Notice thereof given, which is to be 2 s. 6 d. per Cent.; and that a General

Meeting for choosing Directors shall be appointed as soon as the Subscription is completed:

That the Subscribers have had several Meetings, and agreed to enter into a Deed of Association;

which has been executed under the Hands and Seals of several of the Subscribers; which said Deed

recites, That the Subscribers have concerted Measures to carry on a Design of a General Insurance,

throughout England, from Fire; and for raising £. 2,000,000. or so much thereof as shall be adjudged

by Persons impowered, for answering all Losses, to the insured, by Fire; and therefore associate them-

selves; out of whom Directors and Auditors are to be elected, to manage the said Undertaking: That

they declare, that all Monies to be paid by the Subscribers to the Treasurers shall be only in Trust for

them, subjected to Limitations, Rules, &c. therein prescribed; viz.

“That all Persons that are Subscribers, shall be bound with these Presents; and receive and bear

Profit and Loss, in proportion to their Sums subscribed:

That the Subscribers shall pay £. 5. per Cent, at Five Payments; each Payment to be made at Thirty

Days Notice in some News Paper: That there shall be Two Calendar Months between each Payment;

and that the Subscribers, making Default, shall Forfeit Twenty Shillings for every £. 1,000. Stock, on

every Default, and not have any Benefit, till Payment:

That the £. 5. per Cent, and the accruing Interest, is declared to be a Deposit in the Hands of the

Treasurers, to answer all Losses; which Deposit-money shall be put out to Interest on Mortgages, or

laid out on Government Securities, for the Subscribers Use:

That the Directors shall and may, on any Loss, make such after Calls on the Capital of £.2,000,000

as shall be necessary to preserve the Deposit of £100,000. from being lessened; of which after Calls

Three Calendar Months Notice shall be given to the Subscribers, or their Assignees:

That they will insure any Sum, not exceeding £10,000. on Merchandizes, &c. in Brick or Stone

Building; and a Sum, not exceeding £5,000. in Timber Buildings:”

With several other Rules and Regulations, therein particularly mentioned, for their better

Government in carrying on the said Undertaking.

Mr. Mathew Snabling, being examined, said, That the Subscription is completed; and that between

17, or £. 18,000. is paid in; and that he don't know that there is any Premium upon it in Change-alley:

That most of the Subscribers have signed the Deed of Association, as before-mentioned: And likewise

that a Petition is drawn, in order to be presented to his Majesty, for a Charter of Incorporation:


62

That the Committee have also examined into the several Undertakings, carried on by Subscription,

for lending Money upon Government Securities; and for granting Annuities for Lives; and do find,

That there is a Subscription taken of £. 1,500,000. for the Uses, and under the Regulations,

following; viz.

“That the said Sum of £. 1,500,000. should be raised by Subscriptions, under the Name of The

Annuity Company, for purchasing of Government Securities; granting Annuities for Life; and lending

of Money to Merchants, on good Securities, that they may be enabled to pay their Duties to the Crown

more punctually, and thereby have the Discount for prompt Payment:

And, considering how advantageous it will be to several Branches of the Revenue, and Trade in

general, it is hoped, by proper Application, to obtain his Majesty's most gracious Letters Patents for

incorporating the said Subscribers into a Company; and, if a Charter cannot be obtained, then to

propose the Uniting of this with some other Company or Society, who have already made several

advanced Steps, towards their Establishment:

Therefore Books are laid open this Day, being; Friday the 5th February 1719, at Garraway’s Coffee-

house, in Exchange-alley, at Ten of the Clock in the Forenoon; and so to continue until the Subscription

is completed; upon the following Terms;

“That no Person shall be admitted to subscribe for more than £. 10,000. in his own Name:

That no Person shall Subscribe for less than £. 1,000. in his own Name:

That every Subscriber shall pay Three Shillings per Cent, on his Subscription; which shall be

lodged in the Hands of Messieurs Mitford and Mertins, Bankers, in Cornhill; Eight Pence whereof

being for the Use and Benefit of the Proposer, and towards defraying incident Charges; the

Remainder to be in their Hands, towards the Charge of obtaining a Charter, under the Direction

of Managers, when chosen, to issue out the same:

That, in 14 Days after the Books are completed, a General Meeting of all the Subscribers shall

be advertised, to consider of what Methods will be proper to proceed upon; and to choose

Managers for the Direction of the same; for which Purpose printed Lists of all the Subscribers

will be prepared, and Proposals be laid before them for Improvement of the said Stock:

That every Person subscribing, intitled to the Stock, by his Receipt, shall be subject and liable

to what Calls of Payment the Managers shall think fit, or shall lose his Title to, and Subscription

Money in, the said Stock:

That every Person subscribing £. 1,000. is intitled to a Vote; he that subscribes £. 5,000. to

Two Votes; and he that subscribes £. 10,000. to Three Votes; and the £.5,000. and £. 10,000.

Subscribers are intitled to be chosen Managers, or Directors.”

Mr. Baker, the Proposer of the aforesaid Subscription, being examined, said, That all the Money

received was paid to Messieurs Mitford and Mertins; and that the Subscription has no Rise in its Value;

neither are there any Transfers made:


63

That there has been one Meeting of the Subscribers, at the Swan Tavern, 5th of last Month; and

that the Court chose a Governor ; and it was agreed by the said General Court, that Messieurs Mitford

and Mertins should be accountable to Colonel Wyndham, and Five other Gentlemen, for the Money

already paid into their [349] Hands, Hands, according to the Preamble of the Subscription Book

before-mentioned :

And then directed the Proposer to lay before them, what further Schemes he has for the Advantage

of the Society; and agreed, That a General Court should be held on that Day Sevennight:

That a Petition is drawn up, in order to be presented to his Majesty, but not signed:

That the Committee do find, That there is a Subscription opened at Garraway’s Coffee-house, in

Exchange-alley, the 19th of January 1719, :of £. 1,200,000. for lending Money on Stocks, as Annuities,

Tallies, Orders, Bills, and other negotiable Securities, on the Terms following; viz. #

“That every Subscriber shall pay down, at the time of subscribing, as a Deposit in the Hands

of Messieurs John Cox and Edward Cleve, Goldsmiths, the Sum of 2.s. 6d. per Cent, and One Shilling

per Cent more at the same time, for the Undertaker Ralph Keate, towards defraying the Charge of

the Undertaking:

That a: printed Receipt for the 2s. 6d. per Cent. will be delivered out in a few days after the

Subscription is completed:

That no Person is to subscribe more than £. 10,000 nor less than £.1,000.; and not above 5 per

Cent. be called in at the same time.”

Mr. William Lambe, being examined, said, That a Charter was intended to be applied for; and that

there is about £. 1,100,000. subscribed; and that there has been several Meetings of the Subscribers,

in order to carry on the said Undertaking.

Mr. Lennard said, That Mr. Keate, who was the Proposer of this Undertaking, claiming to himself

One Shilling per Cent. for his Trouble, Messieurs Car and Cleeve would not give Receipts but for the

whole Sums paid to them which was 3s. 6d. per Cent.

That the Committee do find, That the Subscription of £. 1,200,000. for selling Annuities, settling

of Jointures, and assuring of Lives, commonly called Mr. Thomas Burgesse’s Subscription, is taken on

such Terms and Conditions as is herein after-mentioned; viz.

“That the Subscribers do agree to pay the respective Sums against their Names, in such

Proportions as shall be called for by a Court of Directors; and, in order to obtain a Charter, the

better to carry on the said Design, they agree to pay, on Subscription, the Sum of 2s. 6d. per Cent,

on the Sums by them subscribed; which Subscription-money is to be paid into the Hands of

Messieurs Green and Eades; and is not to be taken thence but by an Order, signed by a Majority of

the Committee:

And also agreed, That any Subscriber may have Liberty to withdraw his Subscription, on

Notice, in Writing, to Mr. Henry Symonds, at his House in Friday-street, any time within Seven Days


64

before the Day appointed, by Advertisement, in the London Gazette, of the Choice of Directors,

on the Forfeiture only of the said 2s. 6d. paid at subscribing.”

It appeared to the Committee, by a Book of Minutes of the Proceedings of the Subscribers, That

they have had several Meetings; and that a Petition was drawn up and presented to his Majesty, in the

Name of Sir James Hallet, and several other Persons, subscribing the same; praying his Majesty's Royal

Letters Patents for incorporating them, for granting Annuities, securing Fortunes to Widows,

Orphans, and others; which was referred to the present Attorney General, by his Majesty's Order in

Council, dated 8th of January 1719:

That Mr. Attorney, having been attended by Counsel, as well on behalf of the said Petition, as of

the Corporation of the Amicable Society for a perpetual Insurance Office, who desired to be heard

against this Petition, has made a Report thereupon to his Majesty, dated the 10th March 1719; and

therein gave his Opinion, That it is not adviseable for his Majesty to erect any such Incorporation as

is desired by the aforesaid Petition.

Mr. Burgess, being examined, said, That £. 1464. 5s had been paid in as a Part of the Subscription;

and, that £.113. 2s. 4d. thereof had been disbursed: That there had been no transferring any of the

Stock; and that the Receipts are not made payable to the Bearer;

That the Committee having summoned the Governor and Company for raising Thames Water, in

York Buildings, Sir Alexander Cairnes, and Mr. * * * did accordingly attend; and, being examined,

produced to the Committee an attested Copy of an Act, of the 2d of King. Wm. and Queen Mary,

intituled, An Act for incorporating the Proprietors of the Water-works in York Buildings; and for

encouraging, carrying on, and settling the said Water-works; wherein it is recited, That King Charles

the Second, in the 27th Year of his Reign, had, by Letters Patents, granted to Ralph Bucknall and Ralph

Weync, their Executors, Administrators and Assigns, full Power to erect a Water-house in York-house

Garden and to lay Pipes into the River Thames, and to convey the same for the Use of the Inhabitants

and adjacent Places; which Water-houses had been since erected : It is therefore enacted, That the

several Persons in the Act named, the then Proprietors of the Water-houses and Watery works, and

the Proprietors thereof for the Time being; should be a Corporation, by the Name of the Governor

and Company of the Undertakers for raising Thames Water, in York. Buildings, able and capable, in Law,

to have, purchase, receive, possess, enjoy, and retain, Lands Tenements, and Hereditaments, Goods,

and Chattels to them, and their Successors; and also to give, grant, demise, alien, assign, and dispose

of, the same:

And alleged. That the said Governor, and Company were sufficiently impowered by the said Act

to purchase Lands, and grant Annuities, &c. upon the same.

That as to the Petition, of the Earl of Westmorland; and others, praying a Charter for granting

Annuities for Life, and assuring Lives, it was presented to his Majesty, without the Consent or

Approbation of the said Company; for that they disclaimed and refused the Application, and that the

Petition was not in the Name of the Corporation, but in the Names of private Persons.


65

It appeared to the Committee, That the said Petition had been presented to his Majesty, and

referred, by his Order in Council, dated 8th January 1719, to the present Attorney General; who made

a Report thereupon to his Majesty, 10th March 1719: That, having heard the Petitioners, as also the

Amicable Society for a perpetual Insurance Office, Mr. Attorney General gives the following Opinion;

viz. '

“As to the Proceedings upon the said Petition, I am most humbly of Opinion, That the

Corporation, created by the Act of Parliament above-recited, was so instituted for the particular

Purposes therein specified: And though the Power therein given to purchase Lands is not, by

express Words, restrained to any particular annual Value; yet, by a reasonable Construction, the

Exercise of that Power ought to be governed and limited by the Purposes for which the

Corporation was erected; and cannot be understood to give Authority to that Corporation,

supposing it to exist, to purchase Lands of what Value soever, and for Purposes wholly foreign to

the Ends of that Incorporation:

And as to the Transaction between some of the Petitioners and the supposed Governor and

Assistants of the said Corporation, as the same is represented by the Affidavit, and Articles, stated

in the said Report, I am of Opinion, That it is an unwarrantable Practice, and of a very dangerous

Tendency, and highly in Derogation of your Royal Prerogative; there being no Ground or Colour

in Law for the said Corporation to contract with others for taking in Subscriptions for any Sum,

but much less for so great a Sum as £.1,000,000. for the carrying on an Undertaking, in the Name

of the said Corporation, so different from the Purposes of their Incorporation; which

Subscriptions, if taken in, pursuant to such Contract, are a Misuser of the [350] the Powers of

the said Corporation; for which they are liable to Prosecution, if your Majesty shall so please.”

That the Committee have likewise examined into several other Undertakings, of different kinds,

carried on by Subscription; and do find,

That there is a Subscription of £. 2,000,000. for suppressing Thieves and Robbers, taken at Cooper’s

Coffeehouse in Cornhill; the Preamble to which is as follows; viz.

“We, whose Names are hereunto set down, do become Subscribers towards raising a Joint

Stock of £. 2,000,000. Sterling, for preventing and suppressing all Thieves and Robbers both

by Sea and Land; and for insuring all Persons Goods and Effects from the same, and likewise

from all other Casualties, as the Proprietors and Company shall judge proper, pursuant to a

Patent now passing for that Purpose.”

Francis Richardson, Projector of the said Undertaking, being examined, said, That about £. 200,000.

was subscribed for; and that a Petition was presented to his Majesty, (which is referred to his Majesty's

Attorney General, by Order in Council of 21st January 1719) praying his Majesty's Letters Patents, for

an Incorporation to carry on the said Undertaking; but nothing further is done thereupon:

That he intended to proceed in what Method the Company, when chosen, should think proper.


66

That the Committee do find, That the Subscription of £1,200,000. for building and buying Ships

to lett or freight, was opened the 11th of February 1719-20, on the following Terms; viz.

“That no Person shall be admitted to subscribe less than £. 1,000.:

That 2s. 6d. per Cent. for every Sum subscribed be paid to the Undertakers, for procuring a

Charter, and defraying all other Charges and Expences:

That 2s. 6d. per Cent. more for every Sum subscribed be paid into the Hands of Messieurs

Mitford and Mertins, Goldsmiths in London, as Part of the capital Stock of the said Company:

That in Fifteen Days time after the Subscription is completed, a General Meeting of the

Subscribers shall be held, whereof publick Notice shall be given, for choosing Nine Managers,

who shall have the whole Direction in carrying on this Affair; and that Three of the said Nine be

a Quorum:

That no Money be issued out of the Hands of the said Messieurs Mitford and Mertins, but by

Orders under the Hands of Three of the said Managers:

That any Subscriber, or Bearer of the Receipt of the said Subscription, failing to pay according

to the Call of the Governors and Directors, when chosen, shall forfeit the said 2 s. 6d.; and that

both Subscription and Receipt shall be void:

That, in case the said Sum of £. 1,200,000. be not fully subscribed within Sixty days from

henceforth, then the said 2 s. 6 d. per Cent. paid into the Hands of Messieurs Mitford and Mertins, as

also the said 2s. 6d. per Cent, paid to the Undertaker, shall be forthwith repaid to every Subscriber.”

Benjamin Bravoe, being examined, said, That the Subscription is not quite full; and that 200 and odd

Pounds are paid in; and that there has been some Steps made towards obtaining a Patent.

That the Committee do find, That the Subscription of £. 1,000,000. for a Joint Stock, to be

employed in carrying on the Navigation and Traffick of Coals from Newcastle to London, was opened

on the 23d February 1719; and on the following Terms; viz.

“That the Directors of the said Undertaking are to be chosen out of the Subscribers; and the

Money to be called in, in such Proportions and Payments as they shall find necessary to promote,

and carry on, a Joint Trade; all the Profits that accrue to be equally divided among the Proprietors

in proportion to their respective Subscriptions.”

John Smith, One of the Managers, being examined, said, That the whole £.1,000,000. is subscribed;

and that 6d per Cent. is paid in, which the Undertakers are to have for their Charges; and that no Part

of the Stock is transferred:

That they proposed to lower Coals to 25 s. per Chaldron.

That the Committee do find, That the Proposal for raising a Joint Stock of £. 1,200,000. to be

employed in Undertaking and Furnishing of Funerals to any Part of Great Britain, is as follows; viz.


67

“It is proposed, That the said Business shall be undertaken, and carried on, in the Names of

John Taverner, and another Person, as Copartners, in Trust, for themselves, and the several other

Persons, whose Names are herein after subscribed: Which said John Taverner, and such other

Person, are hereby impowered to transact and manage the Affairs and Business of the said

Copartnership, in Trust, as aforesaid, until a General Meeting of the Subscribers shall be called;

and other Persons appointed, in their stead, to manage the said Undertaking:

That every Subscriber and Subscribers shall, upon every reasonable Notice, raise and pay the

several Sums by them respectively subscribed, or such Part thereof as shall be thought necessary

for carrying on the said Undertaking, into the Hands of such Person or Persons as are, or shall

be, appointed, in their behalf, to receive the same:

It is further proposed, That the whole Stock shall be divided into £. 1,200. Shares; and that

every Person having a Share shall be intitled to a Vote for future Managers; and that no One Person

shall have more than Five Votes:

That, with all convenient Speed, after the said Subscription shall be completed, publick Notice

shall be given for a General Meeting of the Subscribers; at which time a Committee of Managers

shall be appointed to take the Advice of Counsel learned in the Law, for a lawful and proper

Establishment of the said Copartnership:

In case any Subscriber shall refuse to submit to such Regulations and Agreements as Counsel

shall advise, as aforesaid; that then every such Subscriber or Subscribers, so refusing, shall, upon

returning their respective Receipts, be repaid the whole Money specified therein, without any

Deduction whatsoever.”

John Maple, One concerned in taking the said Subscription, being examined, said, That 5s. 6d. per

Cent. was paid in; and that they had made no Application for an Establishment.

That the Committee do find, That the Subscription for the Sum of £.1,200,000. Sterling, to be a

Fund for establishing and carrying on a Trade to his Majesty's German Dominions, upon several

Privileges already granted, and upon such further Privileges as his Majesty shall hereafter please to

grant, is taken on the following Conditions ; viz.

“That the Subscribers agree to pay the respective Sums against their Names in such

Proportions as shall be called for by a Court of Directors; and for the carrying on the Design, and

towards the obtaining a Charter, they do agree to pay, on Subscription, the Sum of Two Shillings

and Six Pence on the Sums by them subscribed, to be paid into the Hands of Messieurs Eades and

Green”

Mr. Burgess, One of the Managers of the said Undertaking, being examined, said, That a Petition

was drawn up, in order to be presented to his Majesty; praying a Charter of Incorporation.

That the Committee having summoned the Managers of the Undertaking for raising the Growth

of raw Silk; they accordingly attended; and laid before the Committee a Charter, which appeared to


68

be granted by his Majesty's Royal Letters Patents, bearing Date the 23d Day of May 1717, for carrying

on the said Undertaking,

The Committee being informed, that a new Subscription of £. 10,000,000, for establishing the

Fishery of Britain and Ireland, was opened 011 Monday the 4th of April 1720;

The Committee did that Day summon the Managers of that Undertaking to attend them.

George James did accordingly attend; and, being examined, owned to the Committee, That he did

contrive the Scheme for the said Undertaking; and that he was the Person acting therein: He assured

the Committee, That no Money had been paid in upon the subscription for that nobody yet had

subscribed; and that he would not proceed to carry on the said Undertaking.

Upon the several Matters before stated, the Committee have come to the Resolution following;

viz.

Resolved That it is the Opinion of this Committee, That, for some time last past, several large

Subscriptions having been made by great Numbers of Persons in the City of London, to carry on

publick Undertakings; upon which the Subscribers have paid in small Proportions of their respective

Subscriptions, though amounting in the Whole, to great Sums of Money: and that the Subscribers

having acted as Corporate Bodies, without any legal Authority for their so doing, and thereby drawn

in several unwary Persons into unwarrantable Undertakings; the said Practices manifestly tend to the

Prejudice of the publick Trade and Commerce of the Kingdom.

The First of the said Resolutions being read a Second time, That the said Undertaking, proposed

to be carried on by the Name of the British Fishery, wherein the Sea Ports and Royal Boroughs are

concerned, may be successfully carried on, and prevent great Sums going annually out of the Nation;

and secure a valuable Trade; and may, upon any Emergence, furnish Seamen to man the Royal Navy;

and therefore highly deserves Encouragement;

Resolved, That the said Resolution be postponed,

The Second Resolution being read a Second time;

Resolved, Nemine contradicente, That the House do agree with the Committee in the said Resolution,

That, for some time last past, several large Subscriptions having been made by great Numbers of

Persons in the City of London, to carry on publick Undertakings; upon which the Subscribers have

paid in small Proportions of their respective Subscriptions, though amounting in the Whole to great

Sums of Money; and that the Subscribers having acted as Corporate Bodies, without any legal

Authority for their so doing, and thereby drawn in several unwary Persons into unwarrantable

Undertakings; the said Practices manifestly tend to the Prejudice of the publick Trade and Commerce

of the Kingdom.

Ordered, That Leave be given to bring in a Bill to restrain the extravagant and unwarrantable

Practice of raising Money by voluntary Subscriptions, for carrying on Projects dangerous to the Trade


69

and Subjects of this Kingdom: and that Mr. Secretary Craggs, Mr. Walpole, Mr. Comptroller, Mr.

Chancellor of the Exchequer, and Mr. Hungerford do prepare, and bring in, the same.

f. The Bubble Act’s Legislative History (May-June 1720)

May 4, 172035

“HIS Majesty having received several Petitions from great Numbers of the most eminent

Merchants of the city of London, humbly praying, That he would be graciously pleased to grant them

his Letters Patents for erecting Corporations to assure Ships and Merchandize; and the said Merchants

having offered to advance and pay a considerable Sum of Money, for his Majesty's Use, in case they

may obtain Letters Patents accordingly; his Majesty, being of Opinion, that erecting Two such

Corporations, exclusive only of all other Corporations and Societies, for Assuring of Ships and

Merchandize, under proper Restrictions and Regulations, may be of great Advantage and Security to

the Trade and Commerce of the Kingdom, is willing and desirous to be strengthened by the Advice

and Assistance of this House, in a Matter of this Nature and Importance: He therefore hopes for

their ready Concurrence, to secure and confirm the Privileges his Majesty shall grant to such

Corporations; and to enable him to discharge the Debts of His Civil Government, without burdening

his People with any new Aid or Supply.

A Motion being made, and the Question being put That a Bill be brought in to enable his Majesty

to grant Letters of Incorporation, to the Uses and Purposes mentioned in his Majesty's most gracious

Message;

The House divided.

The Yeas go forth [186 to 72].

Ordered, That Mr. Chancellor of the Exchequer, Mr. Baylie, Mr. Chancellor of the Duchy, Mr.

Solicitor General, Mr. Clayton, and Mr. Lowndes, do prepare, and bring in, the Bill.”

________________________________

May 12, 172036

“Ordered, That it be an Instruction to the Gentlemen who are appointed to prepare, and bring in,

a Bill to enable his Majesty to grant Letters of Incorporation to the Uses and Purposes mentioned in

his Majesty's most gracious Message of the Fourth instant; and also to the Gentlemen who are

appointed to prepare, and bring in, a Bill to restrain the extravagant and unwarrantable Practice of

raising Money, by voluntary Subscriptions, for carrying on Projects dangerous to the Trade and

35 Journals of the House of Commons 19, 355-6. URL: http://goo.gl/gn1jE. 36 Ibid., 361.

http://goo.gl/gn1jE


70

Subjects of this Kingdom: That they do meet, and prepare, and bring in, One Bill, for the Purposes

aforesaid.”

________________________________

May 20, 172037

Mr. Lowndes presented to the House, according to Order, a Bill concerning Assurances of Ships

and Merchandizes at Sea; and lending Money on Bottomry; and for restraining several extravagant and

unwarrantable Practices therein mentioned: And the same was received; and read the First time.

Resolved, That the Bill be read a Second time.

Ordered, That the Bill be read a Second time Tomorrow Morning.

________________________________

May 21, 172038

The Bill concerning the Assurances of Ships and Merchandizes at Sea; and lending Money on

Bottomry; and for restraining several extravagant and unwarrantable Practices therein mentioned; was,

according to Order, read a Second time.

Resolved, That the Bill be committed.

Resolved, That the Bill be committed to a Committee of the whole House.

Resolved, That this House will, upon Wednesday Morning next, resolve itself into a Committee of

the whole House, upon the said Bill.

________________________________

May 25, 172039

A Petition of Sundry Merchants, in behalf of themselves, and others, concerned in the

Undertaking for reviving, and effectual carrying on, a Greenland Whale-fishery, was presented to the

House, and read; setting forth, That the Petitioners were encouraged to such Undertaking by several

Acts of Parliament; and particularly an Act of the First of Queen Ann, that enacts, That it shall and

may be lawful for any of her Majesty's Subjects whatsoever, that would adventure to Greenland for

fishing for Whales, to have and enjoy all the Privileges granted to the Company by former Acts, and

to pay no farther Duty than if they had been of the said Greenland Company: That the Undertaking

manifestly tends to promote Navigation: That they are willing to proceed therein; have taken Partners,

and raised a very considerable Joint Stock, to carry on the Trade with Vigour, to enable them to vie

with Foreigners, who now engross that Trade to themselves, and vend the Proceed of their Voyages

to his Majesty's Subjects at exorbitant Prices: And praying, That they may not be disabled to carry

37 Ibid., 365. 38 Ibid. 39 Ibid., 366.


71

on the said Greenland Whale-fishery; but that they may act in a publick Capacity, for carrying on the

same, as is prescribed by sundry Acts of Parliament for that Purpose.

Resolved, That the said Petition be rejected.

A Petition of divers Merchants, and other Partners in a Joint Stock advanced for lending Money

on Bottomry in behalf of themselves, and many others concerned therein, was offered to the House:

And the Question being put, That the said Petition be brought up; It passed in the Negative.

The House, according to Order, resolved itself into a Committee of the whole House, upon the

Bill concerning the Assurances of Ships and Merchandizes at Sea; and lending Money on Bottomry;

and for restraining several extravagant and unwarrantable Practices therein mentioned.

Mr. Speaker left the Chair.

Mr. Farrer took the Chair of the Committee.

Mr. Speaker resumed the Chair.

Mr. Farrer reported from the Committee, That they had made some Progress in the Bill; and had

directed him to move, That they may have leave to sit again.

Resolved, That this House will, To-morrow, at Twelve of the Clock, resolve itself into a Committee

of the whole House, to consider further of the said Bill.

________________________________

May 26, 172040

The House, according to Order, resolved itself into a Committee of the whole House, to consider

further of the Bill concerning the Assurances of Ships and Merchandizes at Sea; and lending Money

on Bottomry; and for restraining several extravagant and unwarrantable Practices therein mentioned.

Mr. Speaker left the Chair.

Mr. Farrer took the Chair of the Committee. -

Mr. Speaker resumed the Chair.

Mr. Farrer reported from the Committee, That they had gone through the Bill, and made several

Amendments thereunto; which they had directed him to report, when the House will please to receive

the same.

Ordered, That the Report be received Tomorrow Morning.

________________________________

40 Ibid., 367.


72

May 27, 172041

Mr. Farrer, according to Order, reported from the Committee of the whole House, to whom the

Bill concerning the Assurances of Ships and Merchandizes at Sea; and lending Money on Bottomry;

and for restraining several extravagant and unwarrantable Practices therein mentioned; was

committed; the Amendments they had directed him to report to the House; which he read in his Place;

and afterwards delivered the Bill, with the Amendments, in at the Clerk's Table: Where the said

Amendments were once read throughout; and then a Second time, one by one; as far as Clause B; and,

upon the Question severally put thereupon, several of them were disagreed with, and the rest of them,

with Amendments to some of them, were agreed unto, by the House.

Clause B being read a Second time, to prevent either of the Corporations to be erected in

pursuance of this Act from lending any Money on the Bottom of any Ship, or on Goods and

Merchandizes on board, or to be put on board, any Ship belonging to, or employed by, the South Sea

Company, without special Licence of the Court of Directors of the said Company;

And the Question being put, That the House do agree with the Committee in the said

Amendment;

It passed in the Negative.

A Clause was offered, to be added to the Bill, That the South Sea Company might lend Money on

the Bottom of any Ship, and on the Goods and Merchandizes on board any Ship, of, or employed by,

the said Company:

And the said Clause was twice read, and amended, so as to give the same Power to the East India

Company to lend or advance Money for that Purpose:

And then the Clause was, upon the Question put thereupon, agreed unto by the House to be made

Part of the Bill.

Another Clause was offered, to be added to the Bill, That the Act should not hinder or deprive

the African Company from having and enjoying such Powers, Privileges, and Advantages, as do or shall

belong to them; except as to Insurance on Ships and Merchandizes at Sea, and going to Sea; and

lending Money on Bottomry:

And the said Clause was twice read; and amended:

And the Question being put, That the Clause be made Part of the Bill; It passed in the Negative:

Another Clause was offered, to be added to the Bill, That the Act shall not prohibit the Carrying

on of any Home or Foreign Trade in Partnership, in such manner as hath been hitherto usually, and

may legally be done, according to the Laws of the Realm; excepting only as to the Insuring of Ships;

and lending Money on Bottomry:

41 Ibid., 368.


73

And the said Clause was twice read; and, upon the Question put thereupon, agreed unto by the

House to be made Part of the Bill.

Another Clause was offered, to be added to the Bill, That neither of the Corporations intended

to be erected and established, in pursuance of this Act, shall, on Account of the said Corporations,

or either of them, advance or lend to his Majesty, his Heirs or Successors, any Sums of Money, by way

of Loan, or any Part of the Revenue belonging to the Crown, other than such Parts only on which a

Credit of Loan is, or shall be, granted by Parliament:

And the said Clause was twice read, with Blanks; which were filled up:

And then the Clause was, upon the Question put there upon, agreed unto by the House to be

made Part of the Bill.

Another Clause was offered, to be added to the Bill, for restraining Stock-jobbing:

And the Question being put, That the Clause be brought up;

It passed in the Negative.

Ordered, That the Bill, with the Amendments, be ingrossed.

__________________________________

May 31, 172042

AN ingrossed Bill concerning Assurances of Ships and Merchandizes at Sea; and lending Money

on Bottomry; and for restraining several extravagant and unwarrantable Practices therein mentioned;

was read the Third time.

An ingrossed Clause was offered, as a Rider, to be added to the Bill, That the Act shall not extend

to any Corporation formerly created for the carrying on a Trade which they have publickly continued

to exercise from The time of their Establishment; or to any Subscription made, or to be made, for

enlarging the Capital Stock of the South Sea Company; or to any Receipts made out, and given, or to

be made out, or-given, in respect of such Subscriptions; but that all such Subscriptions shall be firm

and valid; and all Receipts, made out concerning the same shall be assignable, at Law, by Indorsement

thereon:

And the said Clause was thrice read : and, upon the Question put thereupon, agreed unto by the


Another ingrossed Clause was offered, to be added to the Bill, by way of Rider, That this Act shall

not hinder or deprive the Corporation of the United Company of Merchants trading to the East Indies

from enjoying all such Powers, Privileges, Franchises, Benefits, Matters, and Things, as do or shall

belong to them:

42 Ibid., 368.


74

And the said Clause was thrice read; and, upon the Question put thereupon, agreed unto by the


Then the Amendments following were severally pro-posed to be made to the Bill; viz.

Press 2. L. 14. After “Partnerships” to insert “now are, or:”

Press 24. L. 9. To leave out “Occasions,” and insert “Affairs:”

Press 26. L. 22. After “Ships,” to insert “and Goods or Merchandizes at Sea, or going to Sea:”

And the said Amendments were, upon the Question severally put thereupon, agreed unto by the

House: And the Bill was amended at the Table accordingly:

Then a Motion being made, and the Question being put, That the Bill do pass;

The House divided.

The Yeas go forth [123 to 22].

So it was resolved in the Affirmative.

And that the Title be, An Act for better securing certain Powers and Privileges intended to be

granted by his Majesty, by Two Charters, for Assurance of Ships and Merchandizes at Sea; and for

lending Money upon Bottomry; and for restraining several extravagant and unwarrantable Practices

therein mentioned.

Ordered, That Mr. Farrer do carry the Bill to the Lords, and desire their Concurrence.

________________________________

10 June 172043

A MESSAGE from the Lords, by Mr. Hiccocks and Mr. Meller:

Mr. Speaker,

The Lords have agreed to the Bill, intituled, An Act for better securing certain Powers and

Privileges intended to be granted by his Majesty, by Two Charters, for Assurance of Ships and

Merchandizes at Sea; and for lending Money upon Bottomry; and for restraining several extravagant

and unwarrantable Practices therein mentioned; without any Amendment.

________________________________

11 June 172044

A Message from his Majesty, by Sir William Saunderson, Gentleman Usher of the Black Rod:

43 Ibid., 373. 44 Ibid., 376.


75

Mr. Speaker,

The King commands this honourable House to attend his Majesty, immediately, in the House of

Peers.

Accordingly, Mr. Speaker, with the House, went up to the House of Peers: Where his Majesty was

pleased to give the Royal Assent to several publick and private Bills.

g. The Bubble Act (11 June 1720)45

“An Act for better securing certain Powers and Privileges intended to be granted by his Majesty by two Charters for

Assurance of Ships and Merchandizes at Sea, and for Lending Money upon Bottomry; and for restraining several

extravagant and unwarrantable Practices therein mentioned.

MOST gracious Sovereign, whereas it hath for many ages past been esteemed good policy, by all proper ways and

means, to secure and encourage the trade of this realm, whereby the wealth and strength of the same, and particularly

the shipping, navigation and public revenues thereof, have been increased;

[A]nd it hath been, time out of mind, a custom or usage amongst merchants, as well of this realm as of foreign

nations, when they make any adventures at sea (especially into remote or dangerous parts) to give a premium or

consideration to particular persons, to have from such particular persons assurance of or upon ships, goods or

merchandizes adventured, or some of them, at such rates or prices as the parties assurers and the parties assured can

agree, which kind of contract or dealing is commonly called a policy of assurance, and several laws and statutes now in

force have been made concerning the same assurances;

[N]notwithstanding which it is found by experience, that many particular persons, after they have received large

premiums or consideration-monies for or towards the insuring ships, goods and merchandizes at sea, have become

bankrupts or otherwise failed in answering or complying with their policies of assurance, whereby they were particularly

engaged to make good or contribute towards the losses which merchants or traders have sustained, to the ruin or

impoverishment of many merchants and traders, and to the discouragement of adventurers at sea, and to the great

diminution of the trade, wealth, strength and publick revenues of this kingdom:

[A]nd whereas it is conceived, That if two several and distinct corporations, with a competent joint stock to each

of them belonging, and under proper conditions, restrictions and regulations, were erected and established for assurance

of goods or merchandizes at sea, or going to sea (exclusive of all or any other corporations or bodies politick already

created, or hereafter to be created, and likewise exclusive of such societies or partnerships as now are or may hereafter be

entered into for that purpose) several merchants or traders, who adventure their estates, or part of their estates, in such

ships, goods or merchandizes at sea, or going to sea (especially in remote or hazardous voyages) would think it much

safer for them to depend on the policies or assurances of either of those two corporations to be erected and established,

than on the policies or assurances of private or particular persons;

45 6 Geo. 1 c. 18. URL: http://goo.gl/VyhJn. Paragraphs have been added in editing the text.

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76

[A]nd that such merchants or adventurers as shall hereafter be minded to agree for assurance of their ships, goods

or merchandizes with private or particular persons, may still be at liberty so to do according to their own option or choice:

[A]nd whereas it has also been a custom or usage in this as well as in other nations, for merchants or traders, who

adventure their ships and merchandizes at sea, to borrow money to be repaid upon the return or arrival of such ships,

which kind of borrowing is commonly called, taking up money on bottomry; in which cases the lenders run a risque or

hazard, more or less, of losing their principal, and are therefore allowed to contract for such interest or consideration-

money for the use or forbearance of the principal, as can be agreed upon between the borrowers and the lenders:

[A]nd it is considered, That it may be a great advantage and encouragement to trade and navigation, if such

merchants and traders might have it in their power, at their own election, either to have recourse to one of the corporations

to be erected and established in pursuance of this act, or to private or particular persons, for borrowing money upon

bottomry as aforesaid, at such rate or rates as stall be agreed upon between such borrowers and lenders respectively:

and whereas the sole right and prerogative of granting charters of incorporation (not being such as are repugnant

to any law or statute of this realm) doth belong to your Majesty;

[A]nd it is considered, That if your Majesty stall be graciously pleased to grant two such distinct charters as

aforesaid, the members of each corporation so to be erected and established (for and in consideration of the advantages

which may accrue to them respectively thereby, and for having reasonable powers and privileges secured to them in

pursuance of this act) may be willing to pay to your Majesty's use such sums of money, at such times and by such

proportions, as are herein after mentioned:

[B]e it therefore enacted by the King's most excellent majesty, by and with the advice and consent

of the lords spiritual and temporal and commons, in this present parliament assembled, and by the

authority of the same, That it shall and may be lawful to and for his Majesty, by one charter or

indenture under the great seal of Great Britain, to declare and grant, that such and so many persons

(who shall be named therein, and of whose abilities and fitness his Majesty shall thereby declare

himself to be well satisfied) and all and every such other person and persons as hereafter from time

to time shall be duly admitted as members into their corporation, shall be one distinct and separate

body politick and corporate for the assurance of ships, goods and merchandizes at sea, or going to

sea, and for lending money upon bottomry, by such name as his Majesty shall think most proper:

[A]nd that it shall and may be lawful to and for his Majesty, by another charter or indenture under

the great seal of Great Britain, to declare and grant, that such and so many other persons (who shall

be named therein, and of whose abilities and fitness his Majesty shall thereby declare himself to be

well satisfied) and all and every such other person and persons as hereafter from time to time shall be

duly admitted as members into their corporation, shall be one other distinct and separate body politick

and corporate for assurance of ships, goods and merchandizes at sea, or going to sea, and for lending

money upon bottomry, by such name as his Majesty also shall think most proper…

II. And it is hereby further enacted by the authority aforesaid, That each of the said two

corporations to be erected and established as aforesaid (for and in consideration of the benefits and

advantages winch may accrue to them respectively by virtue of the said respective charters or

indentures, and the grants thereby to be made to each of them) shall be obliged by force and virtue


77

of this act, and of the respective charters or indentures before-mentioned, to pay or cause to be paid

into the receipt of the exchequer at Westminster, for the use of the King's majesty, in order to discharge

the debts and expences of his civil government, the full sum of three 300,000 pounds of lawful money

of Great Britain (which for both corporations will amount in the whole to six hundred thousand

pound;)…

V… [I]t is hereby further enacted by the authority aforesaid, That each of the said corporations,

intended to be established by this act shall be obliged by force and virtue of this act, and of the

respective charters or indentures before-mentioned, to raise such sums of money capital stock as his

Majesty shall therein direct, not exceeding £.1,500,000, within such time or times, and by such

proportions at a time, and in such manner, as in and by the said charters or indentures respectively

shall be appointed; and the monies so raised shall be and be called the capital stock belonging to each

of the same corporations respectively.

IX. And be it further enacted by the authority aforesaid, That the particular share and shares of

the respective members of and in the capital or joint stock or stocks of the two respective corporations

before mentioned, from time to time, shall be transferrable, assignable and deviseable, and their bills,

bonds and obligations, shall be assignable and recoverable, in such manner and form as his Majesty,

by the said respective charters or indentures, shall prescribe and appoint, as well in relation to such

share and shares of stock, as in reference to such bills, bonds or obligations respectively; and that the

capital stocks of the said respective corporations, intended to be erected and established in pursuance

of this act, and the share and interest executors of each and every particular member thereof and

therein, shall be deemed and adjudged in all courts of law and equity, and elsewhere, to be a personal

and not a real estate, and shall go to the executors or administrators of the person or persons dying

possessed thereof, or entitled thereunto, and not to the heir of such person or persons; any law, statute,

usage or custom to the contrary notwithstanding.

XII. And be it further enacted by the authority aforesaid, That from and after the granting or

making of the said respective charters or indentures for erecting the two corporations before-

mentioned, and passing the same under the said great seal, for and during the continuance of the same

corporations respectively, or either of them, all other corporations or bodies politick, before this time

erected or established, or hereafter to be erected or established, whether such corporations or bodies

politick, or any of them, be sole or aggregate, and all such societies and partnerships as now are, or

hereafter shall or may be entered into by any person or persons, for assuring ships or merchandizes at

sea, or for lending money upon bottomry, shall by force and virtue of this act be restrained from

granting, signing or under-writing any policy or policies of assurance, or making any contracts for

assurance of or upon any ship or ships, goods or merchandizes at sea or going to sea, and from lending

any monies by way of bottomry, as aforesaid; and if any corporation or body politick, or persons

acting in such society corporations or partnership (other than the two corporations intended to be

established by this act, or one of them) shall presume to grant, sign or underwrite, after the 24th day

of June 1720, any such policy or policies, or make any such contract or contracts for assurance of or

upon any ship or ships, goods or merchandizes at sea or going to sea, or take or agree to take any

premium or other reward for such policy or policies, every such policy and policies of assurance of


78

or upon any such ship or ships, goods or merchandizes, shall be ipso facto void, and all and every sum

and sums so signed or underwritten in such policy or policies shall he forfeited, and shall and may be

recovered, to wit, one moiety thereof to the use of his Majesty, his heirs and successors, and the other

moiety thereof to the use of such person or persons as will inform or sue for the same, in any of his

Majesty's courts of record at Westminster, in which action, suit or information, no essoin, protection,

privilege, wager of law, or more than one imparlance shall be granted or allowed: and if any

corporation or body politick, or persons acting in such society or partnership, as aforesaid, other than

the two corporations intended to be established by this act, or one of them, shall presume to lend, or

agree to lend, or advance, by themselves, or any others on their behalf, after the said 24th day of June

1720, any money by way of bottomry, as aforesaid, contrary to this act, the bond or other security for

the same shall be ipso facto void, and such agreement shall be adjudged to be an usurious contract, and

the offenders therein shall suffer as in cases of usury:

[N]evertheless it is intended and hereby declared, That any private or particular person or persons

shall be at liberty to write or underwrite any policies, or engage himself or herself in any assurances

of, for, or upon any ship or ships, goods or merchandizes at sea or going to sea, or may lend money

by way of bottomry, as aforesaid, as fully and beneficially as if this act had never been made, so as the

same be not upon the account or risque of a corporation or body politick, or upon the account or

risque of persons acting in a society or partnership for that purpose, as aforesaid; any thing herein

contained to the contrary notwithstanding.

XVIII. And whereas it is notorious that several undertakings or projects of different kinds have

at some time or times since the 24th June, 1718, been publicly contrived and practised, or attempted

to be practised within the City of London and other parts of this kingdom, as also in Ireland and

other his Majesty's dominions, which manifestly tend to the common grievance, prejudice, and

inconvenience of great numbers of your Majesty's subjects in their trade or commerce, and other their

affairs; and the persons who contrive or attempt such dangerous and mischievous undertakings or

projects, under false pretences of public good, do presume, according to their own devices and

schemes, to open books for public subscriptions, and draw in many unwary persons to subscribe

therein towards raising great sums of money, whereupon the subscribers or claimants under them do

pay small proportions thereof, and such proportions in the whole do amount to very large sums; which

dangerous and mischievous undertakings or projects do relate to several fisheries and other affairs,

wherein the trade, commerce, and welfare of your Majesty's subjects, or great numbers of them, are

concerned or interested:

And whereas in many cases the said undertakers or subscribers have since the said 24th June, 1718,

presumed to act as if they were corporate bodies, and have pretended to make their shares in stocks

transferable or assignable, without any legal authority, either by act of parliament, or by any charter

from the crown for so doing, and in some cases the undertakers or subscribers, since the said 24th

June, 1718, have acted or pretended to act under some charter or charters formerly granted by the

crown for some particular or special purposes therein expressed, but have used or endeavoured to use

the same charters for raising joint-stocks, and for making transfers or assignments, or pretended

transfers or assignments for their own private lucre, which were never intended or designed by the


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same charters respectively, and in some cases the undertakers or subscribers since the said 24th June,

1718, have acted under some obsolete charter or charters, although the same became void or voidable

by non-user or abuser, or for want of making lawful elections, which were necessary for the

continuance thereof; and many other unwarrantable practices, too many to enumerate, have been and

daily are and may hereafter be contrived, set on foot, or proceeded upon, to the ruin and destruction

of many of your Majesty's good subjects, if a timely remedy be not provided:

And whereas it is become absolutely necessary that all public undertakings and attempts tending

to the common grievance, prejudice, and inconvenience of your Majesty's subjects in general, or great

numbers of them, in their trade, commerce, or other lawful affairs, be effectually suppressed and

restrained for the future by suitable and adequate punishments for that purpose to be ascertained and

established.

Now for suppressing such mischievous and dangerous undertakings and attempts, and preventing

the like for the future, &c. be it enacted, that from and after the 24th June, 1720, all and every the

undertakings and attempts described as aforesaid, and all other public undertakings and attempts

tending to the common grievance, prejudice, and inconvenience of his Majesty's subjects, or great

numbers of them, in their trade, commerce, or other lawful affairs, and all public subscriptions,

receipts, payments, assignments, transfers, pretended assignments and transfers, and all other matters

and things whatsoever for furthering, countenancing, or proceeding in any such undertaking or

attempt, and more particularly the acting or presuming to act as a corporate body or bodies, the raising

or pretending to raise transferable stock or stocks, the transferring or pretending to transfer or assign

any share or shares in such stock or stocks without legal authority, either by act of parliament, or by

any charter from the crown, &c. shall be deemed to be illegal and void.

XIX. And be it further enacted by the authority aforesaid, that from and after the said 24th day

of June 1720, all such unlawful undertakings and attempts, so tending to the common grievance,

prejudice and inconvenience of his Majesty’s subjects, or a great number of them, in their trade,

commerce, or other lawful affairs, and the making or taking of any subscriptions for that purpose, the

receiving or paying of any money upon such subscriptions, the making or accepting of any assignment

or transfer, or pretended assignment or transfer, of any share or shares upon any such subscription,

and all and every other matter and thing whatsoever, for furthering, countenancing, or proceeding in

any such unlawful undertaking or attempt, and more particularly the presuming or pretending to act

as a corporate body, or to raise a transferrable stock or stocks, or to make transfers or assignments of

any share or shares therein, without such legal authority, as aforesaid, and all acting or pretending to

act under any charter formerly granted from the crown for any particular or special purposes therein

expressed, by persons making or endeavouring to make use of such charter for any such other purpose

not thereby intended, and all acting or pretending to act under any such obsolete charter as is before

described, and every of them (as to all or any such acts, matters or things, as shall be so acted, done,

attempted, endeavoured or proceeded upon, after the said 24th day of June 1720) shall be deemed to

be a public nuisance and nuisances, and the same, and all causes, matters and things relating thereto,

and every of them, shall for ever hereafter be examined, heard, tried, and determined as common

nuisances are to be examined, heard, tried and determined by or according to the laws of this realm;


80

and all offenders therein, being thereof lawfully convicted upon information or indictment, in any of

his Majesty’s courts of record at Westminster, or in Edinburgh, or in Dublin, shall be liable to such

fines, penalties and punishments, whereunto persons convicted for common and public nuisances are,

by any of the laws and statutes of this realm, subject and liable; and moreover shall incur and sustain

any further pains, penalties and forfeitures, as were ordained and provided by the statute of provision

and praemunire46 made in the sixteenth year of the reign of King Richard the Second.

XX. And be it further enacted by the authority aforesaid, that if any merchant or trader, at any

time after the said 24th day of June 1720, shall suffer any particular damage in his, her, or their trade,

commerce, or other lawful affairs, by occasion or means of any undertaking or attempt, matter or

thing, by this act declared to be unlawful as aforesaid, and will sue to be relieved therein, then and in

every such case, such merchant or trader shall and may have his and their remedy for the same by an

action or actions to be grounded upon this statute, against the persons, societies or partnerships, or

any of them, who contrary to this act shall be engaged or interested in any such unlawful undertaking

or attempt; and every such action and actions shall be heard and determined in any of his Majesty’s

courts of record aforesaid, wherein no essoin, protection, wager of law, or more than one imparlance

shall be granted or allowed; and in every such action the plaintiff shall or may recover treble damages

with full costs of suit.

XXI. And it is hereby further enacted by the authority aforesaid, that if any broker or person

acting as a broker for himself, or in behalf of any others, at any time or times after the said 24th day

of June 1720, shall bargain, sell, buy, or purchase or contract, or agree for the bargaining, selling,

buying, or purchasing of any share or interest in any of the undertakings by this act declared to be

unlawful, or any stock or pretended stock of such undertakers, that then and such every such case,

every such broker or person acting as such, shall not only be disabled and rendered incapable to be or

act as a broker for the future, but shall also forfeit and lose the sum of five hundred pounds, to be

recovered, to wit, one moiety thereof to the use of the king’s Majesty, his heirs, and successors, and

the other moiety thereof to the use of any person or persons who will inform or sue for the same in

any of his Majesty’s said courts of record, as aforesaid, with full costs of suit.

XXII. Provided always, and be it enacted by the authority aforesaid, said, that this act, or anything

therein contained, shall not extend to any undertakings, or other matters or things settled, established

or practised in point of time before the said 24th day of June 1718, but that the same, and every of

them, shall be of such or the like force, effect or validity, and no other, as they respectively would be

of, in case this act had never been made; anything herein contained to the contrary notwithstanding.

XXIII. Provided also, and it is hereby further intended, declared and enacted by the authority

aforesaid, that of the clauses, matters or things in this act contained, shall not extend, or be construed

to hinder his Majesty from erecting or establishing the two corporations intended by this act to be

erected and established, as is above mentioned, or either of them, or to prejudice those two

46 On the penalty of praemunire, see Sir Edward Coke, I Inst. 129-130a: “The judgment in a praemunire is, that the defendant shall be from henceforth out of the king’s protection, and his lands and tenements, goods and chattels forfeited to the king, and that his body shall remaine in prison at the king’s pleasure.”


81

corporations, or either of them, (when erected) in the exercise or enjoying of the powers, privileges,

benefits, or advantages intended to be granted to them respectively, by such respective charters or

indentures as are above mentioned in that behalf, subject nevertheless to such powers of redemption

or revocation as are above in this act prescribed for that purpose; anything in this act contained to the

contrary notwithstanding.

XXIV. Provided also, That any thing in this act contained shall not extend, or be construed to

extend to hinder or deprive the corporation of the governor and company of merchants of Great

Britain, trading to the South-Seas and other parts of America, and for encouraging the fishery, or their

successors, from having and enjoying of all and every or any such powers, privileges, benefits, profits,

properties, matters and things, as do or shall belong to them, or which they could or might enjoy, in

any manner of wise whatsoever, if this act had not been made (except as to insurance upon ships and

merchandize at sea or going to sea;) any thing herein contained to the contrary in any wise

notwithstanding.

XXV. Provided always, that nothing in this act shall extend, or be construed to extend to prohibit

or restrain the carrying on of any foreign trade in partnership, in such manner as hath been hitherto

usually, and may be legally, done, according to the laws of this realm now in force, excepting only as

to the insuring of ships and goods or merchandizes at sea, or going to sea, or lending money upon

bottomry; anything in this act to the contrary in anywise notwithstanding.

XXVI. Provided nevertheless, That it shall and maybe lawful to and for the governor and company

of merchants of Great Britain, trading to the South-Seas and other parts of America, and for encouraging

the fishery, and for the united company of merchants of England trading to the East-Indies, and they

and either of them have respectively hereby liberty, at any time or times hereafter, to advance or lend

on the bottom of any ship or vessel, ships or vessels, and on goods and merchandizes on board any

ship or vessel, ships or vessels of the said respective companies, or that is, are or shall be employed in

the service of the said companies respectively, to any captains or commanders, agents, sailors, or

servants, or other person or persons, which shall at any time or times be imployed in the service of

the said respective companies, any sum or sums of money whatsoever by way of bottomry; any thing

in this act contained to the contrary notwithstanding.

XXVII. Provided always, and be it further enacted by the authority aforesaid, that nothing in this

act contained shall extend, or be construed to extend to any corporation formerly created for the

carrying on a trade, which they have publicly continued to exercise from the time of their

establishment. or to any subscriptions made or to be made for enlarging the capital stock of the

governor and company of merchants of Great Britain, trading to the South-Seas and other parts of

America, and for encouraging the fishery (by or by order of the general court, or court of directors of

the same company) or to any receipts made out and given, or to be made out or given, in respect of

such subscriptions, but that all such subscriptions made and to be made, shall be firm and valid, and

all receipts made out and given, or to be made out or given, concerning the same, shall be assignable

at law by endorsement made or to be made thereon; any thing in this or in any other act, or any law,

usage or custom to the contrary notwithstanding.


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XXVIII. Provided also, That any thing in this act contained shall not extend, or be construed to

extend to hinder or deprive the corporation of the united company of merchants of England trading

to the East-Indies, from having and enjoying all and every such powers, privileges, franchises, benefits,

matters and thing, as do or shall belong to them, or which they could or might enjoy in any manner

of wise if this act had not been made; any thing in this act to the contrary notwithstanding.”

h. Anderson on the South Sea Bubble47

“We are now to enter upon the year 1720 ; a year remarkable beyond any other which can be

pitched upon by historians for extraordinary and romantic projects, proposals, and undertakings, both

private and national ; as well respecting commercial concerns, as the great internal interests of the two

most potent kingdoms of Europe :— and which, therefore, ought to be had in perpetual

remembrance, not only as being what never had its parallel, nor, it is to be hoped, ever will hereafter;

but, likewise, as it may serve for a perpetual memento to the legislators and ministers of our own

nation, never to leave it in the power of any, hereafter, to hoodwink mankind into so shameful and

baneful an imposition on the credulity of the people, thereby diverted from their lawful industry.

…

[98] But of all the rash proceedings of the [South Sea] managers, during the execution of their

scheme, none proved more quickly fatal than their obtaining of the government, on the eighteenth of

August, a scire facias against those airy projects called bubbles, which, at this time, were become very

numerous, and had greatly advanced in their prices, even after an act of Parliament of this same

session, cap. xvii. had passed for suppressing them, entitled, An Act for better securing certain Powers

and Privileges intended to be granted by his Majesty by two Charters for Assurance of Ships and

Merchandize at Sea; and for lending Money upon Bottomree;— and for restraining several extravagant

and unwarrantable Practices therein mentioned, as well as of a royal proclamation for enforcing the

laws against them: so that Exchange Alley, like the Rue Quinquempoix48 at Paris, was daily crowded

from morning to night (as well as the [99] coffee houses) with dealers in those bubbles; many of

which, having obsolete and forfeited charters, under that pretext,

First, Took large money subscriptions for carrying on what they had no right to do.

Secondly, Others of them grafted new and additional projects, on these obsolete charters,

originally granted for very different purposes.

Thirdly, A third species of bubbles, and the most numerous, did not even pretend so much as to

any such obsolete charters, or other authority whatever.

47 Adam Anderson, An Historical and Chronological Deduction of the Origin of Commerce, London, 1801 ed., v. 3, pp.91-123, URL: http://goo.gl/ub1mb. 48 Rue Qincampoix was the street where the Banque Générale, the bank founded by John Law in 1716, had its headquarters, and wherein the shares in the Mississippi Company (then, “Company of the Indies”) were mostly traded.

http://goo.gl/ub1mb


83

It is indeed very true, that the traffic in these did greatly promote luxury, idleness, and extravagance

in the middling and lower classes of people; diverting them from their wonted industry and frugality.

But the great mistake of the South Sea managers concerning those bubbles was their belief that their

traffic obstructed the rise of South Sea-stock; whereas, on the contrary, it was quickly found, that the

trade in them was assisting in keeping up the price of South Sea-stock: for, very many of the lower

people, not being at first able to purchase South Sea-stock, ran greedily into the bubbles, and even

into smaller shares or parts of them; and having soon gained considerably therein, they usually or very

often came afterwards into South Sea-stock and subscriptions. And thus those lesser currents or

rivulets were a constant supply to the great South Sea River: but this the managers did not perceive

till it was too late …

[102] The more to enforce this statute, the King, on the very day he passed it, viz. on the eleventh

of June 1720, issued a proclamation, strictly enjoining the observation of the latter part of it relating

to those projects vulgarly called bubbles; in consequence of which it might have been expected, that

they would have all shrunk to their original nothing in a moment. For a few days, indeed, some check

was given by this measure to that frantic traffic: yet, in the face of all authority, it soon revived and

even increased more than ever, and whilst they daily advanced in price, every one was a gainer, so that

the lower clase of people fell into luxury and prodigality, as well as their betters. From morning till

evening the dealers therein, as well as in South Sea-stock, appeared in continual crowds all over

Exchange Alley, so as to choak up the passage through it. Not a week-day passed without fresh projects

recommended by pompous advertisements in all the newspapers, which were now swelled

enormously, directing where to subscribe to them. On some, six-pence per cent was paid down; on

others, one shilling per cent and some came so low as one shilling per thousand, at the time of

subscribing. Some of the obscure keepers of those books of subscription, contenting themselves with

what they had got in the forenoon, by the subscriptions of one or two millions, (one of which the

author particularly well remembers,) were not to be found in the afternoon of the same day, the room

they had hired for a day being shut up, and they and their subscription-books never heard of more.

On others of those projects, two shillings and two shillings and six-pence per cent was paid down;

and on some few ten shillings per cent was deposited; being such as had some one or more persons

of known credit to midwife them into the alley. Some were divided into Shares, instead of hundreds

and thousands, upon each of which so much was paid down, and both for them and the other kinds,

there were printed receipts signed by persons utterly unknown.

Persons of quality of both sexes were deeply engaged in many of these bubbles, avarice prevailing

at this time over all considerations of either dignity or equity; the males coming to taverns and coffee

houses to meet their brokers, and the ladies to the shops of milliners and haberdashers for the same

ends. Any impudent impostor, whilst the delusion was at its greatest height, needed only to hire a

room at some coffee house or other house near that alley, for a few hours, and open a subscription

book, for somewhat relative to commerce, manufacture, plantation, or of some supposed invention,

either newly hatched out of his own brain, or else stolen from some of the many abortive projects of

which we have given an account in former reigns, having first advertised it in the newspapers the

preceding day, and he might, in a few hours, find subscribers for one or two millions (in some cases


84

more) of imaginary stock. Yet many of those very subscribers were far from believing those projects

feasible: it was enough for their purpose that there would very soon be a premium on the receipts for

those subscriptions; when they generally got rid of them in the crowded alley to others more credulous

[103] than themselves. And in all events, the projector was sure of the deposit money. The first

purchasers of those receipts soon found second purchasers, and so on, at still higher prices, coming

from all parts of the town, and even many from the adjacent countries: and so great was the wild

confusion in the crowd in Exchange Alley, that the same project, or bubble, has been known to be

sold, at the same instant of time, ten per cent, higher at one end of the alley than at the other end.

Amongst those many bubbles, there were some so bare-faced and palpably gross, as not to have so

much as the shadow of any thing like feasibility. The infatuation was at length so strong, that one

project was, in the newspapers, advertised thus; For subscribing two Millions to a certain promising

or profitable Design, which will hereafter be promulgated.

We can well remember, one of those named Globe Permits, which came to be currently sold each

for sixty guineas and upwards in the alley, which nevertheless was only a square bit of a playing card,

on which was the impression of a seal in wax, being the sign of the Globe tavern in the

neighbourhood, with the motto or inscription of Sail Cloth Permits, without any name signed thereon,

the possessors thereof being to be hereafter permitted to subscribe to a new sail cloth manufactory,

projected by one who was then known to be a man of fortune, though afterwards involved in great

calamities and disgrace.

These instances out of hundreds more that might be produced are sufficient to display the frenzy

of the time; when the taverns, coffee houses, and even victualling houses, near the Exchange were

constantly crowded, and became the scenes of incredible extravagance. The very advertisements of

those bubbles were so many as to fill up two or three sheets of paper in some of the daily newspapers

for some months. Yet, all men were not infatuated: and one advertisement in a weekly newspaper well

enough burlesqued the then madness of men, in the following strain. “At a certain (sham) place, on

Tuesday next, books will be opened for a subscription of two millions, for the invention of melting

down saw-dust and chips, and casting them into clean deal boards, without cracks or knots!”

Before we return to the remainder of the execution of the grand South Sea scheme, we shall,, as

an useful warning to posterity, here exhibit a more complete catalogue than any we have seen, of the

stocks, subscriptions, projects, or bubbles, of this unparalleled time, when their highest prices in

Exchange Alley, before the fatal scire facias had (like the touch of Ithuriel's spear) reduced them all to

their proper size and value.

…

[112] Many of the before-mentioned bubbles were indeed so nonsensical and absurd, appearing

even from their very titles, as it might be imagined could only draw in the more ignorant part of the

people; yet even those had a very considerable run, much money being got and lost by them: and as

for the great bulk of them, there were almost incredible numbers of transactions in them daily and

hourly, for ready money, and mostly at very advanced prices; as may partly be conceived by those

whose highest prices we have set down. Moreover, great numbers of contracts were made for taking


85

many of them at a future time; and also for Puts and Refusals49 of them, at very high prices; more

especially in the York-Buildings Company:— In the Temple Mills, Brass Manufacture :—In the two

Copper Companies, &c. in the books of one of which, viz. the Welch Copper Company or Bubble,

(long since come to nothing) I have seen some hundreds of contracts registered, according to act of

Parliament, at very extravagant prices. And it is much to be lamented, that persons of high rank and

dignity placed themselves at the head of many of those even illegal projects. So great was the

infatuation of this time.

The fatal writs of scire facias at length were issued, on the eighteenth of August, against the

following pretended companies, viz. the York-Buildings Company; Lustring Company; the English

Copper and Welch Copper Companies; expressly by name; and in general against all other projects

promulgated contrary to law; and the crown-lawyers were strictly to prosecute [113] all such as had

opened books of subscriptions, and all who subscribed to them, or who made or accepted any transfer

in them.

It was apprehended by many thinking people, that this general infatuation might last till winter,

when it was imagined it would insensibly subside of itself. But the earnestness of the South Sea Junto

to obtain the scire facias brought it sooner to an issue, though very differently from what they assuredly

expected. The publication of it, by authority, in the London Gazette, instantly struck so general a

panic amongst the conductors of all the undertakings, projects, or bubbles, that the suddenness as

well as greatness of their fall was amazing. York-Buildings stock, for instance, fell at once from three

hundred to two hundred, and, in two days after, neither it nor the other three undertakings, expressly

named in the scire facias, had buyers at any price whatever. The more barefaced bubbles of all kinds

immediately shrunk to their original nothing; their projectors shut up their offices, and suddenly

disappeared; and Exchange-Alley with its coffee-houses were no longer crowded with adventurers,

many of whom having laid out their substance in those airy purchases, now found themselves to be

utterly undone; whilst, on the other hand, such as had dealt in them to great advantage, became

extremely shy of owning their gains.

This state of things, how calamitous soever it might appear, was but the prelude to the grand

calamity which soon ensued by the fall of South Sea stock and subscriptions. For when the scire facias

came abroad, that stock was at eight hundred and fifty per cent, for the opening of the books in

August, including the Midsummer dividend; but, from that time forward, it gradually declined in price,

though with many great fluctuations, occasioned by the various arts and endeavours of the Junto to

keep it up; some of the particulars whereof have, in part, been already mentioned.

…

[114] The frailty of the whole South Sea scheme now too plainly appearing to all: the stock, on

the twenty-ninth of September, had fallen to one hundred and seventy-five per cent, and their bonds

were at twenty-five per cent, discount; whereupon there appeared great uneasiness and clamour

49 A "refusal" is, in modern parlance, a "call" or an option to buy at a future date at a certain price (Cope, S. R., “The stock exchange revisited: a new look at the market in securities in London in the eighteenth century”, Economica, XLV (I978), p. 1).


86

amongst the monied men, which produced a great run or demand for cash at the Bank, and a greater

one on the private bankers who had generally lent out much of their cash on South Sea stock and

subscriptions, in consequence of which several very substantial ones were obliged to stop payment

for some time. And now, just when drowning, all people began seriously to reflect on the calamities

brought on people in France, but a few months sooner, [115] by the famous Mississippi stock or

bubble; and to draw a melancholy parallel; which reflexions, made a few months sooner, would have

saved many a worthy family from distress: great clamour was also raised on account of contracts at

high prices, for the third and fourth money subscriptions performable on delivery of the company's

receipts, although no receipts had ever been issued for them. At a general court, on the thirtieth of

September, the supposed contract with the Bank was again mentioned as a positive agreement, at four

hundred percent, for South Sea stock, which now therefore, from one hundred and thirty rose to three

hundred and twenty, but could by no methods be kept so high: the fascination was over, and therefore

it fell daily lower, more especially when it was known after all, that the supposed Bank contract was

no reality, but a mere temporary and very unjust expedient to quiet the clamours of the people.

…

[123] The unaccountable frenzy in stocks and projects of this year 1720 may by some be thought

to have taken up too much room in this work: but we are persuaded that others, of superior judgment,

will approve of the perpetuating, in so large a work, the remembrance thereof, as a warning to after

ages.

We shall sum up every thing which relates to the deceitful arts of raising South Sea stock by new

and extravagant high subscriptions, by a sensible, familiar, and most plain simile, written at this time

by that ingenious gentleman Archibald Hutcheson, Esquire, long since dead, whose fair and candid

calculations on this subject, and on our general national debts, make up a moderate folio volume, viz.

“A, having one hundred pounds stock in trade, though pretty much in debt, gives it out to be

worth three hundred pounds, on account of many privileges and advantages to which he is

entitled. B, relying on A's great wisdom and integrity, sues to be admitted partner on those terms,

and accordingly brings three hundred pounds into the partnership. The trade being afterwards

given out or discovered to be very improving, C comes in at five hundred pounds; and afterwards

D, at one thousand one hundred pounds. And the capital [124] is then compleated to two thousand

pounds. If the partnership had gone no farther than A and B, then A had got and B had lost one

hundred pounds. If it had stopped at C, then A had got and C had lost two hundred pounds; and

B had been as he was before: but D also coming in, A gains four hundred pounds, and B two

hundred pounds; and C neither gains nor loses: but D loses six hundred pounds. Indeed, if A

could shew that the said capital was intrinsically worth four thousand four hundred pounds, there

would be no harm done to D; and B and C would have been obliged to him. But if the capital at

first was worth but one hundred pounds, and increased only by the subsequent partnerships, it

must then be acknowledged, that B and C have been imposed on in their turns, and that

unfortunate thoughtless D paid the piper.”


87

This simile is too obvious to need explanation. A plainly representing the original South Sea capital,

as B and C do the first and second subscriptions for stock, and D the third and fourth subscriptions.

This came not out till the close of the year 1720, when every one too late saw the general deception:

but we remember many who were then of opinion, that had it been published before the two shameful

subscriptions at each one thousand pounds per cent had been resolved on, it might have prevented so

wild a measure.”

i. Dismissal of Petitions for Patents and Charters; List of Bubbles (12 July 1720)50

“The whole nation was become stock-jobbers. The South Sea was like an infectious distemper,

which spread itself in an astonishing manner. Every evening produced new projects, which were justly

called Bubbles, new Companies appeared every day. These were countenanced by the greatest of the

nobility. The prince of Wales was governor of the Welsh Copper; the duke of Chandois, of York

Buildings; the duke of Bridgewater formed a company for building houses in London and

Westminster. There were near a hundred different kinds of projects or bubbles; and it was computed,

that above a million and a half was won and lost by these unwarrantable practices, by which, many

unwary persons were defrauded and impoverished, and a few crafty men enriched, to the great

detriment of domestic trade. The king had, the same day the parliament rose, published a

Proclamation, declaring all these unlawful projects should be deemed as common nuisances, and

prosecuted as such; with the penalty of 500l. for any broker to buy or sell any shares in them.

Notwithstanding this [655] Proclamation, several of the illegal projects were still carried on; upon

which the Lords Justices, on the 12th of July, to put a stop to all farther proceedings, ordered all the

Petitions, that had been presented for Patents and Charters, to be dismissed.

The following is a Copy of the said Order:

At the Council Chamber, Whitehall, the 12th of July 1720. Present, their Excellencies the Lords

Justices in Council.

Their excellencies the lords justices in council taking into consideration the many inconveniences

arising to the public, from several projects set on foot for raising of joint stocks for various purposes,

and that a great many of his majesty’s subjects have been drawn in to part with their money, on

pretence of assurances that their Petitions for patents and charters, to enable them to carry on the

same, would be granted: to prevent such impositions, their excellencies, this day, ordered the said

several Petitions, together with such reports from the Board of Trade, and from his majesty's Attorney

and Solicitor-general, as had been obtained thereon, to be laid before them, and after mature

consideration thereof, were pleased, by advice of his majesty's privy-council, to order, That the said

Petitions be dismissed. Which are as followeth:

50 7 Cobb. Parl. Hist., pp. 654-9. URL: http://goo.gl/xk1Yc.

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Petition of several persons, praying letters patents for carrying on a fishing trade, by the name of

the Grand Fishery of Great-Britain.

Petition of the company of the Royal Fishery of England, praying letters patents for such farther

powers as will effectually contribute to carry on the said fishery.

Petition of George James, in behalf of himself, and divers persons of distinction, concerned in a

national Fishery, praying letters patents of incorporation to enable them to carry on the same.

Petition of several merchants, traders, and others, whose names are thereunto subscribed, praying

to be incorporated for reviving and carrying on a Whale fishery to Greenland and elsewhere.

Petition of sir John Lambert, and others thereto subscribing, on behalf of themselves, and a great

number of merchants, praying to be incorporated for carrying on a Greenland Trade, and particularly

a Whale fishery in Davis's Streights.

Another petition for a Greenland trade.

Petition of several merchants, gentlemen, and citizens thereto subscribing, praying to be

incorporated for buying or building of ships to let or freight.

Petition of Samuel Antrim, and others, praying letters patents for sowing hemp and flax.

Petition of several merchants, masters of ships, sail-makers, and manufacturers of sail-cloth,

praying a charter for an incorporation, to enable them to carry on and promote the manufactory by a

joint stock.

Petition of Thomas Boyd, and several hundred merchants, owners and masters of ships, sail-

makers, weavers, and other traders, praying a charter of incorporation, impowering them to borrow

money for purchasing lands, in order to the manufacturing sail-cloth, and fine Holland.

Petition on behalf of several persons intrusted, in a patent granted by the late king William and

queen Mary, for the making of linen and sail-cloth, praying, that no charter may be granted to any

persons whatsoever for making sail-cloth, but that the privilege now enjoyed by them may be

confirmed, and likewise an additional power to carry on the cotton and cotton-silk manufactures.

Petition of several citizens, merchants, and traders, in London, and other subscribers to a British

stock, for a general insurance from fire in any part of England, praying to be incorporated for carrying

on the said undertaking.

Petition of several of his majesty's loyal subjects of the city of London, and other parts of Great-

Britain thereto subscribing, praying to be incorporated for carrying on a general insurance from losses

by fire within the kingdom of England.

Petition of Thomas Burges, and others, his majesty's subjects thereto subscribing in behalf of

themselves and others, subscribers to a fund of 1,200,000l. for carrying on a trade to his majesty's

German dominions, praying to be incorporated by the name of the Harbourg company.


89

Petition of Edward Jones, a dealer in timber, on behalf of himself and others, praying to be

incorporated for the importation of timber from Germany.

Petition of several merchants of London, and others, praying a charter of incorporation for

carrying on a salt work.

Petition of captain Macpheadris, of London, merchant, on behalf of himself and several

merchants, clothiers, batters, dyers, and other traders, praying a charter of incorporation, impowering

them to raise a sufficient sum of money, to purchase lands for planting and rearing a wood called

Mader, for the use of the, dyers.

Petition of Joseph Galendo, of London, snuff-maker, praying a patent for his invention to prepare

and cure Virginia tobacco for snuff, in Virginia, and making it into the same within all his majesty's

dominions.

LIST OF BUBBLES.

Besides the Projects and Undertakings, above-mentioned many others had been set up and carried

on, under the names of Bubbles, viz.

For the importation of Swedish iron

[657] For supplying London with sea-coal, a subscription of three millions.

For building and rebuilding houses throughout all England, three millions.

For making of muslin.

For carrying on and improving the British allum-works.

For effectually settling the island of Blanco and Sal-Tartugas.

For an engine to supply fresh water for the inhabitants of the town of Deal.

For buying and importing of Holland, Flanders-Lace, &c.

For improvement of lands in Great-Britain, four millions subscription.

For encouraging the breed of horses in England, and improving of glebe and church-lands, and

repairing and rebuilding parsonage and vicarage houses.

For making of iron and steel in Great Britain.

For improving land in Flintshire, one million.

For purchasing lands, &c. to build on, two millions.

For trading in hair.

For erecting salt-pans in Holy-Island, two millions.

For buying and selling estates, lending money on mortgages, &c.


90

For carrying on an undertaking of great advantage, but nobody to know what it is.

For paving the streets of London, two millions.

For furnishings funerals to any part of Great Britain.

Another for buying and selling lands, and lending money at interest, five millions.

For carrying on the royal fishery of Great Britain, ten millions.

For assuring of seamen's wages.

For erecting loan-offices for the assistance and encouragement of the industrious, two millions.

For purchasing and leasing improveable lands, four millions.

For importing pitch and tar, and other naval stores, from North-Britain and America.

For the cloathing, felt, and pantile trade.

For purchasing and improving a manor and royalty in Essex, &c.

For insuring of horses, two millions.

For exporting the woollen manufacture, and importing copper, brass, and iron, four millions.

For a grand dispensary, three millions.

For erecting mills for milling of lead, and purchasing of lead mines, &c. two millions.

For improving the art of making soap.

For a settlement on the island of Santa Cruz.

For sinking pits, and melting lead-ore in Derbyshire.

For making glass bottles, and glass.

For a wheel for perpetual motion, one million.

For improving of gardens

For insuring and increasing children's fortunes.

For entering and loading goods at the Custom-house, and for negotiating business fur merchants.

For carrying on a woollen manufacture in the North of England.

For importing walnut-tree from Virginia, two millions.

For making Manchester stuffs of thread and cotton.

For making Joppa and Castile soap.


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For the wrought iron and steel manufactures in this kingdom, four millions.

For dealing in lace, Hollands, cambricks, lawns, &c. two millions.

For trading in, and improving certain commodities of the product of this kingdom, &c. three

millions.

For supplying the London markets with cattle.

For making looking glasses, coach-glasses, &c. two millions.

For the tin and lead mines in Cornwall and Derbyshire.

For making rape oil.

For importing beaver-fur, two millions.

For making pasteboard, packing-paper, &c.

For importing of oils and other materials used in the woollen manufactures.

For improving and increase of the silk manufacture.

For lending money on stocks, annuities, tallies, &c.

For paying pensions to widows, &c. at small discount, two millions.

For improving malt-liquors, four millions.

For a grand American fishery.

For purchasing and improving fenny lands in Lincolnshire, two millions.

For improving the paper manufacture in Great Britain.

The bottomry society.

For drying malt by hot air.

For carrying on a trade in the river Oronoko in America.

For the more effectual making of baize in Colchester and other parts of Great Britain.

For buying of naval stores, supplying the victualling, and paying wages of the workmen.

For imploying poor artificers, and furnishing merchants and others with watches.

Fur improvement of tillage, and the breed of cattle.

Another for the improvement of our breed of horses.

Another for insuring of horses.

For carrying on the corn trade of Great Britain.


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For insuring to all masters and mistresses the losses they shall sustain by servants, three millions.

For erecting houses, or hospitals, for taking [659] in and maintaining bastard children, two

millions.

For bleaching of course sugars, without the use of fire, or loss of substance.

For turn pikes and wharfs.

For insuring from thefts and robberies.

For extracting silver from lead.

For making China and Delft ware, one million.

For importing of tobacco, and exporting it again to Sweden, &c. four millions.

For making iron with pit coal.

For furnishing the cities of London and Westminster, and the suburbs, with hay and straw.

For a sail and packing-cloth manufactory in Ireland.

For taking up ballast.

For buying and fitting out ships to suppress pirates.

For importing timber from Wales, two millions.

For rock-salt.

For the transmutation of quick-silver into a malleable fine metal.”

j. An Unsuccessful Proposal to Address Excessive Speculation in the Stock Market51

“I shall also transcribe the latter Part of the 26th Page of my said last-mentioned Treatise, for

which, I think, the Reasons are now much stronger than at the Time I wrote it, viz.

“And, above all Things, whether care should not be taken to incourage those Trades most,

from which we have a Ballance in Bullion; and also, to make such Sumptuary Laws as shall appear

necessary, to refrain such Extravagancies as are destructive, not only to particular Persons, but to

the Kingdom in general ? I shall mention but one Thing more, which, I think, will tend very much

to turn Mens Thoughts to the Improvement of those Trades which are really beneficial to the

Kingdom; viz. If their Thoughts could be effectually turned from the pernicious Trade, or rather

Gaming, of Exchange -Alley, where the Brokers, like other Box-Keepers, are the chief Gainers. In

this new sort of Trade, or Gaming, the Nobility, the Gentry, the Merchants, and almost all sorts

51 Hutcheson, Archibald, Collection of Treatises relating to the National Debts & Funds, London, 1721, p. 67. URL: http://goo.gl/ukWRj.

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of People, are universally concerned; and, I believe, where one Bargain is made for the real Sale

of Stocks, with Intention to keep the same, there are Hundreds made in the Way of Stock-Jobbing,

only for a few Days: And it is well known, that the Bear-Skin, the Putts, the Refusals, and paying

the Difference, are some of the most considerable Branches in this new Way of Commerce. And,

for a Redress of this, I would propose a short Law, whereby all Persons, making any Purchase of

Lands or Tenements, Rent-Charges, or Annuities, issuing out of any Lands, or the Publick

Revenues, either for Ever, or for Terms of Years, should be disabled to sell the same for one Year

after such Purchase made; and that all Agreements or Contracts for any Sale, till after the

Expiration of the said Year, should be Null and Void. It is evident, this will be no Inconveniency

to those who intend to become real Purchasers; and it would give some Check to this unprofitable

Trade of Stock- Jobbing.”

I had prepared a Clause to this Effect, to, to have been added to the Bill for Establishing the Two

Companies for Insuring of Ships, and for Suppressing of all the other Bubbles, but I had not an

Opportunity to offer it and it follows in these Words, viz.

“And for the more effectual obtaining the good Purposes intended by this Act, and preventing

the Ruin of many weak and unwary People, and for the better Encouragement of the Trade and

Commerce of this Kingdom; Be it further Enacted, by the Authority aforesaid, That any Stock, Share

or Interest in any of the Companies, which now are, or hereafter shall be established by any Act

or Acts of Parliament, or by Grant or Charter from the Crown, shall be, and are hereby declared

to be absolutely null and void, unless the Person or Persons contracting to assign or transfer such

Stock or Interest, shall have been actually possessed thereof, for the space of before such

Contract so entered into, and such Assignment or Transfer shall have been actually made and

entered in the Book or Books of such Company, whereto such Stock, Share or Interest shall

belong, within the space of after such Contract made for the same”

And I am fully persuaded, that a Clause to this or the like Purport, would have done much good,

and have suppressed all Bubbles effectually, without the help or nay Penalties whatever; and it would

also have prevented the turning the Stocks of Companies, established by Acts of Parliament and

Charters for better Purposes, into real Bubbles, destructive to the Publick.”

k. Sentencing of a Defendant Convicted under the Bubble Act (1722)52

Dominus Rex v. Caywood

THE defendant being convicted upon the late act of Parliament of being the projector of an

unlawful undertaking to carry act leaves a on a trade to the North Seas, whereby many of his majesty's

subjects had been defrauded of great sums of money, came now to receive the judgment court, which

was prayed by Mr. Attorney General upon the statute of praemunire; whereupon the counsel the

defendant argued, that the late statute had not tied up the hands the court from pronouncing any

52 Rex v. Caywood, 1 Stranger 472 (1722), URL: http://goo.gl/mNOPl.

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94

milder sentence, if any favourable circumstances could be laid before them, but had left a discretionary

power in the court to punish, as (the words are) for a common nusance; and if they thought fit, that

then the party should likewise incur any of the pains and penalties ordained by the statute of praemunire.

And if it should be taken otherwise, it could be to no purpose, that the first clause of fining for a

common nusance was inserted, when the judgment of praemunire alone would reach every thing that

the party could have, to answer any fine.

To this it was answered by Mr. Attorney and Solicitor, that the whole judgment in a praemunire

might stand, and yet there might still be some use for the clause about nusances, where part of the

judgment might be to abate the nusance, and the party convicted may be likewise set on the pillory or

whipped, which is no part of the judgment against one convicted upon the statute of praemunire. And

they said the word any in the statute was the same as all; if he is to incur any of the pains and penalties,

that is every one.

Adjornatur. And the last day of the term the Chief Justice declared the opinion of the court, that

they had a discretionary power to inflict all, or only some, of the penalties of a praemunire.

UPON exhibiting articles of the peace against the defendant, it was objected by Mr. Wearg, that

the fact whereon the prosecutor grounds his apprehensions or danger appeared to be committed

before the act of grace, and pardoned thereby; and the crime by that being gone, it must be considered

as never done; and the court never demands security of the peace barely on a man's swearing he goes

in danger of his life, without laying some fact before the court, that it may appear to be such a metus,

qui cadere possit in constantem virum.

Sed per curiam: Suppose it was threats only, would not they be a ground for articles, tho’ they are

not punishable? Though the fact is pardoned, yet it may be instanced for an inducement to us to

believe the defendant a dangerous person. The defendant entered into a recognizance to keep the

peace.

l. Extension of the Bubble Act to the American Colonies (1741)53

“An act for restraining and preventing several unwarrantable schemes and undertakings in His Majesty's Colonies

and Plantations in America

WHEREAS in and by an Act made in the sixth Year of the Reign of his late Majesty King George

the First, intituled, An Act for the better securing certain Powers and Privileges intended to be granted

by his Majesty by two Charters, for Assurance of Ships and Merchandizes at Sea, and for lending

Money upon Bottomry, and for restraining several extravagant and unwarrantable Practices therein

mentioned, for suppressing the mischievous and dangerous Undertakings and Attempts therein

mentioned and described, and preventing the like for the future; it was enacted…

53 14 Geo. II c. 37. URL: http://goo.gl/6XHpF.

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95

And whereas Persons have presumed to publish in America a Scheme for supplying a pretended

Want of a Medium in Trade, by setting up a Bank on Land Security, the Stock of such Bank to be

raised by publick Subscriptions for large Sums of Money, whereof small Sums were from time to time

to be paid in and by the particular Subscribers, and to be managed by Directors, Treasurer and other

Officers, and Dividends to be made as therein mentioned; and the said Company of Subscribers were

to promise to receive the Bills which they should issue for and as so much lawful Money as should be

therein respectively mentioned in all Payments, Trade and Business; and after the Expiration of twenty

Years, to pay the Possessor the Value thereof in Manufactures; and sundry other Schemes, Societies,

Partnerships or Companies, have been and may be set on Foot in America, for the Purpose of raising

publick Stocks or Banks, and unlawfully issuing large Quantities of Notes or Bills there, contrary to

the true Intent and Meaning of the said recited Act:

And whereas Doubts have arisen, whether the said recited Act doth extend to, or can be executed

in, his Majesty's Dominions, Colonies and Plantations in America, in Regard that the Information or

Indictment against the Offenders therein mentioned, and likewise the Actions to be grounded upon

that Act, and thereby given to the Merchant or Trader who should suffer any particular Damage, were

appointed to be heard and determined in some of his Majesty's Courts of Record at Westminster, or

in Edinburgh, or in Dublin, so that the said Act without further Explanation and Amendment may

not be sufficient to suppress and prevent in America the mischievous and dangerous Undertakings

and Attempts therein mentioned, and thereby designed to be prevented and suppressed:

For Remedy whereof, may it please Your most Excellent Majesty, that it may be declared and

enacted; and be it declared and enacted by the King's most Excellent Majesty, by and with the Advice

and Consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament

assembled, and by the Authority of the same, That the said recited Act, and all and singular the

Paragraphs, Clauses, Sentences and Expressions therein contained, for suppressing, restraining or

punishing the extravagant or unwarrantable Practices therein mentioned, did, do and shall extend to

all and every the publick, extravagant and unwarrantable Practices herein before mentioned or

described, and did, do and shall extend to, and are and shall be in Force, and carried into Execution,

in all and every his Majesty's Dominions, Colonies and Plantations in America; and that all and every

the Undertakings, Attempts, Matters and Things in the said recited Act mentioned or described, and

prohibited to be acted, done, attempted, endeavoured or proceeded upon, within the City of London,

and other Parts of this Kingdom, as also in Ireland, and other his Majesty's Dominions; and all other

the Undertakings, Attempts, Matters and Things herein before mentioned or described, are and shall

be deemed to be illegal and void in his Majesty's Dominions, Colonies and Plantations in America

also, and shall not there be practised, or in any wise put in Execution; and that all Offenders against

the said recited or this present Act, being thereof lawfully convicted upon Information or Indictment

in any of his Majesty's Courts of Record in any of his Majesty's Dominions, Colonies or Plantations

in America, shall be liable to such and the like Fines, Penalties and Punishments, whereunto Persons

convicted in Great Britain for common and publick Nuisances are by any of the Laws or Statutes of

this Realm subject or liable; and moreover shall incur and sustain any further Pains, Penalties and

Forfeitures, as ordained and provided by the said Statute of Provision and Premunire, made in the


96

sixteenth Year of the Reign of the said King Richard the Second; and that if any Merchant, Trader or

other Person hath suffered or shall suffer any particular Damage in his, her or their Trade, Commerce,

Exchange or other lawful Affairs, by Occasion or Means of any Undertaking, or Attempt, Matter or

Thing carried on, attempted or done in America, and by this Act, or the said recited Act, declared to

be illegal, and will sue to be relieved therein; then and in every such Case such Merchant, Trader or

other Person, shall and may have his, her and their Remedy for the same, by any Action or Suit

grounded, upon this Act, against the respective Persons, Societies or Partnerships, or against any one

or more of the Persons, who contrary to this Act have or hath been or shall be engaged or interested

in any such unlawful Undertaking or Attempt; and every such Action and Suit (for what hath been or

shall be so undertaken, carried on, attempted or done in America) shall be heard and determined in

any of his Majesty's Courts of Record within any of his Majesty's Dominions, Colonies or Plantations

in America; and in every such Action and Suit the Plaintiff (in case he or she recover) may and shall

recover Treble Damages, with Full Costs of Suit.

II. And be it further enacted by the Authority aforesaid, That all and every Person and Persons

whatsoever, who shall be possessed or of or intitled to any Promissory Note or Notes, Bill or Bills,

which have been or shall be issued by any such Societies, Partnerships or Companies of Persons in

America, shall and are hereby impowered to commence or bring at any Time hereafter, his, her or

their Action or suit, in any Court of Record in any of his Majesty's Dominions, Colonies or Plantations

in America, against the respective Persons, Societies, Partnerships and Companies, who have or shall

issue such Notes or Bills, or against any one or more of the Persons who have been within the Space

of six Years last past, or shall be hereafter engaged or interested in any such unlawful Undertaking or

Attempt, or who mall have signed such Note or Notes, Bill or Bills, in order to recover present

Payment in lawful Money of the full Sum mentioned or expressed in such Note or Bill, to which

Payment every such Person is hereby declared to be personally liable; and in such Actions or Suits, the

Plaintiff or Plaintiffs shall recover and have Judgment for immediate Payment by the Defendant or

Defendants in lawful Money, of the full Sum mentioned in such Note or Bill, with lawful Interest for

the same from the Day of the Date of such Note or Bill, with Full Costs of Suit, although the Time

limited for Payment according to the Tenor of such Note or Bill shall not then be come or past.

III. Provided always, That nothing herein contained shall extend, or be construed to extend, to

inflict any of the Fines, Pains, Penalties, Forfeitures, Punishments or Treble Damages aforesaid, upon

any Person or Persons whatsoever, who have or hath attempted, promoted, undertaken, assisted or

carried on in America any of the Matters or Things declared to be illegal and void by this or the said

recited Act, if such Person or Persons does or do within ten Days after Demand made, pay and

discharge such Sum or Sums of Money respectively, as shall be secured or made payable by such Note

or Notes, Bill or Bills; and desist from, give up, relinquish and wholly forbear to act further in any

Sort, directly or indirectly, in any such Matter or Thing, on or before the twenty-ninth Day of

September one thousand seven hundred and forty-one; any thing herein contained to the contrary

notwithstanding.”

Chapter 3. Regulation of Securities Intermediaries after the Bubble Period

a. Debates in the Lords on a Bill to Prevent the Infamous Practice of Stock Jobbing (1734)

The bill had previously been vigorously debated by the House during April 1733, passed on third

reading, but subsequently dropped by the Lords54.

“Debate in the Lords on the Bill to prevent Stock Jobbing. March 2855. The Lords went into a committee

upon a bill from the Commons, “To prevent the infamous Practice of stock-jobbing”; and the said

bill being read a second time, the earls of Warwick and Cholmondeley, and lord Hervey, spoke against

the bill: their lordships urged,

That the grandeur and strength of a nation depended upon public credit, which was a thing of a

very ticklish nature, and did not always depend upon reason, but upon the opinions of men; and

therefore it was very dangerous to make any innovations with respect to our public funds; for though

one man might have a good opinion of the innovation proposed, yet he could not tell what opinion

others might have of it.

That all human regulations, all human affairs, were subject to imperfections and inconveniences,

and therefore legislators had in all countries been forced to suffer small inconveniences for the sake

of greater conveniences, which was really the case then before them; for though stockjobbing was an

inconvenience, yet considering how much it contributed to the ready circulation of money, and to the

supporting the credit of our funds, it was therefore to be tolerated.

That the credit of our funds depended very much upon the ready access that people had at all

times to their money, and that this ready access was chiefly owing to the practice of stock-jobbing; by

this practice it was, that every man was always sure of finding a purchaser for his stock whenever he

had a mind to sell, and by this only it was, that there was always a certain and fixed market-price upon

every one of our public funds; whereas, should this practice be entirely destroyed, it might soon

become as difficult to find a purchaser for stock, or to ascertain the price of it, as it is now with respect

to land; and the concluding of a bargain might become as tedious in the one case as it is now in the

other.

That at present our people got by commission and brokerage from foreigners at least 80,000l. per

annum, which would be intirely lost to the nation, if that bill should pass into a law; because all

transactions of that nature, even in our own public funds, would then be carried on upon [515] the

exchange of Amsterdam; and it was well known, that when any branch of trade is diverted and turned

out of its old channel, it is no easy matter to bring it back again; and therefore, though the bill was to

continue but for three years, they could not agree to it, because if the trade of buying and selling any

of our public funds should be turned out of this kingdom for three years only, it might not be in our

power to bring it back again.

54 9 Cobb. Parl. Hist., pp. 49-68. URL: http://goo.gl/ol20I. 55 Ibid., pp. 514-9. URL: http://goo.gl/bJlk2.

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That if the creditors of the public were not allowed as free and uncontrolled a liberty of disposing

of their properties in the public funds, as of any other part of their property, it would not only prevent

peoples becoming purchasers of any of our present funds, but it would prevent people's lending their

money to the government upon any future emergency, which might be attended with the most fatal

consequences.

That in all other branches of trade, there was a free liberty allowed to every person that had a

mind to insure his stock in trade: that the selling of stock for time56, and the giving of money for the

put of stock (as it was called in Exchange Alley) was nothing else but a way of insuring the principal

money which a man had in the public funds; and the preventing a man from taking that method of

securing his property in the funds, would be a very great hardship upon all the creditors of the public.

That it was doing an injustice to the persons concerned in the public funds; because it was a

subjecting them to conditions and restraints which they were not subjected to, nor could possibly

dream of, when they lent their money to the public; which was really in effect taking so much of their

property from them: for it was certain, that every sort of property was of the less value, the more

conditions and restrictions it was subjected to: nor could any argument in favour of the Bill be drawn

from that law which had been made against laying wagers about public affairs; because those that

might be concerned in such wagers had never purchased from the public a privilege to lay any such;

whereas the creditors of the public had in some manner purchased a privilege of taking any method

they thought proper for making the most of the property they had in the public funds.

The earl of Strafford, Hay, and Winchelsea, the lords Bathurst and Hardwick, spoke for it: Their

lordships alledged,

That there was really no difference between stock-jobbing and gaming; or if there was any, it

consisted in this, that the former was much more fatal in its consequences, and much more destructive

than the other; for if any man frequented hazard-tables, horse-racing, cock-fighting, or any other sort

of public gaming, it became soon known in the world, and thereby every man was advertised to draw

his effects out of such a man's hand, and not to give him any trust or credit, so that if such men came

to be ruined, they generally could lose nothing but their own estates, and none suffered by their folly

or ill conduct but themselves and their families; whereas in the transactions in Exchange-alley, they

might be, and generally were carried on in the dark; it was not known who were principally concerned,

by which means a man might game for thousands, without its being so much as suspected that he had

ever ventured a farthing in that way; whereby it generally happened that not only the gamester himself

was ruined, but many innocent men, concerned with him in an honest and fair way of trade, found

themselves undone, when they had good reason to think themselves absolutely secure.

That Stock-jobbing was worse than gaming in this other respect, that gaming of any other kind

might be carried on upon a fair and equal footing, but it was impossible that Stock-jobbing ever could;

for there must always be some persons behind the curtain, who must necessarily know a great deal

56 In modern financial terminology, “selling a stock for time” means some form of short-selling the stock, or selling of a stock that the seller doesn't own in the anticipation of a future decline in price.

3. Regulation of Securities Intermediaries after the Bubble Period4

99

more of the game than it was possible for the other adventurers to know, by which means they always

had an opportunity of cheating their fellow gamesters out of what sums of money they had a mind:

and it was but too well known that men had often made an unjust use of the knowledge they had in

this way.

That by the means of this infamous practice of Stock-jobbing, it was always in the power of some

of our foreign neighbours to lay a heavy tax upon this nation, and to draw a great deal of money out

of it, whenever they thought proper; for as the prices of all our public funds must always depend, in

some measure upon the circumstances of foreign affairs, and must vary according as those

circumstances vary, it would always be in the power of the ministers of some of the foreign courts of

Europe, by means of their correspondents here, to raise large sums of money, [517] by giving out a

little for the refusal, or for the put, of some of our public funds.

And in answer to the arguments made use of against the Bill, it was said, That public credit, it was

true, depended upon the opinions of men, but then those opinions were always founded upon reason,

when people were truly informed, and had time to think coolly about the matter, which could not well

happen, as long as the game of Stock-jobbing was allowed, for thousands of lies would be daily

invented to deceive the weak and ignorant; and men would always run headlong into the buying or

selling, or dealing in puts and refusals, not according to the real intrinsic value of the thing to be

bought or sold, but according to their opinion of the price's being about to fall or rise.

That the credit of our funds did not depend upon the gaming or Stock-jobbing in them, but rather

suffered by it, as appeared evidently from this, that the South-Sea annuities, in which there was little

or no gaming, had always bore a higher price than the stock, in proportion to the dividends made

upon both; and it was certain, that every man who was not possessed with something of the spirit of

gaming, would put a greater value upon that security, which he was sure of selling again for what it

cost him, than upon a security by which he run the risk of losing or winning a great deal. And as to

the certainty and invariableness of the price, the price of annuities had always been more certain and

invariable than the price of any other public fund, which shewed that Stockjobbing rather tended

towards unsettling, than towards fixing the price of any of our public funds.

That the readiness of finding a purchaser for any thing, depended upon the people's being certain

as to the value, as to the right, and as to the method of conveying the thing to be sold; and to this

certainty with respect to our public funds, it was owing that the proprietors had then so ready an

access to their money, and not at all to the practice of stock-jobbing; therefore as this certainty could

not be in the least diminished by the Bill then before them, the proprietors of the public funds would,

without doubt, have as ready access to their money after the passing of that Bill, as ever they had

before.

That it could not well be supposed that ever our people had made in any one year 80,000l. by

brokerage and commission from foreigners dealing in our funds; but whatever had been made in that

way could not by the Bill be diminished; for it was certain that buying and selling in the gaming way

could not be carried on by commission, there could be no commission or brokerage paid by foreigners

to our people here but when a transfer was actually made, and when a transfer is to be made, some


100

trustee or correspondent here must still be employed; so that nothing but the game of stock-jobbing

could be carried to the exchange of Amsterdam; and if all our gamesters, as well as the game, were

transported thither, it would be no great loss to the nation.

That it was to be hoped the public credit of this nation depended upon a much more stable

foundation than that of stock-jobbing; and it was not to be presumed that the creditors of the public

had purchased, or that they ever intended by their lending money to the government, to purchase a

privilege of setting up a gaming table in the middle of the city of London; and to pretend that the

prescribing a certain method by which the property of the public funds was transferred from one to

another, was a restraint put upon the liberty of disposing of such funds, or that it would any way

diminish the value of them, was the same thing as to pretend that the statute of the 29th of Charles

2, against fraudulent conveyances of land-estates, was a restraint put upon the liberty of disposing of

such estates; or that the act for registering such conveyances within the county of Middlesex, had

diminished the value of land within that county; whereas it was never yet imagined but that the

proprietors of land estates had as full a liberty of disposing of such estates since the said act of the

29th of Charles 2 had passed, as ever they had before; and it was well known that the act for

establishing a register within the county of Middlesex, had rather increased than diminished the value

of land within that county.

That as bargains for time were still to be allowed, the public creditors might thereby insure their

principal money in the public funds in the same manner as they had done before; but as for the practice

of giving money for the put of stock, if it was to be called an insurance, it was a very odd sort of one;

for by that method a man was to insure not only his own property in the public funds, but in some

manner the whole public funds of England; which was just the same as if a man [519] concerned only

in one ship should give a premium for the insurance of such a sum of money upon the safe return of

all the ships belonging to Great Britain.

Upon reading the last Clause, by which the Bill was made to continue for three years, the lord

Delaware moved,

That it might be made to continue but for one year, and to the end of next session of Parliament.

Lord Bathurst was against this amendment; his lordship said, That such a short term might very

probably encourage the stock-jobbing gamesters to enter into a combination for raising

inconveniences and evil consequences, which they might perhaps be able to support and keep up for

so short a time by some fraudulent and artful management, in order to make people sick of the Bill,

and thereby prevent its being continued; whereas if it was made to continue for three years, things

would in that time take their natural course; the gamesters could not hope to keep up by art and

management any sort of inconveniences, but those which really proceeded from the nature of the

Bill; and therefore in order to know the natural and real consequences of it, it was necessary to give it

a continuance for at least three years.


101

The earl of Hay spoke for this Amendment, and the earl of Strafford and the earl Poulet against

it. At last the question being put, it was carried against the Amendment proposed, by 27 against 16;

and the Bill afterwards passed into a law.”

b. Barnard’s Act (1734)

“An Act to prevent the infamous Practice of Stock Jobbing57

WHEREAS great inconveniences have arisen and do daily arise by the wicked pernicious and

destructive practice of stock jobbing whereby many of his Majesty's good subjects have been and are

diverted from pursuing and exercising their lawful trades and vocations to the utter ruin of themselves

and families to the great discouragement of industry and to the manifest detriment of trade and

commerce:

For remedy thereof, may it please your most excellent Majesty that it may be enacted, and be it

enacted by the King's most excellent Majesty, by and with the advice and consent of the Lords Spiritual

and Temporal and Commons in this present Parliament assembled, and by the authority of the same,

That all contracts and agreements whatsoever which shall from and after the 1st day of June 1734,

be made or entered into by or between any person or persons whatsoever upon which any premium

or consideration in the nature of a premium shall be given or paid for liberty to put upon or to deliver

receive accept or refuse any publick or joint stock or other publick securities whatsoever or any part

share or interest therein, and also all wagers and contracts in the nature of wagers and all contracts in

the nature of putts and refusals58 relating to the then present or future price or value of any such stock

or securities as aforesaid shall be null and void to all intents and purposes whatsoever and all premiums

sum or sums of money whatsoever which shall be given received paid or delivered upon all such

contracts or agreements or upon any such wagers or contracts in the nature of wagers as aforesaid

shall be restored and repaid to the person or persons who shall give pay or deliver the same, who shall

be at liberty within six months from and after the making such contract or agreement or laying any

such wager to sue for and recover the same from the person or persons to whom the same is or shall

be paid or delivered with double costs of suit by action of debt founded on this Act, to be prosecuted

in any of his Majesty's courts of record, in which action no essoin protection wager of law or more

than one imparlance shall be allowed; and it shall be sufficient therein tor the plaintiff to allege that

the defendant is indebted to the plaintiff or has received to the plaintiff's use the money or premium

so paid or received whereby the plaintiffs action accrued to him according to the form of this statute

without setting forth the special matter.

II. And for the better discovery of the monies or premium which shall be given paid or delivered

and to be sued for and recovered as aforesaid; It is hereby further enacted by the authority aforesaid,

That all and every the person or persons who by virtue of this present Act shall or may be liable to

be sued for the same shall be obliged and compellable to answer upon oath such bill as shall be

57 7 Geo. II. c. 8. URL: http://goo.gl/cbkek. This act was made permanent by 10 Geo II, c. 8 (1737). URL: http://goo.gl/lGQpy. Both acts were repealed in 1860 by 23 & 24 Vic., c. 28. URL: http://goo.gl/rsALv. 58 A “refusal” is an option to buy at a future date. See n. 49 above.

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preferred against him or them in any court of equity for discovering any such contract or wager and

the sum of money or premium so given paid or delivered as aforesaid.

III. Provided always, That the plaintiffs relators or informers in such bill shall and do (at the time

of bringing or filing such bill) give good and sufficient security to answer and pay the defendants in

such bill full costs of suit in case such costs shall be adjudged to the defendants and that no person

shall be obliged to appear or to answer such bill until such security is given.

IV. And be it further enacted by the authority aforesaid, That all and every person or persons

whatsoever who shall enter into make or execute any such contract bargain or agreement upon which

any premium or consideration in the nature of a premium shall be given or paid for liberty put upon

or to deliver receive accept or refuse any publick or joint stock or other publick securities whatsoever,

or any part share or interest therein, or any contract or bargain in the nature of putts and refusals as

aforesaid, or shall lay any such wager or make any such contract in the nature of a wager as aforesaid

(except such person or persons who shall actually and bona fide without covin or collusion sue and with

effect prosecute for the recovery of the money or premium given delivered or paid by him her or

them as aforesaid; and also except such person or persons who shall voluntarily before any action or

suit commenced actually and bona fide without covin or collusion repay or tender before one or more

witness or witnesses such monies or premium as he she or they shall have had taken received or been

paid as aforesaid; and also except such persons who shall discover such transactions in any court of

equity) shall forfeit and pay the sum of five hundred pounds; and also all and every brokers agents

scriveners or other persons negotiating transacting or writing any such contract bargain or agreement

as aforesaid shall likewise forfeit and pay the sum of five hundred pounds; which said penalties shall

and may be recovered by action of debt bill plaint or information in any of his Majesty's courts of

record at Westminster, in which no essoin privilege protection or wager of law or more than one

imparlance shall be allowed; one moiety thereof to the use of his Majesty his heirs and successors,

and the other moiety thereof to the use of him her or them who shall sue for the same.

V. And for preventing the evil practice of compounding or making up differences for stocks or

other securities bought sold or at any time hereafter to be agreed so to be, Be it further enacted by the

authority aforesaid, That no money or other consideration whatsoever (except as hereinafter is

provided) shall from and after the said 1st day of Jane 1734, be voluntarily given paid had or received

for the compounding satisfying or making up any difference for the not delivering transferring having

or receiving any publick or joint stock or other public securities, or for the not performing of any

contract or agreement so stipulated and agreed to be performed; but that all and every such contract

and agreement shall be specifically performed and executed on all sides, and the stock or security

thereby agreed to be signed transferred or delivered shall be actually so done and the money or other

consideration thereby agreed to be given and paid for the same shall also be actually and really given

and paid; and all and every person and persons whatsoever who shall from and after the said 1st day

of Jane 1734, voluntarily compound make up pay satisfy take or receive such difference money or

other consideration whatsoever for the not delivering transferring assigning having or receiving such

stock or other security so to be agreed to be delivered transferred assigned had or received as aforesaid

(except in the manner hereinafter provided) shall forfeit and pay the sum of one hundred pounds to


103

be recovered by action of debt bill plaint or information in any of his Majesty's courts of record at

Westminster in which no essoin privilege protection or wager of law or more than one imparlance shall

be allowed ; one moiety thereof to the use of his Majesty his heirs and successors, and the other

moiety thereof to the use of him her or them who shall sue for the same.

VI. Provided nevertheless, That no person or persons who shall sell any publick or joint stock or

other publick securities to be delivered and paid for on a certain day and which shall be refused or

neglected to be paid for according to such agreement shall be obliged to transfer the same; but it shall

and may be lawful for such person or persons to sell such stock or other securities which shall be so

refused or neglected to be paid for to any other person or persons for the best price which can be

obtained; and after such sale to receive (if the parties can agree) or to recover as aforesaid from the

person or persons who first contracted for the same all the damage which shall be sustained thereby.

VII. And provided also, That it shall and may be lawful to and for any person or persons who shall

buy any publick or joint stock or other publick securities to be accepted and paid for on a future day

and which shall be refused or neglected to be transferred to buy the like quantity of such stock or

other publick securities of any other person or persons at the current market price, and to recover

and receive after such purchase and acceptance (if the parties can agree) from the person or persons

who first contracted to sell or deliver the same the damage which shall be sustained by reason of the

not delivering or not transferring such stock or other securities; any thing in this Act or any law usage

or custom to the contrary notwithstanding.

VIII. And whereas it is a frequent and mischievous practice for persons to sell and dispose of

stocks or other securities of which they are not possessed59; Be it therefore further enacted by the

authority aforesaid, That all contracts and agreements whatsoever which shall from and after the said

1st day of June 1734, be made or entered into, for the buying selling assigning or transferring of any

publick or joint stock or stocks or other publick securities whatsoever or of any part share or interest

therein whereof the person or persons contracting or agreeing or on whose behalf the contract or

agreement shall be made, to sell assign and transfer the same shall not at the time of making such

contract or agreement be actually possessed of or intituled unto in his her or their own right or in his

her or their own name or names, or in the name or names of a trustee or trustees to their use shall be

null and void to all intents and purposes whatsoever; and all and every person and persons whatsoever

contracting or agreeing or on whose behalf and with whose consent any contract or agreement shall

be made, to sell assign or transfer any publick or joint stock or stocks or other publick securities

whereof such person or persons shall not at the time of making such contract or agreement be actually

possessed of or entitled unto in his her or their own name or names or in the name or names of a

trustee or trustees to their use or their own right as aforesaid shall forfeit and pay the sum of five

hundred pounds to be recovered by action of debt bill plaint or information in any of his Majesty's

courts of record at Westminster in which no essoin privilege protection or wager of law or more than

one imparlance shall be allowed ; one moiety thereof to the use of his Majesty his heirs and successors,

and the other moiety thereof to the use of him her or them who shall sue for the same ; and all and

59 Here the Act specifically addresses the practice of selling of stocks for time or, in modern jargon, short-selling.


104

every broker or brokers agent or agents who shall negociate transact or intermeddle in the making or

procuring to be made any such contract or agreement as aforesaid and shall know that the person or

persons by whom or on whose behalf such contract or agreement shall be made is or are not possessed

of or entitled unto the stock or security concerning which such contract or agreement shall be made

in his her or their own name or names or in the name or names of a trustee or trustees for their use

or right shall for every such offence forfeit and pay the sum of one hundred pounds to be recovered

by action of debt bill plaint or information in any of his Majesty's courts of record at Westminster in

which no essoin privilege protection or wager of law or more than one imparlance shall be allowed;

one moiety thereof to the use of his Majesty his heirs and successors, and the other moiety thereof

to the use of him her or them who shall sue for the same.

IX. And be it further enacted by the authority aforesaid, That from and after the said 1st day of

June 1734, all and every broker or brokers or other person or persons who shall negociate or act as a

broker receiving brokerage in the buying selling or otherwise disposing of any of the said publick or

joint stocks or other publick securities, shall respectively keep a book or register which shall be called

The Brokers Book in which said book he and they shall fairly justly and truly enter all contracts

agreements and bargains, that he or they shall from time to time make between any person or persons

whatsoever on the day of the making such contract or agreement, together with the names of the

principal parties as well buyers as sellers and also the day of making such contract or agreement, to

the intent and purpose that such broker or brokers and other person or persons acting or negociating

as such as aforesaid, shall from time to time produce such book or register when thereunto lawfully

required: And in case such broker or brokers or any other who shall negotiate or act as a broker as

aforesaid in relation to any the said matters, shall not keep such book or register or who shall wilfully

omit to enter therein fairly justly and truly any such contract bargain and agreement as aforesaid, he

or they shall for every such offence or omission forfeit and pay the sum of fifty pounds, to be

recovered by action of debt bill plaint or information in any of his Majesty's courts of record at

Westminster, in which no essoin privilege protection or wager of law or more than one imparlance shall

be allowed; one moiety thereof to the use of his Majesty his heirs and successors and other moiety

thereof to the use of him her or them who shall sue for the same.

X. Provided always, That nothing in this Act contained shall extend or be construed to extend to

any contracts or agreements for the purchase or sale of any stock annuities or other publick securities

to be made with the privity of the accountant general of the Court of Chancery, in pursuance of any

decree or order of the said Court; but that all such contracts and agreements may be made and

performed in the same manner as they might have been if this Act had never been made.

XI. Provided also, and be it further enacted by the authority aforesaid, That nothing in this Act

contained shall extend or be construed to extend to hinder or prevent any person or persons from

lending any sum or sums of money on any public or joint stock or other public securities whatsoever

or any part share or interest therein, or to prevent or hinder any defeazance contract or agreement

being made and entered into for the re-delivering assigning or transferring such publick or joint stock

or other publick securities or any part share or interest therein, upon the repayment of the sum or

sums of money which shall have been lent and borrowed thereupon, with interest for the same, so as


105

no premium or other consideration whatsoever be paid to or received by the person or persons lending

such money for or in consideration of such loan than legal interest.

XII. Provided also, and belt further enacted by the authority aforesaid, That this present Act shall

continue and be in force from the said 1st day of June 1734, for the term of three years and from

thence to the end of the then next session of Parliament and no longer.”

c. Consequences of Barnard’s Act on Exchange Alley60

“But two or three years later, in 1733, we find Sir John Barnard calling the attention of the House

of Commons to the vagaries of the Alley; and introducing a Bill, which eventually became law, for the

suppression of most of its business. All the arguments which could be adduced against gambling were

brought forward in support of the Bill, and all the jealousies which could be awakened against the

flourishing profession of stock and share dealing were aroused. A most telling allegation was that

stockbrokers were receiving annually from foreigners alone commissions which amounted in the total

to some £80,000. It was against time bargains, differences, that the Bill was specially directed. They

seem to have had their origin when the transfer of Government Stock was impossible for six weeks

at a time, which was the period deemed necessary by the Bank of England to keep the books closed

in preparation of the dividend distribution. The habit of buying and selling the stock without delivery

— in other words, of transacting time bargains and dealing for differences — had rapidly grown and

extended. Sir John Barnard's Act, passed in 1733, was directed against bargains or “putts” or “refusals”

in “any public or joint stock or other public security whatever,” and the first section declared all such

transactions to be void …

[49] But, as a matter of fact, although Sir John Barnard's Act was in force for more than a century

and [50] a quarter it was at no time seriously operative, and its force was whittled away by judgment

after judgment in the law courts. Nevertheless during its currency it made the position of' the broker

a rather uncertain one. Until its repeal the state of the law was such that if a broker was employed in

one of these transactions which the Act made illegal he could not recover from his principal, although

he had actually done work for him and laid out money for him, because he could not establish his

right except by virtue of having done that which was forbidden by law under a penalty. The fact of

work having actually been done was nothing in the broker's favour. To put it in one way, the Stock

Exchange, as far as its speculative transactions were concerned, was outlawed during the continuance

of the Barnard Act and enjoyed the freedom as well as suffered the disadvantages of the outlaw …

By making the brokers of Change Alley extremely careful as to the people with whom and for whom

60 Duguid, Charles, The Story of the Stock Exchange: its History and Position, G. Richards, London, 1901, p. 48. URL: http://goo.gl/JiEez. See also Keyser, Henry, The law relating to transactions on the Stock Exchange, Butterworth, London, 1850, p. 152: “That this [Barnard’s] Act has utterly failed to effect its object is well known, for it is alike anomalous as notorious that a numerous and highly-respectable body of men earn their livelihood by the daily and hourly violation of the clauses of the statute”. URL: http://goo.gl/OLwx5. Cope (1978, p. 9) proposes a more nuanced view. Option contracts had declined by mid-century due to passage of the Act, whereas time bargains although temporarily curtailed by the Act but were largely resurgent by the 1770s.

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they transacted speculative business, the Act caused some temporary cessation in dealing for

differences, but speculation, as distinct from mere investment, was so firmly established in 1733 that

it was not to be up- rooted by Act of Parliament. At first, when the Bill became law, Change Alley was

[51] dumbfounded, terror-stricken. With the cessation of time bargains — and it did not know they

would not cease — its occupation had practically gone…until it was found that the gamble went on

as merrily as ever.”

d. Who is a Broker?

Highmore v. Molloy (1737)61

“LORD Chancellor: I am inclined to think a pawnbroker within the several statutes concerning

bankrupts, and especially within the general words of the 39th clause of the 5th of Geo. 2. the words

of which are, “Whereas persons dealing as bankers, brokers, and factors, are frequently intrusted with

great sums of money, and with goods and effects of very great value belonging to other persons: It is

hereby further enacted that such bankers, brokers, and factors shall be, and hereby are declared to be

subject and liable to this, and other the statutes made concerning bankrupts.”

For though pawnbrokers are not expressly named, yet the general word brokers is the genus, and

all other kind of brokerage the species.

His Lordship said in the same case Though a man be a publick officer, as an exciseman, &c. yet,

if he will trade, he makes himself subject to the statutes of bankrupts.”

__________________________________

Janssen v. Green (1767)62

“THIS was an action for a forfeiture on 6 Ann. c. 16. § 5. for having acted as a broker, without

being admitted so to do by the court of mayor and aldermen.

That statute enacts “that every such person so offending shall forfeit and pay to the use of the

said mayor and commonalty and citizens, for every such offence, the sum of 25l. to be recovered by

action of debt, in the name of the chamberlain of the said city.”

The declaration charges divers instances of his acting as a broker to which he pleaded the general

issue.

61 1Atk. 205. URL: http://goo.gl/5BwPc. 62 4 Burr. 2103. URL: http://goo.gl/Qv0cl.

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The point reserved at the trial was, “Whether a person, who for brokerage and hire negotiates and

concludes bargains for stocks, is a broker within 6 Ann. c. 16.”

Mr. Eyre, Recorder of London, for the plaintiff—

The act of 8 & 9 W. 3. c. 32. “for restraining the number and ill practices of brokers and stock-

jobbers,” recites the inconveniences of the number of such brokers and stock-jobbers increasing very

much: and, to prevent such inconvenience and their ill practices, it enacts that no person whatsoever

shall act as a broker, directly or indirectly, within the Bills of Mortality, till he be first admitted, licensed,

approved and allowed of by the Lord Mayor and Court of Aldermen of the City of London, upon

such certificate of their ability, honesty and good fame, as hath been usual; under a penalty of 500l.

That act contains several other regulations: but it was only temporary, for three years. After it's

expiration, the sixth of Ann. was made; which gives them the power and [2104] profit of admitting

brokers. These therefore are the same sort of brokers as are the subject of the former act.

Mr. Wallace, contra, for the defendant, argued, that the defendant has not acted as a broker, within

the sixth of Ann.

The 1 Jac.1. c.21.describes a broker, and defines a broker to be a person acting between merchants

or tradesmen, in making and concluding bargains concerning their wares and merchandizes, and

monies to be taken up by exchange. But this man's act of negotiating contracts for stocks between one

and another, for brokerage and hire, is not within that description.

By the last clause of 8 & 9 W. 3. c. 32. brokers of stock, though admitted according to that act,

were prohibited (for a limited time) from dealing; unless they should have a licence from the treasury.

And it extends to stocks then existing: the words are— “Securities upon any fund or funds granted by

parliament.” Whereas this stock is subsequent both to 8 & 9 W. 3. and 6 Ann.

Lord MANSFIELD—Is not Sir John Barnard's act to prevent stock-jobbing, decisive of this

question? It directs, that “every broker, or other person, who shall negotiate or act as a broker, receiving

brokerage in the buying, selling, or otherwise disposing of any of the said public or joint stocks or

other public securities, shall keep a book, which shall be called The Broker's Book.” Can any words

more strongly express what the parliament meant by a broker?

Mr. Justice YATES—The Court will follow the parliamentary idea of a broker: And Sir John

Barnard's act (“to prevent the infamous practice of stock-jobbing,”) is conclusive as to their idea of a

broker. It also appears, from the statute of 10 Ann. c. 19. sect. 121.

The Two other Judges concurred.

Lord MANSFIELD—The case of a merchant who acts by commission from a correspondent

abroad, may be a different case: but here is nothing in the case before us, to distinguish this

commission from common brokerage.

Per Cur', unanimously—

Postea to be delivered to the Plaintiff.”


108

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Wilkes v. Ellis (1795)63

“This was an action of debt brought by the Chamberlain of London, on the stat. 6 Anne, c. 16,

to recover the penalty given by that statute against the Defendant, for acting as a broker within the

city, not having been admitted as such by the Court of the Mayor and Aldermen; the offence being

laid in the declaration to be, that “he took upon himself to act as a broker, and as a broker for a certain

reward to him to be therefore given, sold by auction for one John Bailey, certain goods and chattels,

&c.”

The evidence at the trial was, that the Defendant, who was a freeman and liveryman of London,

and had paid the duty of 20s. required by 17 Geo. 3, c. 50, as a licensed auctioneer, had sold the goods

mentioned in the declaration by public auction for Bailey who was the owner of them, and on a case

reserved, the question was, [700] whether the Plaintiff was entitled to recover, i.e. whether the selling

goods by public auction was acting as a broker, within the meaning of the statute?

This case was twice argued: the first lime by Rose, Serjt., Recorder of London, for the Plaintiff,

and Cockell, Serjt, for the Defendant; the second, by Adair, Serjt,, for the Plaintiff, and Le Blanc, Serjt.,

for the Defendant. On the part of the Plaintiff the arguments were the following:—

The Defendant having sold goods by auction, without being previously admitted as a broker by

the Court of Mayor and Aldermen, has incurred the penalty of 251., given by the statute 6 Anne, c.

16, the words of which are, “That all persons that shall act as brokers within the city of London and

liberties thereof, shall from time to time be admitted so to do by the Court of Mayor and Aldermen

of the said city for the time being, under such restrictions and limitations for their honest and good

behaviour, as that court shall think fit and reasonable.” Now a broker is a person, who for a reward

makes a transfer of property, whether the transfer be by private contract or public sale. There is

nothing in the mode of selling by auction that exempts the auctioneer from the capacity and situation

of a broker, which arises out of the nature of a sale. Thus the word auctio in classical language means

a sale by a broker, and auctionem vendere is used in that sense by Cicero in oratione pro P. Quintio.

Ainsw. Dict. Thus too in legal phraseology the term auxionarii is interpreted to mean “brokers.”

Blount's Law Diet. And in Spelman's Glossary, auctionarii are described to be “qui publicis

subhastationibus praesunt,” "propolae, quos Angliece brokers dicimus."

In Jacob's Law Diet, the word brokers is rendered “brocarii et auctionarii,” and auctionarii "sellers

or retailers, but more properly brokers.”

And in the several acts of parliament lo regulate the business of brokers, they are described to be

persons who make bargains and contracts between other persons, concerning their goods and

63 126 E.R. 699. URL: http://goo.gl/UhBrR.

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merchandize. 1 Jac. 1, c. 21. 8 & 9 W. 3, c. 20, s. 60. 8 & 9 W. 3, c. 32. 10 Anne, c. 19, s. 121. 6 Geo. 1,

c. 18, s. 21. 3 Geo. 2, c. 31. 7 Geo. 2, c. 8, s. 8. Which description clearly comprehends an auctioneer,

who is an agent both for the buyer and seller. Upon this principle, that broker is a generic term,

including all persons who make bargains for the sale of properly, many cases have been decided. Thus

in Bosworth v. Machado, cor. Lee, Ch. J. (at Guildhall, Sittings after Trinity Term 1745), it was holden

that a person who sold South Sea stock, was a broker within the meaning of the statute 6 Anne, c. 16.

So also was the case of Janson v. Green, 4 Burr. 2103. If it should be said, that the stat. 17 Geo. 3, c. 50,

imposes upon auctioneers in London and Westminster, an annual duty of 20s. for a licence, unless

they are also authorized by the Mayor and Aldermen of London, to act as brokers within the city, in

which case the duty is only 5s., and therefore that the two characters are distinct and independent of

each other, or at least that an auctioneer who has paid the duty of 20s. is not obliged to pay a farther

duty to the City of London, it is to be observed, that this statute is merely a revenue act, the sole

object of which is the raising a tax for Government; that it did not mean to infringe the rights of the

city, nor can it alter, in whatever manner it may be worded, the nature of the business of auctioneer

and broker, and make things different, which are substantially the same. So general indeed has been

the conviction that auctioneers were within the meaning of the stat. 6 Anne, c. 16, that the constant

usage in the city has been, for them to be admitted as brokers by the court of Mayor and Aldermen.

On the part of the Defendant the arguments were the following. The true definition of a broker

is, that of a person who makes a private bargain between other persons, [701] but not a public one,

Cowel's Interpr. In the stat. 1 Jac. 1, c. 21, he is described to be a person who makes bargains between

merchant and merchant. A broker also both buys and sells, but an auctioneer only sells. A broker

therefore is essentially different from an auctioneer. Brokers too are subject to the bankrupt laws by

the provision of the stat. 5 Geo. 2, c. 30, s. 39. But auctioneers are not included in that provision. With

respect to the definitions given in the several dictionaries, as they all differ from each other, perhaps

there is little reliance to be placed on any.

By a charter of Ed. 3, no persons were to be brokers, but such as were chosen by the merchants

belonging to the mysteries in which they were to act, which corresponds with the recital of the stat. 1

Jac. 1, c. 21, but which never could be extended to auctioneers. By a charter also of Hen. 7, confirmed

by Car. 1, the business of selling by auction was confined to an officer called an Outroper, and all

other persons were prohibited from selling goods or merchandize by public claim or outcry. But long

before, and at that time, brokers exercised their trade in the manner described in the stat. 1 Jac. 1, c.

21. The two characters were therefore different at that time, and the difference between them is most

evidently recognized by the stat. 17 Geo. 3, c. 50, which varies the duty to be paid for a licence,

according to the circumstance of the auctioneer being admitted a broker or not, and therefore implies

that it is not necessary for him to be so admitted, unless he acts as a broker, as distinguished from an

auctioneer.

The Court seemed disposed to be of opinion in favour of the Defendant, but they intimated a

wish for some precise information, whether before the passing the stat. 17 Geo. 3, c. 50, auctioneers

were liable to be called upon to be admitted as brokers, and whether in fact the usage was for them to

be so admitted.


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However, on a subsequent day, before any farther steps were taken, Adair, after stating that he had

consulted his clients on the subject, moved to discontinue the action, evidently from an apprehension

that the judgment of the Court would be against him, and a precedent established unfavourable to the

revenues of the corporation of London.

Leave to discontinue was accordingly granted, upon an undertaking not to bring any fresh action

against the Defendant.”

__________________________________

Clarke v. Powell (1833)64

“DEBT for penalties for acting as a broker within the city of London, in purchasing 50l. 3 per

cents, and procuring the same to be transferred in the books of the governor and company of the

bank of England, the defendant, not being at the time of such purchase and transfer, or either of

them, admitted by the court of mayor and aldermen of the city of London, to be a broker, or to act as

a broker, within the said city.

Plea, the general issue. At the trial before Lord Tenterden C. J., at the London sittings after Trinity

term, 1830, the jury found a special verdict for one penalty of 100l., which stated, in substance, as

follows: — Since the making of the statute 6 Anne, c. 16., and the statute 57 G. 3. c. lx., divers persons

have taken upon themselves to act within the city of London and liberties thereof, in the buying and

selling of the public and joint stock of government annuities, transferable at the bank of England,

and other public securities, for others, for reward in that behalf, such persons so acting not having

been admitted by the court of mayor and aldermen of the said city to be brokers in pursuance of the

said act of the 6 Anne; and since the passing of the said acts, divers other persons have so taken upon

themselves to act within the city of London and liberties thereof, in the buying and selling of the public

and joint stock of government annuities, transferable at the bank of England, and other public

securities, for others, [847] for reward in that behalf, and such last-mentioned persons have been

admitted by the said court of mayor and aldermen to be brokers, and to act as brokers in pursuance

of the said act of the 6 Anne; and have been, and are, from time to time, required to make and execute

upon such admissions, the broker's bond of the city of London. Since the 27th day of June 1817, viz.

on the 8th of July 1829, within the said city of London, the defendant did, for reward to him in that

behalf, purchase for John Johnson, of one Norman Wilkinson, a certain interest or share, amounting

to the sum of 50l., in a certain public joint stock government annuity, transferable at the bank of

England, that is to say, in the capital or joint stock called the reduced 3 per cent, annuities, transferable

at the bank of England; and did then and there procure the said sum of 50l. interest or share in the

said stock, to be transferred by N. W. to J. J., in the books of the governor and company of the bank

of England, and did receive from J. J., as a reward and commission for such purchase and transfer, the

64 4 B.& Ad. 846. URL: http://goo.gl/hKGJD.

http://goo.gl/hKGJD


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sum of 1s. 3d., [and did, from time to time, both before and since the said 27th day of June, on various

occasions, buy divers shares in the government securities, transferable at the bank of England, for

divers other persons, for reward in that behalf,] and was not, at the time of the said purchases and

transfers, or of any of them, admitted by the court of mayor and aldermen of the city of London to

be a broker, or to act as a broker, within the said city, nor had he obtained any admission by or from

such court.

[848] The bond before 1818 was in the penalty of 500l, conditioned as follows : — “That the

party whose admission is recited should faithfully execute his office and employment without fraud,

and should, upon every contract, bargain, or agreement made by him, declare and make known to

such person or persons with whom such agreement was made, the name of his principal, if required;

and should keep a book or register, and therein fairly enter all such contracts, &c. within three days,

and should, upon demand made by either of the parties, buyer or seller, produce such entry, and prove

the truth and certainty of such contracts, &c.: and, for satisfaction of all such persons as should doubt

whether he was 3 lawful and sworn broker, should produce a certain medal; and should not, directly

or indirectly, by himself or any other, deal for himself or any other broker in the exchange or

remittance of money, or in buying any tally or tallies, order or orders, bill or bills, share or shares, or

interest in any joint stock to be transferred or assigned to himself or any broker, or to any other in

trust for him or them; or in buying any goods, wares, and merchandises to bargain or sell again upon

his own account, or for his own or for any other broker's benefit or advantage; or to make any gain

or profit in buying or selling any goods over and above the usual brokerage;” and should discover any

person whom he should know to be acting as broker, not being duly authorised, and should not

employ any one under him to act as a broker, not being duly admitted; and should not presume to

meet and assemble in Exchange Alley, or other public passage or passages within the city, and liberties

thereof, other than upon the Royal Exchange, to negociate his business [849] and affairs of brokerage

to the annoyance or obstruction of any of his Majesty's subjects, or any other, in their business or

passage about their occasions.

The form of bond after 1818 was in 1000l., and conditioned as the former bond, except that there

was a condition for giving either to the buyer or seller, within twenty-four hours after demand, a

contract note, containing therein a true copy of the entry to be made in the “broker's book;" and that

the stipulation respecting the assembling in Exchange Alley or other public places, was omitted. This

case was argued in Michaelmas term.

Follett for the plaintiff. The question is, whether a person acting as a stockbroker within the city of

London, or its liberties, is a broker required by the statute of 6 Anne, c. 16., to be admitted to that office

by the court of the mayor and aldermen of the city of London. That statute subjects a party acting as

a broker within those limits, and not having been so admitted, to a penalty of 251. By the 57 G. 3. c.

lx, that penalty is increased to 100l. In Janssen v. Green it was decided, that a stockbroker was a broker

within the meaning of the statute of Anne, and the authority of that case was recognised in Gibbons v.

Rule, where it was decided that a shipbroker was not within the act, because he was not a person who

bought and sold for another. In popular language, a broker is a person who makes contracts for others.

One of the definitions given of the word broker, in Johnson's Dictionary, is “one who does business for


112

another.” In Jacob's Law [850] Dictionary brokers are described, “Those who make bargains in matters

of money or merchandise;” and he enumerates exchange-brokers, corn-brokers, brokers of stock, and

pawnbrokers. In Blunt's Law Dictionary are mentioned “exchange-brokers, mediators in any contract of

buying and selling, or contracts of marriage, and pawnbrokers.” In Cowel there is a similar enumeration.

The stat. l Jac. l. c. 21. gives the city of London the power of admitting brokers, and describes them as

persons who make contracts between merchants and tradesmen. The meaning of the term in the

statute of Anne is to be collected from other acts of legislation passed about the same time. It will be

said that, at the time of the passing of the 6 Anne, c. 16. there were no stocks transferable in the Bank

of England; but there were government securities then transferable. The 8 & 9 W.3. c.20. is entitled

“An Act for making good the Deficiencies of several Funds therein mentioned, and for enlarging the

Capital Stock of the Bank of England, and for raising the Public Credit;” and section 60. imposes a

penalty of 20l. upon every person who shall be employed as a broker on the behalf of any person to

make or drive any bargain or contract for the buying or selling of any orders or tallies (in the act

mentioned), who shall take more than 2s. 6d. per cent. for brokerage.” This shew that, before the statute

of the 6 Anne, the legislature applied the term broker to a person buying and selling public securities.

The 8 & 9 W. 3. c. 32. (which was in force for three years only) provided that no person should act as

a broker in making bargains respecting [851] any bank stock, or any tallies, bills of credit, or tickets

payable at the receipt of the exchequer, or at any of the public offices, who had not been admitted a

broker within the city of London; and in the fifth section, which imposes a penalty of 500l., the word

broker is constantly used in reference to stock. By 10 Anne, c. 19. s. 121., a penalty is imposed on every

person “who shall be employed as a broker, in the behalf of any other person, to make any bargain,

or contract for the buying or selling of any tallies, orders, exchequer bills, exchequer tickets, bank bills,

or any share or interest in any joint stock erected by act of parliament, &c, who shall take or receive,

directly or indirectly, any sum of money, or other reward, exceeding the sum of 2s. 9d. per cent.” The

6 G. 1. c. 18. s. 21. enacts, “that if any broker, or person acting as a broker for himself, or on behalf

of any others, shall bargain, sell, buy, or purchase, or contract or agree for the bargaining, selling,

buying, or purchasing of any share or interest in any of the undertakings by that act declared to be

unlawful, or in any stock, or pretended stock; of such undertakers,” he shall be disabled from

practising as a broker, and also forfeit the sum of 500l. It appears, therefore, from these several acts

(which are nearly contemporaneous with the stat. 6 Anne, c. 16.) that the legislature used the word

broker as descriptive of a person who made contracts for others in merchandise, transferable stock

of private companies, or government securities. The 7 G. 2. c. 8. s. 4. imposes a penalty of 500l. upon

all brokers and agents, negotiating any contract for the buying, selling, assigning, or transferring [852]

of any public or joint stock, or other public securities whatsoever, which the person on whose behalf

the contract shall be made, shall not at the time of making such contract be actually possessed of or

entitled to in his own right, &c. Sect. 4. also imposes a penalty upon brokers negotiating other bargains

respecting stock, prohibited by the act. But Janssen v. Green is an authority expressly in point to shew

that a stockbroker is a broker within the meaning of the statute of 6 Anne 16. (He was then stopped

by the Court.)

Campbell, Solicitor-General, contra. Stockbrokers are regulated by a general act of parliament, and

are not required by 6 Anne, c. 16., to be admitted by the court of the mayor and aldermen of London.


113

That statute ought to be strictly construed; for it is not only penal, but it imposes a tax on one part of

his Majesty's subjects for the benefit of another. The statute 57 G.3. c. lx. is similar in its nature. It is

for increasing the payments to be made by brokers, and it raises the penalty to 100l. As the statute

itself does not give a definition of the word broker, the meaning of that term may be collected from

other acts of parliament. The Court cannot adopt either the popular or mercantile use of the word

broker; for there are various persons called brokers who are not within the meaning of the statute, as

furniture brokers, ship brokers, and, probably, insurance brokers. A broker is a person whose

employment is to buy and sell for others some visible, tangible commodity, capable of delivery. If the

word be not so confined, an insurance [853] broker might be considered within the act, for he buys

and sells for others a contract of indemnity; or an attorney, who buys and sells for others the grant or

again assignment of an annuity. If the latter be not within the act, a stockbroker is not, for he only

buys and sells the assignment of a government annuity. Now it has been frequently held, that the

public securities are not goods and chattels. The true definition is to be found in the 1 Jac. 1. c. 21.: it

recites, that “Of long and ancient time, by divers hundred years, there have been used within the city

to be selected persons meet to be brokers, &c, who take their oath to use and demean themselves

uprightly and faithfully between merchant English and merchant strangers and tradesmen, in the

contriving, making, and concluding bargains to be made between them, concerning their wares and

merchandises to be bought and sold and contracted for within the city of London, and monies to be taken

up by exchange.” The subject-matter of the contracts made by brokers is described as wares and

merchandise, and money taken up by way of exchange. Now the brokers referred to in 6 Anne, c. 16.,

must have been those who had been so denominated by the ancient usage of London, and whose

dealings were in respect of goods and chattels and monies taken up by exchange. The statute 8 & 9

W. 3. c. 32. was not in force when the statute 6 Anne, c. 16. was passed. The penalties imposed by the

latter statute ought not to be extended to brokers and stockjobbers, or pretended brokers, mentioned

in a statute which had expired. Janssen v. Green cannot be [854] supported. Lord Mansfield, in

considering the statute of Anne, adopted the definition of the word broker found in an act of

parliament passed near thirty years afterwards. The very circumstance of that act having been passed

so long after, for the regulation of stockbrokers, raises the inference that those persons were not held

to be included by the legislature in the statute of Anne. It is clear that in the 8 & 9 W. 3. c. 20. s.60, the

legislature contemplated that other persons beside stockbrokers might make purchases and sales of

stock. It speaks of persons employed as brokers, solicitors, or otherwise, to make bargains. One of

the conditions of the bond which brokers were compelled to enter into was, until the year 1818, that

they should carry on their business in the Royal Exchange, and not in 'Change Alley. Now, the stock

exchange was, at the time when the stat. 6 Anne, c. 16. passed, and is now, the place of business for

buying and selling stock. [Littledale J. The question, whether a stockbroker be within the act, cannot

depend on the terms of the condition of the bond.] Stockbrokers are regulated by general law, the 7

& 8 G. 2. c. 8. [Parke J. That act merely obliges them under a penalty to keep books: it contains no

other general regulation for stockbrokers.] To impose a tax on those who deal in the public securities,

would be indirectly laying a tax on the transfer of those securities.

LITTLEDALE J., in this term, delivered the judgment of the Court. This case was argued before my

brother Parke and myself, in the course of last Michaelmas term, [855] and the question upon the


114

record is, whether a person who, on various occasions, buys shares in the government securities,

transferable at the bank of England for other persons, for reward,—in ordinary parlance, a

stockbroker, —be within the provisions of the 6 Anne, c. 16., and the 57 G. 3. c. lx., and liable to

penalties for acting as such, under the latter act, in London, without having been admitted by the mayor

and aldermen of the city of London.

The first of these acts abolishes the office of garbler of spices, by repealing the statute of 1 Jac.

1., and gives an equivalent to the city by the admission of brokers. The fourth section recites, that the

profits of the said office are part of the revenues of the city of London, and were then leased to W.

Stewart, under a rent of 300l. per annum; the profits of which office, and the right of the said W.

Stewart to the same, by repealing the said act, would be very much diminished: it then enacts, that “all

persons that shall act as brokers within the city of London and liberties thereof, shall, from time to

time, be admitted so to do by the court of mayor and aldermen of the said city for the time being,

under such restrictions and limitations, for their honest and good behaviour, as that court shall think

fit and reasonable; and shall, upon such their admission, pay to the chamberlain of the said city for

the time being, for the uses thereinafter mentioned, the sum of 40s.; and shall also yearly pay to the

said uses the sum of 40s. upon the 29th day of September in every year.” The fifth section provides,

that “if any person shall take upon him to act as a broker within the city and liberties, not being

admitted as aforesaid, he shall forfeit and pay the sum of 151., to be recovered by the chamberlain of

the city."

[856] The other of these acts, the 57 G. 3. c. lx, was passed for granting an equivalent for the

diminution of the profits of the office of gauger of the city by the construction of the London Docks,

and for increasing the payment to be made by brokers. It raises the fee upon admission, and the annual

payment from admitted brokers, to 51., and increases the penalty upon a person “for taking upon him

to act as a broker,” to 100l.

The very question now raised by this record, was decided by the Court of King's Bench upon a

special case, in the case of Janssen v. Green; and by that decision we ought to be bound, unless we are

clearly satisfied that it is contrary to law. The question has been fully and elaborately argued before us;

and in the result we see no reason to think that the decision was wrong.

It was very strongly urged by the Solicitor-General, that the clause in the statute of Anne, which

enacts that all persons “who shall act as brokers” in the city of London, shall be admitted, and pay the

sums therein mentioned, ought to be strictly construed, as it imposes a tax, and that upon persons

who derive no advantage from the abolition of the office for which the payments are given as a

compensation. The act, however, appears also to have had in view the regulation of brokers; and to

have secured and enforced the ancient right of the city to admit brokers, which, by the statuta civitatis

Londini, 13 Ed. l., it appears to have possessed in the earliest times. But supposing that such a strict

construction ought to prevail, because the act imposes a tax for the benefit of an individual, and a

corporation, it is clear [857] that that the statute extends to all persons who shall act as brokers; and

the question is, what persons fall within that description? All who do are equally liable to the tax, and

all are alike taxed, without any corresponding benefit; for the abolition of the office of garbler appears


115

to have conferred no more benefit on one class of brokers than another. But as the legislature has

imposed the burthen on all brokers, all, that we are judicially satisfied were intended to be included in

that denomination, must bear it.

In order to ascertain who these are, the statutes, and particularly those which were passed about

the time with the act in question, furnish us with the best means of information.

The 1 Jac. 1. c. 21. recites, that persons have been admitted as brokers, who have taken their oaths

on admission “to use and demean themselves uprightly between merchant English and merchant

strangers, and tradesmen, in contriving, making, and concluding bargains and contracts to be made

between them concerning their wares and merchandizes to be bought and sold and contracted for, within

the city of London, and monies to be taken up by exchange between such merchant and merchants, and

tradesmen, and these kind of persons have had and borne the name of brokers, and been known,

called, and taken for brokers.” The act proceeds to declare that persons who buy and sell, and take

pawn of garments, &c. are not brokers, but frippiers, and to provide a remedy against illegal pledges;

and the last clause provides that nothing in the act contained shall be prejudicial to the ancient trade

of brokers between merchant and merchant or other traders or occupiers within the city, being

selected as therein mentioned. [858] Though this was the occupation of regular brokers at that time,

it is obvious that when a new subject of dealing was created in government securities, those who dealt

in the same way respecting such securities, might fall under the same denomination. The class of men

who dealt either partially or exclusively in this new description of security, might equally fall within

the description of brokers as those who dealt partially or exclusively in some new description of

merchandize.

That this was so, the statutes passed in the reign of King William clearly and decisively prove. The

8 & 9 W. 3. c. 20. s. 60. mentions brokers employed on the behalf of other persons to make bargains

and contracts for the buying and selling of orders of the treasury, and of tallies, which are described

in the fifty-seventh section, and limits their brokage to 2s. 6i per cent.

The 8 & 9 W. 3. c. 32., a temporary act, entitled “An Act to restrain the Numbers and ill Practice

of Brokers and Stock Jobbers,” after reciting that for the conveniency of trade, sworn brokers have

been anciently admitted within the city of London for the making and concluding of bargains and

contracts between merchant and merchant, and other tradesmen, concerning their goods, wares,

merchandizes, and monies taken up by exchange, and for negotiating bills of exchange between

merchant and merchant; and that brokers, stock jobbers, or pretended brokers, have lately carried on

most unjust practices in selling and discounting tallies, bank stock, bank bills, shares and interest in

joint stock, and other matters and things, and have combined to raise and fall from time to time the

value of such tallies, &c. which is a great abuse of the said ancient trade [859] and employment; and

that the number of such brokers and stock jobbers had very much increased within these few years,

by reason that they were not at present under against such regulations as are necessary to prevent the

mischief aforesaid, for remedy, provides that no person or persons whatsoever shall directly use or

exercise the office, trade, mystery, occupation, or employment of a broker, or act or deal as such within

the cities of London or Westminster, borough of Southwark, or the limits of the weekly bills of mortality,


116

in the contriving, making, or concluding bargains between merchant and merchant, or between

merchants and tradesmen or others, concerning their wares and merchandizes to be bought and sold,

and contracted for, monies to be taken up by exchange between such merchant and merchants, and

tradesmen, or concerning any tallies, or orders, bills of credit, or tickets payable at the receipt of the

exchequer, or at any of the public offices, or concerning any bills or notes payable by the governor

and company of the Bank of England, or for or concerning any part of the capital or joint stock

belonging or to belong to the said governor and company, or to any members of the said company,

or for or concerning any share of the capital or joint stock belonging to any company or society that

is or shall be incorporated by act of parliament, or letters patent, until such person shall be first

admitted, licensed, approved, and allowed of by the lord mayor and court of aldermen for the time

being, upon such certificate of their ability, honesty, and good fame as hath been usual.

The act then proceeds to direct the oath, to limit the number of brokers, to regulate the fee on

admittance (not to exceed 40s.), and to impose a penalty of 5001. [860] on those who use the trade,

&c. of broker, or act or deal as brokers, and to provide that if any person, not being a sworn broker,

shall negotiate and deal as a broker in the discounting of tallies, exchequer bills, or bank bills or notes,

or in stock jobbing, or selling of bank stock or any other interest or securities, upon any fund or funds granted

by parliament, such person so offending shall forfeit 500l. and stand in the pillory. The act proceeds to

make further regulation for the keeping of books, the amount of brokerage (10s. per cent.), and other

matters; and also requires brokers of tallies or securities on funds granted by parliament, to be licensed

by the treasury.

This act was limited to three years.

In the 6 G. 1. c. 18. s. 21. (passed twelve years after the statute of Queen Anne) a penalty is imposed

on brokers buying and selling shares in illegal undertakings.

The 7 G. 2. c. 8. s. 8. mentions “brokers” with reference to transactions of buying and selling stock.

Considering the provisions of these statutes, recently before and after the passing of the statute 6

Anne, it appears to us that persons buying and selling government stock and securities for others were

considered as brokers at that time, and must fall under that description in the statute in question. If

brokers dealing in government stock and securities then existing, were so, it does not admit of a doubt

that those who dealt in all subsequently created stock, and securities of the like description, would be

so; just as much as merchant brokers, who bought or sold a new description of merchandize.

It was urged that the statute 7 G. 2. c. 8. was passed [861] for the regulation of stock brokers.

That is not the case. It is for the purpose of preventing stock jobbing; and the only matter of

regulation which it contains is, that brokers are to keep books, in which contracts are to be registered,

under a penalty of 50l.; and unless the statute in question (the 6 Anne) gives the power of admission,

with such restriction for their good behaviour as they think reasonable, to the mayor and court of

aldermen, there is no power of admission and control over this important class of brokers in any

person. Such a power is not absolutely necessary, and the legislature might have omitted to give it; but

certainly it is not given by any other statute than this.


117

For the reasons above mentioned, and particularly from what may be deemed the

contemporaneous exposition of the legislature itself in the statutes of 8 & 9 W. 3. c. 20. & c. 32., we

are of opinion that the case of Janssen v. Green was rightly decided, and that judgment must be for the

plaintiff.

Judgment for the plaintiff.”

e. Nature of City of London Regulation Concerning Brokers (1816)

Ex parte Dyster in the Matter of Moline65

“The petitioner was a broker of the city of London; and, to a debt sought to be proved by him

under the bankrupt's commission, it was objected that, as such broker, he was precluded by his bond

to the city and by the oath taken upon his being admitted a broker, from trading as a principal; and

that, notwithstanding these obligations, he had had joint dealings with the bankrupt, as a principal,

upon the balance of which transactions he claimed to prove as aforesaid. The question now before

the Court, upon this petition, was, whether the policy of the law will allow a debt to arise out of such

transactions.

By statute, 6 Ann. c. 16. s.4.; it is enacted “that, from and after the determination of this present

session of Parliament, all persons that shall act as brokers within the city of London and liberties

thereof, shall from time to time be admitted so to do by the court of Mayor and Aldermen of the said

city, for the time being, under such restrictions and limitations for their honest and good behaviour as

that Court shall think fit and reasonable.”

[156] In 1708, the year after this act passed, the Court of Mayor and Aldermen made certain rules

and regulations for the government of brokers, which have ever since been, and still are in force, and

by virtue of which every person, previous to his being admitted a broker, is required to enter into a

bond to the Mayor, Commonalty and citizens of London, and also to take an oath, the forms of which

are prescribed by the same rules and regulations, and are, in substance, as follows:

Condition of the bond. “That the said A. B., for and during such time as he shall and doth continue

in the said office and employment, shall and do well and faithfully execute and perform the same

without fraud, covin, or deceit; and shall, upon every contract, bargain, or agreement by him made,

declare and make known to such person or persons with whom such agreement is made the name or

names of his principal or principals, either buyer or seller, if thereunto required, and shall keep a book

or register, and therein truly and fairly enter all such contracts, bargains, and agreements, within three

days at the farthest after making thereof, together with the names of all the respective principals for

whom he buys or sells, and shall upon demand made by any, or either of the parties buyer or seller

concerned therein, produce and shew such entry to them or either of them to manifest and prove the

truth and certainty of such contracts and agreements, and for satisfaction of all such persons as shall

65 1 Mer. 156 (1816). URL: http://goo.gl/EZfLc.

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doubt whether he is a lawful and sworn broker or not, shall, upon request, produce a medal of silver

with his Majesty's arms engraven on one side, and the arms of this city with his name on the other,

and shall not, directly or indirectly, by himself or any other, deal for himself or any other broker in

the exchange or remittance of money, or in buying any tally or tallies, order [157] or orders, bill or

bills, share or shares, or interest in any joint stock to be transferred or assigned to himself, or any

broker, or to any other in trust for him or them, or in buying any goods, wares, or merchandizes, to

barter and sell again upon his own account, or for his own or any other broker's benefit or advantage,

or to make any gain or profit in buying or selling any goods over and above the usual brokerage; and

shall and do discover and make known to the said Court of Mayor and Aldermen, in writing, the

names and places of abode of all and every person and persons, as he shall know to use and exercise

the said office or employment, not being thereunto duly authorized and empowered as aforesaid,

within thirty days after his knowledge thereof, and shall not employ any person under him to act as a

broker within the said city and liberties thereof, not being duly admitted as aforesaid, and shall not

presume to meet and assemble in Exchange-alley, or other public passage or passages within this city

and liberties thereof, other than upon the Royal Exchange, to negotiate his business and affairs of

exchange, to the annoyance or destruction of any of his Majesty's subjects, or any other, in their

business or passage about their occasions.”

Form of oath. “You shall sincerely promise and swear, that you will truly and faithfully execute and

perform the office and employment of a broker between party and party in all things appertaining to

the duty of the said office or employment, without fraud or collusion, to the best of your skill and

knowledge.”

The nature of the transactions in which the petitioner was engaged, after he had entered into the

bond and taken the oath aforesaid, and while he still continued [158] in the office or employment of

a broker within the city of London and liberties thereof, and upon which the prayer of his petition

was founded, appeared upon affidavit to be that, for many years previous to the bankruptcy of Moline,

the petitioner was concerned with the bankrupt and another person, in a secret partnership, in the

purchase and sale of hides and skins; and it was further sworn that, during the whole continuance of

such secret partnership, he bought and sold hides and skins on commission, as broker, and charged

his employers a brokerage or commission on the sale or purchase thereof, although some of such

goods were sold by him to the bankrupt on account of the said secret partnership.

The sums for which the petitioner claimed to be entitled to prove as debts arising out of the

aforesaid transactions, amounted to upwards of 20,000.

Sir Samuel Romilly, Cooke, and Roupell, in support of the petition.

If the present application is opposed at all, it must be, either on the ground that the transactions,

in respect of which relief is sought to be obtained, are positively illegal, or that they are fraudulent

and against conscience, and that, in either case, a Court of Justice will not interpose to give effect to

a contract having such transactions for its foundation.


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If these transactions are illegal, they must be so in consequence of some direct statutory

prohibition; but no such statute can be produced, nor is there a single judicial decision in support of

the allegation. If it be said that the regulation made by the city of London amounts to a legislative

enactment, as being in pursuance of a power vested in the city by an act of the [159] legislature, it

must be first seen what is the nature and extent of the authority actually given to the city by the statute

of Anne. By attending to the recital of that statute, then, it will be made manifest that it was intended

as a mere revenue law ... It is evident, from the whole tenor of this statute, that its object was to secure

to the city of London certain pecuniary advantages by way of compensation for the office which was

thereby abolished. The city has no power to constitute that an illegal transaction which the legislature

has not declared to be illegal. Such a restriction, it is easy to shew, would be contrary to the whole

course of our commercial policy, considered in any other light than that of a mere contract between

individuals not to do a particular act, except under [160] certain conditions. Then the character of a

city broker is not different from that of a private factor. The factor is bound by certain obligations

entered into with his employer. But the Court will not refuse its interference in transactions between

the factor and a third person, because those transactions are contrary to the obligations so entered

into. The employer has his remedy, secured by the contract, for the breach of those obligations; but

the breach of them does not affect the rights of the parties in any other respect than as between one

another. So, here, a bond is entered into, and the city of London has a right to maintain an action for

the breach of its conditions. Suppose, upon a dissolution of partnership, one of the partners to enter

into a covenant with the others not to exercise the same trade within a given distance of the place

where the partnership has been carried on. Would this covenant deprive him of all right to recover, as

against third parties, in respect of dealings carried on in violation of his covenant? So, the city of

London may make what regulations they please as to the terms of a contract between itself and its own

individual members; but those regulations can never constitute, or form any part of, the law of the

land.

Then, with regard to the objection on the ground of the transactions being unconscientious or

fraudulent, and therefore not relievable. No particular act of dishonesty is charged against this

individual. It is not pretended that, in any instance, he has taken advantage of his situation as broker

to gain an unfair profit in the way of his trade by artifice or misrepresentation. The charge of fraud

stands on the mere ground of its being inconsistent with his duty, as a broker, to carry on business as

a merchant. It is inconsistent with his duty so to do, in consequence of a [161] positive engagement

to the contrary entered into with the city of London, confirmed by an oath truly and faithfully to

execute the office of a broker between party and party, in all things appertaining to his duty as such

broker. In the first place, the city of London has no right to impose such an oath. The statute,

authorizing the city to make regulations, gives no authority for enforcing those regulations by an oath.

The oath is, therefore, merely voluntary, and such as the law cannot judicially notice. But, in the next

place, how has this person acted in violation of his oath? It is not alleged that he has not conducted

himself in his office truly and faithfully as between party and party. Whatever fraud there may be in

this transaction, rests entirely with the bankrupt, seeking to elude a just demand by setting up an unjust

and dishonest objection. If any third person had been defrauded by this broker, the transaction might

have been impeached on the ground of fraud, and that, whether an oath had been taken to the


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contrary, or not. Suppose, by articles of partnership, a party binds himself not to carry on trade except

for the benefit of the partnership, and the parties take it upon themselves to enforce this obligation

by an oath; can the Court act upon an oath taken under such circumstances?

[162] Hart, Bell, and Montagu, for the assignees.

The objection to this demand is that the debt claimed is not proveable as arising out of an illegal

transaction; [163] and the illegality of the transaction consists in this, that Dyster, being ostensibly a

broker, has really acted as a principal.

First, Could he have been entitled to recover on such a transaction, setting aside the statute of

Anne and the regulations of the city of London?

Secondly, If so, is he deprived of his right to recover by the effect of those prohibitions?

Another point has been raised in argument, that, supposing he could not recover against third

persons, still this constitutes no ground of resistance to a claim as against his partner in respect of

partnership dealings. But the answer to this question depends upon the preceding; for, if the claim

arises out of an illegal transaction, the Court will give no assistance to a contract which tempts to a

transgression of the law…

The question, then, resolves itself into this. Does the present claim arise out of an illegal

transaction?

[164] If a partnership were formed with a view of the parties enriching themselves by deceiving

others, such a partnership would be clearly illegal. I do not say, In the in this case, that a broker cannot

deal as a principal, but that he cannot be permitted to hold himself out to the world as a broker, being

in fact a principal; and that a partnership bottomed on such an understanding must be void. Dealings

of this description cannot be reasonable or fair, regard being had to the expectations under which a

broker is employed. In dealing with a proprietor, the party is aware of the colour which interest is

likely to lend to the subject under discussion; but, in dealing with a broker, he knows he is not only

entitled to impartial advice, but that it is the interest of him whom he consults to advise impartially;

and the practical effect of discovering that, instead of broker, he is in fact a principal, would be to

withdraw his confidence altogether.

The present case, however, does not rest upon abstract principle. The petitioner is a broker of the

city of London, and, as such, is restrained by positive law from acting as a principal.

The statute (a) provides that persons shall be admitted to act as brokers under such restrictions

and limitations for their honest and good behaviour as the Court of Mayor and Aldermen shall think

fit and reasonable. The questions under this act are three. 1st, Can the legislature give, or, 2ndly, has

the legislature given, to the Court of Mayor and Aldermen, a power to prevent such transactions as

these? 3rdly, If the legislature has given, has the Court of Mayor and Aldermen exercised the power?


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[165] That the Legislature can give such a power is evidenced by a number of instances, as in the

cases of inclosure and turnpike acts, and those enacting discretionary punishments. In many cases it

is absolutely necessary for the Legislature to repose such a discretionary power somewhere.

Then it is impossible to find words more strong than in this case, to shew that the Legislature has

in fact given the power which it is certainly able to give, and which the urgency of the case demands.

It is impossible to maintain that this statute is a mere revenue law. A part of it, indeed, relates to

pecuniary compensation; but what have the words, “Such regulations as the court shall think fit, for

their honest and good behaviour,” to do with pecuniary compensation? How can it be said that this is

analogous to those cases in which a person is merely liable to undergo the penalty of his bond for the

breach of it? As in the supposed case of an outgoing partner who covenants not to exercise the trade

within certain limits? That is a mere private question between the parties themselves; attended with

no deception on the public, no intention to mislead either buyer or seller; and the parties have

accordingly fixed that which they consider to be a sufficient indemnity for the non-performance of

the condition. The present case is wholly different. The broker is a servant of the public. The object

of the Legislature is to prevent double dealing, to generate confidence in the minds of his employer,

and to preserve untainted evidence. The Court of Mayor and Aldermen have executed the power in

the same spirit in which it was given them. The requisites of the bond, which are in themselves very

reasonable and strictly conformable to the objects in view, are, [166] among other things, that the

obligee shall not buy or sell on his own account either directly or indirectly; and the oath which is

faithfully to discharge his duty, is imposed in aid of the bond as an additional obligation. Where is his

duty to be found? In the bond. The bond informs the broker in direct terms what his duty is; and the

oath has, therefore, immediate reference to, and is completely explained by, the bond.

[167] Then, if these regulations are such as the Court of Mayor and Aldermen had the power to

enact, and which they have enacted accordingly, have they, in truth, been violated by this petitioner?

[168] First, it is provided that upon every contract made by him he shall declare the name of his

principal, buyer or seller. So far from doing this; instead of declaring to be the principal, he has come

forward in a character which, prima facie, excludes the notion of his being principal. He has come

forward as broker; and, by so doing, has declared to the world that Moline is the only person interested,

and that he has himself nothing to do with the transaction, except as broker merely. Next, he is

required to keep a book, and therein enter all contracts, with the names of all the respective principals,

within three days respectively after the meeting thereof. Now Dyster's name does not once appear in

his books as a principal. Moline is the buyer, Moline the seller, and Dyster stands forth as broker only.

Lastly, he shall not, either directly or indirectly, buy or sell on his own account. He has done both: and

the question is, shall he be allowed to reap the fruit of so shameful a violation of his positive duty?

This illegal partnership has existed for a long series of years, and would still have existed but for the

bankruptcy which caused a discovery of the [169] whole transaction. It now turns out, in consequence

of this involuntary disclosure, that not one entry in the books is true, and that both bond and oath

have proved an inadequate restraint upon these fraudulent dealings.

Sir Samuel Romilly, in reply.


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This case has been argued on two distinct grounds; first, on that of a positive law prohibiting these

transactions; secondly, on that of their being contrary to moral principle. It must be observed that this

restriction is considered in the light of a bye-law, having the force of a statutory enactment. If so, it

is merely local; and it would be difficult to shew, if it were meant to put down transactions immoral

in their nature, or if it were declaratory of the common law of the land, how it came to be confined

to the City of London. To put it at the highest, it amounts to no more than this; it declares that no man

shall be admitted to act as a broker except at the will of the City of London, and that, when so

admitted, he shall execute this bond. This is the security which they require to be given. They have

therefore chosen their own remedy, and may resort to it by enforcing the penalty of the bond in every

case of infraction.

Next, with regard to the oath imposed. The easiness with which such oaths are violated is indeed

a matter of serious and painful consideration, and yet the violation of them is of every day's

occurrence. In the instance of this particular oath, there is not a broker in the City of London who is

not perjured, at least according to the construction now put upon it; for, if the oath has reference to

the bond, then every [170] man is perjured, who, being admitted as broker, has made a single bargain

any where but on the Royal Exchange, or who has not made the prescribed entry in his books, within

three days after the bargain concluded. But this is a rigorous and not a necessary construction. In

substance, all that the broker has sworn is not to defraud his employers. If he does this, either by

concealment or by misrepresentation, he really violates his oath; but not otherwise.

The question then is, whether, this being an act which Dyster has singly taken upon himself not

to commit, that constitutes such an illegal contract as the Court will refuse to lend its assistance in

carrying into effect even against a third person, who endeavours to protect himself against a just

demand by raising so dishonest an objection; a third person, who has himself been privy to the illegal

dealing; and an objection, which, if suffered to prevail, must be admitted to the extent that a broker,

bringing an action to recover his brokerage, cannot succeed if it can be shewn that he has in any one

instance infringed the conditions of his bond.

The ground of immorality, independent of positive law, is still more absurd in its consequences

than the former. A man shall not be suffered to hold out false colours; so that, if a tradesman

advertises his shop as the cheapest shop in London, and in a single instance does not sell according

to the strict letter of the advertisement, he shall not be able to recover his debts against any person

with whom he has had any dealings whatever. The question here is not what is the effect of these

dealings as between a broker and his employers, nor even as between partners in the same [171]

business in which one acts as a broker; but it is between partners in other transactions and in different

parts of the kingdom. Besides, a part of the debts which is claimed to be proved, consists not of the

profits of trade, but of mere money balances.

The Lord CHANCELLOR,

The first question is, whether this case is to be decided on general principles, or merely upon the

duty of a broker as prescribed by the City's regulations. If on the former, it is contended that this is

the case of a person holding himself out, in a number of buying and selling transactions, as an


123

impartial, disinterested adviser, when in truth he is a party having a concealed interest in the matters

on which he advises. But if it is to depend merely on the City's regulations, and supposing that there

is no more in the case than, as it is pretended, a mere bond given to the City not to engage in these

dealings, I must hold that there is no ground for saying that he shall not recover from his creditors

because he has forfeited his bond. If it shall turn out, however, that that bond was introduced by

virtue of some legislative enactments, as I suspect to be the case, the true question will be, whether

this species of trading is or is not virtually prohibited by the Legislature; and in this view of the case

it is necessary to look into and examine the City records, and the statutes relative to brokers, passed

previously to the act of Queen Anne, in order to see how far these regulations of the City of London

are mere substantive regulations, or are in pursuance, and according to the known intent, of the

Legislature, in passing that statute.

It is very singular, and hardly to be supposed, that [172] this point was entirely overlooked in the

case which has been referred to on the part of the Petitioner.

The Lord Chancellor.

The objection made to the proof of this debt on the ground that the petitioner is a City of London

broker, has been stated two ways; first, that he is, as such broker, positively prohibited from engaging

in those transactions in respect of which his claim is made; secondly, that, if not positively prohibited,

still the transactions are of such a nature as a Court of Justice will not aid.

If the objection were confined to this latter branch of the argument, it would be necessary to

direct an enquiry into these transactions; for there is nothing on the face of the present proceedings

which imports that he was actually a principal in those very dealings in which he was ostensibly

concerned as a broker. If that fact were distinctly brought before me, I should have no hesitation in

saying that no action could be maintained in respect of those transactions, inasmuch as they clearly

amount to a fraud.

On the other point, if it could be made out that the law of the land has positively prohibited a

broker from trading, there would be no more difficulty than in the first view of the case. It is clear

that the Courts will give no assistance towards enforcing a remedy on an illegal contract.

[173] The true question in this case is, Has the law of the land prohibited these transactions?

In this view of the case, I have thought it necessary to furnish myself with the records of the city

of London for the purpose of ascertaining what are the precise restrictions upon the office in

question, and I have looked into the statutes from the earliest period. Upon [174] the general result

of this examination, I think it was clearly the intention of all these provisions, (call them restrictions,

limitations, regulations, or by whatever name is thought most suitable,) founded upon a most obvious

policy, to prevent the broker from trading on his own account. The object of them, however, is foreign

to the present point, which depends entirely upon what is the consequence, in point of law, of a city

broker so trading.


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Are these consequences merely confined to the penalty of the bond, and dismissal from his office?

Or do they extend to create a disability to sustain an action in respect of these prohibited dealings?

In general cases there is no doubt that a man may bind himself not to do a particular act, and yet,

if he does that act, is not prevented from maintaining an action in respect of matters arising out of

the act so committed. As, for instance, a trader who covenants not to exercise his trade within five

miles of London, cannot do a more dishonest thing than to trade in violation of that covenant;

nevertheless the law of the land has not prohibited him. He knows he is liable to [175] forfeiture, and

if he chuses to incur the penalty of his covenant, he may legally do so. In like mAnner, a freeman may

be liable to be disfranchised for a particular act, which act may, notwithstanding, be rendered the

foundation of an action.

It appears to me, in the present case, that the city of London has not, totidem verbis, prohibited a

broker from trading. They have said that, if a broker shall trade, he shall incur a penalty by so doing;

but there is an end.

With respect to the oath, the fair construction of that is, between party and party, with reference

to what particular acts, it imposes the obligation to be faithful in performing this office. If he is bold

enough to incur the consequence of a violation of his oath, there is no authority to prevent him from

so doing.

Upon the general view of this question, then, I do not think that the ground now taken will afford

the means of successfully resisting the claims of the petitioner. If a broker of the city of London trades

for himself, openly and in public, he does that which the policy of every legislative enactment meant

to prohibit. If he mixes in a transaction, in which he is ostensibly the broker, but really a buyer or

seller, this is a gross fraud; but this is a case not now before me, and there must be an enquiry to see

whether that allegation can be supported. But, as to the question with the city of London, they have

not said, You shall not trade. They have said only, If you trade, we will dismiss you; and this, 1 think,

they have a right to do. Therefore he is prohibited sub modo only; but he has not done that which the

law will consider as being incapable of being made the ground for supporting an action.

[176] I am, therefore, of opinion that this ground of objection to the debt will not suffice. With

regard to the other, you may have an enquiry whether, in any and what transactions, on which the

petitioner's present demands are founded, he has really been the buyer or seller, while he ostensibly

acted as broker.”

Chapter 4. Deeds of Settlement

a. The Deed of Settlement of the Society for Equitable Assurances (1762)66

“TO ALL PERSONS TO WHOM THESE PRESENTS SHALL COME, We, whose names and seals are

hereunto subscribed and affixed, severally send greeting.

WHEREAS from mature consideration it appeareth, that many advantages and great benefits, may

arise, and be secured to great numbers of persons in particular situations of life and circumstances of

fortune, from the establishment of a society, to be composed of such persons as shall be qualified

and willing to become mutually contributors for Equitable assurances on lives and survivorships, upon

premiums proportionate to the chance of death attending the age of the life to be assured, and to the time such assurance

is to continue:

AND WHEREAS such assurances may and will, with safety to the assurers, and equity to the

assured, be made in manner herein after specified (that is to say)

…

14. NOW KNOW YE, that We, whose names and seals are hereunto subscribed and affixed, being

well convinced and satisfied that the terms of assurance above recited are equitable, and being willing

and desirous to procure every of us to ourselves respectively, or to our several and respective

executors, administrators and assigns; and to assure to others who shall unite themselves unto us, the

advantages and benefits that may arise and be had from establishing ourselves into a society for the

assurance of lives and survivorships upon the terms aforesaid, HAVE consented, promised, agreed,

undertaken, and covenanted, and DO hereby consent, promise, agree, undertake, and covenant, every

of us for ourselves respectively, to and with all and every other of us to become, by mutual

contribution, Assurers of Lives and Survivorships, and to become Members of, and to enter and erect

ourselves into a Society, by the name THE SOCIETY FOR EQUITABLE ASSURANCES ON LIVES AND

SURVIVORSHIPS, upon such Terms, Premiums and Conditions, and with and under such

Constitutions, Laws, Rules and Regulations, as are herein before recited, or shall be hereafter in these

presents expressed and declared: and for such time and term to continue Members thereof, as shall

be signified in the Policies of assurance to be made out and delivered to every of us respectively at

the time and in the manner herein after for that purpose mentioned.

15. AND ALSO from the motives and for the considerations afore-mentioned, We, the said

subscribers, DO voluntarily hereby severally mutually and reciprocally consent, promise, agree,

covenant, and undertake, by contributions, in such proportion and upon such terms as are herein after

agreed upon, expressed and declared, to pay and satisfy to each other of us, or to the executors,

administrators or assigns of any of us, who, in manner herein after mentioned, shall be claimants for

any sum or sums of money which shall become due to any of us, or to the executors, administrators

66 Morgan, William, The Deed of Settlement of the Society for Equitable Assurances on Lives and Survivorships with the bye-laws and orders, R. Taylor, London, 1833: http://goo.gl/4fKmT.

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126

or assigns of any of us, for or in respect of such assurance, all such sum or sums of money as shall

so become due by virtue of such assurance.

16. AND for the better forming, fixing, and establishing our said Society, and governing and

regulating the same, and the proceedings thereof; and the more effectually to make provision for

producing and securing to every of us the several good and beneficial ends and purposes thereby

intended; We, the said Subscribers to these presents and Members of the said Society, DO by these

presents consent, and severally covenant, promise, agree, and undertake, every of us for ourselves

respectively, to and with all and every other of us, to observe, perform, abide by, conform to, fulfil,

and keep, all and singular the Articles, Clauses, Provisos, Powers, Conditions, Laws, Constitutions,

Ordinances, Regulations, and Agreements herein after mentioned and contained (that is to say)

18. THAT every person making assurance with the said Society, shall, at the time of making such

assurance, by him or herself, or by his or her sufficient attorney lawfully authorized, subscribe and seal

this present Settlement, or sign and seal a Declaration or covenant, that he or she doth voluntarily

enter into and become a Member of the said Society; and will so continue during the whole time or

term of such assurance: AND that, during the whole time or term of such assurance, he or she will

bear and pay his or her part or share and proportion of any sum of money, which, during such term,

by virtue of the regulations herein after contained, shall or may be imposed on, or called for from the

Members of the said Society, in proportion to their several interests therein, in manner herein after

mentioned: AND will conform and submit to, observe and keep, all the present herein Constitutions,

Rules, Laws, Ordinances, and Regulations, whereby the said Society is proposed to be governed and

carried on; AND ALSO all such other Constitutions, Rules, Laws, Ordinances, and Regulations, or Bye-

Laws, as shall hereafter be made in manner herein after directed.

19. AND for the more orderly and effectual management of the affairs of the said Society, there

shall, during the continuance of the said Society, be, of those members of the said Society who shall

be assured by and with the said Society in the sum of Three hundred pounds or upwards upon (and

for the whole continuance of) their respective lives, Fifteen persons who shall be called DIRECTORS

of the said Society: and of the said fifteen Directors, One shall be PRESIDENT, or shall exercise the

office of President; and two shall be VICE-PRESIDENTS, or shall exercise the office of Vice-President

of the said Society: which said Directors and Officers, or persons exercising the said offices, shall be

severally and respectively chosen, and shall exercise their said several and respective offices in manner

herein after mentioned.

20. THAT any Five or more of the said Directors, whereof the President, one of the Vice-

Presidents, or one of the Persons exercising the said offices, shall always be One (except in case of

any contagious sickness, which case is herein after particularly provided for) being assembled together

(in the place appropriated to and generally used for that purpose) in consequence of a summons from

the President, or person exercising the office of President of the said Society; or, in his absence, from

one of the Vice-Presidents, or persons exercising the said office of Vice-President; or, in the absence

of the said Vice-Presidents, from Three of the Directors of the said Society (which summons shall

be left at the dwelling-house, or usual place of habitation, of every Director of the said Society for

4. Deeds of Settlement

127

the time being who shall be resident within the bills of mortality of the city of London, at least Three

days before the day appointed for such assembling), shall be called A COURT OF DIRECTORS of the

said Society.

21. THAT such Court of Directors being so assembled, shall have power to order and direct the

affairs of the said Society, according to the Rules, Directions, Ordinances, and Regulations herein after

particularly mentioned; OR according to such Bye-Laws, Regulations, or Ordinances, as shall at any

time or times hereafter be made by a General Court of the said Society : AND before such Court of

Directors shall proof be made, by all those who shall be Claimants upon the said Society, of the death

of those persons under whom they claim: AND after proof so made, such Court of Directors shall

have power to pay, or order the payment of any sum or sums of money, which shall or may be claimed,

and shall be due, by reason of the policies granted by, or entered into by the said Society; or which

shall or may otherwise become due and payable from the said Society.

23. THAT the said Directors shall, by a majority of votes, from time to time nominate and choose

Five persons, who shall be and act as Trustees for the said Society; which said Trustees shall be

continued only during the pleasure of the Court of Directors of the said Society, and shall be

removeable thereby; AND all contracts entered into, and securities taken, or given by the said Society,

shall be entered into, taken, or given, by and in the names of the said Trustees, or by and in the names

of Three of them at the least; AND all policies, contracts, securities, deeds, and writings, touching or

office. concerning the said Society, shall be signed, executed, taken and made, by or to them, and in

their names, or by, or to, and in the names of Three of them at the least; AND the said Court of

Directors shall have power to remove any of the said Trustees from their said trusts: AND in case any

of the said Trustees shall be so removed, they who shall be so removed, shall, upon the resolution of

the said Court for their removal being notified to them in writing, signed by the Actuary of the said

Society, or by the person who shall execute the office of Actuary to the said Society, surrender up and

assign all their estate and interest in any of the said securities, and in the said trust, in such manner,

and to such persons, as the said Court of Directors shall direct and appoint; AND when and so often

as the number of the said Trustees shall by deaths, removal by majority of votes, or otherwise, be

reduced to Three, then new Trustees shall be chosen, in manner before mentioned, in the room or

stead of those so deceased or removed; AND as often as new Trustees shall be chosen, the former

Trustees shall assign all their estate and interest to such new Trustees so chosen, at the appointment

of the said Directors and at the proper cost of the said contributionship; AND all such persons, as

shall be chosen Trustees in manner aforesaid, shall, previously to their acting in such trusts, enter into

such securities, and give and execute such covenants and declarations of trust for the discharge

thereof, as shall be good, valid, and effectual in the law for that purpose.

24. THAT all Directors and Trustees, for the time being, of the said Society, shall be indemnified

the saved harmless by the said Society, from and against all charges, damages and expenses, which they

shall or may be put unto, or sustain, by reason or means of acting in their respective trusts, or of the

due execution thereof; AND that none of them shall be chargeable for any the acts or defaults of each

other, but for their own acts or defaults only.


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25. THAT all the lawful acts, covenants, contracts, and orders of the said Directors and Trustees,

shall charge and bind all and every the subscribers to this present deed or instrument, and all and every

other person or persons who shall, by any other way or means, become a Member or Members of the

said Society, as their own proper act or acts.

45. THAT there shall be upon, or within the first forty days next after, the last Thursday in the

month of March, in the year of our Lord 1764, and upon, or within forty days next after, the last

Thursday in every succeeding month of March, one General Court or Meeting of the said Society, for

the Election of Directors of the said Society; of the time and place of which Court or Meeting, at

least seven days notice shall be given in the London-Gazette, or in some, or one other of the public

papers, by the Actuary, or person executing the office of Actuary of the said Society; and whereat all

the Members of the said Society, who shall be assured with the said Society in the sum of One hundred

pounds or upwards upon (and for the whole continuance of) their respective lives, or as many of them

as shall think proper, shall be present; which General Court or Meeting (whereof the President, one

of the Vice-Presidents, or one of the persons exercising the said several offices, or one of the

Directors of the said Society, shall always be one) shall elect and choose, during the lifetime of the

said Edward-Rowe Mores herein before appointed a Director of the said Society for the term of his

natural life, Nine of the then Directors of the said Society other than the said Edward-Rowe Mores so

appointed as is aforesaid ; and after the decease of him the said Edward-Rowe Mores, Ten of the then

Directors of the said Society, to be continued of the number of Directors of the said Society for the

year ensuing, and Five other Persons, Members of the said Society, dwelling within the city of London,

or within twenty miles thereof, and who shall be assured by the said Society in a sum not less than

Three hundred pounds upon (and for the whole continuance of) their respective lives, to be admitted

into the number of the Directors of the said Society for the year ensuing; which said Nine persons,

together with the said Edward-Rowe Mores during the term of his natural life, and which said Ten

persons after his decease, so to be continued as is aforesaid, together with the said Five persons so to

be admitted as is aforesaid, shall be Directors of the said Society for the year ensuing, or until other

fit and proper persons shall be duly elected and chosen into the number of Directors in their room.

46. THAT the said Directors, or any Seven of them, being assembled for that purpose in a Court

of Directors in the said Society, shall, within Thirty days from such choice, elect out of their own

number one person to be, and exercise the office of, President of the said Society.

47. THAT the President, or person exercising the office of President, of the said Society, shall have

Power to nominate Two of the Directors of the said Society to be his Vice-Presidents or Deputies;

which Two, so nominated, shall continue to exercise the said office of Vice-President, all the time that

the President, by whom they were nominated, shall himself continue to exercise the office of

President, they not being removed by the said President, or person exercising the said office of

President; or not being rendered incapable of exercising the said office of Vice-President, by ceasing

to be Directors of the said Society.

52. THAT all elections of Directors of, or of persons who are to exercise the office of Directors

in, the said Society, and all matters and things to be transacted or done, in all General Courts or


129

Meetings of the said Society, shall be made, done, and determined, by a majority of votes of those

Members of the said Society, assured with the said Society in the sum of One hundred pounds or

upwards upon (and for the whole continuance of) their respective lives, who shall be present at such

Court or Meeting.

53. THAT no one Member of the said Society, having such right to vote, shall in any matter or

thing have, or give, any more than One vote: except that in case, upon any question put in any Court

or Meeting of the said Society, there shall be an equal number of voices or votes on or for each side

of the question; and then the person, who according to the rules and regulations of the said Society

shall preside at such Court or Meeting, shall have the Casting voice or vote

54. THAT there shall be, in every year, Four General Courts or Meetings of the whole Society, to

be holden Quarterly upon the First Thursday of the several months of March, June, September, and

December; and as many more General Courts or Meetings of the whole Society, as the President,

either of the Vice-Presidents, or any of the persons respectively exercising the said offices, or any Five

of the Directors of the said Society, shall think necessary; and at least Ten days notice of the time

when, and the place where, such General Court is to be holden, shall be given in the London-Gazette,

or in some or one of the public papers, by the Actuary, or person executing the office of Actuary of

the said Society; which General Courts (the first only excepted) shall not consist of less than Twenty

one Members of the said Society, who shall be assured with the said Society in the sum of One

hundred pounds or upwards upon (and for the whole continuance of) their respective lives, whereof

Five shall be Directors of the said Society; of which Five the President, or One of the Vice-Presidents,

of the said Society, or One of the persons respectively exercising the said offices, shall always be One.

55. THAT the said General Courts, being so assembled, shall have power to make Statutes and

Bye-Laws, Rules, Orders, and Ordinances, for the good order of the said Society; AND the same at

their pleasure to annul and alter; AND to determine the requisites and qualifications necessary to be

found in those, whose lives shall be proposed to be assured by the said Society ; AND to direct the

form and manner to be observed in such enquiries as may be necessary to be made concerning the

same; AND to direct the form and manner to be observed in making the proper and necessary advance

of the premiums of assurance above the terms herein before specified, which ought for the security

of the said Society to be taken, when the occupation, or other circumstances attending the person

whose life is to be assured, shall appear to be more hazardous than common; AND upon any just and

reasonable cause to remove any of the Directors or Officers of the said Society, as well those who

shall have been elected by the Court of Directors as those who shall have been elected by the General

Court of the said Society, from the exercise of such their office; AND to impose penalties, or the

payment of certain sums by way of penalties, on any of the Members of the said Society, for any

breach or non-observance of the Statutes or Bye-laws, Rules, Orders, or Ordinances of the said

Society: which penalties, or sums so imposed or laid, shall be paid by the persons on whom they shall

have been so imposed or laid, for the use of the said Society. BUT no such Statutes, or Bye-Laws,

Rules, Orders, or Ordinances, nor any such removal of Officers or Directors from their respective

offices, or from the exercise thereof, shall be binding, until the same shall have received the


130

approbation of Two successive General Courts or Meetings of the said Society, whether Quarterly or

Extraordinary: AND no Repeal of any Statute, Bye-Law, Rule, Order, or Ordinance, shall be binding,

until the same shall have received the approbation of Three successive General Courts or Meetings

of the said Society, whether Quarterly or Extraordinary.

65. THAT there shall be deposited, by every person making assurance with the said Society for a

single year, or for any number of years certain less than Ten years, the sum of Ten shillings for every

One hundred pounds assured, and proportionably for every sum under One hundred pounds; AND

by every person making assurance with the said Society for the term of Ten years certain, or upwards,

or for the whole continuance of a life, the sum of Twenty shillings for every One hundred pounds

assured, and proportionably for every sum under One hundred pounds.

66. THAT the Premiums of assurance paid by the Members of the said Society (except so much

of the said premiums as shall, by a General Court of the said Society, be judged necessary for the

current expenses of the said Society) shall be laid out in Government or other good and sufficient

securities, in the names of the Trustees of the said Society for the time being, or in the names of any

Three of them, according to the directions of the Court of Directors of the said Society; and shall

there remain, the said Premiums to pay and satisfy such claims as shall be lawfully made upon the said

Society: and the said Deposits for such purposes as are herein after mentioned.

68. THAT when and as often as it shall appear to a General Court of the said Society, that the

premiums received, and to be received, for the assurance of those lives and survivorships for which

the policies of the said Society shall have been already granted, will not be sufficient to pay the claims

made, or liable to be made, upon the said Society, in consequence of the decease of those persons

whose lives or survivorships shall have been assured by the said Society, then the said Society shall, in

a General Court, declare a Call, and shall direct to be paid by the Members of then said Society, in

proportion to their several sums assured, such sums of money as shall be necessary to make good the

deficiency; which said sums of money are hereby covenanted and agreed to be paid by each of the

Members of the said Society; AND if any Member or Members of the said Society shall refuse or

neglect to pay the whole, or any part of the sums so called for, at such time or times, and in such

manner, as the said General Courts shall direct and appoint, then the said Society shall or may, in a

General Court, inflict such reasonable penalty on such defaulter or defaulters, for the sum or sums so

by him, her, or them omitted to be paid, as by the said General Court shall be thought fit and proper;

and if the said sums so called for, or any part thereof, together with the penalty so imposed for the

non-payment thereof, shall be behind and unpaid by the space of Twenty days after the infliction of

such penalty, then, as well the said sums remaining unpaid, as the penalty which shall have been

imposed for the non-payment of them, together with lawful interest both for the said sums and

penalty, to be computed from the time of the infliction of the said penalty, shall become a charge on,

and (if not otherwise satisfied) be deducted out of the deposit made by such defaulter or defaulters

at the time when he, she, or they, became a Member or Members of, or made assurance with, the said

Society; or out of any share, claim, or demand, which he, she, or they, his, her, or their executors,


131

administrators, or assigns, shall or may then, or at any time or times thereafter, have upon or against

the said Society, by virtue of any policy of assurance, or otherwise howsoever.

70. THAT when and as often as it shall appear to a General Court of the said society, that the

Stock of the said Society, arising from premiums, is more than sufficient to pay the claims made, or

liable to be made, upon the said Society; then, and so often, the said Society shall, in a General Court,

declare a dividend of the surplus, or of such part thereof as shall, by the said General Court, be

thought and judged convenient, amongst the then Members of the said Society who shall be assured

with the said Society upon (and for the whole continuance of) their respective lives, in manner and

form following (that is to say)

77. THAT if at any time hereafter, application shall be made to the Crown for a charter to

incorporate this society, this present deed or instrument shall be the plan and basis of such charter,

and all and every the clauses, articles, provisoes, conditions and agreements, in this said deed or

instrument contained (those only excepted which by reason of the death or removal of any person

therein mentioned must necessarily be changed) shall be the clauses, articles, provisoes, and conditions,

proposed, presented, and offered to be inserted therein.

79. THAT these presents, and every thing herein contained, whether the same be mentioned by

way of covenant, agreement, or undertaking; or by way of future Constitutions, Laws, Rules, or

Ordinances, of and for the regulation of the said Society, shall be binding and obligatory, in every

respect, to all intents and purposes, as well to all and every person and persons whatsoever, taking

policies, and becoming contributors and Members thereby, as to all and every person and persons

hereunto subscribing: AND we who have executed these presents do each of us, for ourselves,

covenant, promise, and agree, to and with the others of us, and to and with every of them, their and

every of their executors, administrators, and assigns, that we are, and will be, firmly held and bounden

by these presents, and by every thing herein contained in manner above mentioned. In Witness

whereof we have hereunto severally set our hands and seals, the Seventh day of September, in the year

of our Lord 1762.”

b. Prospectuses of Mining Companies (1825)

“ANGLO-CHILIAN MINING ASSOCIATION, for working Gold, Silver, Copper, Tin, and

other Mines in Chili67.

The following are the Regulations under which this Association is established:

1. The Capital is to be One Million Five Hundred Thousand Pounds Sterling; divided into fifteen

thousand shares of One Hundred Pounds each.

67 English, Henry, A general guide to the companies formed for working foreign mines, with their Prospectuses, Boosey & Sons, London, 1825: http://goo.gl/0ynrC.

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2. The first Instalment of £5 per share is to be paid forthwith into the hands of either of the

Bankers to the Association to the account of the Directors, and the remaining £ 95 per share by such

instalments as may be from time to time required by the Directors, upon their giving twenty-one days

previous notice of each call.

3.

Qualification of

a

Director………………………………………

30 Shares.

of an

Auditor…………………………………...

20 Shares.

At all Meetings of Shareholders each Proprietor of

10 Shares to

have………………………………….

One Vote.

20 and

upwards……………………………………

Two Votes.

4. After the first six Calendar Months from the date of the Deed of Association, shares not to be

deemed a qualification for voting, until held for six Calendar Months.

5. The Directors are to appoint three Trustees from among themselves, in whose names all

investments are to be made.

6. The present Directors are to remain in office for the first five years; at the expiration of that

time three are to go out annually, but will be re- eligible.

7. The Capital may be increased by the creation of a further number of shares, if deemed advisable

by the Directors for the time being, and approved by a majority of Votes of the Shareholders present

at a General Meeting convened for that purpose.

8. As soon as the Directors shall consider that the concerns of the Association are sufficiently

advanced to enable them to report thereon, a Meeting of the Shareholders is to be convened, and

subsequently a General Meeting of the Proprietors is to be held annually, and the progress and state

of the concerns are to be reported to them.

9. The first Dividend is to be made as soon as a profit of £ 5 per Cent, has been realized, and

subsequently as circumstances may admit.

10. No shares are to be sold or transferred, nor shall any Proprietor be entitled to vote, until he

shall have paid all the previous calls thereon.

11. No transfer made by a Proprietor shall be valid at law or in equity, unless the Purchaser shall

have been approved by or under the authority of a Board of Directors, and the Purchaser shall have

executed a proper Instrument to bind him to the observance of the regulations of the Association.

12. The Association shall not act, or assume, or pretend to act as a Corporate Body, or in any

manner contrary to existing laws. Provision is to be contained in all engagements to be made by or on


133

behalf of the Association, that no Shareholder shall be subject or liable beyond the unpaid amount

of his share or shares of £ 100 each.

13. A Deed is preparing, and when approved by a majority in number of the Directors, is to be

the Deed for establishing the Association, and is to contain such covenants, provisoes, powers of

reference to arbitrators, regulations for managing the concerns, forfeiture of shares, and dissolution

of the Association, and such other powers, stipulations, conditions, and clauses as the Directors or

the major part in number of them shall deem best adapted to effectuate the objects of the Association.

The Deed is to be executed by each Proprietor within twenty-one days after notice shall have been

given in the London Gazette and two daily Newspapers of its being ready for signature, on penalty

of forfeiture of the Instalments previously made.

14. The Deed is to be subsequently enrolled in the High Court of Chancery.”

___________________________

“UNITED MEXICAN MINING COMPANY68

…

The Capital of £ 240,000 sterling, to be divided into 6000 Shares of £40 each. The first instalment

of £5 per Share to be paid forthwith, into the hands of the Bankers of the Association, to the account

of the Directors.

The second instalment of £5 per Share, to be paid on signing the Deed of Settlement; and the

remaining sum of £30 per Share, to be advanced from time to time, as may be required by the Court

of Directors. The calls to be made by the Directors, at not less than 21 days' notice.

Qualification of a Director, 25 Shares; of an Auditor, 20 Shares.

The Directors to appoint a Secretary and all other officers and servants in England. The Directors

also to appoint the two Managers to be Members of the Board of Management in Mexico, and such

officers and assistants (if any) as they shall deem necessary to be sent from Europe to Mexico.

The Mexican Board to appoint all officers and servants in Mexico, excepting as provided by the

receding article.

At a Meeting of Shareholders, the Proprietor

of 10 Shares, to

have

1 Vote.

of

25………………..

2 do.

68 Ibid., p. 67


134

of

50………………..

3 do. and no more.

After the first six calendar months, from the execution of the Deed of Settlement, Shares not to

be deemed a qualification for voting, unless previously held for at least six calendar months.

The number of Shares to be increased, if deemed necessary or proper by the Directors, and

sanctioned by a majority of votes of the Shareholders present, at two successive General Meetings, at

an interval of one calendar month at the least.

The holders of original Shares in proportion thereto, to have the preference of subscribing for

the new Shares, should any be created.

No Share to be sold or transferred until the payment of all the previous calls thereon shall have

been made. No transfer to be made by a Proprietor, unless the purchaser shall have been approved of

by the Court of Directors. The purchaser to bind himself to the observance of the laws and

regulations of the Association.

One-tenth part of the profits to be reserved, and invested in the public funds, or in other sufficient

securities, in the names of the Trustees, to form a reserved fund, as a provision against contingencies.

This reserve to be continued until its amount be equal to the original Capital of £240,000, and

whenever this fund may be diminished by its application to the above purposes, the reserve of the 10

per cent. on the profits to be repeated, so as to maintain a fund equal to the full amount of the said

original Capital.

Whenever in any year the net profits of the Association shall exceed 10 per cent. on the Capital

advanced, the President for the time being of the Board of Management in Mexico, to be entitled to

one-eighth part of such excess in that year; of this one-eighth part one-fifth to be invested in the

public funds, or other public securities of this country, in the names of the Trustees of the

Association, as a guarantee for his faithful administration; such reserve to be paid or transferred on

his retirement from office, or death, to him or his legal representatives.

The first dividend to be made as soon as a profit of 5 per cent, shall have been realized, and

subsequently as circumstances may admit.

The contributors to be an Association for the purpose above set forth, and not to act or pretend

to act as a Corporate Body, unless authorized by Act of Parliament, nor in any other manner contrary

to existing laws.

The other regulations are similar to those of Mining Companies in general.”


135

c. Form of Provisional Agreement for Joint Stock Company (1842)69

“Form of Provisional Agreement for any Joint Stock Company proposed to be governed by a Deed of Settlement.

THIS INDENTURE made the day of , one thousand eight hundred and forty- ,

between the several persons whose names are subscribed and seals affixed in the schedule hereunder

written of , the one part, and

C. D., of , E. F., of , G. H., of , I. J., of , K. L., of , M. N., of , and O. P., of , of the other part:

Whereas the several persons parties hereto of the first part, and the said A. B., C. D., E. ., G. H.,

l. J., K. L., M. N., and O. P., have associated together under the name, firm, or style of the “

Company,” for the purposes of establishing [here state the object of the company,] and have agreed

to raise amongst themselves a capital of £ such capital to be divided into x shares of y

pounds each ; and whereas the said A. B., C. D., E. F., G. H., I. J., K. L., M. N., and O. P., are the

present directors of the said company ;

And whereas, the said [repeat the names of the parties last mentioned], and the persons, parties

hereto of the first part, are also respectively subscribers for and holders of shares in the said company,

and have respectively paid to the secretary for the use and benefit of the said company a deposit of z

for each share subscribed for and held by them respectively;

and whereas, pursuant to the existing regulations of the said company the directors have power,

from time to time, upon giving twenty-one days’ notice, to call for payment of such parts of the sum

or sums of money subscribed for by the several shareholders and now remaining unpaid as they the

directors in their discretion shall think fit, not exceeding in the whole at any one time the sum of x

per share;

and whereas for the better effecting the objects of the said company, the said several persons

parties hereto of the first part have agreed to enter into the several covenants and agreements

hereinafter contained.

Now THIS INDENTURE witnesseth, that in pursuance of the said agreement each of them, the

said several persons parties hereto of the first part, doth hereby for himself his heirs, executors,

administrators, and assigns, but not the one for the other of them covenant, promise and agree to and

with the said A. B., C. D., E. F., G. H., I. .i)., K. L., M. N., and O. P., their executors, and administrators,

in manner folllowing (that is to say)

That they, the several persons parties hereto of the first part, their heirs, executors, administrators,

or assigns shall and will well and truly pay such part of the sum or sums of money by them respectively

sub scribed for and now remaining unpaid as shall from time to time be called for pursuant to the

regulations hereinbefore recited, or pursuant to the regulations for the time being of the said company

69 Taken from Wordsworth, Charles, The Law of Joint Stock Companies, Saunders and Benning, London, 1842, Appendix 3, p. 96. URL: http://goo.gl/4PyxD.

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at such times and places to such person or persons and in such manner as shall be ordered by the said

directors or by the directors for the time being of the said company.

And that they the said several persons parties hereto of the first part shall and will when thereunto

required by advertisement in the public papers or by notice in writing to be left at their respective last

or most usual place of abode execute such deed or deeds of settlement or other instrument or

instruments containing such covenants, clauses, stipulations and agreements as shall be deemed

necessary or expedient by the directors of the said company for the time being, for the management

and carrying on of the affairs of the said company, and as shall be previously executed by the said

directors for the time being, provided always, and it is hereby declared to be the true intent and

meaning of these presents, that they the said several persons parties hereto of the first part, may assign

or transfer their several and respective shares and interest in the said company, but that no such

assignment or transfer shall be deemed valid unless the same shall within months from the date of

these presents be registered in the books of the said company and the sum of 2s. 6d. be paid for the

same for the use and benefit of the said company.

Provided also, and it is hereby further declared and agreed by and between the several parties

hereto, that if any present or future shareholder or shareholders shall not perform and keep the several

covenants hereinbefore contained, it shall and may be lawful to and for the directors of the said

company for the time being, if they shall think fit so to do by writing under their hands or under the

hands of any five of them, to declare the share or shares of such shareholder or shareholders forfeited,

and that then and thenceforth the interest of such shareholder or shareholders in the said company

shall cease and determine, and such shareholder or shareholders shall not have any claim whatever

upon the said company or the members thereof for or in respect of any sum or sums of money which

now has or have or hereafter shall or may have been paid upon his or their respective shares.

Provided also, and it is hereby lastly agreed and declared, that when and so soon as any shareholder

shall have executed the hereinbefore mentioned deed or deeds of settlement or other instrument or

instruments pursuant to the covenant hereinbefore contained, then and thenceforth such shareholder

shall be discharged from the performance of the several covenants and agreements herein contained:

In witness, &c.”

Chapter 5. Canal Mania

a. MacPherson on Canal Mania70

“It is worthy observation, that, from the commencement of the session of parliament in the year

1790 to the conclusion of the session in 1794, no fewer than 81 acts were passed for navigable canals

and improvements of inland navigations, whereof 25 were in the year 1793, and 20 in the year 1794.

Mr. Phillips, in his History of inland navigation, observes, that the capital flocks of the canals, for

which acts were passed in these two years, amounted to £5,300,000, all expended at home among the

ingenious, the industrious, and the labouring, members of the community, for the purpose of

improving, and enriching, not only those parts of the country through which the canals pass, but the

whole kingdom, and augmenting the general mass of our commerce. Many of them are additional

branches, or extensions, or amendments, of canals already projected or executed. But it would be

tedious to particularize them; and the principal ones are already noticed, or will be noticed at the time

of completing them. It seems not at all improbable, that canals will in a few years be almost as

numerous as turnpike roads, as their superiority over them is so very obvious for affording a cheap

and easy conveyance for heavy goods, many kinds of which could not be conveyed at all by land

carriage.”

b. Acts for the Creation of Canal Corporations (1793-4)

“An act for making and maintaining a navigable canal from or nearly from a place called The Saltisford, in the

parish of Saint Mary, in the borough of Warwick, unto or near to the parish of Birmingham, in the county of

Warwick, and to terminate at or near to a certain navigable canal in or near to the Town of Birmingham, called The

Digbeth Branch of the Birmingham and Birmingham and Fazeley canal navigations.71

Certain persons incorporated by the Name of “The Company of Proprietors of the Warwick and

Birmingham canal navigation.” Act to commence April 5, 1793.

Canal to begin at a bridge at a place called The Saltisford, in the parish of Saint Mary in Warwick,

through Budbrooke, Hatton, Shrewley, Rowington, Kingfwood, Baddesley, Clinton, Knowle, Solyhull,

Hampton in Arden, Elmdon and Bickenhill, in the county of Warwick; Yardley in the county of

Worcester, and Aston juxta Birmingham, and Birmingham, and to terminate at the Digbeth Branch

of the Birmingham and Fazeley canal.

General powers. Surveys taken. Map and book of reverence authenticated by the speaker of the

house of commons, and allowed as evidence. For making a communication with the Birmingham and

Fazeley canal, and preventing loss of water by the junction. For the tonnage and wharfage of all coals,

coke, iron, iron stone, and goods carried from the Digbeth Branch of the Birmingham and Fazeley

70 MacPherson, David, Annals of Commerce, Manufactures, Fisheries, and Navigation, Nichols & Sons, London, 1805, v. 4, p.

300. URL: http://goo.gl/5QjJC. 71 33 Geo. III c. 38 (1793). URL: http://goo.gl/EIKlz. Paragraphs added.

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canal into the intended canal, 6d. per ton, and from the intended canal to the said Digbeth Branch,

3d. to be received by the proprietors of the Birmingham and Fazeley canal. For recovery of the rates

to be paid to the Birmingham and Fazeley canal. Birmingham and Fazeley canal company may reduce

the tonnage rates, and the navigation free, on payment of the said rates. Birmingham and Fazeley canal

to reduce the said rates to 5d. a ton, when they have paid off 3,600l. with interest due to certain

subscribers of an intended canal, and to give an account thereof annually to this company. Power to

deviate one hundred yards from the line laid down in the plan. Land owners omitted in the book of

reference not to obstruct making the canal. Breadth of canal and towing paths to be thirty yards.

Course of canal through Mr. Spooner's and Sir Thomas Gooch’s lands described. Canal to be made

at a certain distance from the houses of Mr. Moland and Mrs. Baldwyn. Water to be taken from the

river Rea, or the stream supplying Olton mill. After the canals &c. set out, the land so set out, may be

sold and conveyed to the company. Commissioners names. In what cases juries to be impanelled. 20l.

penalty on sheriffs making default, and 5l. on jurymen. Expences of commissioners and jury. Persons

requesting juries to enter into a bond to prosecute. Notice of injury to be given to the company of

proprietors before complaint made to the commissioners. Persons giving false evidence, liable to

punishment for perjury. Upon payment or tender of money assessed, the company to enter to make

canal. Verdicts, &c. to be recorded, and lands become vested in the company. The company to be

taxed for lands and buildings in the same proportion as adjoining lands. Purchase monies to be laid

out to the same uses. Commissioners to settle proportion of money to be paid to persons interested.

If costs and damages not paid in four months, the same may be levied by distress and sale.

Commissioners to enter proceedings in a book, and appoint a clerk. To destroy the works felony.

Proprietors may raise 100,000l. to be divided into shares of 100l. each, and no person to have

more than 15 shares. Power to raise 30,0001. more if necessary. Five per cent, interest to be paid to

subscribers, until the canal is finished. Subscribers to have a vote for each share. First meeting of

general assembly on May 27, 1793, for choosing a committee. Committee to be under the control of

the general assembly. General assemblies to consist of 550 shares. Power of general assemblies. Power

of committee. Subscribers forfeiting, shall have personal notice, and the forfeiture must be declared

at a general assembly. General assemblies may remove committee men, make bye laws, &c. On death

of subscribers before shares completed, executors and administrators allowed to contribute. How

shares may be disposed of. After a call, no share to be sold until the money is paid. Officers to be

appointed and to give security. Books to be kept by the committee.

Rates of tonnage; for coal, stone, iron, timber and other things, for less than 6 miles and palling a

lock, 1s. per ton. For 6 miles and less than 12, miles, 2d. per ton a mile. For 12 miles and less than 16,

but not to pass the uppermost lock, at each end of the uppermost summit, 2s. per ton. For 16 miles

and upwards, but not to pass the uppermost lock at both ends of the upper summit, 1d. halfpenny

per ton per mile. For navigating any part of the canal, and passing the locks at both ends of the upper

summit, 2s. 3d. per ton. From Birmingham towards Warwick, and pairing the upper lock below Hatton

Hill, 2s. 9d. per ton. For 1 mile and less than 6 miles, and not passing any lock, 2d. per ton a mile. Two

thirds of the above rates for the tonnage of lime and lime stone. Rates to be free from taxes. If iron,

iron stone, coals, lime, lime stone or other goods, remain upon the company's wharfs above 24 hours,

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139

wharfage to be paid. Exemptions. Company of proprietors may alter rates., Masters of boats, &c. to

give an account in writing to the collectors of the rates of goods on board. Weight of the lading of

vessels to be marked on them. Boats to be gauged. One hundred and twenty pounds weight, deemed

an hundred weight. Collectors may weigh goods. Navigation free on payment of rates. No vessel less

than 20 tons or 70 feet long, to pass through locks. Occupiers of lands may use pleasure boats, &c.

Roads to be made through common field lands. Drains to be made for the adjoining lands. Towing

paths to be separated from the adjoining lands, and gates, bridges, &c. to be made, and in case of

failure commissioners to do it. In case the company neglect to repair works, land owners to do it.

Works damaged by floods, to be repaired by the company. Coals, &c. found in digging the canal, may

be taken by the proprietors of land. Method of getting mines, and discovering when they are working

under the canal. Mines to be got by the owners, unless the company make satisfaction. Owners of

lands, &c. may make cuts into the canal, and erect bridges, &c. The company restrained from erecting

or taking down mills, buildings, &c. without the consent of the owners. Land owners, &c. may erect

warehouses, &c. on their own land, and if not done within twelve months after notice, the company

may build. Land owners for six hours to have wharfage; for six days 1d. halfpenny per ton for coals,

stone and brick, and 3d. for other goods. Cranes to be erected on the wharfs and quays.

Boat masters or owners to be answerable for damage done by their crew, and masters to recover

back from their servants any sums paid for their neglect. Proper places to be made for boats to turn

or lie in, or to pass each other. Vessels lying so as to obstruct the navigation, to be removed. Five

pounds penalty for overloading and obstructing the passage of the canal, or throwing ballast into it.

Injuring locks, gates, &c. penalty not less than 20s. nor more than 5l. Regulation for vessels passing

locks.

Canal not to be under commissioners of sewers. Remedy for satisfaction to be made in gross or

by annual rent. For preserving rights of lords of manors and copyholds. Lords of manors and land

owners, may fish in canal. Persons on board boats having nets, &c. not qualified, to forfeit 5l.

Electing new commissioners. Impowering the quarter sessions to nominate commissioners in

certain cases. Qualification of commissioners to be 100l. a year real estate, or 2000l. personal estate.

Commissioners may act as justices. Commissioners to give 14 days notice of their meetings.

Commissioners to hold meetings when requested. Power to hold special meetings for ascertaining

damages. Meetings to be held within 5 miles of the canal. For recovering lands in case the canal shall

not be completed or disused. Compelling subscribers to pay.

Majority of proprietors may make future applications to parliament for power to open other

communications with the canal. Recovery and application of penalties. Proceedings not to be quashed

for want of form, or removed by Certiorari. Damages not provided for, to be settled by the

commissioners. Persons aggrieved by any irregularity in distress, to recover only the special damage.

Appeal to quarter sessions. Limitation of actions. General issue. Treble costs. Publick act.

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An act for making and maintaining a navigable canal from Wisbeach river, at or near a place called the Old Sluice,

in the town of Wisbeach, in the isle of Ely, and county of Cambridge, to join the river Nene, in the parish of Outwell,

in the said isle of Ely, and in the county of Norfolk, and for improving and maintaining the navigation of the said

river, from Outwell Church to Salter’s Load Sluice.—(May 9, 1794)72

Proprietors names. Incorporated by the name of “The Wisbeach Canal Company.”

Commissioners appointed for settling differences. No proprietor, or person interested in the

navigation, to act as a commissioner. Commissioners to be allowed seven shillings and sixpence apiece

each meeting. Commissioners at their first meeting to appoint a clerk, and their proceedings to be

entered in a book. Meetings to be publick, and all orders to be made by a majority. Five commissioners

to constitute a meeting, and all meetings to be within ten miles of the canal. Commissioners may

summon and examine witnesses on oath. Commissioners’ adjudications to be put into writing, and

signed and sealed by three of them. Map and book of reference to remain with clerks of the peace.

Width of canal and towing paths to be twenty yards. Not to injure any house, garden, &c. For

removing the cottages, &c. on the old river. Power for the bishop of Ely to grant out parcels of the

waste. For enabling disqualified persons to sell or exchange lands, &c. Company obliged to purchase

small parcels of land separated in making canal. Satisfaction to be made in gross sums, or by rents.

Copyhold rights to be preserved. Compensation to be made for tithes. Commissioners to settle

damages. Commissioners to settle the proportions to be paid to persons having only partial interest

in estates sold. If parties are dissatisfied with the determination of the commissioners, the value to be

ascertained by a jury. Verdict for value of lands and damages to be ascertained separately. Verdicts to

be recorded. Persons requesting juries to enter into bonds to prosecute. Notice of injury to be given

to the company before complaint to the commissioners. Damages how to be recovered. Purchase

money belonging to corporations, &c. to be laid out to the same uses. Power to enter and take

possession of lands, &c. on payment or tender of purchase money.

Proprietors may raise fourteen thousand pounds, to be divided into shares of one hundred and

five pounds each. Shares deemed personal property. Company may raise six thousand pounds more,

by contribution or mortgage. Tickets of shares to be delivered to the proprietors. Five per cent interest

to be paid until the canal is finished.

A general assembly to be held the second Friday in May, annually, and the chairman to have the

casting vote. If proprietors of seventy shares not present at general assemblies, no business to be

done. General assembly to choose a committee, and appoint a treasurer and other officers, and power

to make bye laws. For calling special general assemblies. Duty of the clerk. Committee to meet. The

chairman of the committee to have a casting vote. Committee to make calls of money. On the death

of subscribers before shares completed, executors may complete the same. Shares maybe sold. For

compelling payment of subscriptions.

72 34 Geo. III 92 (1794). URL: http://goo.gl/1X2Dn. Paragraphs added.

http://goo.gl/1X2Dn

5. Canal Mania

141

Rates or tonnage and wharfage. For every chaldron of coals, hundred of battens, half hundred of

single deals, quarter of an hundred of double deals, a load of fir timber, fifty cubic feet to the load,

and all other timber, forty cubic feet to the load, every four packs of wool, reckoning ten tod to each

pack, every five quarters of oats, rye, grafs, and hayseeds, barley, big, and malt, a load of turf, reed,

sedge, hay, flax, or hemp, reckoning twenty hundred weight to the load, every five hundred pan tiles,

thousand flat tiles, or five hundred bricks, twenty cubic feet of stone, every pipe, butt, puncheon, or

piece of wine, or spirituous liquors, six sacks of flour, weighing twenty stones each sack, five barrels

of ale, beer, or porter, of thirty-six gallons each, and every chaldron of lime, forty bushels to the

chaldron, one shilling each. For every five quarters of wheat, barley, mustard feed, hemp feed, rape

feed, lind feed, rye, peas, or beans, one shilling and sixpence. And for every ton weight of all other

goods, one shilling. Recovery of rates. Exemptions from rates. Allowing land owners to carry manure

toll free. Power for land owners to use pleasure boats. Company empowered to lease the rates. Masters

of boats to give an account of their lading. Collectors may weigh and measure vessels and goods.

Preventing boats laden with corn going to Lynn or Wisbeach being stopped by the collectors of the

toll. Power to fix the price of small parcels.

Navigation to be free upon payment of rates. Masters of vessels to be accountable for damages

done by boatmen. Places to be made for boats to turn or lie in. Vessels obstructing the navigation to

be removed, and vessels sunk to be weighed up. Five pounds penalty on persons overloading or

obstructing the passage of the canal. Destroying the works, felony. Regulations of vessels passing

locks. Lock keepers not to give undue preference. Vessels passing locks with less than three tons, to

pay for three tons. Boatmen to have tickets delivered on passing locks, which will entitle them to repass

toll free within a certain time. Boats laden with turf may pass the look at Outwell, on payment of

tonnage for turf only. Pleasure and market boats may pass through locks tonnage free, in certain cases.

Bridges and tunnels to be made, and a culvert for draining lands in Oldfield, in Elm. No watering

places for cattle, or tunnels laid in the canal. Owners of land in Oldneld, in Elm, in Emneth, and

Outwell, to lay tunnels for taking in fresh waters. For fencing off towing paths. If the company do

not fence off towing paths, and make bridges, the land owners may, at the company's expence. Lords

of manors and land owners may erect wharfs; if not done in six months, the company may build.

Rates for craneage sixpence a ton. Company not to use private wharfs. &c. Canal not to be under the

power of commissioners of sewers.

Recital of river Nene navigation, act 27 Geo. 2. One hundred pounds per annum to be paid to the

Nene commissioners. Additional toll of three-pence per ton on goods passing from the river Nene

and Well Creek into the Wisbeach canal, if tolls paid at Salterns Load or Standground Sluices to be

exempted from further toll. Application of the tolls. Monies advanced by the Wisbeach canal company

to be repaid out of the tolls, with interest. Fund provided for the future preservation of the river

between Outwell and Salter's Load Sluice, and residue to be applied in improving the river between

Outwell and Standground Sluice. Trustees to be appointed to meet annually. Power of trustees. The

company to make locks, pointing and ebb doors at Outwell, Popham's Eau, and Salter's Load. Gauges

to be fixed thereon by engineers, to be appointed by the Bedford level corporation and the Wisbeach

canal company. The locks and doors to be under the direction of a person, to be appointed by the


142

Bedford level corporation, but to be shut when the water shall fall below the gauge. Authorising

trustees to stop up tunnels in certain cases. If waters in the river Nene are above the high water mark,

then the company to run them through the canal. Power for company to drain lands through the canal,

but not to raise the water in the canal above the soil of the adjacent lands so as to injure them. Rights

of the Bedford level corporation saved.

Recovery of fines and forfeitures. Appeal. False testimony before the commissioners perjury.

Limitation of actions. General issue. Treble costs. Publick act.

Chapter 6. Hostility to the Incorporation of Insurance Companies

a. Report on the Petition for a Charter for the Equitable Assurance (1761)73

“To the Right Honourable the Lords of a Committee of His Majesty's most Honourable Privy

Council.

May it please your Lordships,

IN humble Obedience to your Lordship's Order of the 2d Day of April, 1760, referring to us the

annexed Copy of a Petition of the Hon. Coote Molesworth of Chichester, Doctor in Physic, and

Fellow of the Royal Society; Sir Richard Glynn, Knt. and Bart. Alderman of London; Thomas

Pickering, of London, D. D.; John Silvester, of London, M. D. F. R. S.; and 78 others, in Behalf of

themselves and many others His Majesty's dutiful and loyal Subjects, for our Consideration, and to

report our Opinion thereupon to your Lordships, which Petition sets forth,

That great Numbers of His Majesty's Subjects, whose Subsistence principally depends on the

Salaries, Stipends, and other Incomes payable to them, during their natural Lives, or on the Profits

arising from their several Trades, Occupation, Labour, and Industry, are very desirous of entering into

a Society for insuring the Lives of each other, in order to extend [53] after their Decease the Benefit

of their present Incomes to their Families and Relations, who may otherwise be reduced to extreme

Poverty and Distress, by the premature Death of their several Husbands, Fathers, and Friends, which

humane Intention the Petitioners humbly apprehend cannot be effectually carried into Execution

without His Majesty's Royal Authority to incorporate them for that Purpose.

That to effect their said humane Intention, the Petitioners beg Leave to propose the following

Plan, viz:—

That the Petitioners shall form themselves into a Society for the Assurance of Lives, and that they

and their Successors shall have Power to grant Policies for that Purpose.

That on granting such Policies, the Petitioners and their Successors shall receive, and from Time

to Time continue to receive, from the Persons to whom the same are respectively granted, a Premium

or Premiums proportionate to the Chance of Death attending the Age of the Life or Lives assured,

and the Term of Years for which the same shall be respectively assured.

That on granting such Policies, the Petitioners and their Successors shall also receive from the

Persons to whom the same are respectively granted, a Deposit of a further Sum to answer the Ends

of a joint Stock or Fund; which Deposit shall be placed out on Government or other sufficient

Securities, and there remain to make good any Deficiency or Deficiencies that shall or may happen to

be in the Fund arising from Premiums, by Means of an unusual Mortality amongst the Members of

the said Society, or by any other Means whatsoever.

73 In Eden, F. M., On the Policy and Expediency of Granting Insurance Charters, Burton, London, 1806, pp.52-59, URL: http://goo.gl/QFmhR.

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144

That no such Policy or Policies of Assurance shall be granted to any Person or Persons until he

or they shall have signed or executed a Declaration or Covenant, purporting that he or they do

voluntarily enter into and become a Member or Members of the said [54] Society, and will so continue

during the Term or Terms for which the Policy or Policies to be granted to him or them shall

respectively continue in Force, and will bear or pay their Proportion or Proportions of any Loss or

Losses, which, during such Term or Terms, shall or may happen to the said Society, and exceed the

Amount of the Premiums and Deposits to be paid as aforesaid.

That the Petitioners are ready and desirous to ascertain and fix the several Premiums and Deposits

proposed to be by them and their Successors taken as aforesaid, and also to be restrained from acting

contrary to their said Plan.

That Establishment by His Majesty's Royal Charter of a free and open Office of Insurance, upon

the Plan aforesaid, will, as the Petitioners, with great Submission, apprehend, be more equitable than

any hitherto proposed, as being calculated for the sole Benefit of the Persons assured, a Method not

hitherto practised; and will, as the Petitioners humbly hope, in a Variety of Instances, prevent the

before-mentioned Inconveniencies, and be productive of the greatest Advantages to the Public.

That there is at present subsisting but one Corporation for perpetual Assurance on Lives, which,

as the Petitioners humbly apprehend, acts upon so circumscribed and narrow a Plan, that very few of

His Majesty's Subjects do receive any Benefit from it, in Comparison of the great Number to whom

the Benefit of such an Insurance might be extended.

The Petitioners therefore humbly pray that His Majesty, out of his Royal Grace and Favour, will

be pleased to grant His Majesty's Royal Charter for the Purposes aforesaid, unto … [55] and

Gentlemen, by the Name of “The Corporation for Equitable Assurances on Lives,” under such

Restrictions as to His Majesty in his Royal Wisdom shall seem meet.

Upon this Petition your Lordships will be pleased to observe,

1st. The Petitioners propose to insure upon cheaper Terms, and for a longer Time, than is practised

at present in any Offices, to which End they have specified the Rates at which the Assurance is to be

done.

2nd. They propose to raise a Capital, by investing, the Premiums, together with a small additional

Sum of 40s. to be deposited by every Person insured, to answer all Losses; and by way of further

Security, to oblige every Person insured to become a Member of the Corporation, and to declare or

covenant that he will bear his Proportion upon any Call, if the Premiums and Deposits should prove

deficient.

Upon these Proposals we are required to deliver our Opinions, whether it will be proper for His

Majesty to grant the Petitioners a Charter of Incorporation for these Purposes.

We having been attended with Counsel on Behalf of the said Petitioners, and also by Counsel on

Behalf of the Governors and Companies of the London and Royal Exchange Assurance Companies,

and also on the Behalf of the Corporation of the Amicable Society, for a perpetual Assurance on

6. Hostility to the Incorporation of Insurance Companies

145

Lives, in Serjeant's Inn; the said Companies and Corporations having entered Caveats with the

Attorney-General against granting the Prayer of the said Petition, and the said petitioners and their

Opponents having produced the several Affidavits annexed to this our Report, we have proceeded to

examine the same, and after the best [56] Consideration we have been able to give the Subject, We are

humbly of Opinion to advise His Majesty not to comply with the Prayer of this Petition for the

following Reasons:

1st, Because it appears to us altogether uncertain whether this Project will or can succeed in the

Manner in which it is proposed; and if the Success is uncertain, the Fund for supporting it, which is

to arise from the Profits of the Undertaking, will be precarious.

This last Consideration is in our Opinion a fatal Objection to the Scheme, for though an

Undertaking plainly calculated for the Benefit of the Public, may in some Instances deserve

Encouragement, even where the Success is dubious, yet in such Cases, the Projectors alone ought

generally to abide the Peril of the Miscarriage.

In the present Proposal therefore, whatever else may be hazardous, the Capital or Fund to answer

Losses ought to be certain and liable to no Casualty, for which Reason when the Legislature enabled

His Majesty to erect the two Corporations of the Royal Exchange and the London Assurance, they

thought it necessary to oblige these Bodies, in the first Place, to raise a large Capital before they began

to insure.

The Success of this Scheme must depend upon the Truth of certain Calculations taken upon

Tables of Life and Death, whereby the Chance of Mortality is attempted to be reduced to a certain

Standard: this is a mere Speculation, never yet tried in Practice, and consequently subject, like all other

Experiments, to various Chances in the Execution.

The Tables upon which the Calculations are built, are the Bills of Mortality of London, and the

Breslau Tables, and admitting them to be strictly accurate (of which there is strong Reason to believe

the Contrary) they are compounded of diseased as well as healthy Persons, of those who are embarked

in dangerous as well as other Employments, without pointing out the Proportions they bear to each

other, and [57] yet as the Petitioners propose to ensure only such even of the healthy, as are not

employed in dangerous Occupations, the Register of' Life and Death ought to be confined, if possible,

for the Sake of' Exactness, to such Persons only as are the Objects of Insurance; whereas the

Calculations offered embrace the Chance of Life in general, the healthy as well as unhealthy Parts

thereof, which, together with the Nature of such Persons’ Occupations are unknown Numbers.

As the Fund to answer Losses must depend principally upon the Premiums (for we pay but little

Regard to the small Deposits or the personal Covenant), the Project should be sure of Success;

otherwise the Adventurers will be undone, or greatly injured, and the Calamity will fall the heavier,

because it will fall principally upon the poorest Sort, the Rich having no Temptation to insure. Under

these Circumstances, if there was no other Objection to the Scheme proposed, the Uncertainty of

Success would make us fearful of advising the Charter.


146

We are the more apt 'to doubt of the Event, because it has been represented to us by the Affidavit

of Mr. Savage, that all the Profit, which has been received by the Royal Exchange Assurance from the

Time of its Commencement to the present Time, amounts only to a Sum of 2,651 £ 4s. 6d. the

Difference between 10.915 £ 2s. 2d. paid in Premiums, and the Sum of 8.263 £ 17s. 8d. disbursed in

Losses, which small Profit must have been near exhausted in the Charges of Management. If then

this Corporation, who are charged with taking unreasonable Premiums, have reaped no greater Profit,

we can hardly expect a more considerable Capital to arise from lower Premiums; and the hazard of

Loss will be increased in Proportion as the Dealing will be more extensive.

2d. The Crown has very wisely been always cautious of incorporating Traders, because such

Bodies will either grow too great, and by overwhelming [58] Individuals, become Monopolies; or else,

by failing, will involve thousands in the Ruin attendant upon a Corporate Bankruptcy. As Trade seldom

requires the Aid of such Combinations, but thrives better when left open to the free Speculation of

private Men, such Measures are only the Expedient where the Trade is impracticable upon any other

than a joint Stock, as was thought to be the Case in the East India, South Sea, Hudson's Bay, Herring

Fishery, and in some other Companies erected upon that Principle; but there does not appear to be

any such Necessity in the present Case, because the Business of insuring Lives is carried on not only

by the two great Companies already mentioned, but such Policies are duly underwritten by Numbers

of private Men; and we think that, if the Profit was so enormous as the Petitioners have endeavoured

to represent, upon the Terms now, and for many Years practised in the City of London, there would

not have been wanting enterprising Persons to have reduced the Premiums, and drawn this Branch of

Dealing to themselves by underselling the Market. If the Petitioners, then, are so sure of Success,

there is an easy Method of making the Experiment, by entering into a voluntary Partnership, of which

there are several Instances now subsisting in this Business of Insuring; and, if upon such a Trial these

Calculations are found to stand the Test of practical Experiment, the Petitioners will then apply with

a much better Grace for a Charter than they can at present, whilst the Scheme is built, only upon

speculative Calculations.

3d. The Parliament, in erecting the two great Companies already mentioned, have sufficiently

declared their Opinion, that such Charters ought not to be granted without some Benefit accruing to

the Public, and were not sure when they passed the Act whether they were not erecting a Nuisance;

to prevent which a Power was reserved to the Crown to abolish the Corporation at any Time within

the Term of 31 [59] Years, if they should be found upon Trial to be mischievous or inconvenient;

and we cannot help observing, that, except only in the Case of the Amicable Society of Serjeants Inn,

and which is formed upon a very narrow Bottom, the Crown has never of itself, so far as appeared to

us, granted such a Charter as the present, in any Case whatsoever; and, as the two great Companies

paid a very large Sum to the Public for the Privilege of their Charter, we cannot advise the Crown to

entrench upon their Rights on the bare Request of any Set of Men, without a clearer and more certain

Prospect of public Good.

It is for these Reasons principally that we find ourselves under a Necessity of advising His Majesty

not to comply with the Prayer of this Petition, and though we are fully persuaded that those worthy

Gentlemen who have made this Application are really convinced that this Scheme will prove


147

advantageous to the Public, as well as profitable to themselves, yet we have not sufficient Evidence to

satisfy us that either of these Ends will be answered, or that any Necessity of the Times requires the

Trade to be extended under a new Charter of Incorporation.

All which is most humbly submitted to your Lordships Consideration, by

Your Lordships most obedient Servants,

Tuesday, July 14th, 1761.

C. PRATT,

C.YORKE.”

b. Report on the Petition for the Globe Insurance Charter (1802)74

“To the Lords of the Committee of his Majesty's most Honourable Privy Council.

May it please your Lordships,

In obedience to your Lordships’ Order bearing Date the-11th Day of May, 1801, and reciting that

“Whereas his Majesty had been pleased, by his Order in Council of the 15th of January,

1801, to refer unto your Lordships a Letter from his Grace the Duke of Portland, one of his

Majesty's principal Secretaries of State, to the Lord President of the Council, transmitting a

Petition of Sir Frederick Morton Eden, Baronet, Miles Peter Andrews, and William

Wilberforce Bird, Esquires, on Behalf of themselves and others, praying a Charter for

incorporating a Company to be called “The Globe Insurance Company,” with such Powers,

Privileges, and Authorities, and Subject to such Conditions, Restrictions, and Penalties, as his

Majesty's Wisdom might think proper, together with a Report of his Majesty's Attorney and

Solicitor General thereupon ; and also upon the Draft of a Charter [61] prepared on the

Behalf of the Petitioners for the Purposes stated in their Petition, and laid before his Majesty's

Attorney and Solicitor General; and that a further Petition of the said Sir Frederick Morton

Eden, Baronet, and others, had been presented to this Board, stating that they were desirous

of making various Alterations and Amendments in the said Draft of Charter, and praying that

their former Petition, together with the Report of his Majesty's Attorney and Solicitor General

thereupon, and the said Draft of a Charter, might be referred back to his Majesty's Law

Officers; and that the several Parties who had theretofore entered Caveats against the Grant

of a Charter for the said Globe Insurance Company having attended your Lordships, and

signified their Consent to the Reference prayed by the Petitioners, your Lordships were

thereupon pleased to order, that the said Petitions, together with the Report of his Majesty's

Attorney and Solicitor General, and also the Draft of the said Charter, should be referred to

us, to consider of the several Alterations and Amendments proposed by the Petitioners to be

74 Ibid, pp. 60-74. URL: http://goo.gl/UXDU5.

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inserted in their said Charter, and to Report our Opinion thereupon to your Lordships with

all convenient Speed;”

We have been attended by Counsel as well on Behalf of the said Petitioners as of the several

Parties who had heretofore entered Caveats against the Grant of a Charter for the said Globe

Insurance Company, and have heard the whole of the several Arguments and Allegations which any

of the said Parties were desirous of urging and bringing under our Consideration, as well upon the

Subject of the particular Objections which were stated to the Charter in the Report of our immediate

Predecessors in Office, as upon the Alterations and Amendments which the Petitioners have expressed

themselves willing to introduce for the Purpose of obviating those Objections. And, in the first Place,

we think it necessary to observe that many Arguments [62] of considerable Weight were urged before

us, and particularly one on the Part of the Phoenix Company, against the Policy and Justice of granting

any such Charter of Incorporation to the Petitioners as is prayed for on their Behalf. But as, upon due

Attention to the Terms of your Lordships’ Order, by which the several Matters therein specially

mentioned are referred to our Consideration, we are of Opinion, that no Questions of this general

Nature were intended to be submitted to us on the Part of your Lordships, (your Lordships having

only directed us to consider of the Effect of the several Alterations and Amendments which had been

proposed by the Petitioners for the Purpose of obviating the Objections stated by the late Attorney

and Solicitor General, and to report our Opinion thereupon), we feel it proper to forbear offering any

Opinion to your Lordships upon those Heads. With respect to the Alterations and Amendments

submitted to us, we apprehend that the most distinct and convenient Mode of treating them, will be

to consider them in the Order in which the Objections, they are intended to obviate, respectively stand

in the Report of our Predecessors.

The first Objection is, that

“the Act of Parliament, to which the Petition refers, contains a Clause, requiring that in

the Charter which his Majesty was thereby authorised to grant, it should be provided that the

Corporation thereby to be created and established should be obliged from Time to 'Time

during its Continuance to cause such a Stock of ready Money, or such Share or Shares of the

Parliamentary Stocks or Public Funds of Great Britain, to be provided and reserved, and to

be immediately subject to the Disposition of the said Corporation, as should be sufficient to

answer all the just Demands upon them on Account of the Policies of Assurance, Deeds,

Contracts, or Engagements, to be made or entered into by the said Corporation; but that the

Charter proposed to their Consideration by the Petitioners had no sufficient [63] Provision

for that Purpose; and that it seemed to them that such a Provision was not only necessary in

Compliance with the Terms of the said Act, but for the Protection of the Persons with whom

the proposed Corporation might engage in the variety of Transactions proposed to be

authorised by their Charter, which were much more various, and might lead to more hazardous

Speculation than the authorised Dealings of any Company yet established by Law.”

With Reference to this Objection, we are of Opinion, that the Weight of it is removed by the

Amendments which the Petitioners are willing to have introduced into their Charter; for,


149

independently of their Consent to renounce several Objects of their proposed corporate Dealings,

which justly appeared to the late Attorney and Solicitor General, as much more various and leading to

more hazardous Speculation than the authorised Dealings of any Company yet established by Law,

they have consented that, over and above the Capital agreed to be invested in the Purchase of

300,000£ Land Tax, the additional Capital of 500,000£ shall be invested in the Funds; and that (if

upon any Occasion it should become necessary for the Company to resort to this Capital for the

Payment of their Debts, and any Part thereof should have been so applied) it shall be unlawful for

them to make any Dividends amongst the Proprietors till such Capital of 500,000£ shall have been

reinstated. And we have introduced Provisions into the Draft of the Charter which we now lay before

your Lordships for that Purpose.

The next objection suggested by the late Attorney and Solicitor General is, that:

“the Act has required that the Company shall employ 300,000£ in the Purchase of Land

Tax, but that it contains no Provision to prevent the Re-sale of the Land Tax so purchased;

and that it appeared to them that, if the Company should be permitted to sell at a Discount,

they might greatly injure the Sale of Land Tax, as they were by the Act authorised to purchase

at the [64] same Price as the Land Owners; and that it seemed therefore important that they

should be prohibited to sell any Land Tax for less than the Price paid for it: and that, to inforce

that Provision, it might be necessary to make the Directors of the proposed Company who

should authorise any Sale at a lower Price, personally responsible for the Breach of the

Condition; and to require that the Company should at all Times be possessed of 15,000£ a

Year in Land Tax (which is equal to the Land Tax which they could then purchase with

300,000£) so long as any Land Tax should remain in the Hands of Government unsold; and

that the Petitioners appeared to be willing to submit to the latter Provision, in case such Land

Tax could be taken as Part of the Fund to be reserved to answer Demands upon them, under

the Clause of the Act already referred to; but as that Clause required that a Fund should always

be kept in ready Money or Shares of Parliamentary Stocks or Public Funds of Great Britain,

it might be doubtful whether Land Tax so purchased and reserved by the Company could be

deemed to answer that Description; and that, if the Land Tax to be purchased by the Company

would not answer the proposed Fund to be reserved according to the Terms of the Act, they

conceived it would much embarrass the Company, as in that Case, according to the Provisions

of the Act, a Quantity of 3 per Cent Annuities of equal Value, ought to be provided and kept

in the Name of the Company, at the same Time that the Company could not be permitted to

part with the Land Tax to be purchased by them at a Discount without Injury to the Public:

and that, to enforce these Provisions it seemed necessary to declare by the Charter, that if at

any Time the Company should not have so much Land Tax, or so much three per Cent.

Annuities standing in their Names, the Company shall be ipso facto dissolved, the Charter

should thenceforth be null and [65] void, and the Directors of the Company for the Time

being should be personally responsible to the Creditors of the Company for the Debts of the

Company, and the Damage which might be occasioned by such Misconduct: they doubted

however, whether this Provision could be made effectual without the Aid of Parliament.”


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This Objection as far as it applies to the Want of an additional Capital beyond the 300,000£ Land

Tax is already obviated by the Proposal of the Company to raise the additional Capital of 500,000£

referred to in our Observations upon the former Objection; and to obviate so much of the present

Objection as relates to the Resale of the Land Tax, it has been proposed on the Part of the Petitioners,

that the Land Tax, to be purchased with the 300,000£ shall be assigned to fit Persons as Trustees for

the Company, and who shall be nominated by the Lords of his Majesty’s Treasury, in Case they should

think fit to take upon them the Trouble of such Nomination, or by such other Persons as your

Lordships should please to name, and which Trustees shall not be empowered to sell any Part of such

Land Tax without the consent of the Lords of the Treasury, and at the Price, and upon the Terms to

be in that Behalf fixed by the Lords of the Treasury. And we think that this Part of the Objection

may be thus effectually obviated in case the Lords of the Treasury shall condescend to take this

Trouble upon them: or if any other of his Majesty’s servants can be properly substituted in their Room

for the above Purposes. But, if the Resale of the Land Tax cannot conveniently be restrained by

Reason of such a Trust-assignment as we have suggested, we concur with the late Attorney and

Solicitor General in thinking that this Part of their Objection cannot be wholly obviated without

further Provisions of Parliament on the Subject, and of such a kind as may render the Directors

personally responsible for the Damages to be eventually [66] occasioned by their Misconduct.

As to the third Objection in which the late Attorney and Solicitor General, after taking Notice that

“the Governors and Company of the Bank of England, and the private Bankers had

objected to the proposed Charter, under an Apprehension, that it would enable the Company

to act as a Bank; and that the Petitioners had stated to them, that they disclaimed all Intention

of so acting; and had declared themselves willing to submit to any Restrictions in that Respect:

and that, to Effect this Purpose, and particularly to prevent the Interference of the proposed

Company with the charter of the Bank, they thought it would be necessary to prohibit their

acting in any Manner whatsoever, as a Bank, except in receiving Deposits according to the

express Words of the Act, and to make their evasively acting as a Bank for all Purposes, which

might be easily done under the Terms of the Act, without some more specific Prohibition, it

seemed to them that Penalties ought to be imposed on the Directors, Cashiers, and Officers

of the Company, who should discount any Bills or answer any Drafts in respect of any

Deposit, before the Expiration of six Months from the Date of the Deposit on any Pretence

whatsoever; but that also appeared to them to require the Sanction of Parliament to give it

effect,”

The Ground of this Objection appears to us to be fully and effectually removed by an Offer on

the Part of the Petitioners, to relinquish all Claim on their Part, to be incorporated for the Purposes

which have excited this Jealousy on the Part of the Bank of England, and the private Bankers: and to

be expressly restrained

“from receiving Deposits of the Funds belonging to, and acting as Trustees thereof for,

Benefit or Friendly Societies, and other charitable and benevolent Institutions; and for making

Provisions for the Widows and Children of the Clergy, and for Clergymen; and for the


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receiving Deposits from, or on Account of the Members of the [67] industrious Classes of

Society, and others;”

and from acting as a Bank in the same, or in any other Respect or Capacity whatsoever, upon Pain

of Dissolution; which Penalty, together with the criminal Responsibility, which the individual Members

would incur, by presuming to act as a Corporation for any Purposes, other than those which are

immediately authorised by their Charter of Incorporation, or at any Rate, for Purposes expressly

forbidden by their Charter, appears to us sufficient to obviate the Objection on this Head.

As to the fourth Objection, which suggests, that

“there should be in the proposed Charter Clauses prohibiting any Species of Trade, or any

Dealings whatsoever, except those to be specifically described in the Charter, being carried on

by the Company, which according to the Terms of the Charter, the proposed Company might

do; although the Petitioners had disclaimed any Intention of engaging in any such Dealings,

and that Forfeiture of the Charter, and the personal Responsibility of the Directors, with

Penalties on the Officers, seemed necessary to give Effect to the Prohibition, and that the

same could not be made effectual without the Aid of Parliament,”

This seems, in our Opinion, adequately obviated already by the Terms of the Charter, as at present

framed, not only by conferring no corporate Being upon the Petitioners for the Purposes which are

supposed most likely to be abused, but also by the express prohibitory Provision above mentioned,

against trading, dealing, or acting as a Corporation, for any but the immediately specified, and

authorised, Purposes; and by the Penalty of a Forfeiture of their Charter, for acting in Defiance of

such Prohibition. And, as to the Necessity of Penalties to be imposed on the Officers, in order to give

Effect to this Prohibition, we venture to submit our Opinion, that any Persons, criminally questioned

upon an Information in quo Warranto, as Individuals, for presuming to act as a Corporation for

Purposes foreign to the Purposes [68] of their Incorporation, and in which they are, by the express

Terms of their Charter, prohibited from acting, (and as to which, therefore, they are no Corporation

at all,) are liable to be punished by Fine and Imprisonment at Common Law, as for the Usurpation of

a Franchise. We think, therefore, there is no absolute Occasion for the Aid of Parliament, on this

Subject, if there still remained, after the Provisions on this Head, which are already introduced into

the Charter, any reasonable Ground for Jealousy and Apprehension, that the Powers of the Charter

would be, in this respect, exceeded and abused.

As to the fifth Objection, which respects the Propriety of imposing

“some Restraint on the Terms of the Company’s Dealings in Annuities, Post-obits, and

other Traffick of the same Description, in which they understood it was the Intention of the

Company to adventure, and in which the Example of a great Company authorised by

Parliament, and by your Majesty’s Charter, might be highly injurious, if their Dealings should

be for the same unconscientious Advantages as were usually extorted by those who deal with

necessitous Persons in such Transactions, which, in general, can only be carried on with

necessitous Persons, and most frequently with young Persons subsisting on Expectancies. In


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this View, it appeared to them that Publicity in such Transactions is highly important: and that

all Post-obits to be granted to the Company, ought to be subject to Provisions, similar to those

respecting Annuities, contained in the Act of Parliament of the 17th Year of your Majesty’s

Reign, for registering Grants of Life Annuities, and for the better protection of Infants against

such Frauds; but they conceived that could not be done without the Aid of Parliament.”

We conceive that this Objection applies principally to Post-obits, and Dealings of that Description:

as far as it so applies, it is wholly removed by an express Renunciation on the Part of the [69] Company

of all Dealings of that Kind, and a Consent to be restrained therefrom by the Terms of their Charter.

As to the mere Dealing in Annuities, if it had stood alone, as it now will do, we do not apprehend that

it would have been objected to on the Part of our Predecessors; and so standing, we do not ourselves

feel it to be fairly objectionable.

As to the sixth Objection, which suggests the Importance of

“preventing the proposed Corporation from becoming Land-jobbers, and from which the

late Attorney and Solicitor General apprehended that the Company could not be restrained by

any Provision in his Majesty’s Charter, without repealing Part of the Act under the Authority

of which it was proposed to be granted, although the Petitioners had proposed to submit to

any Restrictions in this respect; and particularly to a Provision, that all Estates, which, being

originally vested in the Company, by way of Mortgage, might become their absolute Property,

by Foreclosure or otherwise, should be sold by them within twelve Months after such Title

should have become absolute, the Petitioners having declared that they were only desirous of

acquiring Landed Property for their necessary Accommodation, with Buildings, and other

Conveniences for the Transaction of their Business.”

We agree with the late Attorney and Solicitor General, in the Importance of preventing the

proposed Corporation from becoming Land-jobbers. We think, however, that a Restraint introduced

into the Charter upon this Head, would be agreeable to, and in furtherance of, the apparent Intention

of the Legislature, which appears to have been to prohibit them from being Land-owners (except in

the way of Securities for Annuities) beyond 2000£ per Annum. And we are not aware of any

Repugnancy which would exist between the proposed Charter and the Act of Parliament, (so as to

make a Repeal of any part of such Act necessary,) if the Charter should provide for the early Sale of

Lands, which should come to the [70] Hands of the Company charged with, or made Securities for,

such Annuities; and which is offered to be provided for, by a Consent on the part of the Petitioners,

to be bound to sell all such Interest in Land, as may devolve to them in the way of Securities for

Annuities, within a twelve Month from the Time their Title accrues; and to sell likewise within the

same Period, all Lands which may become their Property by Foreclosure of Mortgage or otherwise.

The Seventh Objection states that

“the Clause in the Act exempting the Capital Stock of the Company from all Taxes and

Assessments, (except the Income Tax) may tend to raise considerable doubts with respect to

the Income of individual Members of the Company, which may be subject to that Tax, and


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may particularly affect the Imposition of any other Duty of the same Nature, if that Tax shall

be repealed, or indeed to make any Variation in the Tax as now imposed; and that it therefore

would be improper for his Majesty to grant any Charter to the proposed Company, until the

Legislature shall by some explanatory Act remove all Doubts on this subject.”

This is an Objection which we have not introduced any Provision or Alteration to obviate: and, if

it be considered as of Importance, cannot be obviated without Recourse to Parliament, because the

Benefit given to the Company in this particular is expressly given by the Legislature, and we apprehend

must therefore remain to them, unless, upon reference to Parliament, the Legislature should think

proper to repeal it; but though we feel great Diffidence in any Opinion of ours, which is at Variance

with that of our Predecessors, yet we cannot forbear submitting, that it appears to us that the Evil,

apprehended in the Objection, will not exist, as, with due Deference, we think, that the Income,

derived to the individual Members of the Corporation, from their Shares of Dividends upon [71]

such Capital, will be liable to that and every Tax in the same Manner, as it would be were there no

such Provision in the Charter, or Act of Parliament; and that it is only to the Corporate Fund, in the

Hands of the Corporation before Division, that this Exemption is meant to apply.

As to the Eighth Objection, which considers,

“that the Capital of the proposed Company should be restrained to some certain Sum, but

that there is no Provision for that Purpose, either in the Draft of the proposed Charter, or in

the Act to which it refers;”

we concur in thinking, that the standing Capital, called in the Act the extraordinary Capital Stock

of the Society, ought, unquestionably, to be limited; and it is limited by the Charter, and the Act to

1,000,0001. But, with respect to the floating or trading Capital, if there be any necessity for any

Limitation to be imposed upon that, we think the necessity of such Limitation would be a fundamental

Objection to the existence of the Society itself; for, it seems to us, from the particular Nature of this

Trade, that any Limitation of their trading Capital must be extremely difficult, and hardly possible to

be adopted, without cramping the fair Expectation of the Adventure, and without destroying all that

prospect of Success which must be the adequate Object to the Persons embarking in the Adventure,

and can alone by Possibility afford such Extent of Profit as may enable them to realize that Prospect

of ulterior Advantage to the Public which is the Subject of Consideration in the next Objection. For

this Capital, which we denominate trading and floating Capital, and distinguish from the extraordinary

Capital Stock, must depend upon the Amount of the Premiums received, those Premiums forming at

once the Capital, the Indemnity, and the Profit. In submitting these Observations, we do not consider

ourselves as in any Degree differing from our Predecessors; because at the Time they made the

Objection [72] now under Consideration, it applied to an intended Corporation, with Views and

Speculations of various Trades and Adventures, which the Society has consented to abandon. And we

agree, that, if all those Trades and Adventures had still remained within the Plan of this Society, the

Limitation of their trading Capital, as suggested by the late Attorney and Solicitor General, might have

been necessary for the Security of the Public.

The Ninth Objection is, that


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“the Proposition for laying out a Moiety of the Profits of the proposed Company, after a

Deduction of 5£ per Cent. on the Capital, to the extent of 700,000£, in the purchase of Land

Tax, had an appearance of Delusion, if the Capital of the Company was not to be carried

beyond 1,000,000£. At any Ordinary Rate of Profit in Money Transactions on such a Capital,

the Application of a Moiety of the Profits, after a Deduction of 5£ per Cent. on the Capital,

must require a vast Series of Years before an Accumulation of 700,000£ could be made; and

no Means were provided, nor did it appear to them that any effectual Means could be provided,

(especially without the Aid of Parliament), to ascertain what might be from Time to Time the

Profits beyond 5£ per Cent. on the Capital and all Charges.”

We entertain no sanguine Expectation of much Benefit to be derived to the Public from the

Proposition above considered; but still we do not apprehend, that though the fixed Capital be limited

to 1,000,000£, that Capital can be the Measure upon which the probable Profits of this Trade are to

be calculated. A great Company, like that in Question, must necessarily require a very large standing

Capital for Buildings, Clerks, and other Expences of Establishment: but the Capital, which is to

furnish the Gains, and also, principally to bear the Losses, of an Insurance Company, to which this

Society is now nearly to be reduced, is that which must arise [73] from the Receipt of the Premiums,

and which must necessarily extend itself as their Responsibility extends. We apprehend that, upon the

Principle On which alone the Business of Insurance can be profitable and usefully carried on, the

Premiums, to be received on each Insurance, must be calculated so as not only to be equal to the

Chance of Loss upon the Article insured, but also to afford a fair Profit beyond it to the Insurer. If,

therefore, they conduct their Insurances wisely, though the standing Capital be only a Million, upon

which, invested as the greater part of it is to be, they will be able to make little more than 5£ per Cent.

Interest, if so much, yet the Sums received as Premiums for Insurance, upon each of which some

Profit must, upon Calculation, be expected to arise, may grow to such an Extent as to afford a Profit

to the Proprietors much greater than 5£ per Cent. upon the standing Capital.

With regard to the Difficulty of ascertaining the Amount of these Profits, we think it will,

undoubtedly, be attended with some Difficulty but the Disclosure of their Accounts before

Parliament, and the Power of the Treasury to appoint Auditors from Time to Time, as may appear to

be necessary, seem to furnish an adequate Security for such reasonable Approach to Certainty as may

answer the Objects of the Public.

As to the Complaint, that

“the several Companies, now established for the Purposes of Insurance by Charter, Who

had appeared before the late Attorney and Solicitor General, complained of the Advantage

over them proposed to be given to the intended Company by the authorised Extent and

Variety of their Dealings in which those chartered Companies were not authorised to engage;

and that, amongst Insurance Companies who have not obtained Charters, one, namely, The

Phoenix Company, having petitioned his Majesty for a Charter of Incorporation, received so

much Discouragement in pursuing their Application, from the Opinion, then expressed by the

then Officers of the Crown, to whom [74] their Petition was referred, of the Impropriety of


155

such Charter, that they were induced to abandon their Petition, under the Persuasion that the

Report of his Majesty’s then Attorney and Solicitor General in obedience to his Majesty’s

Commands would be, that it would not be in their Opinion proper for his Majesty to grant

any such Charter;”

We have, in the beginning of this Report, adverted to the Complaint made on the Part of The

Phoenix Company, and have stated our Reasons for not troubling your Lordships with an Opinion

upon the Facts and Arguments which were urged on their Behalfs against granting any Charter of

Incorporation at all to The Globe Insurance Company, and your Lordships will judge how far we were

warranted in forbearing to notice them upon the Grounds already suggested by us. But, with respect

to the other Companies, we apprehend that the Grounds of Complaint urged on their Behalf, are now

removed by the Modifications introduced into the Draft of Charter, as now submitted to your

Lordships; whereby it will appear that those Dealings, in which other Companies are not authorised

to adventure, are renounced on the Part of the Petitioners for this Charter, and are excluded by the

Terms of the Charter itself.

Upon the whole we are of Opinion, that, supposing the Policy and Expediency of granting any

such Corporation to be admitted, (which Question, as we have said before, we do not consider as

being referred to us) we apprehend the Terms on which the Petitioners are now content to take the

Charter will remove all those Objections, mentioned in the Report of Sir John Mitford and Sir William

Grant, upon which their Opinion of the Necessity of further Application to Parliament seems to have

been founded.

All which is humbly submitted to your Lordships Wisdom.

EDWAD LAW.

SP. PERCEVAL.

8th Feb. 1802”

c. Unincorporated Joint Stock Companies with the Right to Sue and Be Sued (1807)

“An Act to enable The Globe Insurance Company to sue in the Name of their Treasurer, and to inrol Annuities.

(25th. April 1807)75

WHEREAS several Persons have formed themselves into a Society or Partnership, under the

Name of The Globe Insurance Company, and have subscribed very considerable Sums, in order to carry

On the Business of insuring Houses, and other Property, from Loss or Damage by fire; to effect

Insurances on Lives, and to grant and purchase Annuities:

75 47 Geo. III, c. 30. For similar legislative grants to insurance companies, see 47 Geo. III, c. 31, 32, 33 and 34. Available at http://goo.gl/JQBtL.

http://goo.gl/JQBtL


156

And Whereas the Public hath been greatly benefited by the Formation of such Society or

Partnership, with a competent Capital to carry on the same, and a considerable Revenue is derived to

His Majesty therefrom:

And Whereas Difficulties have arisen., and may from Time to Time arise, as well in recovering

Debts, which may grow due to the said Society or Partnership, called The Globe Insurance Company, as

in prosecuting Persons who may steal or embezzle the Property of, or who may commit, or be guilty

of any other Offence against, or with Intent to injure or defraud the said Society or Partnership; as by

Law all the several Subscribers or Proprietors to and in such Society or Partnership must, in such

Cases, sue and prosecute by their several and distinct Names and Descriptions:

And whereas an Act was passed in the Seventeenth Year of His Majesty's Reign, intituled, An Act

for registering the Grants of Life Annuities and for the better Protection of Infants against such

Grants; whereby it was and is required, that a Memorial of every Instrument granting any such Annuity

or Rent Charge as is therein mentioned, should, within the Time therein 'mentioned, be inrolled in the

High Court of Chancery and that such Memorial should, among other Particulars, contain the Names

of all the Parties, and for whom any of them were Trustees:

And Whereas the said Society or Partnership, by reason of the Number of Persons who are or

may be interested therein, is unable to comply with the Requisitions of the said Act in the last-

mentioned Respect, and is prevented thereby from rendering the Contracts of the said Society or

Partnership for the Purchase or Sale of Annuities effectual and valid;

Wherefore, for the more easily carrying into Execution the several Undertakings herein-before

mentioned, and for removing the Difficulties aforesaid, may it please Your Majesty that it may be

enacted and be it enacted by the King's most Excellent Majesty, by and with the Advice and Consent

of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and the

Authority of the same, That all Actions and Suits to be commenced or instituted by or on Behalf of

the said Society or Partnership against any Person or Persons, or Body or Bodies Politic or Corporate,

shall or lawfully may be commenced or instituted and prosecuted in the Name or Names of the

Treasurer or Treasurers for the Time being of the said Society or Partnership, as the nominal Plaintiff

or Plaintiffs for and on Behalf of the said Society or Partnership; and that all Prosecutions to be

brought or instituted by or on Behalf of the said Society or Partnership for Fraud upon or against, or

for Embezzlement, Robbery of, or stealing the Property of the said Society or Partnership, or for any

other Offence committed against, or with Intent to injure or defraud the said Society or Partnership,

shall or lawfully may be so brought or instituted, and carried on, in the Name or Names of the

Treasurer or Treasurers for the Time being of the said Society or Partnership; and in all Indictments

and Informations it shall be lawful to state the Property of the said Society or Partnership to be the

Property of the Treasurer or Treasurers for the Time being of the said Society or Partnership; and

any Offence committed with Intent to injure or defraud the said Society or Partnership shall and

lawfully may in such Prosecution be laid to have been committed with Intent to injure or defraud the

said Treasurer or Treasurers for the Time being of the said Society or Partnership; and any Offender

or Offenders may thereupon be lawfully convicted of any such Offence, and the Death, Resignation


157

or Removal, or other Act of such Treasurer or Treasurers, shall not abate any such Action, Suit, or

Prosecution.

II. Provided always, That nothing herein contained shall extend, or be deemed, construed, or taken

to extend, to incorporate the said the Society or Partnership; or to relieve or discharge the said Society

or Partnership, or any of the Members thereof, or Subscribers thereto respectively, from any

Responsibility, Contracts, Duties, or Obligations whatsoever, which by Law they may now, or at any

Time hereafter, be subject or liable to, either as between such Society or Partnership and others, or

between the, or any of the, individual Members of such Society or Partnership and others, or among

themselves, or in any other Manner whatsoever.

III. And be it further enacted, That it shall and may be lawful to and for the said Society or

Partnership to inrol, in the High Court of Chancery, a Memorial of every Deed, Bond, Instrument,

or other Assurance, whereby any Annuity or Rent Charge shall, from and after the passing of this Act,

be granted to or by the said Society or Partnership, for One or more Life or Lives, or for any Term of

Years, or greater Estate determinable on One or more Life or lives, in the Names of the Parties to

such Deed, Bond, Instrument, or other Assurance; and such Inrolment shall (all other Requisites of

the said recited Act being duly complied with,) be as good and effectual to all Intents and Purposes as

if the Names of all the Persons for whom such Parties respectively, or any or either of them, shall be

Trustees or a Trustee, were or was stated therein, any Law, Statute, or Custom to the contrary

notwithstanding.”

__________________________________

“An Act to alter and explain Two Acts to enable the Globe Insurance Company to sue in the Name of their

Treasurer, and to inrol Annuities. (27th. May 1809)76

And Whereas Doubts have arisen whether the said recited Acts of the Forty-seventh Year of His

present Majesty are in all Respects effectual for the Purposes for which the same were intended;

wherefore, for obviating and removing such Doubts, May it please Your Majesty, That it may be

enacted, and be it enacted, and declared by the King's Most excellent Majesty, by and with the Advice

and Consent of the Lords Spiritual and Temporal, and Commons in this present Parliament

assembled, and by the Authority of the same,

That, from and immediately after the passing of this Act, in all Agreements, Covenants. Contracts,

Bonds, Obligations, Warrants, Judgments, Grants, Charges, Surrenders, Fines, Recoveries,

Conveyances, and other Assurances whatsoever, by which any Annuity or yearly Rent hath been, or

shall be sold, limited, or otherwise assured to, or in trust for, or for the Benefit of the said Society or

Partnership called, “The Globe Insurance Company;” or to any Person or Persons Acting for, or on

the Behalf of the said Society or Partnership, or by which any Annuity or yearly Rent hath been, or

76 49 Geo. III, c. 122. Paragraphs added.


158

shall be granted, sold, limited, or otherwise assured by the said Society or Partnership, called “The

Globe Insurance Company,” or by any Person or Persona acting for, or on the Behalf of the said

Society or Partnership; and in all Memorials of the said Assurances respectively, the Names of the

Members of the said Society or Partnership, and of all the Persons interested in the same, or acting

on the Part or Behalf of the said Members, or other Persons, or any of them, or for whom they or

any of them are Trustees, shall, for all the Purposes of the said Act of the Seventeenth Year of the

Reign of His present Majesty, be considered to be sufficiently mentioned, expressed, and contained

within the Provisions of the said Act of the Seventeenth Year of the Reign of His present Majesty,

and the true Intent and Meaning of the same, if, in the Assurances or any one of the Assurances, by

which such Annuities or Rents respectively shall be sold and secured, and in the Memorials of the

same respectively, it is or shall be expressed, or appears, or shall appear, that the Annuity or yearly

Rent so granted, sold, limited or otherwise assured, is thereby granted, sold, limited, or otherwise

assured by the said Society or Partnership, or to or for the Benefit of the said Society or Partnership

as the Case may be, and that the Consideration for the same is paid, advanced, or given to, or by, or

on the Behalf, or on the Account of the said Society or Partnership, as the Case may be; and thereupon,

(the other Requisites of the said Act of the Seventeenth Year of the Reign of His said Majesty being

complied with), the said Deeds and Assurances, and the Memorials of the same, shall be as valid, and

effectual, to all Intents, Effects, Constructions, and Purposes whatsoever, as if the Names of all the

Members of the said Society or Partnership, and of all the Persons interested in the said Society or

Partnership, or represented by them, or for, or on the Behalf of whom they, or any of them have

acted, or been Trustees, or paid or advanced, or given the Money, or other Consideration for the said

Annuities, or shall act or be Trustees, or pay or advance, or give the Money or other Consideration for

the said Annuities, were stated in the said Assurances and Memorials respectively, in the Manner

prescribed by the said Act.”

Chapter 7. Banking Laws and Joint Stock Banking Companies

a. An Act for establishing an Agreement with the Bank of England (1800)77

“An Act for establishing an Agreement with the Governor and Company of the Bank of England, for Advancing

the Sum of three millions, towards the. Supply for the Service of the Year one thousand eight hundred.—[28th March

1800.]

…

And Whereas the said Governor and Company of the Bank of England are willing and contented

to advance, towards the Supply granted to your Majesty for the Service of the Year 1800, the Sum of

3,000,000, on or before the 5th Day of April 1800, on the Security of Exchequer Bills … and to he

made payable without Interest, and to be charged and chargeable upon and repaid out of the first

Aids or Supplies which shall be granted by Parliament for the Service of the Year 1806; and in case

sufficient Aids or Supplies should not be granted by Parliament for that purpose before the 5th day of

April 1806, the same to be charged and chargeable upon, and to be re-paid out of the consolidated

fund; provided … that in Consideration of the said Advance of 3,000,000 in the Manner, for the

Period, and upon the Terms above mentioned, the said Governor and Company be continued a

Corporation with the sole Power and Privilege of exclusive Banking, and all other the Abilities,

Capacities, Powers, Authorities, Franchises, Immunities, Exemptions, Privileges, Profits, Emoluments,

Benefits, and Advantages, which they now have, possess, or 'enjoy, by virtue or in pursuance of their

Charter, or of any former Actor Acts of Parliament, or of any Employment by or on Behalf of the

Publick, be granted and confirmed to the said Governor and Company, in such Manner as is herein-

after mentioned:

…

XV. And to prevent any Doubts that may arise concerning the Privilege or Power given, by former

Acts of Parliament, to the said Governor and Company, of exclusive Banking, and also in regard to

the erecting any other Bank or Banks by Parliament, or restraining other Persons from Banking during

the Continuance of the said Privilege, granted to the Governor and Company of the Bank of England,

as before recited; it is hereby further enacted and declared, That it is the true Intent and Meaning of

this Act, that no other Bank shall be erected, established, or allowed by Parliament; and that it shall

not be lawful for any Body Politick or Corporate whatsoever erected or to be erected, or for any other

Persons, united or to be united in Covenants or Partnership, exceeding the Number of six Persons, in

that Part of Great Number of Britain called England, to borrow, owe, or take up, any Sum or Sums of

Money on their Bills or Notes, payable on Demand, or at any less Time than six Months from the

borrowing thereof, during the Continuance of the said Privilege to the said Governor and Company;

who are hereby declared to be and remain a Corporation, with the Privilege of exclusive Banking, as

before recited, subject to Redemption on the Terms and Conditions before-mentioned; (that is to say,)

77 39 & 40 Geo. III, c. 28. URL: http://goo.gl/cE0yi.

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on One Year's Notice to be given after the 1st Day of August 1833, and Repayment of the laid Sum of

3, 200,000 Pounds, and all Arrears of the said 100,000 Pounds per Annum; and also upon Repayment

of the said Sum of 8,486,800 Pounds, and the Interest or Annuities payable thereon or in respect

thereof, and all the Principal and Interest Money that shall be owing on all such Tallies, Exchequer

Orders, Exchequer Bills, Parliamentary Funds, or other Government Securities, which the said

Governor and Company, or their Successors, shall have remaining in their Hands, or be entitled to, at

the Time of such Notice to be given as aforesaid, and not otherwise; any Thing in this Act, or any

former Act or Acts of Parliament, to the contrary in anywise notwithstanding.”

b. Parliamentary Debates on the Bank Charter Amendment Bill (1826)

Discussions of the Bank Charter Amendment Bill in the Lords78:

“The Earl of Liverpool rose, pursuant to notice, to move the second reading of the bill … He

believed it would be most convenient for the discussion to call their lordships' attention to the different

branches of the subject, in order fully to explain the measures which his majesty's government had

thought it right to adopt under the present circumstances. He was well aware of the difficulties

opposed to any measure of remedy which could be suggested. At the same time he could not help

thinking that, if their lordships were disposed to look the difficulties fairly in the face, they would

become less than they might at first sight appear to be. A noble lord opposite, had, on a former

occasion, referred to what he had thought it right to say in the course of last session, on the subject

of the speculations which were then going on. What he had then said, showed that the causes of the

present evils were not unforeseen. It had been said, however, that he had not pointed out all the

sources of the delusion, and that in particular he had not said any thing of the country banks. Now,

he would refer to the recollection of those who heard him at the time, as well as to those floating

records, which, though loose and hastily made, would be found substantially correct, for an account

of what he had said at that time. It would be found, that upon that occasion he had gone even out of

his way, to give notice to the persons embarked in [451] the wild speculations, of the hazard they were

incurring. He had then observed, that one of the reasons of his mentioning the subject was, that those

speculations were not confined to the metropolis, where people might easily know what they were

worth, but that they were extended through the country by the agency of the country banks.

Government had received intelligence of this, and numerous individuals knew of it as well as

government. When he referred to this declaration, he did it out of no view of laying claim to any

prophetic spirit, beyond that possessed by any other noble lord, who had directed his attention to

questions of that nature. Their lordships must say, when they recollected the numerous speculations

78 HL Deb 17 February 1826 vol 14 cc450-500. URL: http://hansard.millbanksystems.com/lords/1826/feb/17/bank-charter-amendment-bill#S2V0014P0_18260217_HOL_2. Contains Parliamentary information licensed under the Open Parliament Licence v1.0.

http://hansard.millbanksystems.com/lords/1826/feb/17/bank-charter-amendment-bill#S2V0014P0_18260217_HOL_2

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7. Banking Laws and Joint Stock Banking Companies

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of the last year, the mining speculations, the loans to foreign countries, the various extravagant projects

which were on foot, that it was impossible but, sooner or later, a powerful reaction must take place.

In discussing the proposed measures, he should first endeavour to ascertain the causes of the

present distress. And he had no difficulty in stating, that he agreed with those who had ascribed the

principal part of the evil to those extraordinary and extravagant speculations which were afloat in this

country during the last year, and which undoubtedly had their origin in the then great prosperity of

the country. Their lordships would recollect the speculations of that period. The foreign loans, the

mining associations, the joint-stock companies, had come to such an extent, that a noble lord, then in

his place, and a noble and learned friend of his, not then on the woolsack, had thought it right to

devise measures to obstruct the passage of these projects through parliament. Their objects were plain

to every man, and made him feel for the dangers to which the unwary were exposed. The spirit of

adventure—the spirit of gambling and speculation—was pushed to an extent never exceeded at any

period of the history of this country since the celebrated South-sea bubble. This spirit of adventure

and speculation was not confined to these new objects of speculation, but extended itself to all the

branches of legitimate and ordinary trade. Their lordships had lately heard a great deal of the danger

of giving freedom to trade, and much of the evils had been ascribed by some persons to those acts

of parliament, by which some branches of trade had been liberated; but, the greatest speculation had

[452] taken place in those articles, the trade in which had always been free…Every branch of trade

had thus been extended to a degree unparalleled in this country. Such had been the spirit of enterprise,

not only [453] with respect to gambling and joint-stock companies, but also to speculations in trade,

that it was beyond possibility, that a great re-action should not follow.

Having stated thus much with regard to over-trading, he would proceed to speak of the currency,

and to shew its connection with the present state of things. He knew there were different theories

upon the subject. Some persons attributed all the evils to speculation, while others attributed them all

to the currency. That they did not flow exclusively from the currency, he thought he had already shewn;

but he did not think that all these speculations and gambling transactions could have been carried to

the degree they had been carried, if they had not been aided by the paper currency. Both causes had

operated. The speculations in trade had been the origin of the evil; the spirit of gambling carried into

every branch of trade had been the beginning, but it could not have been so extensive if it had not

been aided by the state of the currency. Let their lordships see how the question stood with regard to

the currency. That question also divided itself into two branches—the notes of the Bank of England,

and the notes of the country banks…

[455] Thus, the notes stamped for the country banks exceeded, in 1825, by a considerable amount,

the average amount of former years. Whatever reduction of the paper circulation was effected by the

Bank of England, was more than made up by the issues of the country banks…

Having established this fact, he would ask their lordships, if it was too much for him to say, that

the spirit of adventure and speculation, the gambling in joint-Stock companies and mining

associations, in loans, and the other extravagant projects, which he had before alluded to, had been,

fomented and encouraged by the facilities afforded by the over-issues of the country banks; and that


162

the failure of these speculations, necessarily involving that of those who had afforded them

accommodation, was one of the main causes of the distress of the country?... Thus, therefore,

although the run was not altogether confined to the Country banks, and it was impossible when once

the panic had diffused itself abroad that it-should be so still it would, he believed, be acknowledged

that the run was mostly upon the country banks, and that when it extended itself to London, it fell

with, the greatest fury upon the establishments most connected with the country-bank circulation.

…

These were the grounds on which he submitted his first measure to the consideration of the

House. It was proposed, as the means of making the evils more equally felt, whenever an unfavourable

state of the exchanges took place, by which the great mass of the people would be protected from its

effects. But then it would be said, “That measure of itself will be inadequate; you ought to go further;

that is doing a good deal, but it is not doing [461] enough.” But, though he preferred a metallic to a

paper-currency in small transactions, still he admitted, that a system of banking, established on sound

principles, was attended with convenience, and even benefit, to a country. The measure, however,

which he had to propose on this subject, he granted, was but a half-measure. And why was it so?

Because their lordships would recollect, they had the chartered rights of the Bank of England to

contend with. This was an obstacle to their going further at present. They ought to go further

whenever they could; but the question now was, were their lordships, although they could not go as

far as they wished at present, to go as far as they could? He was surprised to hear it objected to, on no

other ground than that it was calculated to do too little good. But surely, if it would do some good,

and could do no harm, that was a groundless objection. The present system of law, as to banks in this

country, he considered to be one of the most absurd that ever was invented. It was in the teeth of all

sound policy or common sense. It had grown up gradually, and was not the result of any original plan

or system. He could easily conceive one of two systems founded upon reason and good policy, which

might be adopted by banks. For instance, let them have a system of liberty, permitting any number of

partners; or let them have a system of restriction, founded on conditions of indemnity or security, so

that the public had a chance of being secure. He could understand that in America, one of those

systems was acted upon. For instance, in the state of Massachusetts, they had twelve chartered banks,

and no others were allowed; and, the moment any one of them became unable to pay their notes in

specie, it forfeited its charter. That might be a wise system in the country in which it existed. At all

events, it was a system which he could conceive. It was a limited system, founded upon conditions.

There was, however, another system which was founded upon perfect and entire liberty; and which,

for similar reasons, might be found equally efficacious. Because, where perfect liberty prevailed, each

person having an equal right to invest his capital, the wealthier must in time drive out the weaker and

less solvent, and thus the same end would be obtained by different means. He might illustrate his

argument by a reference to the state of the banking establishments in the [462] metropolis. The private

bankers in London had it in their power to circulate their own notes—a privilege which they ally

however, invariably waived, because the public would not take them, so long as they could get those

of the Bank of England, in the solvency of which they had more confidence. So, if there were

chartered joint-stock banks in other parts of the kingdom, there could be no doubt but that they


163

would immediately absorb the whole circulation of the country. Therefore, by either of those systems,

the object of security would be attained. But what was the system in existence at present? Why, the

most rotten, the most insecure, the very worst, in every respect, that could possibly be conceived. Any

petty tradesman, any grocer or cheese-monger, however destitute of property, might set up a bank in

any place; whilst a joint-stock company, however large their capital, or a number of individuals,

exceeding six, however respectable and wealthy they might be, were precluded from so doing by the

present system. One more absurd, therefore, he repeated, could not be conceived. Let them, then,

either continue the system of restriction in point of number, but qualify it by condition; or else allow

full liberty of number so that whichever they adopted, the public might have security for their

property. The beneficial consequences resulting from one of these systems was manifested by its

effects in Scotland. He knew he might be told that it was in vain for him to look to the example of

that country, because they had not the power of granting charters. He admitted they had not, unless

the Bank of England were to give up its charter; and therefore it was, that he had before said that his

was but a half-measure. They had, however, consented to allow the restriction as to the number of

partners in country banks to be removed, and so far one difficulty was removed. In return for this, the

Bank might derive the consolation that they would have an opportunity of gratifying the desire, if

they experienced it, of establishing branch banks throughout the country. Indeed, he believed they

had a right to do so at present; and he confessed 'he was most anxious that they should make the

experiment. But he trusted that, if they did not think it prudent to make the experiment themselves,

they would not suffer the people to wait until [461] the year 1833, exposed to the consequences of

the present system, but set the public free, by allowing the Crown to grant charters to country banks.

He believed it would not in any respect injure them, but, on the contrary, while it would be attended

with the greatest advantages to the country at large, it would be beneficial also, in its consequences, to

the Bank itself.

…

Lord Ellenborough said, he could not give his assent to the measures flow before [496]

parliament, without expressing his opinions freely with regard to them. The measures at present

proposed, as he understood them, were three: one intended to afford immediate relief; and the other

two to prevent a recurrence of the calamities under which the country laboured. His chief objection

to the measure for present relief was, that it would not relieve those who were most deserving of it,

and that, while it would relieve some, it would necessarily injure others. For example, while it relieved

those, who would not convert their Exchequer-bills into cash at a discount, it injured the banks that

had been obliged to sell them during the height of the panic. There was no proof of the want of a

circulating medium. It was more extensive now than at the end of 1824; yet, the object of government

was, to increase it, when its very extent was alleged as one of the causes of the distress. The great

cause of distress was, that people were all called on to pay what they owed, at the same time, and much

sooner than they expected. It pervaded every class and description of persons. He knew not by what

means relief could be administered; but he was sure that the measure of the noble earl would not

reach those who were innocently involved in the calamities that pressed on the country. But, the noble

lords on the Treasury bench were not agreed as to the character of their own measures. The noble


164

earl had admitted, that the measure relative to the country banks was only a half measure, and had

expressed his regret that he could not grant charters to the many joint-stock companies at once, while

the noble lord who spoke last regarded the measures as of the greatest importance, and was only

afraid that too great a number of joint-stock banks would be instituted. For his part, the events of the

last two or three years, he confessed did not induce him to look at joint-stock companies with a

favourable eye. He was not, therefore, sorry at the delay which must take place in the full completion

of the measures; and, therefore, he thought no injury would result from the circumstance of these

new companies not being able immediately to obtain charters. When the period fixed by law arrived,

the materials would be provided for establishing them on an extended basis. He trusted no events

would occur to prevent his majesty's ministers from following up the course on which they had

entered. No man [497] evidently thought more deeply on the subject than the noble earl at the head

of the Treasury, nor felt greater apprehensions from the present state of things. As it was impossible

to doubt, that the noble earl was in favour of a system of restriction, it was to be regretted that into

the present bill, out of which joint-stock banking companies might arise, a provision had not been

inserted for the purpose of restricting such companies in their operations. The measure for putting

an end to the circulation of small notes at the end of three years, was a measure only of justice and

humanity to the poorer classes, and therefore he highly approved of it; but, still, approving of it

entirely, as far as its operation went, it was not, he thought, a measure which would reach to the causes

of the existing mischief. For, if the noble earl at the head of government, looked at the papers on the

table, he would find, that of 3,000,000l. of country-bank paper, issued between last year and the year

before, scarcely 1,000,000l. had been issued in notes under 5l. Therefore, the putting an end to the

circulation of 1l. and 2l. notes was not going far enough. To him it appeared idle to talk of the

convertibility of notes into gold, while our system of country banking remained upon its present

footing. If that system was allowed to go on, his firm persuasion was, that the country banks must

ruin the Bank of England itself. In February of the last year, the Bank of England, seeing the foreign

exchanges against us, had taken the just course to correct that mischief, by calling in more than

3,000,000l. of their issues. What was the consequence? Why, that the country banks had immediately

advanced their issues, for every pound which the Bank of England had withdrawn. Under such a

system, it was physically impossible for the Bank to prevent foreign exchanges from being against us.

At present, the Bank was compelled to take the risk, not only of its own trading, but of the trading

of all the country banks. Its situation was one of great difficulty, and he was surprised how it had

acquitted itself so well. It was absolutely necessary to the safety of the country, that the currency

should be placed upon a solid foundation. He was quite sure that the noble earl must feel deep

apprehension on the subject; and he trusted that after the present 498 alarm had passed away—with

seven [498] years of delay for consideration, before the Bank charter would expire—that noble lord

would propose some definitive scheme which should give confidence for the future. The convulsions

which the country had sustained under the old system, did mischief far beyond any actual loss that

was sustained. It was said that, by the recent failures, the country would lose 2,000,000l. in money;

but, the real mischief was in the derangement in the transfers of property which such accidents

produced. He viewed the whole of this subject as of the highest importance to the safety of the

country; and he trusted that the noble earl, with all the authority which belonged to him, as head of


165

the government, and in virtue of his great talents and personal integrity, would boldly face the subject,

and come down to parliament, with some comprehensive plan for establishing a firm and solid system

of banking.”

__________________________________

Discussions in the House of the Bank Charter Amendment Bill79:

“The Chancellor of the Exchequer said, that he could not enter into any of the views of the

hon. member, with respect to the probability of the country being deluged with paper, or to that of

the new banks being managed with improvidence. He could not believe that the country would be

placed in any such jeopardy, because it might be the pleasure of parliament to modify the existing

Bank charter, or hereafter to decline continuing the privileges of the Bank, by putting the law on a

more extended scale than that on which it now stood. It was not necessary to argue either of those

questions; for the passing of the bill through its former stages sufficiently-proved that the House was

desirous that some facilities should be given to the formation of banks upon a more extended scale

than that which the present state of the law allowed. He could not believe, that the only safe system

of banking was [239] identically that system which happened to exist in England at the present

moment. Every person must see the utter incapability of the Bank to carry on all the banking concerns

of the country. They had not the means to help the whole country, as they had done the county of

Lancaster. The question, therefore, to be considered was, whether it was necessary to continue the law

with respect to the number of partners? What peculiar magic there was in the number six, he could

not conceive; nor could he possibly imagine, why that number should be held to be perfectly safe, and

a greater number to be replete with danger. The hon. member for Newton had alluded to an

extravagant project for establishing a bank with a capital of one million, to be subscribed in shares of

two pounds each. That such a project had been entertained, and proposed to the public, was

undoubtedly true; and he had himself received a circular letter, which invited him to become one of

the honorary members. The proposal was, that if he would allow himself to be set down as an

honorary member, he might, if he pleased, dispense with taking any shares, and he might have nothing

to do with the concern. He must confess, that this latter part of the proposal was the only part which

he approved of. It was completely applicable to his views, and he accordingly had had nothing to do

with it. But surely, because there were persons wild enough to entertain most absurd and mischievous

projects, it was not to be argued that such schemes should deter the legislature from endeavouring to

give the wholesome and ordinary facilities of trade to the banking system. Absurd combinations were

not impossible under any system. If the termination of the Bank charter and privileges had left the

government the opportunity of doing as they thought fit, he certainly would not have proposed some

of the limitations which clogged the present bill. The arrangement as to the limited amount for which

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166

parties were allowed to draw, was certainly a very great defect. But the government had been obliged

to be content with what they could get. He should have been glad if the Bank had been prepared to

waive their exclusive rights, to a greater extent than they had done; but that not being the case, he and

his colleagues could only propose to parliament the utmost he could obtain from the Bank. He thought

it right of the country to avail itself of the facilities as far as they [240] went; for they were calculated

to place the banking system upon a much better footing than that on which it had hitherto stood.

…

Mr. Leycester thought, that the greater the number of partners in banks, the less security there

would be for the respectability of their character, or the solvency of their circumstances. He

considered the present bill objectionable in every point of view.

…

[241] Mr. Spring Rice was surprised to hear the hon. Bank director say, that private banks were

preferable to the Bank of England. One great objection with him to the present measure was, that it

gave a monopoly of local circulation to the Bank of England; as its branch banks would be established

free from the difficulties which the joint-stock banks would have to contend with. He recommended

that publicity should be given to the amount of local issues of paper.

Mr. J. P. Grant contended, that, although government had probably made the best bargain they

could with the Bank of England, yet they had not done enough for the permanent advantage of the

country. There could not be, in his opinion, any danger of over-issues, which were apprehended on

the part of the country banks; because, as long as they were compelled to pay their notes in notes of

the Bank of England, and those were payable in gold, there must be an effectual check upon too great

an extension of credit in that way. In remarking upon the clause which prohibited the chartered banks

from discounting bills or issuing notes in London, he begged to ask, whether it was intended that they

should [242] not have any agent or correspondent in the metropolis? If they were allowed an agent,

he might, in the ordinary performance of his duties, violate the law in that respect, without any

intention of offending against the provisions of the act; and he therefore thought it highly necessary

that the clause should be so worded as to leave no doubt upon the subject. He also objected to the

clause which prevented chartered Banks from issuing notes payable in London, under the sum of 50l.;

and to the clause by which these chartered banks of six persons were at once to be put in possession,

without any act of the legislature, of a power enjoyed by no other corporation or company in the

kingdom, unless under the authority of an act of parliament—he meant the right to sue and be sued,

in the name of their manager or director. That right, thus conferred, seemed to be a little invidious

towards other companies, to whom the same power had been refused. The hon. gentleman concluded,

by expressing his conviction, that the bill, with all its imperfections, would be highly beneficial to the

country; and declared, that while the with drawings of the exclusive privileges of the Bank of England

could not be attended with any loss to that establishment itself, it would be the means of producing

results the most important to the community.


167

The Chancellor of the Exchequer said, that a similar clause was inserted in the Irish Banking

act, and it was only on the insertion of such a clause that the Bank of England consented to waive

the privileges of its charter. He could not undertake to answer for the exact legal effect of the words

of the clause; but if there was any obscurity in the words, or if there was any thing contained in them

which would practically prevent the formation of these co-partnerships, such was not the intention

either of the Bank or the government; and these words might be so altered as to remove the objection

entertained against the clause. As to the attack which the learned gentleman had made upon the bill,

it was directed against the measure generally, and not against this clause. If the learned gentleman had

read the correspondence between the Bank and government he would have seen that the substance

of this clause had been insisted upon by the Bank.”

c. An Act for the better regulating Copartnerships of certain Bankers in England (1826)80

“An Act for the better regulating Copartnerships of certain Bankers in England; and for amending so much of

an Act of the Thirty ninth and Fortieth Years of the Reign of His late Majesty King George the Third, intituled An

Act for establishing an Agreement with the Governor and Company of the Bank of England, for advancing the Sum

of Three Millions towards the Supply for the Service of the Year 1800, as relates to the same.

[26th May 1826.]

…And Whereas the Governor and Company of the Bank of England have consented to relinquish

so much of their exclusive Privilege as prohibits any Body Politic or Corporate, or any Number of

Persons exceeding Six, in England, acting in Copartnership, from borrowing, owing or taking up any

Sum or Sums of Money on their Bills or Notes payable on Demand, or at any less Time than Six

Months from the borrowing thereof; provided that such Body Politic or Corporate, or Persons united

in Covenants or Partnerships, exceeding the Number of Six Persons in each Copartnership, shall have

the whole of their Banking Establishments and carry on their Business as Bankers at any Place or

Places in England exceeding the Distance of Sixty five Miles from London, and that all the Individuals

composing such Corporations or Copartnerships, carrying on such Business, shall be liable to and

responsible for the due Payment of all Bills and Notes issued by such Corporations or Copartnerships

respectively:

Be it therefore enacted by the King's most Excellent Majesty, by and with the Advice and Consent

of the Lord Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the

Authority of the same, That from and after the passing of this Act it shall and may be lawful for any

Bodies Politic or Corporate erected for the Purposes of Banking, or for any Number of Persons

united in Covenants or Copartnership, although such Persons so united or carrying on Business

together shall consist of more than Six in Number, to carry on the Trade or Business of Bankers in

England, in like Manner as Copartnerships of Bankers consisting of not more than Six Persons in

Number may lawfully do; and for such Bodies Politic or Corporate, or such Persons so united as

80 7 Geo. IV, c. 46. URL: http://goo.gl/jeygk. Paragraphs added.

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aforesaid, to make and issue their Bills or Notes at any Place or Places in England exceeding the

Distance of Sixty five Miles from London, payable on Demand, or otherwise at some Place or Places

specified upon such Bills or Notes, exceeding the Distance of Sixty Miles from London and not

elsewhere, and to borrow, owe or take up any Sum or Sums of Money on their Bills or Notes so made

and issued at any such Place or Places as aforesaid: Provided always, that such Corporations or Persons

carrying on such Trade or Business of Bankers in Copartnership shall not have any House of Business

or Establishment as Bankers in London, or at any Place or Places not exceeding the Distance of Sixty

five Miles from London ; and that every Member of any such Corporation or Copartnership shall be

liable to and responsible for the due Payment of all Bills and Notes which shall be issued, and for all

Sums of Money which shall be borrowed, owed or taken up by the Corporation or Copartnership of

which such Person shall be a Member, such Person being a Member at the Period of the Date of the

Bills or Notes, or becoming or being a Member before or at the Time of the Bills or Notes being

payable, or being such Member at the Time of the borrowing, owing or taking up of any Sum or Sums

of Money upon any Bills or Notes by the Corporation or Copartnership, or while any Sum of Money

on any Bills or Notes is owing or unpaid, or at the Time the same became due from the Corporation

or Copartnership; any Agreement, Covenant or Contract to the contrary notwithstanding.

…

IV. And be it further enacted, That before any such Corporation or Copartnership exceeding the

Number of Six Persons, in England, shall begin to issue any Bills or Notes, or borrow, owe or take up

any Money on their Bills or Notes, an Account or Return shall be made out, according to the Form

contained in the Schedule marked (A) to this Act annexed, wherein shall be set forth the true Names,

Title or Firm of such intended or existing Corporation or Copartnership, and also the Names and

Places of Abode of all the Members of such Corporation or of all the Partners concerned or engaged

in such Copartnership, as the same respectively shall appear on the Books of such Corporation or

Copartnership, and the Name or Firm of every Bank or Banks established or to be established by

such Corporation or Copartnerships and also the Names and Places of Abode of Two or more

Persons, being Members of such Corporation or Copartnership, and being resident in England, who

shall have been appointed Public Officers of such Corporation or Copartnership, together with the

Title of Office or other Description of every such Public Officer respectively, in the Name of any

One of whom such Corporation shall sue and be sued as hereinafter provided, and also the Name of

every Town and Place where any of the Bills or Notes of such Corporation or Copartnership shall be

issued by any such Corporation or by their Agent or Agents; and every such Amount or Return shall

be delivered to the Commissioners of Stamps, at the Stamp Office in London, who shall cause the

same to be filed and kept in the said Stamp Office, and an Entry and Registry thereof to be made in

a Book or Books to be there kept for that Purpose by some Person or Persons to be appointed by the

said Commissioners in that Behalf, and which Book or Books any Person or Persons shall from time

to time have liberty to search and inspect on Payment of the Sum of One Shilling for every Search.

V. And be it further enacted, That such Account or Return shall be made out by the Secretary or

other Person, being One of the Public Officers appointed as aforesaid, and shall be verified: by the

Oath of such Secretary or other Public Officer, taken before any Justice of the Peace, and which Oath


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any Justice of the Peace is hereby authorized and empowered to administer; and that such Account or

Return shall, between the 28th Day of February and the 25th Day of March in every Year, after such

Corporation or Copartnership shall be formed, be in like Manner delivered by such Secretary or other

Public Officer as aforesaid, to the Commissioners of Stamps, to be filed and kept in the Manner and

for the Purposes as hereinbefore mentioned.

VI. And be it further enacted, That a Copy of any such Account or Return so filed or kept and

registered at the Stamp Office, as by this Act is directed, and which Copy shall be certified to be a true

Copy under the Hand or Hands of One or more of the Commissioners of Stamps for the Time being,

upon Proof made that such Certificate has been signed with the Handwriting of the Person or Persons

making the same, and whom it shall not be necessary to prove to be a Commissioner or

Commissioners, shall in all Proceedings, Civil or Criminal, and in all Cases whatsoever, be received in

Evidence as Proof of the Appointment and Authority of the Public Officers named in such Account

or Return, and also of the Fact that all Persons named therein as Members of such Corporation or

Copartnership were Members thereof at the Date of such Account or Return.

VII. And be it further enacted, That the said Commissioners of Stamps for the Time being shall

and they are hereby required, upon Application made to them by any Person or Persons requiring a

Copy certified according to this Act, of any such Account or Return as aforesaid, in order that the

same may be produced in Evidence or for any other Purpose, to deliver to the Person or Persons so

applying for the same such certified Copy, he, she or they paying for the same the Sum of Ten Shillings

and no more.

VIII. Provided also, and be it further enacted, That the Secretary or other Officer of every such

Corporation or Copartnership shall and he is hereby required, from time to time, as often as Occasion

shall render it necessary, make out upon Oath, in Manner hereinbefore directed, and cause to be

delivered to the Commissioners of Stamps as aforesaid, a further Account or Return according to the

Form contained in the Schedule marked (B) to this Act annexed, of the Name or Names of any

Person or Persons who shall have been nominated or appointed a new or additional Public Officer or

Public Officers of such Corporation or Copartnership, and also of the Name or Names of any Person

or Persons who shall have ceased to be Members of such Corporation or Copartnership, and also of

the Name or Names of any Person or Persons who shall have become a Member or Members of such

Corporation or Copartnership, either in addition to or in the Place or Stead of any former Member

or Members thereof, and of the Name or Names of any new or additional Town or Towns, Place or

Places, where such Bills or Notes are or are intended to be issued, and where the same are to be made

payable; and such further Accounts or Returns shall from time to time be filed and kept, and entered

and registered at the Stamp Office in London, in like Manner as is hereinbefore required with respect

to the original or annual Account or Return hereinbefore directed to be made.

IX. And be it further enacted, That all Actions and Suits, and also all Petitions to found any

Commission of Bankruptcy against any Person or Persons, who may be at any Time indebted to any

such Copartnership carrying on Business under the Provisions of this Act, and all Proceedings at Law

or in Equity under any Commission of Bankruptcy, and all other Proceedings at Law or in Equity to


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be commenced or instituted for or on behalf of any such Copartnership against any Person or

Persons, Bodies Politic or Corporate, or others, whether Members of such Copartnership or

otherwise, for recovering any Debts or enforcing any Claims or Demands due to such Copartnership,

or for any other Matter relating to the Concerns of such Copartnership, shall and lawfully may, from

and after the passing of this Act, be commenced or instituted and prosecuted in the Name of any

One of the Public Officers nominated as aforesaid for the Time being of such Copartnership, as the

nominal Plaintiff or Petitioner for and on behalf of such Copartnership ; and that all Actions or Suits,

and Proceedings at Law or in Equity, to be commenced or instituted by any Person or Persons, Bodies

Politic or Corporate, or others, whether Members of such Copartnership or otherwise, against such

Copartnership, shall and lawfully may be commenced, instituted and prosecuted against any One or

more of the Public Officers nominated as aforesaid for the Time being of such Copartnership, as the

nominal Defendant for and on behalf of such Copartnership; and that all Indictments, Informations

and Prosecutions by or on behalf of such Copartnership, for any Stealing or Embezzlement of any

Money, Goods, Effects, Bills, Notes, Securities or other Property of or belonging to such

Copartnership, or for any Fraud, Forgery, Crime or Offence committed against or with Intent to injure

or defraud such Copartnership, shall and lawfully may be had, preferred and carried on in the Name

of any One of the Public Officers nominated as aforesaid for the Time being of such Copartnership;

and that in all Indictments and Informations to be had or preferred by or on behalf of such

Copartnership against any Person or Persons whomsoever, notwithstanding such Person or Persons

may happen to be a Member or Members of such Copartnership, it shall be lawful and sufficient to

state the Money, Goods, Effects, Bills, Notes, Securities or other Property of such Copartnership, to

be the Money, Goods, Effects, Bills, Notes, Securities or other Property of any One of the Public

Officers nominated as aforesaid for the Time being of How Forgeries, such Copartnership; and that

any Forgery, Fraud, Crime or other Offence committed against or with Intent to injure or defraud any

such Copartnership, shall and lawfully may in such Indictment or Indictments, notwithstanding as

aforesaid, be laid or stated to have been committed against or with Intent to injure or defraud any

One of the Public Officers nominated as aforesaid for the Time being of such Copartnership; and

any Offender or Offenders may thereupon be lawfully convicted for any such Forgery, Fraud, Crime

or Offence; and that in all other Allegations, Indictments, Informations or other Proceedings of any

Kind whatsoever, in which it otherwise might or would have been necessary to state the Names of

the Persons composing such Copartnership, it shall and may be lawful and sufficient to state the Name

of any One of the Public Officers nominated as aforesaid for the Time being of such Copartnership;

and the Death, Resignation, Removal or any Act of such Public Officer, shall not abate or prejudice

any such Action, Suit, Indictment, Information, Prosecution or other Proceeding commenced against

or by or on behalf of such Copartnership, but the same may be continued, prosecuted and carried on

in the Name of any other of the Public Officers of such Copartnership for the Time being.

…

XI. And be it further enacted, That all and every Decree or Decrees, Order or Orders, made or

pronounced in any Suit or Proceeding in any Court of Equity against any Public Officer of any such

Copartnership carrying on Business under the Provisions of this Act, shall have the like Effect and


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Operation upon and against the Property and Funds of such Copartnership, and upon and against

the Persons and Property of every or any Member or Members thereof, as if every or any such

Members of such Copartnership were Parties Members before the Court to and in any such Suit or

Proceeding; and that it shall and may be lawful for any Court in which such Order or Decree shall

have been made, to cause such Order and Decree to be enforced against every or any Member of

such Copartnership, in like Manner as if every Member of such Copartnership were Parties before

such Court to and in such Suit or Proceeding, and although all such Members are not before the

Court.

XII. And be it further enacted, That all and every Judgment and Judgments, Decree or Decrees,

which shall at any Time after the passing of this Act be had or recovered or entered up as aforesaid,

in any Action, Suit or Proceedings in Law or Equity against any Public Officer of any such

Copartnership, shall have the like Effect and Operation upon and against the Property of such

Copartnership, and upon and against the Property of every such Member thereof as aforesaid, as if

such Judgment or Judgments had been recovered or obtained against such Copartnership; and that

the Bankruptcy, Insolvency or stopping Payment of any such Public Officer for the Time being of

such Copartnership, in his individual Character or Capacity, shall not be nor be construed to be the

Bankruptcy, Insolvency or stopping Payment of such Copartnership; and that such Copartnership and

every Member thereof, and the Capital Stock and Effects of such Copartnership, and the Effects of

every Member of such Copartnership, shall in all Cases, notwithstanding the Bankruptcy, Insolvency

or stopping Payment of any such Public Officer, be attached and attachable, and be in all Respects

liable to the lawful Claims and Demands of the Creditor and Creditors of such Copartnership, or of

any Member or Members thereof, as if no such Bankruptcy, Insolvency or stopping Payment of such

Public Officer of such Copartnership had happened or taken place.

XIII. And be it further enacted, That Execution upon any Judgment in any Action obtained against

any Public Officer for the Time being of any such Corporation or Copartnership carrying on the

Business of Banking under the Provisions of this Act, whether as Plaintiff or Defendant, may be

issued against any Member or Members for the Time being of such Corporation or Copartnership;

and that in case any such Execution against any Member or Members for the Time being of any such

Corporation or Copartnership shall be ineffectual for obtaining Payment and Satisfaction of the

Amount of such Judgment, it shall be lawful for the Party or Parties so having obtained Judgment

against such Public Officer for the Time being to issue Execution against any Person or Persons who

was or were a Member or Members of such Corporation or Copartnership at the Time when the

Contract or Contracts or Engagement or Engagements in which such Judgment may have been

obtained was or were entered into, or became a Member at any Time before such Contracts or

Engagements were executed, or was a Member at the Time of the Judgment obtained: Provided

always, that no such Execution as last mentioned shall be issued without Leave first granted, on Motion

in open Court, by the Court in which such Judgment shall have been obtained, and when Motion shall

be made on Notice to the Person or Persons sought to be charged, nor after the Expiration of Three

Years next after any such Person or Persons shall have ceased to be a Member or Members of such

Corporation or Copartnership.


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XIV. Provided always, and be it further enacted, That every such Public Officer in whose Name

any such Suit or Action shall have been commenced, prosecuted or defended, and every Person or

Persons against whom Execution upon any Judgment obtained or entered up as aforesaid in any such

Action shall be issued as aforesaid, shall always be reimbursed and fully indemnified for all Loss,

Damages, Costs and Charges, without Deduction, which any such Officer or Person may have

incurred by reason of such Execution, out of the Funds of such Copartnership, or in Failure thereof,

by Contribution from the other Members of such Copartnership, as in the ordinary Cases of

Copartnership.”

Chapter 8. The Late and Unexpected Revival of the Bubble Act

a. Rex v. Dodd (1808)81

“THE defendant, some time in the year 1807, published and circulated two different schemes; one

of them, entitled “Prospectus for the London Paper Manufacturing Company;” the other, “A

Prospectus of the intended London Distillery Company for making and rectifying genuine British

Spirits, Cordials, and Compounds.” By the first of these it was proposed, amongst other things, to

raise by subscription 50,000£, by twenty-five hundred transferable shares of 50£ each, payable by

instalments, not exceeding 10£ per cent.; the whole to be under a deed of trust or enrolment in

Chancery; “by which no party (it was said) could be accountable for more than the sum subscribed

under the regulations therein stipulated:” and the persons qualified to be chosen directors by the

amount of their shares were to be taken in the rotation in which they subscribed. The great advantages

of this scheme over other paper manufactories were extolled throughout the prospectus. The other

scheme, for a distillery company, which was also held forth in terms of extravagant praise to attract

popular favour, proposed to raise 100,000£ by two thousand transferable shares at 50£ each, payable

by instalments not exceeding 10£ per cent at twenty days' notice; to be in like manner under a deed

of trust enrolled in Chancery, “by which no party was to be accountable for more than the sum

subscribed under the regulations stipulated therein.” This also was to be under the management of

directors properly qualified, to be nominated in rotation as they subscribed. Annexed to the former

scheme was a supposed report to the directors of the London Distillery Company from the defendant,

stating that he had begun in [517] May or June 1807 taking in 1£ subscriptions; and speaking of the

large sums which would be required for the purchase of premises, &c.; and naming different

individuals, amongst others himself, to be elected to the principal employments in the concern.

[518] The Attorney-General (on the part of a private relator), moved the Court on a former day for

a criminal information against the defendant as the framer and promoter of these schemes, which he

contended to be against the express provisions and plain policy of the stat. 6 Geo. 1. c. 18. s. 18., and

supported the application by an affidavit verifying the issuing of these printed proposals by the

defendant, to whom application was made by the deponent for information respecting the nature of

them, and from whom he received a prospectus as to the paper manufactory. That the deponent

agreed to subscribe to it, and paid the defendant 5£ as for an instalment of 10£ per cent on a

transferable share of 50£. And in answer to an inquiry by the deponent what return would be made

if the scheme did not succeed, the defendant answered 2 ½ £ per cent on each share: and at the same

time mentioned that the subscriptions to the distillery scheme which he had to offer to the public had

been all full three months before, and that the shares bore a premium, but he thought he could get

the deponent one for a premium of 10£ or 20£. Facts of a similar nature were also sworn to, with

respect to the defendant's taking subscriptions for the distillery scheme in a book kept in an office for

that purpose, and for which a clerk in the office delivered receipts purporting to be signed by the

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defendant as surveyor; and that at the same time the defendant came into the office and conversed

with another person present on the nature of the undertaking, who also subscribed.

…

[520] S. 19. [of the Bubble Act] enacts that all such unlawful undertakings and attempts so tending

to the common grievance, &c. shall be deemed public nuisances, and subjects the offenders to the

penalties of praemunire, in addition to the fines, penalties and punishments of persons convicted of

common and public nuisances. And subsequent clauses give other remedies in respect of these

grievances. With a proviso (s. 25.) that the act shall not be construed to prohibit or restrain the carrying

on of partnerships in trade, in such manner as had been before usually and may legally be done.

[521] Garrow, Park, Jervis, Lawes, and Adolphus, shewed cause against the information, and denied

that there was any apparent mischievous tendency or public grievance in these schemes, (the one of

which was to supply better and cheaper paper, and the other to supply better and cheaper British

spirits to the public than they had at present;) without which they were not within the letter, and still

less within the spirit of the law. The relator does not pretend to say that the money was attempted to

be raised, without any real intention to apply it to the purposes in view, in fraud of the subscribers; or

that the schemes themselves are impracticable and fallacious; but the objects which are openly avowed

are such as, if realized, must not only be advantageous to the subscribers, but to the public at large.

They are fair objects of trade, meant to be obtained by fair competition with other traders; but as a

larger capital was required than it is in general practicable for a few private partners to raise, it was

proposed to accomplish it by inviting many subscribers to form a joint stock. Then if the object were

legal, and it would have been legal for any number of persons to have met by appointment and entered

into partnership for this purpose, as they may for any purpose of trade, except in the coal trade, and

in that of bankers, and of insurance, under different acts,) the mere circumstance of inviting others

by advertisement to join them in such an undertaking cannot make it unlawful, nor the defendant's

mistake of the law in supposing that each partner would only be accountable for the joint debts

incurred to the amount of his subscription. Then the circumstance of this association, if legal in its

object and beneficial in its nature and tendency, being to be accomplished by transferable shares, is

not in itself made illegal by the act of Parliament, unless the Court see clearly [522] that it has, in the

words of the act, a manifest tendency to the common grievance, prejudice and inconvenience of the

public. It is only put by way of example amongst other means which may have that tendency: but still

the Court must be satisfied that the scheme itself to be promoted by those means has such

mischievous tendency. They also dwelt on the hardship of instituting a prosecution of this sort upon

a statute, which, except in the instance of a prosecution against Caywood within two years after it

passed, does not appear by any case in print to have been acted upon: and he is there represented to

have been a projector of an unlawful undertaking to carry on a trade to the North Seas, whereby many

of His Majesty's subjects had been defrauded of great sums. And they urged that the Court would

not put in force so penal a law at the instance of a private relator, who had himself voluntarily, without

solicitation from the defendant, or any one connected with him, become a subscriber, with a view, as

it seemed, of preferring this complaint; when, if the evil were of magnitude sufficient to call for public

redress, the Attorney General might file an information ex officio against the offenders.

8. The Late and Unexpected Revival of the Bubble Act

175

The Attorney General, Best, Serj. and Abbott, in support of the rule, premised that the only probable

reason why this branch of the statute had not been acted upon for so long a time was because it had

corrected the evil it was intended to suppress, till now of late when it had shewn itself again, and it

was again necessary, in proportion as schemes of this sort multiplied (and the public had heard of

others on foot besides [523] those in question), to put this wholesome law in force. They then argued

from the wording of the statute that the Legislature meant to prohibit altogether projects of this

nature, described by certain indicia as tending in their nature to the common grievance, prejudice and

inconvenience of the subject. It states that it was notorious that projects of different kinds had been of

late practised or attempted to be practised which manifestly tended to the common grievance, &c.;

that the persons who continued or attempted such dangerous and mischievous projects, under false pretences

of public good (and such are blazoned forth in these schemes), presumed to open books for public subscription;

that they drew in the subscribers or claimants under them to pay small proportions thereof: some of them,

it is said, presumed to act as corporate bodies, and had pretended to make their shares in stocks transferable,

without any legal authority. All these acts, which are to be found in the present case, are declared to

be dangerous and mischievous. But then the legislature go on further to recite more generally, that it

is necessary that all public undertakings and attempts tending to the common grievance, &c. of the

subjects in their trade or lawful affairs should be suppressed: and then it enacts for remedy that all

undertakings and attempts as aforesaid (which must mean all those particularly described in the first part

of the preamble,) and all other public undertakings tending to the common grievance, &c. (which

evidently points to the general words at the conclusion of the preamble,) and all other matters and

things whatsoever for furthering, countenancing, or proceeding in any such undertaking;" and more

particularly (inter alia) the pretending to [524] raise transferable stocks, or to assign shares in such stocks, &c.

without authority of Parliament or of the Crown, are declared to be illegal and void. That the particular

acts described are in themselves unlawful, as being assumed to have a mischievous and dangerous

tendency, is further evident from the 21st section, which subjects to punishment any broker who shall

act as such in contracting for the sale or purchase of any share or interest in any of the undertakings

by the act declared to be unlawful. But unless the particular acts themselves described are to be taken as

expressly prohibited without any reference to what a jury may consider as their tendency, how is a

broker to know whether a jury will consider them as tending to the common grievance, so as to govern his

conduct in exercising his business of a broker. But if the construction of the act were otherwise, it

cannot be doubted that these schemes come within the spirit of it. They hold out a false lure to the

subscribers, that they shall not be answerable for more than the amount of their shares, which is

calculated to ensnare the unwary: while extravagant hopes of gain are proclaimed to allure the greedy;

and adventurous persons of small property are drawn in by the facility held out of paying their

subscriptions by small instalments; which is one of the mischiefs intended to be prevented by the act.

There are also mischiefs of a more general nature affecting others than the subscribers themselves;

for when a multitude of persons are engaged in a commercial adventure with transferable shares, it is

next to impossible for those who deal with them to know to whom they are giving credit, or for the

members themselves to know the extent of their own responsibility. It is impracticable for 500 persons

to sue or be sued with effect. And the individual share-holder does not get rid [525] of the evil by

parting with his share; as he still remains liable not only for the partnership debts contracted during


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the time he held it, but also for those contracted afterwards with one who may have continued to deal

with the company on his credit, not knowing that he had ceased to be a partner. One of the special

objects of the act therefore was to prevent numbers of persons clubbing together with transferable

shares for the purpose of carrying on trade. It was considered as a crafty expedient to enable the

original projectors, after having possessed themselves of the joint stock and subscription funds, to

withdraw themselves from responsibility : but if the shares are not transferable, then the loss and ruin

will fall as it ought upon the original projectors. One object of the legislature was to secure simple

individuals against the ruinous consequences of such projects, where great hopes are holden out to

the public on false foundations; a large fund to be collected by numerous subscriptions of small sums,

of which the chief projector is to retain a principal share in the management; and the shares to be

transferable in order to facilitate the escape of those who are in the secret, and to make redress more

difficult and fruitless. Another object was to secure the public. Legal corporations are known, and can

be made responsible by their property, and punished by the forfeiture of their charter; but bodies of

this sort, indefinitely numerous, and having only individual existence, can with difficulty be traced, and

cannot afford the same protection to the public who deal with them.

LORD ELLENBOROUGH, C. J., at the conclusion of the argument, [526] observed that it was a

question of considerable novelty upon the construction of the act, which, though of some standing,

could not be considered as obsolete : yet the long period which had intervened since the passing of

the law, and the little use which appeared to have been made of it, might perhaps afford some excuse

for this party, and for others who of late may have been engaged in similar projects, if it should appear

that they had fallen unawares into the commission of an offence. The Court would therefore take into

consideration, first, whether the acts imputed to the defendant were illegal; and next, whether under

the circumstances it might be proper to grant the information prayed for. The first question was of

very extensive consequence, as it might affect other cases; and the Court would wish their decision to

have as much public benefit with as little private inconvenience as possible. Two days afterwards His

Lordship delivered the opinion of the Court to this effect.

The case has been very fully argued, and the application for an information has at least had this

good effect, that it has produced a full discussion of the question, and has given a general notoriety

to the existence of the statute of the 6th of Geo. 1., so that no person can hereafter pretend to say

that it is an obsolete law, and on that account no longer to be enforced against such as offend against

the provisions of it. After a lapse, however, of 87 years since any authenticated proceeding has been

had upon this branch of the act, and when other ways are still open to the party now applying to put

this act in force against offenders, the Court in the exercise of a sound discretion, under all the

circumstances of the case, will forbear to interfere in this extraordinary manner. But at the same time

we wish it to be understood [527] that it is not because we think that the facts brought before us are

not within the penalty of the law: but we choose to express ourselves with the greater reserve, because

the defendant may still be indicted, and the Court may still be called, upon the removal of the

indictment by certiorari, or upon an information filed by the Attorney General to give their opinion

on this very case. But independent of the general tendency of schemes of the nature of the project

now before us, to occasion prejudice to the public, there is besides in this prospectus a prominent


177

feature of mischief; for it therein appears to be held out that no person is to be accountable beyond

the amount of the share for which he shall subscribe, the conditions of which are to be included in a

deed of trust to be enrolled. But this is a mischievous delusion, calculated to ensnare the unwary

public. As to the subscribers, themselves, indeed, they may stipulate with each other for this contracted

responsibility; but as to the rest of the world it is clear that each partner is liable to the whole amount

of the debts contracted by the partnership. I forbear to comment on lesser circumstances: such as the

smallness of the sum to be subscribed in the first instance, which seems to carry an appearance of

holding out a lure to the unwary: and other features in the case. But considering that this is brought

forward after a lapse of so many years since any similar prosecution was instituted, and brought

forward by a party who does not profess to have been himself deluded by the project; and the statute

having been passed principally for the protection of unwary persons from delusions of this kind; the

Court think, in the exercise of their discretion, that they should not now enforce the statute against

this defendant at the relation of a [528] person so circumstanced: leaving the relator to the common

law remedy by indictment, or the defendant to be proceeded against by his Majesty's Attorney-

General, ex officio, if he should deem it adviseable for the protection of the public. But the Court think

it is fit that this rule should be discharged without costs. And they recommend it as a matter of

prudence to the parties concerned, that they should forbear to carry into execution this mischievous

project, or any other speculative project of the like nature, founded on joint stock and transferable

shares: and we hope that this intimation will prevent others from engaging in the like mischievous and

illegal projects.

Rule discharged, without costs.”

b. Rex v. Webb (1811)82

“THIS was an indictment found at the quarter sessions in Warwickshire, and afterwards removed

into this court by certiorari. The indictment contained eight counts: upon the first [407], third, and

fourth, of which the defendants were acquitted at the trial. The second stated that the defendants,

contriving and intending to prejudice and aggrieve divers subjects of the king in their trade and

commerce, under false pretences for the public good, after the 24th June 1720, to wit, on the 1st of

August, 1808, at Aston, near Birmingham, in the county of Warwick, did, according to their own device

and scheme, make subscriptions towards raising a great sum of money for establishing and setting on

foot a certain new and unlawful undertaking tending to the common grievance, prejudice, and

inconvenience of great numbers of the king's subjects in their trade and commerce; that is to say, did

make subscriptions towards raising a sum not exceeding 20,000£, to be divided into more than 20,000

parts or shares, for the purpose of buying corn, grinding the same, making bread, and dealing in or distributing

flour and bread, and for other purposes unknown; which undertaking was a public undertaking, and did

then and there and still doth relate to affairs in which the trade, commerce, and welfare of great

numbers of the king's subjects were and are concerned; to wit, at, &c. to the common nuisance of all

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the king's subjects, against the form of the statute, and against the peace, &c. The 5th count charged

that the defendants subscribed towards collecting and raising by subscription a great sum of money

not exceeding 20,000£ to be divided into not more than 20,000 shares, for the purpose of assisting

and favouring a certain other new and unlawful undertaking tending to the common grievance &c. (as

before) [408] and did then and there pay upon such subscription certain small sums, amounting in the

whole to a large sum, to wit 30£; which last undertaking was a public undertaking, &c. (as before).

The 6th count charged that the defendants presumed to act as if they were a corporate body, and

pretended to raise a transferable and assignable stock, without any legal authority, and without any

charter from the crown for so doing; that is to say, as a corporate body, for the purpose of buying

corn, grinding the same, making bread, and dealing in or distributing of flour and bread, and for other

purposes unknown; and having a number of shares not exceeding 20,000, transferrable and assignable

by and from the holders of such shares to any other person or persons at the pleasure of the holders

thereof; to the common nuisance of all the king's subjects, &c. against the form of the statute, &c.

and against the peace, &c. The 7th count charged that the defendants, without any legal authority, and

without any charter from the crown for so doing, pretended to raise a transferrable stock to a large

amount, to wit, not exceeding 20,000£, to be divided into not more than 20,000 shares, which shares

were to be and are transferrable and assignable from the holders thereof to any other person or

persons at the pleasure of such holders; to the common nuisance &c. and against the statute, &c. The

8th count charged that the defendants, contriving and intending as aforesaid, did, according to their

own device and scheme, further countenance and proceed in a certain other new and unlawful

undertaking, tending to the common grievance prejudice, and inconvenience of great numbers of the

king's subjects in their trade and commerce; that is to say, an undertaking for [409] the purpose of

buying corn, &c. (as before) ; which last was a public undertaking, and did then and there and still

doth relate to affairs in which the trade, commerce, and welfare of great numbers of the king's subjects

were and are concerned ; to wit, at Aston, &c. to the common nuisance, &c. against the form of the

statute, &c. and against the peace, &c.

Upon these several counts the jury found a special verdict, which stated in substance, that

Birmingham in the county of Warwick, is a large and populous town, inhabited by many persons

employed as labourers and workmen in divers manufactories carried on there; and that in the year

1796, the price of bread having risen to a very great and extraordinary height throughout the kingdom,

a deed-poll, dated 22d of September in that year, was executed by the defendants (Barber, Townshend,

Warner, and Goddington,) and divers others to the jurors unknown; the said named defendants and

the said other persons then being inhabitants of Birmingham, or the neighbourhood thereof; whereby

each of the said parties whose names were thereunto subscribed mutually covenanted and agreed with

the others, their executors, &c. and assigns, that the parties thereto should be joint traders and co-

partners in the business of buying corn, grinding the same, making bread, and dealing in and

distributing of flour and bread, in such manner as should be thought most advantageous to the co-

partnership by the committee for the time being, to be appointed in manner therein mentioned; and

that the co-partnership should commence from the 1st of June then last, and be continued until

determined in manner thereinafter mentioned, and should be carried on under the name or firm of

The Birmingham Flour and Bread Company; and also that the said joint trade should be carried on


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upon a capital or [410] joint stock not exceeding 20,000£, to be divided into not more than 20,000

equal shares. And it was by the said deed-poll, amongst other things, agreed that no partner should

hold more than 20 shares, unless the same should come to him by marriage or other means therein

mentioned. And that if any transfer, sale, or assignment should thereafter be made by any of the said

partners to any person holding or entitled to as many shares as should, with the shares so transferred,

sold, or assigned, exceed 20 in number for each member, (except by marriage, bequest, succession, or

other act of law,) that such share and shares as should exceed 20 for each person, should sink into the

said capital or joint stock for the benefit of the said co-partnership. That ground should be bought or

rented, and proper mills, storerooms, bake-houses, and other conveniences should be erected, and the

business carried on where the committee for the time being should appoint. And that each of the

parties thereto, his executors, &c. and assigns, in respect of each share, should weekly purchase from

the co-partnership, at the prices fixed by the committee, such a quantity of flour and bread, or flour,

or bread, not exceeding in value 1s. a week for each share as the committee should deem expedient.

That in default of the party paying for the same, his share should be forfeited and sold, &c. (The deed

then contained a provision for the appointment of a committee of 21 partners for the management

of the concern.) That the committee should convene a general meeting of the partners when they

should think proper, when a state of the affairs of the said partnership should be laid before them,

and the votes of a majority of the partners in value then present should be final [411] and conclusive

: the votes to be taken by shares, and not by voices. That the said capital or joint stock should be paid

to the bankers for the time being, by such instalments as should be ordered by the committee, so as

no call should exceed 10£ per cent, on each share, or be made at less than a month from the preceding

call; and every person who should neglect or refuse to make good such payments for a month should

forfeit his shares, which should sink into the joint stock. That no partner, should at any time, sell,

assign, or transfer any share or interest in the said joint trade to or in trust for any person, unless the

person to or for whom the same should be sold, assigned or transferred should enter into such

covenant or covenants with the partners for the time being in the said joint trade, or with a trustee by

them or their committee to be appointed, for the performance of all and every the covenants, clauses,

and things therein contained, by virtue of a power thereinafter contained; in the same manner as such

person so selling, assigning, or parting with the same ought to do or have done, and as such person to

or for whom the same should be sold, assigned or transferred would or ought to do or have done, in

respect of such share or shares, in case he had originally been a partner in the said joint trade, and had

been a party to and executed the said deed-poll; as by the said parties for the time being or their

committee or counsel should be lawfully and reasonably required. And that in case of death or

insolvency of any of the partners for the time being, their legal representatives or assignees should be

considered as partners in the said joint trade, and should and might hold and dispose of such share

or shares of such persons so [412] dying or becoming insolvent, subject to the terms in the said deed-

poll contained. And also that it should be lawful for a majority in value of the partners for the time

being present at any public meeting held by notice, &c., from time to time to make such additions to

and alterations in all or any of the said articles or deeds of partnership, and all such lawful bye-laws

respecting the said joint trade, and for the government and advantages thereof as to them should seem

proper and convenient. That it should be lawful for 3-4ths in value of the whole of the partners, at


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any general meeting pursuant to a month's notice, &c. to dissolve the said joint trade or co-partnership.

And, lastly, each of the parties to the deed promised and agreed with the others, and also with the

treasurer of the said joint trade for the time being, from time to time to pay to the banker of the said

joint trade 1£ for each share, when called for by the committee; and also all other sums which he

should from time to time become indebted to them for or on account of the said joint trade, &c. That

at the time of executing the said deed-poll, the defendants, Barber, Townsliend, Goddington, and 1300

other persons executing the same, subscribed divers sums according to the amount of their several

shares in the said co-partnership. And that after the same had been so executed, 1200 other persons,

amongst whom were the defendants Webb, Parkes, Ledsam, and Pritchet, became subscribers to and

members of the co-partnership, and subscribed divers sums for the purpose of carrying on the same:

and that the shares taken by the several subscribers and members thereof amounted, at the time of

taking the inquisition, to 8300, many of which shares have been, from time to time, since the

establishment of the co-partnership, sold and transferred, according to the terms of the deed-poll, to

divers persons not originally [413] members of the co-partnership, and the transfer of such shares

made by the chief clerk to the committee for the time being appointed by virtue of the deed-poll, and

under the direction of the committee. That after making the deed-poll, and when a sufficient sum had

been subscribed for that purpose, certain freehold premises in the parish of Aston, near Birmingham,

were purchased, and a steam-engine, storehouse, bakehouses, and other buildings erected thereon,

under the directions of the committee, according to the provisions of the deed: and that the co-

partnership trade has, from the time of the erection of the engine and buildings, been carried on

under the direction of such committee, of which all the defendants have been for the greatest part of

the said time and still are members. The jurors further found that the company was originally instituted

from laudable motives, and for the purpose of more regularly supplying the town of Birmingham and

the neighbourhood with flour and bread, and that the same was in its original institution and still is

beneficial to the inhabitants at large of Birmingham and its neighbourhood, but is prejudicial to the

bakers and millers of the said town and neighbourhood, in their respective trades. But whether the

co-partnership is an unlawful undertaking and public nuisance, within the meaning of the stat. 6 Geo.

1. (c, 18.) and whether the defendants have, in becoming members thereof and subscribing thereto,

and acting therein as aforesaid, offended against the statute, the jurors pray the advice of the court ;

and find a verdict of guilty on the 2d, 5th, 6th, 7th, and 8th counts, or not guilty thereon accordingly.

This case was argued in last Easter term by Reader for the [414] prosecution, and Bramston for

the defendants; the arguments turning upon the application of the stat. 6 G.l.c 18. s. 18 & 19 to the

facts stated in the special verdict. The cases referred to in the course of the argument were Dodd’s

case (a), Buck v. Buck, and Rex v. Stratton and Others (c). And after time taken by the court for further

consideration of the case;

LORD ELLENBOROUGH, C. J. now delivered judgment. This was an indictment founded on the

stat. 6 Geo. 1.c. 18. s. 18 and 19., by which certain mischievous and dangerous undertakings therein

specified are declared to be public nuisances. After stating the indictment and the substance of the

special verdict, his Lordship continued. The special verdict in this case has not found that the acts

imputed to the defendants were in fact grievous, prejudicial, or inconvenient to any of his majesty's


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subjects during the time to "which the indictment relates: on the contrary, it is found, that the

undertaking was originally set on foot from laudable motives, and that the same was, in its original

institution, and still is beneficial to the inhabitants at large of the town of Birmingham and its

neighbourhood. But it was urged that the facts found to have been done on the part of the defendants

are such as the statute assumes and concludes to be grievous, prejudicial, and inconvenient to great

numbers of his majesty's subjects, and that they must accordingly be deemed so to be in point of law,

though they are not found to be so in fact. The acts supposed to be made out against the defendants

are these: [415] 1st, that they have raised a large capital by small subscriptions: 2dly, that this has been

done to enable them to buy and grind corn, to make bread, and to deal in and distribute flour and

bread: 3dly, that the shares in this capital are transferrable: and 4thly, that the subscribers have

presumed to act as if they were a body corporate. The first and second of these points are certainly

established: the third is made out to a certain extent; but to a certain extent only: and the fourth is not

made out. That the shares are not transferrable, unless under the restriction that the vendee shall enter

into covenants to demean himself as though he had been an original subscriber, is quite clear; because

there is an express clause to this effect in the deed-poll of September 1796. The nature of the thing,

too, imposes this additional restriction upon the transfer of shares, that the vendee must either be

resident at or near Birmingham, or must have an agent there; because the possession of each share

imposes upon the holder the obligation of taking weekly so much bread and flour, not exceeding one

shilling's-worth per share, as the committee should fix. The shares in the stock, therefore, are not

generally transferrable, but are virtually restricted to persons in the neighbourhood only: they are

transferrable to no one who will not enter into covenants, and take his weekly portions; no one can

become a purchaser of more than twenty shares; and for anything which appears in the deed, it may

be essential that, upon each transfer, the consent of the other members or of the committee should

be obtained. It is to this extent only, and in this manner, that shares are transferrable. As to the fourth

point, that the subscribers have presumed to act as if they were a body corporate; how is this made

out? It was urged that they assumed a common name, (which, however, does not appear to have been

the case ;) that they have a committee, general meetings, and power [416] to make bye-laws; but are

these unequivocal indicia and characteristics of a corporation? How many unincorporated insurance

companies and other descriptions of persons are there that use a common name, and have their

committees, general meetings, and bye-laws? Are these all illegal? or which of these particulars can be

stated as being, of itself, the distinctive and peculiar criterion of a corporation ? Taking it, then, that

these subscribers have not acted peculiarly as a body corporate, but that they have raised a large capital

by small subscriptions for the purposes stated, and that the shares in such capital are, to the extent

already pointed out, transferrable; it remains to be considered how far this is necessarily per se, without

any prejudice to any individual, constituted an offence by the stat. 6 Geo. 1.e. 18. s. 18, 19. The title

of that act, as far as it has reference to this subject, is for restraining several extravagant and

unwarrantable practices therein mentioned. The occasion of passing it is well known. Subscriptions

had about that period been opened to an enormous extent, (to as much, it is said, as 300 millions,)

upon the wildest schemes imaginable (a) the shares in such adventures were transferrable: they were

as common an article of sale at market as the stock in the public funds, and had been sold at immense

premiums. The first clause in the act applicable to this subject begins by reciting "that it was notorious


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that several undertakings or projects of different kinds had been publicly contrived and practised, or

attempted to be practised, which manifestly tended to the common grievance, prejudice, and

inconvenience of great numbers of his majesty's subjects in their trade or commerce and other their

affairs; and that the persons who contrived or attempted such dangerous and mischievous

undertakings or projects, under false pretences of public good, did [417] presume, according to their

own devices and schemes, to open books for public subscriptions, and to draw in many unwary

persons to subscribe therein towards raising great sums of money, whereupon the subscribers did pay

small proportions; which dangerous and mischievous undertakings or projects related to several

fisheries and other affairs, wherein the trade, commerce, and welfare of his majesty's subjects, or great

numbers of them, were concerned or interested." This is the substance of the first recital, and it seems

to refer to such undertakings and projects as tended to the common grievance, &c. of many of the

king's subjects, and to subscriptions upon such undertakings and projects only. The next recital is "that

in many cases the said undertakers and subscribers (that is, as it should seem by the first recital, the

undertakers and subscribers upon projects of such a tendency,) had presumed to act as if they were

corporate bodies, and had pretended to make their shares in stocks transferrable, without any legal

authority, by act of parliament or charter; and in some cases the undertakers or subscribers had acted

or pretended to act under some charter granted for special purposes therein expressed, and had used

such charters for raising joint stocks and making transfers for their own private lucre; which were

never intended by the charter: and in some cases the undertakers or subscribers had acted under some

obsolete charter. That many other unwarrantable practices, stated to be too many to enumerate, had

been, were, and might be contrived, [418] &c. to the ruin and destruction of many of the king's

subjects, if a timely remedy were not provided; and that it was become absolutely necessary, that all

public undertakings and attempts, tending to the common grievance prejudice and inconvenience of

the king's subjects in general, or great numbers of them, in their trade, commerce, or other lawful

affairs, should be effectually restrained and suppressed by suitable and adequate punishments. It then,

for suppressing such mischievous and dangerous undertakings and attempts, and preventing the like

in future, proceeds to enact that all and every the undertakings and attempts described as aforesaid,

and all other public undertakings and attempts tending to the common grievance &c. of the king's subjects,

or great numbers of them, in their trade commerce, or other lawful affairs, and all public subscriptions

receipts, payments, assignments, transfers, &c. and all other matters and things whatsoever for

furthering, countenancing, or proceeding in any such undertaking or attempt; and more particularly

the acting or presuming to act as a body corporate, the raising or pretending to raise transferable stock,

the transferring or pretending to transfer any share in such stock, without legal authority by act of

parliament or charter, and all acting or pretending to act under any charter granted for special

purposes, by persons using such charter for raising a capital stock or making transfer of such stock,

where such charter did not design the raising or transferring such stock, and all acting or pretending

to act under any obsolete charter, become void or voidable by non-user or abuser, or for want of

elections, shall be deemed illegal and void." What is, therefore, thus described as illegal may be divided

into two classes; first, the undertakings described in the preamble, especially those in which the parties

pretend to act as a body corporate, or to have [419] transferrable stock; and secondly, all other

undertakings tending to the common grievance, &c. of the king's subjects, or great numbers of them,


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in their trade, commerce, or other lawful affairs; raising transferrable stock, &c. &c. The 19th section

provides, that all such unlawful undertakings and attempts so tending to the common grievance, &c. as before,

and the making or taking any subscription for that purpose, the receiving or paying any money on

such subscriptions, the making or accepting any transfer or pretended transfer of any share or shares

upon such subscription, and all and every other matter and thing for furthering, countenancing, or

proceeding in any such unlawful undertaking or attempt; and more particularly the several acts more

particularly prohibited in the preceding clause, of acting as a corporate body, raising transferrable

stock, or assigning any share therein, without legal authority, and acting under charters, &c. shall he

deemed public nuisances, and shall be tried as such ; and all offenders therein shall be liable to the

punishment to which persons convicted of public nuisances are subject, and moreover shall incur and

sustain any further pains, &c. as were ordained by the statute of provision and premunire made 16

Ric. 2; that is, forfeiture of all lands, goods, and chattels, and imprisonment for life. By s. 20. Any

merchant or trader suffering particular damage in his trade, &c. by occasion or means of any

undertaking or attempt, matter or thing, by that act declared unlawful, is entitled to remedy by action:

and by s. 21. any broker bargaining for, buying, selling, &c. any share or interest in any of the

undertakings by that act declared to be unlawful, or in any stock or pretended [420] stock of such

undertakers, shall be rendered incapable of acting as a broker, and forfeit 500£. The act then contains

provisoes, that it shall not extend to undertakings settled before the 24th of June 1718, nor to the two

companies established under that act, viz. the Royal Exchange and London Assurance Companies, nor

to the South Sea company, nor to the carrying on home or foreign trade in partnership in such manner

as had usually been done, and before that act might legally be done, nor to corporations before created

for carrying on trade, nor to subscriptions for enlarging the stock of the South Sea Company, nor to

the East India Company.

Upon this view of the statute we think it impossible to say, that it makes a substantive offence to

raise a large capital by small subscriptions, without any regard to the nature and quality of the objects for which

the capital is raised or whatever might be the purposes to which it was to be applied. The recital in the act, as far as

it refers to subscriptions, is this, that the persons who contrive such dangerous and mischievous

undertakings or projects, (i.e. such as manifestly tend to the common grievance, &c.) under false

pretences of public good, do presume, according to their own devices and schemes, to open books

for public subscriptions, and draw in many unwary persons to subscribe, &c. The subscription,

therefore, which the preamble contemplated, were subscriptions upon dangerous and mischievous

projects, where the pretences of public good were false, and where the [421] unwary were the persons

who were drawn in to subscribe. The enacting part in s. 18, where it refers to subscriptions, makes

illegal all public subscriptions, &c. for furthering, countenancing, or proceeding in any such

undertaking or attempt ; that is, such undertakings or attempts as are specially pointed out in the

preamble, or any other public undertaking or attempt tending to the common grievance, &c. The

enacting part in s. 19. relates to all such unlawful undertakings and attempts, so tending to the common

grievance, &c. and the making or taking of any subscriptions for that purpose, &c. It is only, therefore,

where the subscription is with reference to undertakings, &c. which the act prohibits, that it is illegal:

the act does not apply indiscriminately to all subscriptions. The purpose for which this capital was

raised, viz. the buying corn, &c. not manifestly tending to the common grievance, and being in this


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case expressly found to have been beneficial; the only remaining question is this, whether, as the shares

in this institution are, to the extent which has been pointed out, transferrable, the defendants have

offended against this act in respect of having raised such a description of transferrable stock.

It may admit of doubt, whether the mere raising transferrable stock is in any case, per se, an

offence against the act, unless it has relation to some undertaking or project which has a tendency to

the common grievance, prejudice, or inconvenience of his majesty's subjects, or of great numbers of

them. The mischief intended to be remedied arose from such undertakings and projects; and the

suppression of such undertakings and projects seems to be the great object of the act. But, without

entering particularly into that point, it may be sufficient to say here, that in the qualified extent to

which these shares are transferrable, it cannot [422] be said that there has been such a raising of

transferrable stock as to fall clearly within the scope of the act. It was not the object of the undertaking

to raise stock for the purposes of transfer, nor to make such stock a subject of commercial speculation

or adventure: it is made expressly transferrable to no one individual to a greater amount than 20£, and

the purchaser is obliged in every case to enter into covenants, and to comply with the condition of

taking from the institution a weekly supply of bread and flour.

For these reasons we think that the facts stated on this special verdict do not bring the defendants

within the prohibition of this act of parliament, so as to make them, according to the fair sense and

meaning of it, liable to be found guilty on any of the counts in this indictment; and that the judgment

must therefore be entered for the defendants.”

c. Pratt v. Hutchinson (1812)83

“In debt on bond, dated the 7th of December 1809 whereby the defendant bound himself in the

penal sum of 420£. to the plaintiff, as treasurer of the society called the Greenwich Union Building Society,

the declaration stated the condition of the bond; reciting that by a certain deed of rules and

regulations, dated 7th January [512] 1809, one T. M. and I. K. with divers others, had founded a society

called the Greenwich Union Building Society, to raise by monthly subscriptions a fund or capital to be

laid out in building houses, and to divide the same between them, under and subject to the rules and

regulations thereinafter expressed ; and that is was by the first article in the said deed declared that the

society should consist of no more than 50 members, holding in the whole not more than 200 shares

of 210l. each; and that by the 5th article the members should draw lots from time to time, as often as

the funds of the society amounted to 100l. clear; and by the 8th, 9th, 10th, and 11th articles every share

should consist of a dwelling-house of the best materials, to be completed in a workmanlike manner,

and should be begun by the bricklayer and carpenter thereinafter named within one week after every

notice for that purpose, and should be roofed in within three weeks, and completed within six months

after such notice; in default of which the bricklayer, carpenter, or any other tradesman, should forfeit

for his neglect 5l. percent, upon their respective bills. Then followed clauses, that no money should be

advanced to any tradesman till the house ordered should be completed to the satisfaction of the

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society's surveyor, and then the treasurer should have an order from the society to pay the several bills:

and that from the time such house should be finished, the member owning the same should pay to

the society 5l. per cent, per annum on the 210l. share so drawn and advanced, until the final close of the

society by each member having paid his 210l. on each share held by him. And that every member who should

have built his house previous to his having a prize or share, which he should be permitted to do,

should, whenever he should be the successful [513] drawer, be paid 210l. for every share he should

hold, provided he employed the tradesmen to build the same appointed by the society, and not

otherwise: and in case the said tradesmen should not have been paid by such member, they should be

paid by the treasurer, &c. in the first place, and the surplus only, if any, of the said 210l. paid to such

member. By article 13, each person, on having the 210l. advanced on each share, should deposit his

titledeeds or other good security, to the satisfaction of the society, in the treasurer's hands till the final

close of the society. And further reciting that T. Mumford and J. Sheen had become entitled to one share,

and entitled as such to the advance from the society of 210l. on depositing their title deeds or giving

good security as aforesaid, and that the society had agreed to accept the joint and several bond of

them, and of the defendant and one H. Caslin as their sureties, for the money advanced to them, and

for all future payments to them by the rules of the society, and also for the due performance by them

of the said rules; and that the plaintiff, as treasurer, had paid to Mumford and Caslin 210l. on one share;

the condition of the bond was that if Mumford and Skeen should pay to the treasurer, for the use of

the society, interest on the said 210l. so advanced to them, at the rate of 5l. per cent., and also the

monthly subscription of two guineas upon their said share, until the final close and determination of

the said society; and also keep all the rules, &c.; then the bond to be void. The declaration then alleged

several breaches in non-payment of the interest and monthly subscriptions for a certain time.

[514] The defendant pleaded that after making of the act of the 6 Geo. 1. (c. 18.), the said society

was founded for raising a joint stock by small monthly subscriptions, and making transferrable shares

of the same. And that by the 3d article of the deed of rules, &c. it was declared that the members

should meet on the first Thursday in every month, &c., when the books should continue open for two

hours, and each member should pay two guineas on every share held by him until 210l. should be paid

for each share; such payments to be made to the treasurer, &c.: and by the 4th article, any member

neglecting to make his payment at such meeting should forfeit 2s. 6d.; and if such arrears and forfeiture

were not paid at the next meeting then he should forfeit 5s., and for a third like default 10s. 6d.; and if

after notice he should still neglect to comply with the articles, he should be excluded, and the money

advanced by him forfeited, unless he should provide a person within three month from his last default,

who should be voted eligible to become a member by the society; in which case the member selling

his share should forfeit 10l. per cent, upon his subscription for the benefit of the society, unless the

default appeared to happen from the misfortune of the person so selling his share. And by the 30th

article, every member should have full power at all times to sell his shares privately whenever and at

what price he should think proper, and that the secretary should transfer the same in the transfer-

book of the society, and that every transfer should be signed and witnessed by the secretary: provided

that every purchaser becoming a member should on his admission become a party to the articles, and

duly execute and [515] observe the same; and that no person should be permitted to purchase any

share until he should have been first proposed and approved at a meeting of the said society, by at


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least three-fourths of the members present. That by the 28th article it was declared, that certain

tradesmen (named) should be employed by the society in their several capacities, and no others. And

then the defendant averred that the society was not established either by act of parliament or charter,

or other legal authority; and that the obligation declared on was void in law by force of the statute. To

this there was a general demurrer.

Marryatt was to have argued in support of the demurrer, but the Court thought it unnecessary to

hear him.

Lord Ellenborough, C. J. called on the defendant’s counsel to state upon what grounds it could

be contended that the shares created by this agreement were transferrable stock within the meaning

of the stat. 6 G. 1. c. 18. (s. 18.) when the holder had not the power of transferring his share except

upon certain conditions, namely, upon the purchaser being approved by the society, and becoming a

party to the original articles?

Comyn, for the defendant, said that the plea had been put in before the decision of the Court in

the case of The King v. Webb and Others was known; and upon the opinions intimated in the former

cases, which he submitted were not impugned in this respect by Webb’s case, in which the nuisance of

that particular undertaking was expressly negatived by the special finding of the jury, [516] which

stated that the company was originally instituted from laudable motives, and that it then was and still

continued to be beneficial to the inhabitants at large of Birmingham, where it had been set on foot.

(Bayley, J. The plea does not allege generally as a question for the jury that this society was prejudicial

to the public at large; and, therefore, unless it be brought within the statute, it is no answer.) Taking it

then not to be within the statute so far as the right of transfer of the shares is of a limited nature, it

is still within it as a project for raising a large sum for building houses by small subscriptions; which is

one of the very speculations mentioned in Anderson’s History of Commerce, as one of the bubbles of the

day which gave rise to the act of parliament. Then the stipulation in the articles, that certain persons

only shall be employed in the building and not others, is in restraint of trade, and against the general

policy of the law. (Lord Ellenborough, C.J. How can it be said to be in restraint in trade, to contract for

the employment of particular tradesmen in whom the parties have a confidence?) It would not be

illegal in individuals exercising their own judgment upon it; but persons cannot indiscriminately

combine not to employ any other than certain persons. (Lord Ellenborough, C. J. The combination must

be for some illegal object; but there is nothing illegal in stipulating to employ particular persons only

in the building.) The clubbing together of numbers of persons with transferrable shares, even though

limited, for the purpose of carrying on trade, was one of the very mischiefs intended to be prevented

by the act: it is calculated to put down individual industry and competition, which is most advantageous

for the public. If fifty persons may do this, why may not a [517] thousand? (Bayley, J. That would bring

it to a question of fact for the consideration of the jury, whether the extent of the numbers engaged

in such undertakings was not prejudicial in fact to the public. Le Blanc, J. When every member has paid

his 210l. as I read it, the engagement is to close.)

ELLENBOROUGH, C.J. said that the Court were all clearly of opinion that there was no pretence

for the objection made upon the statute by the defendant, and gave


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Judgment for the Plaintiff.”

d. Josephs v. Pebrer (1825)84

“ABBOTT, C. J. — I am clearly of opinion, that in this case a nonsuit must be entered. From the

evidence it appears, that a number of persons associated themselves together to form a large company,

called "The Equitable Loan Bank Company." On the evidence, the object of this company did not

very distinctly appear; but it was admitted, on both sides, to be a company for the lending of money

at a rate of interest higher than is allowed by law to be taken by any, except persons subject to the

regulations respecting pawnbrokers. There is, in point of law, no objection to a company being formed

prospectively, for the purpose of obtaining the authority of an act of Parliament, or of the King's

charter, provided, that before they act as a company, they obtain one of those two sanctions: but if,

as in this case, they issue certificates for a great number of small transferable shares, and provide, that

the members of the company shall submit themselves to the regulations or by-laws made, or to be

made, by certain directors, before any authority has been obtained by act of Parliament, or a charter

from the Crown for that purpose [511], then I am of opinion that they are an illegal company within

the meaning' of the statute 6 Geo. 1, c. 18: first, by pretending and assuming to act as a corporate

body without legal authority; and, secondly, by issuing out a great number of small shares, generally

transferable, to any person who chooses to buy them. I have, therefore, no doubt that this company

is an illegal one; and that, being so, the dealing in these shares is unlawful, and that, therefore, all

contracts respecting them are null and void. The traffic in shares of this kind must be highly injurious,

as what is gained by one person must be lost by another; whereas, in commerce, every party may be a

gainer.

BAYLEY, J. — It is clear, that this association was within the meaning of the statute 6 Geo. 1, c.

18. The wording of that statute is certainly not clear; but after reciting (§ 18) that persons had contrived

dangerous and mischievous undertakings or projects, under false pretences of public good, and had

presumed to open books for public subscriptions, and drawn in many unwary persons to subscribe

therein, towards raising great sums of money; and that the undertakers or subscribers had presumed

to act as if they were corporate bodies, and pretended to make their shares in stocks transferable or

assignable, without any legal authority, either by act of Parliament or charter from the Crown; provides,

that all such undertakings and attempts, and all other public undertakings or attempts, tending to the

common grievance, prejudice, and inconvenience of his Majesty's subjects, or great numbers of them,

shall be deemed illegal and void. Now, in this case, it appears, that the individuals forming this

company acted as a public company, and that they had small transferable shares; and though Mr.

Marryatt appears to consider, that it has been decided that a company having transferable shares is not

illegal, yet I take the distinction to be, whether the shares are generally transferable or not: for if the

shares are generally transferable, [512] without restriction, to any one who is able to purchase them,

then the company becomes illegal. And in the case of Rex v. Webb and Others, 14 East, 406, LORD

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ELLENBOROUGH considers, that if the Birmingham Flour Company had presumed to act as a body

corporate, or if their shares had been generally transferable without restriction, that would have been

an illegal company. But, in that case, the transfer of shares was much limited. No one person could

have more than twenty shares of one pound each; and they could not transfer their shares to any

person without the consent of the committee. There is also the case of Pratt v. Hutchinson, 15 East,

511, which was the case of a subscription for the building of houses near Greenwich, by means of

which each of the subscribers was successively to have a house built for him at the society's expense,

in an order to be determined by lot; but in that case, the subscribers were, of necessity, restricted to

persons who were either living, or about to live in that neighbourhood; and further, the shares could

only be transferred to persons who consented to become parties to the original articles, and persons

who were approved of at a meeting of the society. Now contrast these cases with the present. In this

case, for some purpose that does not distinctly appear, forty thousand shares are created, and all of

them are to be generally transferable to every body. The Legislature, by an act of Parliament, or the

King, by his charter, might make this legal; but in this case, there has been neither act of Parliament

nor charter. I am therefore of opinion, that this is contrary to the act of Parliament, and that the

plaintiff, having lent himself to contravene the act of Parliament, cannot recover in this case.

HOLROYD, J. — I am of the same opinion. As these shares were to be generally transferable, I

think the plaintiff cannot recover in this case. [513]

LITTLEDALE, J. — In my opinion, this case clearly falls within the statute 6 Geo. 1, c. 18. To bring

a case within the operation of that statute, it must appear that the pretended company tends to the

common grievance of a great number of the King's subjects; and the question is— Does not this

company tend to that effect? In my opinion it certainly does; for all undertakings, having small

transferable shares, especially if they assume to be by a corporation, are declared by the Legislature to

be to the common grievance, and to be illegal. In the present case, this company do pretend to be a

body corporate; for, before they obtain the authority of an act of Parliament, or the King's charter,

the shareholders are to be governed by the regulations made by a committee; which is saying, in effect,

that the forty thousand shareholders are to be a great corporation, this committee being the select

body. In the next place, these shares are generally transferable, without any kind of limit or restriction;

and, prima facie, this is an undertaking to the grievance of great numbers of the King's subjects. In

all the cases, the transfer of shares had been limited in such a way as to make them not generally

transferable: perhaps if it had been shewn that the objects of this society were perfectly legal and

good, the society might not have been illegal; but so far from that, the object of it, as far as the Court

are informed, is to lend money at a rate of interest greater than is allowed by law to be taken by any

persons who do not subject themselves to the regulations respecting pawnbrokers: so that this is, in

fact, a company to lend money at usurious interest: and without every one of the forty thousand

shareholders was to become a pawnbroker, and conform himself to the regulations established

concerning persons so trading, this company is most clearly an illegal one. But, even if that were not

so, as it is not shewn that this company was established for a legal purpose, the plaintiff is certainly

not entitled to recover in this action.


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ABBOTT, C. J.— Though that point has not been argued at the bar, I am of opinion, (as at present

advised), that at common law the sale of these shares would be illegal and void; as it is, in effect, a

wagering whether an act of Parliament will pass to legalize them or not.

Rule absolute for entering a nonsuit.”

e. Nockels v. Crosby (1825)85

“ASSUMPSIT for money had and received. Defendant pleaded the general issue, and paid 252l.

11s. into court. At the trial before Abbott C. J. at the London sittings after Hilary term 1824, a verdict

was found for the plaintiff for 47l. 15s., subject to the opinion of the Court upon the following case:

The defendants were the directors of a scheme called the "British Metropolitan Tontine." A printed

paper was circulated with their authority, stating (amongst other things) that to effect the objects of

the scheme it was proposed to receive subscriptions of ten shillings a week from each member for the

period of one year, viz. from the 1st of January 1821, to the 1st of January 1822, and that the total

amount of such year’s subscription should be deemed a share, and all such shares form one capital or

joint stock of the company, with benefit of survivorship; that the amount of the subscriptions would

be vested in the names of the trustees, and from time to time laid out in government or other

securities, the net proceeds and interest of which would be equally divided among all surviving

shareholders twice in every year; that members were to subscribe their names to the company’s rules

and regulations at the time of opening their subscriptions, or at any subsequent convenient [815] time,

and to abide thereby, that the management of the company was vested in eight directors; and that at

the expiration of the year every subscriber would receive a shareholder's ticket, which would be

saleable or transferrable. The above was the paper referred to in the following agreement, which was

signed by the plaintiff and several other persons: “We whose names are hereunder subscribed do

hereby consent and agree to, and with the present and any future directors of the British Metropolitan

Tontine as follows: first, we do each of us agree to become subscribers thereto, and to take such

numbers of shares upon such life or lives as is or are set forth against our respective names; secondly,

we do acknowledge the plan or prospectus hereto annexed to contain the nature and intent of the said

Tontine, so far as the same is therein expressed, and do ratify the same in every respect, and agree to

abide thereby; thirdly, we do agree to ratify and confirm all rules, laws, and regulations passed, or which

shall at any time hereafter pass, for the further promotion, direction, management, and carrying into

effect the said Tontine, and to sign any deed or deeds to that effect; fourthly, we do agree to pay our

subscriptions for one year.” An account was opened with Glyn and Co., bankers in London, entitled

“British Metropolitan Tontine.” The plaintiff paid two sums of money, amounting together, to 308l.

6s., to the aforesaid account at Messrs. Glyn and Co's. Various other subscribers to the Tontine paid

sums of money to the said account, amounting in the whole, with the plaintiff's payments, to 737l.

10s. 6d. In the books of the Metropolitan Tontine the following resolutions are entered:

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[816] “General resolutions of the 19th January 1821.

“First, that the books of the Tontine be opened to receive subscriptions, and that no less than 2l.

per share shall be received in the first instance, being for the first monthly subscription.

“Secondly, that the affairs and entire management of the concerns of the Tontine be vested in

eight directors, any three of whom to be a sufficient quorum for the purpose of transacting business.

“Thirdly, that James Pope be appointed secretary and solicitor to the directors of the Tontine, and

that for such secretaryship he be paid such yearly salary as the present or any future directors may

think fit.

“Fourthly, that all monies to be received under or in virtue of the Tontine be paid into the hands

of the treasurer or treasurers thereof, and that no monies be drawn for or paid by the treasurer or

treasurers unless by draft, to be signed by not less than three of the directors.

“Fifthly, that the directors do, as often as occasion may require, place out at interest, in the names

of the trustees, in government or other securities all sums of money remaining in the hands of the

treasurer.”

“30th August 1822.

“Resolved by a quorum of the directors present that, there not being a sufficient sum subscribed

to warrant the further prosecution of the scheme, the subscribers have returned to them the amount

of the subscriptions less the expenses attending the same, and that such expenses be ascertained at

another meeting of the directors to be held at the secretary's house the 6th of September next."

[817] "Old Bethlem, 6th September 1822.

“Resolved by a quorum of the directors present that the expences attending the prosecuting the

scheme of against the Tontine do amount to the sum of 3l. 19s. 7d. per share, and that each subscriber

do have the amount of his subscription returned, less the said 3l. 19s. 7d. per share.”

On the 27th of May 1822, the plaintiff wrote to the directors, requesting to have his money

returned immediately, and said, he understood it was to be returned subject to some small charge, and

he did not then make any objection to the charge.

On the 25th of July 1822, he again wrote and complained of the delay in returning his money; and

that he had “been put off from time to time in consequence of charges attending the concern.”

In September 1822 several checques signed by the defendants were drawn on Glyn and Co. for

different sums, amounting in the whole to the said sum of 737l. 10s. 6d. which checques were paid by

them from the money paid into the aforesaid account. One of such checques for 252l. 11s. was made

payable to the plaintiff or bearer, and placed by the defendants in the hands of Mr. Pope, the secretary,

with instructions to deliver it to the plaintiff; but the plaintiff refused to accept the same in satisfaction

of his claim, and the said Mr. Pope, without the knowledge or authority of the said defendants, paid

the said checque into his own private account at the bank of England, through which the same was


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presented to and paid by Glyn and Co. Previous to the commencement of the present action the

plaintiff had sued G. C. Glyn, one of the partners in the banking-house of Glyn and Co., for the money

sought to be recovered in this action, [818] but had afterwards discontinued that suit. On the trial, Mr.

Pope, the secretary of the Metropolitan Tontine, being called as a witness for the defendants, stated, that

the expences of the institution amounted to 3l. 19s. 7d. a share making 47l. 15s. on the plaintiff's twelve

shares; that the expences consisted in stationery, printing, advertisements, postages, and 751. paid to

the witness for his trouble; that he explained this to the plaintiff, and offered him the balance, 252l.

11s., which he refused; that none of the money was appropriated to their own use by any of the

defendants. He further stated, that the money paid by the subscribers was not laid out at interest, but

remained in the hands of the bankers with whom the account was opened, and that the defendant,

George Mitchell, and the witness alone caused the prospectus to be put forth, and prosecuted the

scheme themselves. That the defendant, Crosby, was not a subscriber, and that he attended one

meeting only when the checques were signed.

Campbell, for the plaintiff. The plaintiff is entitled to recover back the whole sum advanced. The

consideration upon which it was paid failed; the money was, therefore, in the hands of the defendants

money had and received to the plaintiff's use. It will, perhaps, be urged as a defence, that the scheme

was within the bubble act, 6 G.1. c. 18.: but first it was not so; and even if the Court should think it

was, still the scheme was abandoned, and never carried in any degree into effect. The illegality of it,

therefore, cannot alter the present plaintiff's rights. This was not within the bubble act, it was not to

carry on any wild trading speculation, which manifestly tended to the prejudice of the [819]

subscribers, but was a mere association to contribute money with a benefit of survivorship. But even

if this were otherwise, the plaintiff would be entitled to recover. When a person sues to recover back

money paid on a consideration that has failed, then it is money had and received to his use, and the

nature of the consideration is out of the question: Farmer v. Russell. If money paid to a stakeholder on

an illegal wager is paid over, it cannot be recovered back; but the rule is otherwise if the money has

not been paid over, Cotton v. Thurland, Smith v. Bickmore. Here, the defendants took no steps towards

the performance of the contract upon which the money was paid in. It remained wholly unproductive

from January 1821 till August 1822, when the scheme was abandoned; the plaintiff is therefore entitled

to recover back the whole sum advanced. (Holroyd J. Suppose five persons enter into partnership, and

contribute 1000l. each, they afterwards find the concern a losing one, and put an end to it, can any

one maintain an action against the others for his share?) Perhaps not; but this is a different case; at

most it was only a proposed partnership, and nothing was done towards carrying it into effect; and it

is most fit that those persons who proposed the scheme should bear the expences. Besides, the

directors had no power to make a resolution to deduct the expences out of the monies contributed;

they had power to make resolutions for carrying on the concern, but not for the abandonment of it;

the plaintiff, therefore, was not bound by the resolution in question.

[820] E. Lawes contra. The defendants are clearly entitled to deduct the money in dispute from

the amount paid in by the plaintiff. They did not warrant that the concern would answer, but only

proposed that it should be tried, and the abandonment of the scheme was with the plaintiff's assent.

That appears from his letters, which were written before the resolution to put an end to the concern


192

was made. They also shew that he agreed to pay his proportion of the expences, for he alludes to the

proposed deduction of part of his money to pay those expences, and does not object to it. But it does

not appear that the defendants ever received any of the plaintiff's money; they only gave an order to

Pope, and he received, and now has the money. If that were not so, still this action could not be

maintained. All the shareholders were jointly interested in the funds of the concern, and the

defendants have never stated any account, or bound themselves to pay over any sum to the plaintiff.

(Bayley J. Crosby was not interested in the money.) Then the action was improperly commenced against

him. In the next place, this scheme falls within the 6 G. 1. c. 18. s. 18. That act is not confined to

trading speculations; and here books were opened for public subscriptions; small sums were collected,

amounting in the whole to a large sum, the shareholders acted as a corporation, having agreed to be

bound by the resolutions and bye-laws of the directors, and the shares were to be transferrable. It is

therefore precisely similar to that which was determined to be illegal in Josephs v. Pebrer. (Bayley J. It

might be intended to make the shares transferrable, [821] but in fact no shares were ever issued.) The

intent to make them so was, together with the other circumstances, in itself illegal, and the whole

transaction being illegal, no right of action can arise out of it. (Littledale J. It seems to be nothing more

than an agreement by the subscribers to be joint tenants of the money subscribed.)

BAYLEY J. I am of opinion that the plaintiff is entitled to recover the whole sum which he

advanced. There is no difficulty in some of the points urged, viz. that the money was not received by

the defendants, or that it was drawn out and applied with the concurrence of the plaintiff. The money

was originally paid by the plaintiff into the hands of certain persons, who, for the purposes of this

concern, were the bankers of the defendants, and it was paid upon a prospect that it should be in the

bankers' hands in furtherance of a continuing scheme. It was afterwards drawn out by the defendants,

and it was their duty to see to the proper application of it. If they had paid the whole to the plaintiff,

or according to his directions, of course he could not complain; but if they applied a part of it without

his assent, and in a mode which the law did not warrant, the plaintiff clearly has a right to recover,

unless it can be shewn that he was party to a scheme within the 6 G. 1. c. 18. The scheme was not

within that statute, unless it was formed for the purpose of carrying on some mischievous project or

undertaking, and unless we can predicate of it that it was likely to tend to the common grievance,

prejudice, and inconvenience of his majesty's subjects, or great numbers of them in their trade,

commerce, or other lawful affairs. The cases of Rex v. Webb [822] and Pratt v. Hutchinson were decided

on that principle. I think that we cannot assume, as a matter of law, that this scheme was within the

description before given. It is true that a large sum, made up of many small payments, was to be

collected; but that was not to be invested in any general speculation, but merely to enure to the benefit

of the survivors. Prima facie the principal effect of the scheme would be to encourage the saving of

money. But this action might be maintained even if the scheme were within the act, for it proved

abortive, and no transferrable shares were ever created, and the period had not arrived at which it

would have been within the operation of the statute. The defendants then having possession of the

plaintiff's money, applied it without his express assent. Do they shew any matter of law sufficient to

justify that application of it? The scheme was set on foot by Pope and the defendants, and the

prospectus was circulated with their assent. On all projects some expence must be incurred before

many members join the concern. Upon whom should that fall? Undoubtedly, if the scheme proves


193

abortive, it should fall upon the original projectors, and not upon those who advance their money on

the faith of its going on. The plaintiff did nothing to render himself liable to the expences, and it was

the duty of the defendants within a reasonable time to lay out in securities the money received. They

never did so, but kept it for eighteen months in their bankers' hands, and appear to have acted

throughout as if they thought the undertaking must fail. For these reasons, I think that the plaintiff is

entitled to the whole of the money [823] which he advanced; and it is also observable that, by 1825,

the third resolution of the directors, Pope was to have such annual salary as the defendants should fix;

they never fixed any; it is therefore questionable whether that would not of itself be sufficient to

prevent them from deducting that part of the money sought to be retained which was paid to Mr.

Pope.

HOLROYD J. At the commencement of the argument I entertained great doubts upon this

question, but am now satisfied that the plaintiff is entitled to recover. There is not sufficient in the

case to warrant the payment of any part of the money detained to Pope; for even supposing the

concern to have gone so far as to authorise the appointment of a salary to him, still in point of fact

none was appointed. It appeared to me at first that this was very like the case of a partnership, which

I put during the argument, but here the concern was never really set agoing; and I think that the

expences incurred in setting a scheme on foot are not to be paid out of the concern unless they are

adopted when it is actually in operation. In the present case a very small sum was collected, and that

was not invested in government or other securities, which, by the prospectus, were to be the only

source of profit. No tontine could exist until the money was laid out. All the steps taken were therefore

only preparatory to carrying the project into effect, and as it never was carried into effect, I think that

the plaintiff is entitled to have back the whole of the money that he advanced.

LITTLEDALE J. I also am of opinion that the plaintiff is entitled to recover upon this general

principle, that [824] if persons set a scheme afoot, and assume to be the directors or managers, all the

expences incurred before the scheme is in actual operation must, in the first instance, be borne by

them. When it is in operation, the expences and charge of management should be borne by the

concern, and then it may be fair that the preliminary expences should be paid in the same way; for

then the subscribers have the benefit of them. The prospectus put forth by these defendants stated

that the money subscribed was to be placed out at interest. The plaintiff's sole object in paying the

money must have been to have it so placed out, but during eighteen months it remained idle at the

bankers. Suppose there had been no subscribers, then the projectors must have paid all the expences.

If, then, one person only subscribes, are all those expences to be cast upon him? The hardship and

injustice would be monstrous; yet that would be the consequence in such a case were we now to hold

that the plaintiff was liable to a proportion of the expences incurred by these defendants. With respect

to the supposed partnership, it is plain that there could be none until the money was laid out in

execution of the proposed scheme. I am therefore clearly of opinion that the plaintiff was entitled to

recover.

Postea to the plaintiff.”


194

f. Kinder v Taylor (1825)86

“The bill was filed by Thomas Kinder. The following were the material allegations contained in

it:—

That, in or about the early part of the year 1823, the plaintiff became acquainted with Don Juan

Garcia and General Paroissien, who came over to this country in the capacity of Envoys and Ministers

Plenipotentiary of the Government of Peru; and that, in consequence of some communications

which took place between him and them, and other circumstances, he was induced to direct his

attention to the practicability of working the Silver Mines in the provinces of Mexico, and of forming

a company in this country for that purpose:

That, with a view of obtaining the requisite powers and authorities for working the mines, and of

acquiring the necessary information, he wrote to Robert Ponsonby Staples, who was his partner, and

carried on the partnership business in the city of Mexico, upon the subject, and mentioned, amongst

others, the mines of Count Regla, situated [69] in Real del Monte, in Mexico, as being desirable, if a

grant or lease of them could be obtained :—that in the month of August, 1823, the plaintiff received

advices from his partner, Mr. Staples, stating that he had obtained for, and transmitted to the plaintiff

full powers from the Count de Regla, to work his mines [69] in Real del Monte, in Mexico, by means

of a company or association to be established in this country:—that having heard that John Taylor

had great success and experience in mining concerns, he communicated with him upon the subject of

the proposed plan, in which Taylor, having approved of it exceedingly, expressed his willingness to

join, provided a majority of the shares was distributed among his friends; and accordingly, that the

plaintiff and Taylor agreed, that a company should be formed for working the mines of the Count de

Regla, and other mines in Mexico; that the capital of it should consist of 200,000l. divided into five

hundred shares of 400l. each; that of these, three hundred should be distributed amongst Taylor and

his friends, and two hundred amongst the plaintiff and his friends; and that, as the plaintiff was

desirous of distributing some of the shares among his friends in Mexico, he should not, until he had

an opportunity of communicating with them, be called upon to pay the instalments upon fifty of the

shares retained by him:

That, on the 16th of January 1824, a meeting of some of the parties, who proposed to be

interested in the aforesaid undertaking, was held for the purpose of taking the subject into

consideration, and it was then resolved, that Mr. Taylor should be authorized, on behalf of the persons

assembled at the meeting, to treat with the plaintiff for a grant of the Regla Mines, and that he should

be instructed to convene an early meeting, of the gentlemen then present, to consider and approve a

proper mode of management:

That at the same meeting, Taylor made a communication respecting the mines of Moran, also

situate in Real del Monte, concerning which, the following minute was made: “Mr. Taylor reported an

offer made to him of the mine of Moran, also situate in Real del Monte, by Col. Murphy, on the part

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of James Murphy, Esq., the proprietor, and his intention of treating for it on behalf of the company

then to be formed:”

That a general meeting of the persons, who proposed to be interested in the aforesaid undertaking,

was held on the 4th of February, 1824, when a committee of management was appointed, and several

resolutions, of which the following are the most important, were passed:

“That the Company be now formed; that the terms proposed by Thomas Kinder, on the part of

Count Regla, upon which certain mines, in the Real del Monte, the property of that nobleman, will be

given up to the management of the Company, be agreed to; that John Taylor be authorized to conclude

a contract with Thomas Kinder, for the grant of the mines upon the proposed terms, in the name and

on the behalf of the Company; that John Taylor be empowered to enter into a contract with Col.

Murphy, for the grant of the mines of Moran, upon terms similar to those proposed by Thomas

Kinder; that the company shall bear the title of the Company of Adventurers in the Mines of Real

del Monte, or such other title as the committee may think fit; that the capital to be raised for the

purpose of working the mines, shall be 200,000l., and shall be divided into five hundred shares of

400l. each; that the shares shall be immediately subscribed for, and the sum of 5l. per cent, paid upon

the amount of such subscriptions; that the affairs of the Company shall be conducted by a committee

of management; that the committee of management be authorized to instruct Messrs. Martineau and

Malton to prepare a deed of settlement, or to apply for an act of parliament, with as little delay as

possible, for the regulation of the company; and that as soon as such deed shall be prepared, it shall

be submitted by the committee of management, for approval and adoption to a general meeting of

the proprietors, to be convened by the committee for that purpose.”

That in pursuance of these resolutions, articles of agreement in writing, bearing date on the 6th

of March, 1824, were entered into, and made between the plaintiff, on behalf of the Count de Regla,

of the one part; and John Taylor, on behalf of the above-mentioned Company of Adventurers, of

the other part; whereby it was agreed, that the mines of Count Regla, situated in Real del Monte, in

the district of Zacherea, in the province of Mexico, should be confided and intrusted to the

management of the Company, for the purpose of being effectually worked by means of steam engines,

and other machinery, for the term of twenty years, upon the terms and conditions therein mentioned:

and that on the 6th of March, 1824, other articles of agreement [70] in writing, were also entered into

and made by and between Col. Murphy and John Taylor, for and on behalf of the Company, whereby

the mine of Moran, situate in Real del Monte, was to be confided to the management of the Company,

for the term of twenty-one years, upon certain terms and conditions therein mentioned:

That the plaintiff originally retained seventy-seven shares in the undertaking, out of the two

hundred shares, which it was agreed should be distributed by him; and that the committee having

called for the payment of the first instalment, of 20l. per share, the plaintiff duly paid the same on

twenty-seven shares, being all the shares retained by him, except the fifty shares, the instalments on

which were not to be required until he had communicated with his friends in Mexico; and that the

plaintiff afterwards parted with six more of the shares, reducing the total number of shares held by

him in the said undertaking, to seventy-one:


196

That the committee of management caused an indenture or deed of settlement to be prepared,

pursuant to the aforesaid resolutions, which bears date on or about the 16th of August, 1824, and is

made between Philip Taylor, John Martineau, Thomas Whitehead Reed, Charles Malton, Richard

Martineau, and Samuel Thomas Rawlett, of the one part; and the several other persons, whose names

and seals are thereunto subscribed and affixed, of the other part; whereby—after reciting the

resolutions of the meeting held on the 4th of February, 1824, and the appointment of the committee

of management; and also reciting, as the fact was, that the affairs of the company had been conducted

by the committee of management up to that time; that contracts had been entered into by the plaintiff

and Col. Murphy, with John Taylor, for and on behalf of the Company; that the committee of

management, in the exercise of their discretion, and in order to carry the intention of the general

meeting into effect, had engaged and sent out to Mexico, officers, agents, and workmen, with certain

salaries and allowances; and that three of the principal officers and agents, so sent out to Mexico, had

also been appointed to act as commissioners on behalf of the company, for which purpose the

committee of management had delegated to them full and complete powers for that purpose; that all

contracts and engagements entered into with the several officers, agents, and workmen, sent out to

Mexico by the committee of management, had been entered into, on behalf of the Company, by John

Taylor, who had thereby become responsible for the payment of large sums of money; and that the

committee of management had caused credits to be opened under their guarantee with certain foreign

houses, and had entered into other pecuniary transactions for the Company:—It was witnessed, that

for the purpose of more effectually establishing the Company, each of the several persons, parties

thereto of the second part, so far as related to the acts and deed of himself and herself respectively,

and his and her respective heirs, executors, administrators, but not further, or otherwise, did thereby

for himself and herself respectively, and his and her respective heirs, executors, administrators,

covenant, promise and agree with and to the said Philip Taylor, John Martineau, Thomas Whitehead

Reed, Chas. Malton, Richard Martineau, and Samuel Thomas Rawlett, and with and to each and every

of them severally and respectively, and with and to their, and each and every of their respective

executors, administrators, and assigns to the effect following, namely:

That the several parties thereto, of the second part, thereinafter distinguished by the title of

proprietors, and the several other persons, who shall become proprietors, shall remain and continue a

company under the name of the Company of Adventurers in the Mines of Real del Monte, until such

time as the Company shall be dissolved, in pursuance of the provisions for that purpose thereinafter

contained:

That the capital of the Company shall consist of the sum of 200,000l., divided into five hundred

shares of 400l. each, and of such further sum or sums as may be raised by contribution amongst the

proprietors for the time being, or by the sale of new shares under the powers for those purposes

thereinafter contained:

That the object and business of the Company shall be to work such mines in Mexico, as the

company of directors, conformably with their powers, and with the interests of the Company, shall

think [71] proper, and to carry on the operations connected with, or incident to mining:


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That the affairs of the Company shall be confided to the management of a body of directors,

consisting of twelve members, to be chosen from among the proprietors:

That certain persons, who were specified by name, shall be the first directors of the Company;

and that John Taylor shall be the manager of the Company:

That all contracts and engagements entered into by the committee of management, or by John

Taylor, under their direction, with the several officers, agents, and workmen, sent out to Mexico, or

with any other officer, agent, or servant of the Company, or with any other person or persons; and all

other contracts, purchases, and engagements, entered into by the committee of management,' or by

John Taylor, under their direction; and all powers and authorities given or delegated by the committee

of management, to the commissioners of the Company, shall continue in full force, and shall be as

valid, and binding and conclusive upon the proprietors of the Company, as if the same had been

entered into, given, or delegated by the court of directors, in pursuance of the authority thereinafter

vested in them, for that purpose:

That the committee of management, and John Taylor respectively, shall be indemnified out of the

funds of the Company, from all liability in respect of the before-mentioned transactions; and that all

appointments made, and all deeds done by the committee of management, since the formation of the

Company, shall be, and the same are thereby ratified and confirmed:

That the proprietors of the Company shall assemble together at the house or office of the

Company, or at such other convenient place, as the directors shall appoint once in every year at least,

and specially at such other times as they shall be duly convened; and that a majority of three fourths

of the number of votes given by the qualified proprietors present at any special general court, shall

be requisite to decide any question relating to the increase of the company, to the making new laws,

regulations, and provisions, or to the amending, altering, or repealing any of the existing laws and

regulations, or to the dissolution of the Company; but that as to all questions relating to any other

business, a majority of the number of votes, given by the qualified proprietors present, shall be

sufficient to decide:

That, if, at any time after all the five hundred shares shall have been taken up, and all sums required

to be paid in respect of them, shall have been paid, it shall be thought advisable to raise more money

for the purposes of the company, it shall be lawful for a special general court, called for that purpose,

to enter into a resolution to increase the capital of the company to any amount, to be specified in such

resolution, either by a contribution amongst the proprietors, or by the sale of new shares; such

increased capital, if to be raised by a contribution among the proprietors, not exceeding the sum of

50,000l.:

That, at the special general court, where any such resolutions shall have been entered into, the

number and price of new shares, and the payment of such price, either at one time, or by instalments,

at intervals not less than one calendar month from each other, and the times of paying such price shall

be fixed and determined upon; and such resolution, if confirmed by a subsequent general court, to be

convened for that purpose, at a distance of not less than two weeks, nor more than four weeks from


198

such first general court, shall, in such case, and not till then, be binding upon the proprietors; and the

capital of the company shall be increased in the manner and to the amount specified in such resolution:

That in case the capital of the company should at any time be increased by the sale of new shares,

the proprietors for the time being, shall be entitled to the preemption of such new shares in proportion

to the amount of their respective shares in the then capital of the company:

That, subject and without prejudice to the powers vested in the general courts, the court of

directors shall have the entire management of, and superintendence over the affairs and concerns of

the company; and for that purpose it shall be lawful for the court of directors to work the mines which

have already, or shall at any time thereafter be granted to the company, in such manner as the court

of directors shall think proper, and to enter into such [72] contracts and engagements, and to make

all such purchases or sales on behalf of the company as they shall think expedient.

Regulations also were prescribed as to the mode in which shares were to be transferred; and it was

especially provided, that persons purchasing shares, should, from the time of the purchase, be liable

to all the obligations of proprietors, but should not be entitled to any profits or advantages till they

had executed a deed of covenant, binding themselves to observe all the provisions of the above-

mentioned deed of regulation.—

The bill then went on to make the following allegations:

That the plaintiff had executed the deed of settlement as the proprietor of seventy-one shares;

that he was called upon to pay, and obliged to pay the instalments that became due on these seventy-

one shares:

That the commissioners who were sent out to Mexico received instructions from John Taylor and

the committee of management, for taking any other mines in Mexico, besides those of Count Regla

and the Moran mine, which might be likely to forward the interests of the company; and particularly

to endeavour to obtain a grant of the Bolanos mine:

That, accordingly, Captain Vetch, shortly after his arrival in Mexico, entered into a treaty for a

grant or lease of the Bolanos mine, making, in pursuance of that object, a journey to that part of

Mexico where the mine is situate, and ultimately concluded a contract or agreement on behalf of the

proprietors of the Real del Monte Company, for a grant or lease of the mine for a term of years, with

the necessary powers and authorities for effectually working the same; that such contract or agreement

was duly reduced into writing, and executed as required by the laws of Mexico for the proprietors of

the mine, and also by Captain Vetch on behalf of the company; and that the mine had since been

worked on behalf of the company:

That, about the time when information -was received in this country, that the contract or

agreement for the Bolanos mine had been completed, John Taylor and his friends, being jealous of

the number of shares which the plaintiff continued to hold, formed a scheme for withholding from

the plaintiff his fair proportion of shares in the Bolanos mine, and for appropriating to their own use

fifty of the shares to which the plaintiff was justly entitled therein, under the pretence that he had not


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distributed fifty of his shares in the Real del Monte Company, according to his original intention,

among persons in Mexico:

That circular letters were sent by Taylor to the different proprietors of shares, offering to their

acceptance certain shares of the Bolanos mine: that one of these circulars was sent to the plaintiff,

but accompanied with an intimation from Taylor, that the shares of the Bolanos mine, which would

be allotted to him, would be less by fifty than those which he held in the Real del Monte; but that the

plaintiff insisted steadily on his right, as the holder of seventy-one shares in that company, to seventy-

one shares of the Bolanos mine:

That John Taylor and his friends then arranged amongst themselves, that a general meeting of the

proprietors, of the Real del Monte Company should be called, at which the proprietors should resign

all claim to the Bolanos mine in favour of John Taylor, with a view of enabling him to make that

unjust distribution of the shares thereof which they had previously attempted; and that in furtherance

of the same purpose a new company should be formed by John Taylor, for working the Bolanos mine,

the shares of which should be distributed amongst the proprietors of the Real del Monte Company,

with the exception of the plaintiff, in proportion to their shares in the capital of the same company.

That a special general court of the proprietors of the Real del Monte Company, was accordingly

called, and held on the 11th February, 1825, when the following resolutions were passed: “1st, That

the Bolanos mine is the property of Mr. Taylor, and that the company divests itself of any claim to

shares: 2dly, that the servants and agents of the Real del Monte Company do give any assistance in

their power, to the persons interested in the Bolanos mine.”

That shortly after the general court had been held, John Taylor and his friends, in pursuance of

their scheme, proceeded to form a new company for working the Bolanos mine, and appointed John

Taylor manager, and the other defendants, (being the [73] directors of the Real del Monte Company,)

with one exception only, directors and auditors thereof; that they also caused printed prospectuses to

be issued for working the mine, and for raising a capital of 200,000l. for that purpose, to be divided

into five hundred shares of 400l. each; that, in pursuance of the understanding which had previously

existed, they offered to the proprietors of the Real del Monte Company, with the exception of the

plaintiff, the same number of shares, in the capital to be raised for working the Bolanos mine, as such

proprietors possessed respectively in the Real del Monte Company; and that, although no assignment

or distribution of shares in the Bolanos mine had, at the time of filing the bill, actually taken place ;

John Taylor and the other defendants intended to distribute them amongst themselves, and such of

the other proprietors of the Real del Monte Company as should accept the offer, but refused to assign

any shares to the plaintiff.

The bill further charged,

That the resolutions passed on the 11th of February, were not passed bona fide, or with the

intention, on the part of the proprietors who agreed to them, of giving up their shares in the Bolanos

mine;—that it was understood they were to be entitled to, and that, in truth, they are to have, the same

number of shares at least, in the capital of the new mining company, or association formed for the


200

Bolanos mine, as they held in the capital of the Real del Monte Company ; and that some of the

proprietors, who voted at the general court, were personally interested in passing such resolutions, as

it was understood that the shares of the plaintiff, in the Bolanos mine, were to be distributed amongst

them:

That the formation of the company for working the Bolanos mine was, in fact, a scheme for

excluding the plaintiff from his fair proportion of shares therein ;— that the capital is to be divided

in the same number of shares as the capital of the Real del Monte Company; and that the persons

interested therein are, with few exceptions, proprietors of the Real del Monte Company:

That the directors, auditors, manager, and other servants and agents of the Bolanos Company, are

'the same persons as fill the like situations in the Real del Monte Company; that the business of the

Bolanos Company is carried on at the office of the Real del Monte Company; and that the principal,

if not the only, object of forming the Bolanos Company, was for the purpose of depriving and

defrauding the plaintiff of his just share and proportion in that mine, and in the contract which had

been entered into for working it.

There was also a charge, that the other proprietors of the Real del Monte Company, besides the

defendants, were so numerous, that it would be almost impracticable to make them parties to the suit;

that their number was such as to render it unnecessary, by the rules and practice of the court, to make

them parties; that their names, moreover, were unknown to the plaintiff; and that the defendant, to

whom they were known, refused to inform him of the names, so that he was unable to make them

defendants.

The prayer of the bill was,

That it may be declared, that the proprietors of the Real del Monte Company, were entitled to the

contract for the Bolanos mine, and to the benefit thereof: and that the plaintiff was entitled to the

same share and interest therein as he held and was entitled to in the capital of the Real del Monte

Company; and that John Taylor and the other defendants, if necessary, may be decreed to assign and

make over to the plaintiff such shares, rights, and interests therein, as he may be entitled to, or

otherwise to make good the same to him ;—and that it may be declared that the aforesaid attempt to

deprive the plaintiff of his just share therein, was fraudulent and contrary to good faith ;— that an

account also may be taken of all the dealings and transactions of the Real del Monte Company; and

that the defendants may be decreed to account for the produce and profits of the Bolanos mine since

the aforesaid contract was made for working the same, and of all remittances come to the hands of

the defendants or any of them, on account thereof, and that what may be due to the plaintiff on

taking the accounts may be paid to him; that, if necessary, the Real del Monte Company may be

dissolved, and the estate and effects belonging thereto converted into money, and the affairs of the

company wound up, and that [74] the respective shares of the plaintiff and the other partners therein

may be paid to them respectively:—And that the defendants may, in the mean time, be restrained from

appropriating, assigning, selling, disposing of, or otherwise parting or agreeing to part with, and from

doing any act which may give or appear to give to any person or persona whomsoever any title or

claim to any share, right, or interest whatsoever in the Bolanos mine, or the said contract or agreement


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which has been made for working the same; and also from employing the agents, officers, servants, or

workmen of the Real del Monte Company, or any of them, and from permitting them or any of them

to give any assistance whatsoever in or about the Bolanos mine, or the affairs thereof, or in any

business, matters, or things whatsoever relating thereto, either in this country, Mexico, or elsewhere,

and from employing the officers of the Real del Monte Company, and using or applying any of the

funds, stock, or property of the same company, for the use or on account of, or for any purpose

connected with the said Bolanos mine or the company which has been formed for the same :—And,

if necessary, that one or more proper person or persons may be appointed to manage the Bolanos

mine, and the other mines of the Real del Monte Company, and to receive the produce and remittances

on account of the mines, and to conduct the concerns of the company until the affairs thereof can

be wound up.

The defendants were John Taylor and the persons who were the directors of the Real del Monte

Company.

Upon the certificate of the bill filed, and the affidavit of the plaintiff verifying its allegations, an

injunction was moved for ex parte. .

The Lord Chancellor directed the motion to stand over; and notice of it to be served on the

defendants.

In opposition to the motion an affidavit was filed by several of the defendants, and particularly by

Taylor. It set out with representing the origin of the Real del Monte Company, in a manner somewhat

different from the statement contained in the bill; ascribing a greater degree of importance to the

exertions and influence of Taylor and his friends, and less to those of Kinder. It averred also, that

Kinder had acted fraudulently and contrary to good faith in retaining the fifty shares, which he had

been permitted to hold for the purpose of being distributed among persons in Mexico; and, that it

was only from considerations of expediency, that the company had allowed him to continue to be the

proprietor of those shares. With respect to the Bolanos mine, Taylor denied that the contract relating

to it had been obtained in the manner represented in the bill; or that the commissioners, sent out by

the committee of management of the Real del Monte Company, were instructed by such committee,

to obtain a contract for the mines of Bolanos, for the use of the Real del Monte Company. On the

contrary he stated that, at the time when these commissioners were about to depart from this country

for Mexico, it occurred to him (Taylor), that, in case the contracts with the Count de Regla, and the

contract for the mine of Moran, should not be ratified, it would then become desirable that the

commissioners should look out for other mines, in order that the expense of sending them out might

not be wholly thrown away:—That, accordingly with this view, he instructed the commissioners, that,

in case the contract should not be confirmed, they should; in that event, and that event only, look out

for other mines to be worked by the company, amongst which the mines of Bolanos were mentioned,

and in such case, he was willing to abandon the intention he had previously formed of working the

Bolanos mine, by a company consisting of his own particular friends exclusively:—That, about the

latter end of April, 1824, one William Dollar applied to him, and stated that he (Dollar) was the agent

of certain persons who had acquired a right to the mines of Bolanos, and offered to treat with him


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for a grant thereof:—That, conceiving Mr. Dollar to have authority tt> contract for a grant of the

mines, he (Taylor) did, by a memorandum of agreement, bearing date on the 4th of May, 1824, agree

to take the mines of Bolanos, and work the same upon certain' terms; in which memorandum it was

expressly stated, that the contract was made and entered into by a company then forming:

[75] That, immediately after making the contract, he transmitted the same to Captain Vetch, with

instructions to get the same ratified, and to send a competent person to inspect and report upon the

mines:

That, after the contract was so transmitted to Captain Vetch, it was determined by him (Taylor)

and his friends, whom he consulted thereon, that, in case of a ratification of the contract, the same

should be offered to the several persons, who should, at the time of the receipt of intelligence of such

ratification, be proprietors of the Real del Monte Company, with the exception, nevertheless, of fifty

shares, which, instead of being allotted to Thomas Kinder for his own use, were to be kept in reserve

for such persons as might be useful in working the Bolanos mines:

That it afterwards turned out, that neither William Dollar, nor those for whom he acted, had any

title to the mine of Bolanos; but Captain Vetch did, notwithstanding, on the receipt of the instructions,

proceed to obtain a grant of that mine from the proprietors thereof, for and on account of Taylor:

That all expenses relative to the Bolanos mine, and the contract for it had been kept distinct from

the accounts of the Real del Monte Company; that the Bolanos mine had not yet been worked; and

that it was as a matter of favour, and not of right, that he (Taylor) had offered the shares of the

Bolanos mine to those who were proprietors in the Real del Monte Company.

With respect to what passed at the meeting of proprietors of the Real del Monte Company, held

on the 11th of February, 1825, the affidavit stated that the following were the resolutions then

adopted:

“That it appears to this court that Captain Vetch has lately entered into a contract for

working the mine of Bolanos, in the province of Guadalaxara.

It appearing to this court, that an opinion has been entertained by some of the proprietors

of this company, that the contract so entered into by Captain Vetch, has been made on behalf

of the Real del Monte Company, Resolved, that there is no foundation for such an opinion,

and that the mine of Bolanos does not belong to the Real del Monte Company.

That, at all events, it will be highly inexpedient that the mine of Bolanos should be

undertaken by the Real del Monte Company; and the proprietors of that company do

accordingly reject the offer now made by Mr. Taylor, and do abandon all right and title to such

mine.

That it will be expedient that the mine of Bolanos should be worked by another and

distinct company, to be regulated by separate and distinct rules and regulations, and to be in

all respects independent of this company.


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That, should a majority of shares in the Bolanos mine be offered to, and accepted by

persons who are proprietors of this company, then, and in such case, the directors be and are

hereby authorized to allow their commissioners, and other agents and servants of the company

in Mexico, to give such aid and assistance to the management and affairs of the Bolanos

Company, and upon such terms and conditions, as the directors of this company shall from

time to time think proper, any additional salaries thereby incurred, being defrayed by the

proprietors of the Bolanos Company.”

A demurrer to the bill was also put in, which proceeded upon two grounds; 1st, that, even upon

the facts stated, as alleged upon the record, there was not enough to show, that, in construction of

law, the contract for the Bolanos mine was a trust for the Real del Monte Company; the other, that all

the proprietors of that company ought to have been made parties.

The Solicitor General, Mr. Heald, and Mr. Walker, appeared for the plaintiff;

Mr. Shadmell and Mr. Sugden, contra.

The argument, upon the motion for the injunction, turned chiefly, as between the parties, upon

the point, whether, looking at the constitution and the objects of the Real del Monte Company, and

at the circumstances appearing on the affidavits, the plaintiff had shown such a probability of title to

the shares which he claimed in the Bolanos mine, as would give him a right to the intermediate

summary protection of the court. But the Lord Chancellor, early in the argument, expressed strong

doubts with respect to the legality of such an association as the Real del Monte Company, and [76]

the right of any persons, claiming as proprietors in such a company, to have the aid of a court of

justice. This led to much argument on these points; both the counsel for the plaintiff, and the counsel

for the defendants, contending, that the company was legal, and that the King's Courts were bound

to adjudicate upon rights arising out of its transactions.

March 26.—The LORD CHANCELLOR.

This is a case distinguishable undoubtedly from many of the speculations now in vogue. I may,

however, say, that rumours are abroad, that persons have formed companies, and have given

descriptions, and held out a prospect, of vast benefits to arise from them, never intending themselves

to continue members; but raising large sums of money upon the credulity and avarice of individuals

with whom they deal. It may be well for such men to be aware, that it is said by those who understand

the law better than I do, that it is a question, whether, if persons so engaging should happen to be

indicted for a conspiracy to form a company not meaning to form it, but meaning to withdraw

themselves from their engagements by selling their shares to other persons, such conduct would not

amount to a deceit and fraud, upon which the indictment might be sustained.

It must be observed, that, in this case there was a company existing from February 1824, to August

1824, before the deed forming the company or partnership was executed by any one. Now there may

be a very great difference in point of law, between the transactions of a body whose transactions are

regulated by a deed actually executed, and the transactions of a company formed long before the deed

is executed. Some things may be legal after the deed is executed, which are not legal until the deed is


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executed; and some things may be legal before the deed is executed, which will not be legal after its

execution. The speculation being for working the mines of Real del Monte and the Moran, there is a

committee of management formed, consisting of gentlemen whose names are mentioned in the

prospectuses, and who had certain powers given them. Mr. Taylor was to treat for the Real del Monte

and the Moran mines; but I do not find in the instrument in writing, which first formed the company

in February, 1824, the last reference to engagements in any other mines except those two. It will remain

for me, to consider, by a careful investigation of that document and of the deed, whether I can reach

the opinion, that either Mr. Taylor or the committee of management could authorize any person, so

as to bind that company, to deal for any other mines for the company.

Supposing even, that there were other circumstances in the case than now appear, it would be very

extraordinary if the construction of the written instruments should be so large as the plaintiff

contends for. The capital being to consist of 200,000l., to be divided into so many shares of 500l.

each, and the company being formed with a view of working the Real del Monte mines and Moran

mine by means of that capital:—it would be a most extraordinary thing to suppose, that either Mr.

Taylor or the committee of management, have had authority given to them before the deed was

executed, to have made contracts which were to bind the company to the amount of 200,000l. capital

more. If they had such authority, then they had just as good authority to bind the company to the

extent of two hundred millions more: for if it can be thought that they could bind the company with

respect to other mines besides the Real del Monte and Moran, their authority could be limited only by

the impossibility of making contracts with respect to other mines.

In order to see how this point of the case stands, we must look at the engagement to indemnify

contained in the deed of August, 1824. Now I think it will be found exceedingly difficult to say, that

the engagement of indemnity, either to Mr. Taylor or to any other person who was employed in

Mexico in the mean time, was an engagement of indemnity that would reach this transaction

concerning the Bolanos mine.

If what was done before the execution of the deed of August, 1824, did not make what Vetch

contracted for a mine belonging to this company, then the mine could be claimed only upon the

ground of its being a mining estate in trust: and if a trust in respect of the mine be raised, either in

writing or in fact, upon any circumstances which are [77] stated and admitted to have taken place, and

if the company choose to have the benefit of that trust, there was no option on the part of Mr. Taylor.

The company, however, could not be bound, till the court of directors approved of what had been so

done. And if it is rejected on the part of the company, if they do not choose to make it a part of the

property, I have not the least notion that it can belong to the company. The Real del Monte Company,

if called upon to sanction a new engagement, might very well say, “We will not take the Bolanos mine,

and thereby incur the liability of paying instalments to the amount perhaps of 2,000l. when all that we

agreed to pay was 400l.”

Now, if the Bolanos mine could not become the property of the Real del Monte Company, unless

it was approved and taken to by the company, by the effect either of conduct or of express adoption,

it becomes important to see, whether the bill and affidavit contain sufficient allegations that the


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contract for it has been approved by the court of directors, or any statement of such circumstances

as would induce me to say, that, though there has been no express approbation, a trust has nevertheless

been raised, and exists. I believe it will be difficult to show, that such allegations or statements of

circumstances are contained in the bill and affidavit of the plaintiff; and the affidavit of Mr. Taylor

makes a strong case the other way.

It is remarkable, that we are left completely in the dark with respect to the contract which is the

subject of dispute. This contract for the Bolanos mine is not set forth; the terms of it are not disclosed:

nobody says, that he has seen it; we are not told with whom it is made. That may raise a difficulty with

respect to the jurisdiction of that court.

March 29.—The Lord Chancellor delivered his final judgment upon the motion for an injunction. It

was to the following effect:—

The bill begins by stating, that, in or about the early part of the year 1823, the plaintiff became

acquainted with Signor Don Juan Garcia, and General Paroissien, who came over to this country in

the capacity of envoys and ministers plenipotentiary of the government of Peru. And if the plaintiff's

case were to depend upon the truth of those facts, I should dismiss the bill directly; because His

Majesty's courts of justice cannot recognize the fact, that there was any such thing as a government

of Peru in the year 1823. Nor am I aware at present, whatever matters may be in progress, that any of

the King's courts can acknowledge or admit, that there is such a government at this moment.

The bill then proceeds to state the origin and formation of the Real del Monte Company; the

material clauses of the deed which regulates it; and the circumstances on which the plaintiff contends,

that the Bolanos mine is a part of its property.

It appears, that the company was first formed on the 4th day of February, 1824; for the first of

the resolutions passed on that day declared, that the company was then formed. It must, therefore, be

taken as a fact, for and against all parties engaged in this undertaking, that this is a company which

existed from the 4th of February, 1824, but was regulated by no deed till the following August. It

appears, also, that, during that interval, shares in it were, in fact, transferred. Upon that 4th of February

also, certain authorities were given to Mr. Taylor; but these authorities were limited expressly to the

mines of Count Regla and the Moran mine.

As to what passed between the 4th of February and the execution of the deed, I may observe,

that if it becomes absolutely necessary to decide upon the legality or the illegality of the existing body,

it would be necessary to know, who were the original subscribers; to know what the contract was, what

changes there had been in the subscribers between the month of February and the month of August,

who were the persons that executed this deed, who were engaged in the undertaking at the time the

deed was executed, what the transactions of the company had been previous to the execution of that

deed, how far the individuals composing the company had changed between the formation of the

company and the regulation of it under this deed, and what had been done, either of a nature which

any body could suggest to be [78] perfectly legal, or of a nature, the legality of which might be subject


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of argument, between the date of the formation of the company and the date of the execution of

the deed.

The Lord Chancellor then went through the details and provisions of the deed of August, 1824.

That deed, said his Lordship, expressly states, that the object of the company was to “work such

mines in Mexico as the court of directors, conformably with the interest of the company and the

powers thereinafter contained, should think proper.” These are the first words, in which powers of

contracting for other mines are mentioned, (for, at the foundation of the company in February, 1824,

its object was to take the benefit of the contracts with Count Regla and Murphy, and of these alone);

and they, in unequivocal terms, confine the business of the company to working, not such mines in

Mexico as the committee of management or any person authorized by them should select, but such

mines in Mexico as the court of directors, conformably with their powers and the interests of the

company, should think proper.

Another material clause is that which provides, that all contracts or engagements made by the

committee of management, or by John Taylor under their direction, with their several officers, agents,

&c. “or with any other person or persons whomsoever,” and all contracts entered into for the purchase

of quicksilver, &c. “and all other contracts, purchases, and engagements whatsoever, entered into by

the committee of management, or by the said John Taylor under their direction, and all powers and

authorities given or delegated by the said committee of management, to the commissioners of the

company shall continue in full force and effect, and shall be as valid, binding, and conclusive upon the

proprietors, as if the same had been entered into or given or delegated by the court of directors,” in

pursuance of the authority vested in them by the deed. Now, I desire to know, whether it is possible

to put such a construction upon this clause, that it shall mean more than this—that what Taylor and

the committee of management had done under the powers given to them, should be of as much force

as if it had been done by the court of directors. But the powers given to Taylor and the committee,

related only to the first contracts for Count Regla's mines and the Moran mine. It was only the court

of directors, that could enter into contracts for other mines; and the extent of authority even of the

directors went no farther than to the calling on the original subscribers to raise an additional capital

of 50,000l.

The Lord Chancellor then went through the clauses of the deed, which related to the holding of

courts of proprietors, the appointment of directors, officers, &c., the passing laws, &c. All these

arrangements, he observed, were very like the constitution of some companies, who were acting, not

as a corporation, but being a corporation: and if the Bank of England, the East India Company, or

the South Sea Company, wanted a new charter, they could not do better than copy the deed of

regulation of the Real del Monte Company.

In the cases which have been determined, continued his Lordship, no attempt was made to state

what constitutes acting as a corporation. It is, undoubtedly, a very easy thing to say, that a great number

of other bodies have acted like the body whose acts are under consideration: but I cannot find that

any case ever has, either in argument or decision, defined, what it is to act as a corporate body. That

that point may be most material, it is clear; because, if the acting as a corporate body can be taken to


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be a thing per se prohibited by the act of the 6th of Geo. 1. surely it is extremely material, that the

first opportunity should be taken, in which a matter of this kind comes before a court of law, to

determine the question. It is in a court of law that the question is most properly brought to a decision;

for it is a pure question of law: and it is only incidentally, that the Court of Chancery may determine

it, for the purpose of giving or refusing the relief, which, if the law be the one way, the plaintiff may

be entitled to have; and if the law be the other way, he ought not to have.

Supposing, on the other hand, that the acting as a corporate body is not within the 6th of George

1. as of itself, a distinctly [79] prohibited act, I wish to know, if it can be considered by any lawyer as

clear, that, if persons take upon themselves to act as a corporate body, assuming that character with

respect to all others His Majesty's subjects, though they have not gotten the authority of His Majesty,

or of an Act of Parliament for so doing - is it clear that that is not an offence at common law? That

is a point, which, at least, ought to be very well considered; for it has ever occurred to me, upon

looking at this case, as one of the most difficult things in the world, to hold, and give a reason for

holding, that bodies, like the Real del Monte Company, are not acting as corporate bodies.

Suppose this instrument had been what it is not, (although it is in a great part of it) a copy of the

East India Company's charter: suppose also that the East India Company, not being a corporation,

had been creating stock before the grant of their charter, and had been acting according to all the

terms, conditions, and powers contained in the charter, or acting as a corporate body, (and let it be

remembered, that it is not being a corporation that is prohibited, but it is assuming to act as a corporate

body); would it not be a most singular and a most difficult thing to maintain, that, if the East India

Company are acting, or can only act as a corporate body under the King's charter, or under an Act of

Parliament; yet, if there be another body acting under terms and conditions precisely and exactly the

same as those contained in the charter of incorporation, that other body is not to be said to be

assuming to act as a corporate body? To carry this a little further, suppose that there is a corporate

body existing for a particular purpose, which corporate body chooses, with respect to other purposes

not within the scope of its corporate purposes, to apply all its corporate means, and, in fact, its

corporate character, as far as its dealings with the public go, to purposes that are not described in their

charter. It would be a most extraordinary thing to say, “you are not assuming to act as a corporate

body, with respect to purposes for which you are not a corporation; and because you are not a

corporation, it must be argued that therefore you are not assuming to act as a corporate body, when

every act you do, is acting as if the purposes, not within the charter, were, with reference to what you

are doing, purposes within the charter, and when the world, who does not see your charter, must

suppose that you are acting in a corporate character with respect to purposes, which in truth are not

corporate purposes; since you are acting exactly in the same way with reference to purposes net

corporate, as you do with reference to purposes that are corporate.”

This is no new-fangled idea; for if we look at what passed in this court, not long after the Act of

1720, in the case of Child v. The Hudson's Bay Company, when this question arose, namely: the

Hudson's Bay Company having powers for making bye-laws for their regulation and management,

whether the bye-laws which were made, were good bye-laws within the charter;—we find that my

Lord Chancellor decided, that they could not make bye-laws and regulations not for corporate


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purposes; and he concludes his judgment by saying, that they could not make bye-laws in relation to

projects prohibited by the 6th Geo. 1. c. 18. So that he seems to introduce the necessity of considering

what it is that constitutes the acting as a corporate body.

Then that is a consideration which may divide itself into two heads: first, what are the acts which

a body, being actually a corporate body, can be said to do as a corporate body; and, secondly, what are

the acts for purposes not corporate, in respect of which, if they affect to do them in the face of the

world, in the same manner as if they act for corporate purposes, they can still be said to be acting as

a corporate body. These points are the more material; because, in the act of the 6th Geo. 1., when we

look at the clauses of exception, we find, that, even with respect to corporate bodies, the legislature

thought itself obliged to except, by express provisions, legal existing bodies and acknowledged

corporate bodies, out of the operation of the clause relative to raising transferable stocks.

Upon the clause relative to the increase of the capital of the company, his Lordship asked, whether

it was possible according to the fair construction of the deed, for any person to insist, that, before the

execution of that deed, the committee of management, [80] or their officers in Mexico, could have

contracted on behalf of the company for the Bolanos mine, and thereby obliged them to advance an

additional capital of 200,000l. If the committee of management, or Mr. Taylor, could do that, what

was there to hinder them or him from pledging the company to the extent of two hundred millions,

as well as to the extent of two hundred thousand pounds? To whom is the power of increasing the

capital of the company given? Not to the court of directors, not to the ordinary general court, not to

the committee of management, not to Mr. Taylor, under the authority of the committee; but “to a

special general court called for the purpose,” and acting in the manner and under the restrictions

provided by the clause on this subject. The capital therefore can be increased only by the means here

provided; and if the increase should exceed 50,000l., it is compulsory on the company to take 50,000l.;

but it is not compulsory on the company to take more than that sum; and they are to raise the rest, if

they can, by taking in new subscribers, giving, however, a preference to the old subscribers.

By another clause of the deed, the members of the company do what, as among themselves, they

have a right to do, namely, they confine their responsibility to the amount of their respective shares,—

an obligation which they may certainly enter into, if it is an obligation affecting merely their own

interests. But it may not be unfit to add, that persons should be aware, that, however they can limit

the responsibility of shareholders in such undertakings as between themselves, yet, as to third persons,

they cannot do it; and that every man who subscribes becomes, as to the third persons, liable to the

extent of every shilling he has or will have in the world, every acre of land which he has or may have

in the world.

In addition to what I have remarked on the liability of every shareholder, with respect to third

persons, for the special engagements of the company, I may further say, that it may be well for those,

who may hereafter form such companies, to take care, that the prospectus, held out to the public, may

not make them liable, not only for the special engagements of the company, but to the full extent of

the capital stated in the prospectus to be subscribed for.


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Another important clause in this deed, is the clause providing for a dissolution of the company;

and upon it the question would be, whether it could apply in every case in which a dissolution is fit.

If persons think proper to limit the powers of dissolving a partnership, when it is a partnership not

for a given time, but a partnership which, upon the ordinary principle, would be capable of dissolution,

because an individual insisted that it should be dissolved—if in such case, the partnership is so formed,

as to subsist until a dissolution is worked by the consent of particular individuals, or of any special

number of individuals, whose consent is thereby made necessary to the dissolution: a very

considerable question, (although it is not one that I should have any great difficulty in dealing with,)

would be this: Is such a clause to be taken as a clause regulating a dissolution, which is to be brought

about by the mere will and pleasure of a person seeking dissolution; or is the clause to be considered

at all applicable to a dissolution, which is sought for upon the ground that a party is acting in a way in

which he is not authorized to act under the deed forming the company or body? For instance, if men

misconduct themselves, I apprehend they would have a great difficulty in applying such a clause as

this to that case. If there was any flagrant misconduct, I should have very little difficulty in saying, that

this clause was not meant to regulate that state of circumstances; because, under such circumstances,

the Court would not keep persons together for better or worse. I should think that a clause of that

kind could mean, not that it should be applied in cases in which there is misconduct, but that it is to

be applied only in cases in which the question of dissolution arises upon a fair view of what is for the

interest of the company; and that in relation to the question of interest, the company is not to be

dissolved by an individual arbitrarily saying, “I will put an end to the partnership;” but that it be

dissolved or not dissolved, according to the determination of a body of persons selected for that

purpose, in whose discretion the instrument has vested the decision of that particular question; at the

same time not taking out of the reach of a court of equity, [81] to decree a dissolution in cases where

misconduct or misappropriation of property would be a ground for such a proceeding.

The deed contains likewise a general clause concerning reference to arbitration; which, however,

is not so constructed as to throw out the jurisdiction of this Court.

With respect to the question, whether this is a company within the intent and meaning of the 6th

of Geo. 1., this Court has undoubtedly a jurisdiction to decide upon the legality or illegality of an act,

even if its illegality should be attended with highly penal consequences, where the civil effects of that

act are before the Court, and in order to determine, whether, that civil relief ought to be given or

withheld, which ought not to be given, unless the act, out of which the demand of relief arises, is

legal. And though in some cases it would not be too bold to say at once, that no relief will be given,

because the whole claim is founded on a contract which the law does not countenance; yet a judge in

equity ought to be very sure that he is right, before he proceeds upon such a ground. And I admit,

that this is not a case which I ought to decide upon that single consideration.

With respect to the cases at law upon the subject, and particularly the case of the King v. Webb,

the Lord Chancellor said, that the doctrine would require to be considered in many points of view,

which had not in those cases been attended to sufficiently. In particular, the Courts had not explained

or defined, what it was that constituted acting as a corporation. Now, the statute supposes, and he

himself confidently believed, that to act as a corporation, not being a corporation, was an offence at


210

common law. Indeed, in dealing with transactions of this kind, it should never be forgotten, that we

have a common law as well as a statute law; and that what may not be within the comprehension of

the statute, may, nevertheless, be within the prohibition of the common law.

The act of the 6th Geo. 1. (continued [82] his Lordship,) is very ill drawn. The recital clause mixes

and jumbles together a variety of things in such a manner, that it is very difficult to say what is or is

not included in it. This is a penal law; and in such statutes the enactment clauses should always describe

most accurately what is to be made to amount to an offence. Now, instead of the enacting clauses of

this act being expressed with minuteness and distinctness as to what is described to be matter of

offence, it leaves us to make out, by any reasoning which we can apply to the clauses of recital, what

is to be understood, by implication, to be the matter of offence created by the enacting clauses. This,

to say the least, is a very inconvenient mode of legislating in penal matters. But whenever the act of

parliament comes again to be considered, I should wish, that the question of construction should be

argued upon the effect of the recital, as a recital, as a recital which takes it for granted, that there are

some things so prejudicial to the subjects of the country, as to be manifestly of the tendency described

in the act, and to have it considered whether, if within the words that are used, the thing complained

of is manifestly to the injury of his Majesty's subjects, cases of this kind are to be left to the decision

of a jury; or whether, on the other hand, those kinds of cases are not cases pronounced already by

the law, to be manifestly a grievance to his Majesty's subjects.

I should wish it also to be considered, with reference to the recital clauses, whether the assuming

to act as a corporation is not an offence, meant to be created by the act, independently of the

circumstance of opening books and subscriptions; and I cannot quit the topic without saying, that I

can find nothing in this act, which is to confine it to opening books and subscriptions ;—to the

opening of books to-day— getting out of the concern to-morrow, and shutting the books the next

day; and it is impossible, in my judgment, that so limited a construction can be put upon the act,

particularly when we look at the clauses of exception. There are acknowledged companies and

chartered companies, the cases of which are contemplated by this act; and in that contemplation, the

legislature exempts them from the penalties of the former clauses. Will any one tell me, that the

companies named in the clauses of exception were contemplated by the legislature as companies that

were to open a book today and shut it up the next day, or were to engage in extremely fraudulent acts?

I have not the least doubt, that, if you could give me a case of parties holding together, and being

about to form a company, and it could be made out to the satisfaction of a jury, that they meant to do

no more than to bring forward the scheme, which might be the most futile thing in the world, make

it the means of raising a price, and getting great premiums, taking care to get themselves out of the

scrape before the company is formed:—I have no difficulty to say that this is an indictable offence.

With respect to the application of the statute, and of the common law to this particular case, if my

opinion should ever be called for upon the legality or illegality of the Real del Monte scheme, I must

have a great deal more information concerning their proceedings than is at present before the Court.

In deciding upon the particular grievance complained of by this bill, the Court is placed in some

difficulty from the circumstance, that it nowhere appears what the contract is, which is the subject of

dispute. Supposing, however, that there is a contract for the Bolanos mine; and that the contract is a


211

beneficial one, let us see how the law will stand. If the members of the Bolanos Company (supposing

that there is such a company, and it is very material with reference to this suit, whether there be or be

not such a company, because, although the Real del Monte directors are before the Court, yet as to

the directors of the Bolanos Company, unless they are the same individuals, I have nobody before me

to represent the Bolanos Company,) have acquired the interest in the Bolanos mine, under such

circumstances as would make that mine a subject of trust for the Real del Monte Company; I am ready

to admit that the latter company has a right to have the management of that subject of trust. But, on

the other hand, we must recollect, that it is one thing to say, where an acquisition has been obtained

under such circumstances, that the old company might insist upon taking the benefit of it; and quite

a different thing to say that they are obliged to insist upon it. For instance, if it should turn [83] out

in this case, that Mr. Vetch has been dealing under the authority of Mr. Taylor; and that Mr. Taylor

has been acting under the authority of the directors; and yet, on the other hand, the instrument for

the regulation of the company requires, that there shall be a special authority for the adoption of any

new contract, which adoption again will depend upon the question, whether it is a benefit to adopt

the new contract or not; and further, if those who are intrusted with that special authority do not

choose, acting on behalf of the body, to take the Bolanos mine; then, I say, that the members of the

old company cannot be called upon by Mr. Kinder, or any body else, to take a benefit which they

might take. Suppose, for instance, in the circumstances of this contract, which took place here and in

Mexico, put together, that such a case had been established as would have authorized the directors, at

a special general court, to say, that they would have the Bolanos mine; does it at all follow, either in

point of law, or in equity, that, if the court of directors, at a special general court, choose to say, that

they will not have the mine, any individual member can set up a claim to it?

Nay, I go further; for I say, that, according to law, an old company, with the exception of an

individual, may form a new company for new purposes: that was laid down in the case of the Life and

Fire Insurance Company. That company set up also a Marine Insurance; but one gentleman was

obstinate, and filed a bill, insisting that the Fire and Life Insurance Company, of which he was a

member, could not compel him to be a member of any other company; on the other hand it was

insisted that his copartners could compel him: I was clearly of opinion that they could not; and that,

if persons entered into a partnership for a particular purpose, they could not engage any person

belonging to that partnership in any other pursuit, in which that person had never agreed to be

engaged. But if all the other members of that Fire and Life Insurance Company thought proper to

form a Marine Insurance Company, he not being one of them, then, unless it could be shown that

there *was some clause in the original deed or instrument, to prevent them from doing so, I thought

that the Court had no authority to take away from them the power of doing that, if they were desirous

so to do. In like manner, if this company thought proper to say, “Well, Mr. Kinder, we are not bound

to take the Bolanos mine, and we will not take it;” I cannot undertake to say, that, (as soon as they had

divested the Real del Monte Company of the right to the Bolanos mine, by the refusal to accept it),

the very individuals, who refused to accept it for the Real del Monte Company, might not form another

company, and take it for themselves.


212

That being the general law, has Mr. Kinder a right to say to these persons “I do insist, that this

shall belong to the Real del Monte Company; I do insist that there shall be 200,000l. more subscribed

in the same shares as in the Real del Monte Company.” A person might be quite right in saying, “If I

am entitled to fifty shares in the Real del Monte Company, I am entitled to call upon you to make all

the other terms agree in that respect;” but would not all the other partners have a right to say “We will

not undertake upon those terms with you?” And what right have I to interdict them from so saying?

The directors of the Real del Monte Company, however, have got quite wrong; and the same error

was committed in the Fire and Life Assurance Company, who thought that they could carry on the

Marine Assurance Company, by the officers and servants of the Fire and Life Assurance Company.

But the Court said, that they had no right to do so. In the same way, there is here a resolution, which

directs the employment of the officers and servants belonging to the Real del Monte Company, for

the benefit of the Bolanos Company: that cannot be, and therefore must be prohibited, unless this

company turns out to be an illegal body.

Upon the whole, even looking at the plaintiff's representation of the circumstances, I do not think

that his affidavits .are sufficient to raise the trust under which he claims: but I am sure that they are

not sufficient to raise such a trust, when I look at the affidavits on both sides. Neither do I see any

thing which would authorize me to say, that Mr. Taylor was not at liberty to enter into any other mining

concern, or to contract for any other mine, with such .persons as he might think fit to engage [84]

with. Therefore the ultimate opinion which I have formed, putting all the matter of the legality of the

company out of question, is this—that there has not been, what (to sustain Mr. Kinder's claim) there

must have been, such an adoption, not by Mr. Kinder, but by the Real del Monte Company, of this

Bolanos mine concern, as authorizes Mr. Kinder to demand, or rather compels me, upon his call, to

grant the injunction which is now sought: on that ground, I refuse the injunction, with the exception

of so much of it as relates to the resolution for employing the agents, servants, &c. of the Real del

Monte Company in the management of the Bolanos mine, a resolution, as I have already said, which

the directors were not competent to make

The Lord Chancellor did not think it necessary to pronounce any judgment on the demurrer: but he

made the following observations with respect to the alleged defect of the suit, in not having all the

parties before the Court:

“I have granted injunctions,” said his Lordship, “as my predecessors have done, even where all the

parties were not before the Court: but in all those cases I must have been satisfied, that all the parties,

who could be brought before the Court either individually, or by those representing their interest, were

brought before the Court— which would be quite sufficient for the purpose of enabling the Court to

do justice. With respect to those cases in which some individuals sue on behalf of themselves and all

others interested, and they bring before the Court all the individuals who are to do the act which must

be done in order to give relief, I apprehend there is no difficulty. The difficulty is, how to deal with

cases where the plaintiff does not represent all. With respect to the demurrer it will perhaps be found,

that, although there are cases in which the Court has gone very far in binding a great many absent

persons, by what was done with respect to persons present, yet it will be quite a different question


213

what is to be done in a case where the persons, who are to be bound, are bodies of persons who are

called upon to make such new subscriptions and advances as this Bolanos Mine Company must

require. When pecuniary advances are to be made by each and every individual according to the ratio

of contribution, I think it may be difficult to deal with this case, without having more parties before

the Court.”

Chapter 9. Repeal of the Bubble Act

a. A comprehensive proposal for reform (1825)87

“THE questions I propose in the following pages briefly to investigate, are

First—What may be the cause of the present great increase of Joint Stock Companies.

Secondly-—What are the probable consequences of such increase ; and whether, by a

consideration of the nature of their several objects, some principle may not be found,-to indicate the

degree in which such Associations are beneficial or injurious in their effects upon society; and,

Finally—Whether the law, as it at present stands, relating to Joint Stock Companies, be not

susceptible of improvement.

In considering the increase of these projects, our attention is first arrested, by the vast amount

and prodigious rapidity of that increase; whilst the avidity with which each project in succession is

devoured by the public, unexampled [2] entirely in the memory of any living man, has only been

equalled at the period of the South Sea and Mississippi Schemes. Each day brings forth its brood; they

spring up around us on every side; from Ores in the earth to Pearl Oysters in the sea; from Mexico to

New Holland; from Wet Docks and Rail-roads to Washing and Alderney Cows; every element in turn

is invaded; each quarter of the globe is explored, and all trades and professions are scrutinized, to

discern if peradventure they may not afford some basis whereupon to build the goodly edifice of a

Joint Stock Company. To a scrutiny conducted with such animating motives for diligence, success is

rarely wanting; the fittest of opportunities is speedily discovered for the formation of a Company,

whose operations, whilst they will be of incalculable advantage to the community, will yield an ample

remuneration to the subscribers. Anon appears, in beautiful proportion, pyramidically shaped, an

advertisement, setting forth in glowing terms, yet with a certain air of graceful reserve, the unrivalled

advantages of the scheme; aloft sublime upon the apex shines some name illustrious either at the

eastern or western end of this happy and money-getting metropolis, the president; below his awful

dignity, but yet of scarcely inferior rank, may be discerned the vice-presidents, who commonly are

twain dividing their greatness; and to them [3] succeeds, arranged in. double file, the array of the

directors, twelve or twenty-four in number. These gentlemen might not, at first sight, appear to an

ordinary man, to be of a sort or condition greatly differing from his own; but no, they too, by their

incessant appearance before the public eye, have become the heirs of fame; their names, “Familiar in

our months as household words,” seem essential to the very idea of a Joint Stock Company ;—its

existence would be incomplete without them. Below them follow, in orderly arrangement, auditors,

treasurers, trustees, (I am not sure that I marshal them aright,) bankers, solicitors, engineers, and lastly,

in the corner, (and often the real corner-stone of the project,) appears the secretary.

87 Clay, W., Remarks on Joint Stock Companies, John Murray, London, 1825. Published anonymously under the pseudonym “By An Old Merchant.” URL: http://books.google.ca/books?id=Txw0AQAAMAAJ.

http://books.google.ca/books?id=Txw0AQAAMAAJ

9. Repeal of the Bubble Act

215

Appended to the advertisement is a notice, where the public (it is all for the good of the public)

may apply for admission to the benefits of this unexampled scheme; but short is the auspicious

moment of admission, and vain the headlong eagerness with which we seek to avail ourselves of it;

the golden vision gleams but for a moment, and then is shut from our desiring eyes. The “public” is

informed that the lists of subscription are full; no matter of how many millions they consisted, nor

across what oceans, [4] into what deserts, those millions are to be sent; the lists are full, overflowing;

but the disappointed applicant has the consolation of hearing that he has many companions in

affliction, and that fifteen millions have been turned away. Let him, however, be comforted; the same

paper that informs him, that the shares he has missed are at five per cent. and “looking up,”…

This mania comprehends all classes in its influence; it is epidemic, and afflicts alike the rich and

poor, the titled and the humble, the leisurely gentlemen of St. James’s-street, and the scuttlers through

Change-alley.

…

[90] There are evidently two distinct aspects under which these associations may be considered,

with a view to legislative regulation—requiring respectively exertions distinct in their nature of the

authority of the legislature; they are

The mode of constituting these Joint Stock Companies, in the first place. .

Their objects when constituted in the second.

With regard to the latter, it is clear that no general legislative provision can be made. In every fresh

case of an application to parliament to incorporate a Joint Stock Company, such application must be

tried by its own merits, and the expediency of the proposed undertaking be decided by examination

of evidence. All that can be done is to establish some principles which may serve as guides in the

investigation, and assist in determining the degree of encouragement which each undertaking may, by

its nature and tendency, be entitled to…The constitution of these companies may, with more case, be

made the subject of previous [91] regulation; and I am inclined to think, that legislative interference

on this head alone, would go further towards furnishing a test of the expediency of the objects

proposed by new companies than might at first sight be supposed; for as regulations judiciously

framed, would, in a great measure, put a stop to the getting up such associations with a mere view to-

jobbing in the shares, such projects only would be brought forward as promised well for permanent

investment, and such persons alone would become subscribers as had the requisite means to carry

them into effect. At present, it is certain that the mere fact of the existence of such projects cannot

be assumed in the smallest degree as evidence of their necessity or expediency.

I am not aware of any legislative enactment on the subject of Joint Stock Companies generally,

since the act of 1720, already cited, and it is to the provisions of that act that reference is always had

in framing the laws and regulations of these associations…

I am not, however, inclined to think that the law, as it now [92] stands, is either well directed in its

object, or would be convenient in its effect. If the projectors of these associations are right in


216

supposing that the precautions they take will secure them from the pains and penalties provided by

the act, it is a dead letter; if, on the contrary, the act could be put in force, it would be too severe and

undistinguishing in its operation. It was certainly the intention of the legislature, by the act of 1720,

to suppress entirely all Joint Stock Companies not incorporated by act of parliament or royal charter.

It may be doubted whether this would be expedient; the many useful institutions which have grown

up in contravention of it, seem to prove the contrary. It would, perhaps, be better to repeal this act,

and place beyond a doubt the legality of Joint Stock Companies established by deed; rendering them

legal, however, only upon certain conditions. I would by no means propose that they should enjoy the

same immunities as Joint Stock Companies incorporated by act of Parliament, or possess the privilege

of securing their shareholders from individual responsibility; a freedom from liability beyond the

amount of the respective shares should still remain, a privilege only to be acquired by an express grant

of the legislature: it would be preposterous that an association of individuals should, by subscribing a

deed, or by [93] any other act or contrivance of their own, have it in their power to exempt themselves

from the operation of the laws. This exemption, should only be granted -after ample investigation,

and upon clear proof that it would be of advantage to the public… [94] It is probable that if the

mode of forming Joint Stock Companies by deed were clearly defined and sanctioned by law, that

applications to Parliament for acts of incorporation would only be made by associations for the

construction of public works which require for their operations peculiar powers, such as enforcing

the sale of private property, .altering roads, &c. It is well that such undertakings should always stand

in need of the sanction of Parliament…

It should seem, therefore, that if it be true that there are certain defects inherent in the present

mode of forming Joint Stock Companies, and which, as common to all, require a common remedy, it

would be necessary to devise the means of applying this remedy equally to those associations which

are constituted by deed, as to those incorporated by act of parliament. This might perhaps be effected,

by making it a standing order of either house of parliament, that the [95] same provisions Which may

be embodied in a law for regulating the constitution of Joint Stock Companies by deed, should also

form a part of all special acts of incorporation…

It is evident, I think, that almost all the evil attendant upon these associations arises from two

sources,—the entire want of restraint upon the proceedings of the projectors, directors, &c. &c.; and

the practice of selling shares on which a deposit of two, or three, or five per cent. has been paid by

the original subscribers.

Towards remedying this latter evil, we have already a standing order of the House of Lords to

serve as our guide, and the substance of that order I would propose to blend with restraints upon the

functionaries of such associations as follows, viz. .

lst. It shall not be lawful for any persons proposing to establish a Joint Stock Company to take any

premium for admission into such company.

2dly. No transfer of shares shall be legal or valid until the lists of subscription are full, and until

the signature of the deed of partnership, or the passing of the act of incorporation, as may be.


217

[96] 3dly. It shall not be lawful for such deed to be signed, or such act- shall not be obtained,

before a certain portion of the capital proposed to be raised (three-fourths, perhaps) shall have been

deposited in the hands of Trustees, to be retransferred to the company when it shall be legally

constituted.

4-thly. That the names of the Presidents, Vicepresidents, Directors, Auditors, Treasurers, and

Secretary, together with the number of shares held by such individuals in the stock of the [97]

company, shall be inserted in the deed or act as may be; and that it shall not be lawful for those

individuals to increase or diminish the amount of their shares, whether they do or do not retain their

several offices, in any case whatsoever; (death or insolvency must of course be understood to be

excepted,) until a period to be named.

5thly. That in the cases of associations for the investment of reclaimable capital—such as Banks,

Insurance Companies, &c. &c., such period shall not be less than three years from the date of the

constitution of the company, and in respect to associations for the investment of irreclaimable

capital,—such as the construction of public works, working mines, &c. &c. either at home or abroad,

the period shall be fixed to be at the completion or failure of the original design, to be determined by

the resolution and vote of a general assembly of proprietors.

The above regulations are intended to apply equally to the associations which shall be incorporated

by act of parliament, and to those which shall be constituted merely by deed. With respect to the latter,

the following additional regulations might be advisable.

1st. The deed of partnership of any association or society consisting of more than six persons,

shall be enrolled in the High Court of Chancery, with the names and descriptions of the several

members affixed thereto, and the shares they hold respectively in the stock of the company.

[97] 2d. Every transfer of shares to be valid must be enrolled in like manner.'

3dly. That such companies may sue or be sued by their secretary, or other officer, and that all the

members be responsible for the issue of the suit.

4thly. That persons obtaining judgment against such company, shall, in default of their demand

being satisfied by the Company through its functionaries, be at liberty to issue execution against any

person or persons who were members of the Company at the period when the claim arose, which was

the subject of the action, or suit; but such recourse shall not be legal, unless in the case of the

insufficiency of the funds of the Company at the time of the verdict being obtained.

5thly. That they may make bye-laws binding on their own members in their general assemblies;

elect directors, and act in such other respects; as is usual and convenient for Joint Stock Companies,

excepting that no contrivance or contract shall be valid or legal that purports to limit the individual

responsibility or the members.

…


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[100] That some legislative interference is necessary I am firmly convinced, and I trust that the

approaching session will not pass away without the enactment of laws that may effectually put a stop

to the most disgraceful scene of gambling, delusion, and credulity, that has occurred for a century to

lower the respectability of the exchange of London, that may confine Joint Stock Companies to their

proper province, viz., to be the organs of applying a superfluity of national wealth to useful objects,

and, finally, restrain their being made mere engines, in the hands of a few individuals, to enrich

themselves at the expense of the community.

b. Parliamentary debates on the repeal of the Bubble Act (1825)

“REPEAL OF THE BUBBLE ACT88.

The Attorney-General rose, for the purpose of moving for leave to bring in a bill to repeal so

much of the act of the 6th Geo. 1st cap. 18., commonly called the Bubble Act, as related to Joint-

stock companies. He would shortly state to the House his object in introducing this bill. The act to

which it related had of late excited considerable discussion in the courts of law and equity, and it

appeared to be [1019] agreed on all hands, that its meaning and effect were altogether unintelligible.

It was, in fact, impossible to ascertain what had been the intention of the legislature in passing that

act. When, coupled with this fact, it was recollected, that the penalty imposed by the act, was, among

others, that persons offending should be guilty of a præmunire,—that was to say, that they should

incur the heaviest penalty for committing an offence against an unintelligible act of parliament—he

thought he need state no more to induce the House to agree with him as to the necessity of repealing

this act. But, there were other grounds which manifested that necessity still more strongly. From the

year 1720, the year in which it was passed, down to the present time, Joint-stock companies had been

formed for the most useful and laudable purposes, and many of them still existed. Some of them had

been the means of acquiring great wealth to the individuals connected with them, and also

advantageous to the public. Among them, the companies for the insurance of lives and property were

the most eminent; and all of those, under the interpretation which was sometimes put upon this act,

were said to be illegal. For the protection, then, of these individuals, it was highly expedient to repeal

part of the existing law. He might be asked, whether it was his intention to propose any provision

instead of it? And to this he must reply, that he had at first intended to do so, but that, after having

very attentively considered the subject, he had been convinced that to do so would be at once difficult,

unwise, and impolitic. The reasons which had induced him to believe that it would be inexpedient to

legislate on this subject at all were, that up to the period of passing the Bubble act, although the

commerce of the country had been extended to a very important degree, no legal enactments had

been considered necessary. After the events which gave rise to this act in 1720, with the exception of

a criminal prosecution, the nature of which was not very clearly understood, and which took place

two years afterwards, no legal proceedings had been had under it, until ten or twelve years ago. It had,

in fact, become a dead letter; and he had therefore a right to conclude that no such law was necessary.

88 HC Deb 02 June 1825 vol 13 cc1018-23. URL: http://hansard.millbanksystems.com/commons/1825/jun/02/repeal-of-the-bubble-act. Contains Parliamentary information licensed under the Open Parliament Licence v1.0.

http://hansard.millbanksystems.com/commons/1825/jun/02/repeal-of-the-bubble-act

http://hansard.millbanksystems.com/commons/1825/jun/02/repeal-of-the-bubble-act



219

It could not be objected, in answer to this view of the subject, that it had not been exercised because

it had [1020] accomplished the objects for which it was passed, because this had been done before,

and companies were established shortly afterwards which had continued ever since. If any other hon.

gentleman took a different view of the matter, it would be competent to him to bring in a bill for

regulating companies in such a manner as he might think fit; but, he must be permitted to say, for his

own part, that he did not think any such measure necessary. He would add, that he meant to insert in

the bill he should bring in, a provision that it was not to interfere with any proceedings now depending

in any of the courts, but that they were to be decided according to the law as it stood when those

proceedings were commenced. There was another provision which he meant to add, with a view of

facilitating the granting of charters by the Crown to companies for trading and other purposes. Under

the charters as they were commonly granted, the persons incorporated were not individually liable for

any of the debts of the company, but only so far as the corporate property extended. This

circumstance caused considerable reluctance on the part of those whose duty it was to advise the

Crown to grant charters. Persons wishing to form a company were therefore obliged to apply, in the

first place, to parliament, for an act enabling the Crown to grant a charter, and afterwards for the

charter, thus doubling the expense. To remedy this, he should propose a clause enabling the Crown,

whenever application should be made for a charter, to insert in it a provision rendering any individual

member of a corporation liable for the debts of that corporation, according to the judgment of the

Crown in each particular case. Simple legislation had many advantages; he should not therefore

substitute any act for that which he wished to repeal; for he thought it expedient that the Crown

should have the power of exercising its discretion as to granting charters, and of modifying such

charters according to the nature of the respective cases. He would now move, "That leave be given to

bring in a bill to repeal part of the act of the 6th Geo. 1st, cap.18, and to empower the Crown to grant

Charters of Incorporation."

Colonel Davies approved of the motion, but feared that the learned gentleman's bill might

encounter opposition in another place, from a learned lord who had already [1021] expressed his

opinions on this subject. He regretted that the law, as laid down by lord Ellenborough, in deciding a

case on this act, had not been adhered to; because, in his opinion, that decision sufficiently explained

the act of parliament, and would have rendered the proposed bill unnecessary. A learned person in

another House had uttered a general exclamation against all joint-stock companies. He supposed that

learned person roust be completely acquainted with the laws; but if, in uttering his indiscriminate

denunciation, he had spoken intelligently as a lawyer, it was palpable that he had spoken with the

utmost possible ignorance, both as a statesman and a political economist.

Mr. Huskisson said, that the proposition of his learned friend was one which he concurred in,

because he was satisfied that the interests of commerce required the proper encouragement and.

protection of joint-stock companies. When the gallant member said that if lord Ellenborough's

decision had not been called in question, the proposed bill would not have been necessary, he showed

that by the possibility of that decision being disturbed, it was highly expedient to have the law made

certain. That decision was, that all companies not prejudicial to the public interests were legal. But,

where there were so many companies, was it fit that this question should be left to the consideration


220

of the jury? Where persons had embarked large properties in a speculation, ought they not to be

guaranteed by some secure provision of the law, instead of having their interests left to the eloquence

of a counsel, or to the discretion of a jury? He had no reason to doubt that lord Ellenborough's

interpretation of the law was correct; but the law itself was still left in a state of uncertainty, and the

object of his learned friend was, to remove that uncertainty. The impulse which had recently been

given to commerce, and which would in all probability be extended much further, called for some

further protection than that which existed. The mere provision, that parties should sue and be sued

was not enough, as the inconveniences which were every day experienced, abundantly proved. His

learned friend, in bringing in this bill, had done that for which the commercial world and the whole

community would be infinitely indebted to him. Parties would in future be enabled to enter [1022]

into their speculations, without any other restriction than that which the Crown would exercise in

pronouncing upon the utility and propriety of their designs. He trusted that the House would approve

of the proposition, and he had no reason to believe that it would experience any opposition in another

quarter which had been alluded to, because it was evidently calculated to do away with all the evils of

the present state of things.

Mr. K. Douglas was glad to see this subject engaging the attention of the House. There were

several companies in Scotland, which had subsisted for many years under an impression that they were

legal, and without the least notion that they were incurring the penalties of an act which had become

a dead letter. In some recent cases, however, great inconvenience had been experienced by the parties,

in consequence of the objections arising under this act.

The Attorney-general said, that the bill he proposed to bring in, was for the repeal of the Bubble

act, which applied only to England. He believed it was intended to propose measures in the other

House respecting Scotland.

Mr. Denman could not agree with his gallant friend, as to lord Ellenborough's decision, because

it left the law just in this state—the persons composing a company were liable to be indicted, and

there were two points to be decided; the first by the jury, whether the object of the company was

beneficial or injurious to the public; and the second what interpretation the judge might think fit to

put upon the words of the act. Both these points were, in his opinion, very unfit to be left either to

judge or jury. Since the passing of the act, only two cases had arisen upon it, in which the jury had

found that the objects of the companies were beneficial; but it was nevertheless a subject which, in its

nature, admitted of so much variety of opinion, that it was unfit to be left to the decision of a jury.

The act to be repealed was a specimen of the inexpediency of occasional legislation. It was not passed

until after the evils which, it pretended to remedy were over, and at the end of a century it was the

cause of serious inconveniences, to obviate which another application to the legislature had become

necessary. As to the power proposed to be given to the Crown to grant charters, he questioned the

propriety of it. [1023] Leave was given to bring in the bill.”


221

c. The Act to repeal the Bubble Act (1825)89

“An Act to repeal so much of an Act passed in the sixth year of his late Majesty King George the First, as relates

to the restraining of several extravagant and unwarrantable Practices in the said Act mentioned; and for conferring

additional Powers upon his Majesty, with respect to the granting of Charters of Incorporation to trading and other

Companies. (5th July, 1825)

WHEREAS As by an Act passed in the sixth year of the reign of his late Majesty King George

the First, intituled, “An Act for better securing certain Powers and Privileges intended to be granted

by his Majesty, by two charters, for Assurance of Ships and Merchandizes at Sea, and for lending

Money upon Bottomry, and for restraining several extravagant and unwarrantable Practices therein

mentioned,” it was enacted [follows a recital of sections XVIII to XXI of the Bubble Act:]

And whereas it is expedient that so much of the said recited act as is above set forth should be

repealed; and that the said several undertakings, attempts, practises, acts, matters, and things aforesaid

should be adjudged and dealt with in like manner as the same might have been adjudged and dealt

with according to the common law, notwithstanding the said act: Be it therefore enacted by the King’s

most excellent Majesty, by and with the advice and consent of the lords spiritual and temporal, and

commons, in this present parliament assembled, and by the authority of the same, That from and after

the passing of this act, so much of the said recited act as is above set forth shall be and the same is

hereby repealed; provided always, that nothing herein contained shall extend or be construed to extend

to affect any action or suit now depending in any court of law or equity; but that every such action or

suit shall and may be proceeded in, prosecuted, defended, and determined, in the same manner as if

this act had not been passed.

II. And be it further enacted, that in any charter hereafter to be granted by his Majesty, his heirs

or successors, for the incorporation of any company or body of persons, it shall and may be lawful,

in and by such charter, to declare and provide, that the members of such corporation shall be

individually liable, in their persons and property, for the debts, contracts, and engagements of such

corporation to such extent, and subject to such restrictions as his Majesty, his heirs or successors, may

deem fit and proper, and as shall be declared and limited in and by such charter; and the members of

such corporation shall thereby be rendered so liable accordingly.”

89 6 Geo. 4, c. 91. Available in Charles Wordsworth, The Law of Joint Stock Companies, Saunders and Benning, London, 3rd ed., 1842 - http://goo.gl/M4U45. Paragraphs added.

http://goo.gl/M4U45

Chapter 10. A Period of Uncertainty in the Courts

a. Van Sandau v Moore (1826)90.

“EARLY in 1824, a Joint Stock Company was set on Foot, called the "British Annuity Company.”

It was to consist of sixty thousand shares of 50l. each, forming a capital of 3,000,000l., which was to

be employed in making loans by way of annuity. Advertisements were published and prospectuses

were circulated, describing the nature of the proposed Company, and the mode in which its business

was to be conducted; and by these the Plaintiff, Mr. Van Sandau, a solicitor by profession, was, as he

represented, induced to apply for some shares. Forty shares were accordingly allotted to him, on each

of which he paid a deposit of 2l. The Company was established; and, in the same year, an Act of

Parliament was obtained, enabling them to sue and be sued in the name of their Chairman or Secretary

for the time being. A deed of settlement was also prepared, containing the regulations by which the

affairs of the Company were to be managed; and it had been signed by many of the shareholders. Mr.

Van Sandau, however, refused to sign it, on the ground that it contained provisions inconsistent with

the advertisement and prospectuses, on the faith of which he had become a partner in the concern:

and, being dissatisfied with the mode in which the affairs of the Company were carried on, he, in

October 1824, filed a bill against the Chairman and the Secretary; praying that the Company, and the

Defendants on behalf of the Company, might be restrained from doing any act to deprive him of his

shares, or from acting on the deed of settlement; and that certain directions might be given as to the

mode in which the business of the concern was to be conducted.

Peter Moore, the Chairman, and James Mitchell, the Secretary, who were the only Defendants,

demurred generally for want of equity; and, upon the argument of the demurrer, they demurred also,

ore tenus, for want of parties.

The LORD CHANCELLOR allowed the demurrer, for want of parties. His Lordship at the same

time expressed an opinion, that, as the dissolution of the Company was not prayed, the Court could

not grant the particular relief which the Plaintiff asked.

In May, 1825, Mr. Van Sandau filed a second bill, to which all the shareholders of the Company,

between two and three hundred in number, were made Defendants.

He stated in it, that the partnership, no term having been prescribed for its duration, was dissoluble

by notice, at the pleasure of any of the partners; and that he had, on the 30th of April, 1825, sent a

notice of dissolution to the Secretary and to the Solicitor of the company. This notice was addressed,

“To all persons being members, shareholders, proprietors, or partners of or in, or composing the said

Company or Partnership using the style or firm of British Annuity Company, to the persons calling

themselves, acting as, or being directors thereof, and to the chairman, deputy-chairman, and secretary

thereof, or whomsoever else it may concern.” He further charged various acts of mismanagement,

which, even if the Company were not dissoluble by notice, gave him, as he contended, a right to have

90 1 Russ. 441. URL: http://goo.gl/ijWqU

http://goo.gl/ijWqU

10. A Period of Uncertainty in the Courts

223

it dissolved by the interposition of the Court. The prayer was, that the Company might be declared to

have been dissolved, or might then be dissolved, that its affairs might be wound up, and that the

persons styled directors might be restrained from acting in that capacity; but if the Court should be

of opinion, that the Company was not and ought not to be dissolved, then that the deed of settlement

might be set aside; that a new deed might be prepared and executed, pursuant to the original

advertisement and prospectus; and that the directors, chairman, and deputy-chairman, might be

restrained from doing certain acts.

Mr. John Wilks, jun., the Solicitor of the Company, and himself a Defendant, entered appearances

for fourteen of the directors, and filed for them fourteen separate answers, each of which had long

schedules annexed to it.

These answers, besides denying or palliating the acts of misconduct charged in the bill, stated, that

the deed of settlement, which was complained of, had been produced before the House of Lords,

when the bill was in progress, in order to explain the general outline and scheme of the Company;

that the Plaintiff, by refusing to execute the deed, and to pay the calls which had been made, had

forfeited his shares, and ceased to have any interest in the concern; that the directors, though they

were entitled to have declared his deposits forfeited, had been always willing to repay him his 80l. with

interest; that the most fair and reasonable proposals had been made to him in order to induce him to

desist from harassing the Company, but that all those proposals had been rejected by him.

On the 14th of March, 1826, the Plaintiff moved, before the Vice-Chancellor, that it might be

referred to one of the Masters to inquire, if the fourteen answers were substantially, or, in any and

what respects, different; and whether there was any and what sufficient reason for such fourteen

Defendants, or any and which of them, so answering separately: And if the Master should find that

there was a sufficient reason for the said fourteen Defendants, or any of them, answering separately,

then he was to inquire whether there was any and what sufficient reason for repeating the schedules

annexed to each of the answers; and that, for the purpose of those inquiries, the fourteen Defendants

might be directed to furnish the Master with copies of such answers.

The affidavit of the Plaintiff, sworn in support of the motion, stated, that the fourteen answers

were sworn in London, several of them on the same day, and all of them, except one, in the month of

August; that the fourteen answers and schedules were all of them alike, and nearly verbatim copies of

each other, in no respect materially differing from each other, but appearing to have been prepared

from one draft only; that the same set of schedules, in effect fourteen times repeated, were annexed

to each of the answers; that each of the answers consisted of 627 folios, and the schedules to each

answer, of 423 folios; that the charge for office copies of the fourteen answers would amount to 365l.;

and that Wilks, as well as many of the fourteen Defendants, had declared, that their sole object in

putting in separate answers was to increase the expenses of the suit, so as to deter the Plaintiff from

prosecuting it further. As evidence of this intention, the affidavit stated, that Wilks, on the 24th of

May, 1826, in reply to a letter in which the Plaintiff remonstrated against the vexatious conduct

pursued on behalf of the Defendants, wrote to the Plaintiff a letter, which contained the following

passage:


224

“As your suit is frivolous, absurd, and vexatious; as you have no more to do with the Company

and its concerns than an inhabitant of Ethiopia, and as the Costs must ultimately ruin you, even to

beggary; and therefore, in the end, some of them at least fall upon the Company, I shall oppose, for

myself and for my clients, your ridiculous and contemptible suit, by every legal means.”

The affidavit also stated, that Wilks, without any sufficient or proper reason, and solely for the

purpose of multiplying the costs of the suit, had taken out forty-seven separate orders, for time to

answer, for the said fourteen and two other Defendants. Then, as further evidence that the answers

had been prepared by Wilks for an unfair purpose, and not from the instructions of the Defendants

themselves, it set forth a correspondence between Mr. Wilks and a director, Mr. Peach, in which Wilks

had endeavoured, but without success, to prevail on Mr. Peach to swear an answer similar to those

which had been filed by fourteen of his co-directors. One of the letters, addressed to Mr. Peach by a

clerk of Mr. Wilks, contained the following postscript: “Of course any expense attending upon the

putting in of your answer by the solicitor of the company will be paid by the solicitor of the company.”

The order made by the Vice-Chancellor upon the motion was, “That it be referred to the Master

in rotation to inquire and state to the Court, whether, with a view to the defence in the cause, it was

necessary or expedient, on the part of the said fourteen Defendants, or any and which of them, who

have filed their answers through the intervention of Mr. Wilks as their solicitor, that separate answers

should be filed by each Defendant; and if the said Master should, as to any of the Defendants, find

that it was not necessary or expedient, with a view to their defence, to put in separate answers, then

let the Master inquire how it happened that such separate answers were put in: and, for the better

discovery of the matters aforesaid, the said Defendants are to produce before the said Master, upon

oath, all books, papers, and writings in their custody or power relating thereto, and are to be examined

upon interrogatories, as the said Master shall direct; and the said Master is to be at liberty to state any

matters specially at the request of any party."

A motion was now made, before the Lord Chancellor, to discharge the order made by the Vice-

Chancellor.

There was no affidavit in answer to the affidavit sworn by the Plaintiff.

In the course of the argument before the Lord Chancellor, it appeared that the fourteen answers

were all signed by the same counsel. Two counsel declared, that the course pursued by the Defendants

had been adopted with their approbation: and another stated, that he had advised Mr. Wilks not to

file any affidavit in answer to the Plaintiff's.

The Solicitor-General, Mr. Heald, Mr. Shadwell, and Mr. Wakefield, for the motion to discharge the

order.

We resist this order, on the ground that it interferes with the rights of the suitor. It is the privilege

of Defendants to answer separately, if they please; the Court has no jurisdiction to compel them to

answer jointly; there is no instance of any attempt to exercise such a jurisdiction; and nothing could

be more imprudent than for Defendants, in a suit which may last for many years, to conjoin themselves

for better and for worse with a number of strangers. To what can the inquiry tend, whether it was


225

necessary or expedient for these fourteen Defendants to file separate answers? They are themselves

the judges of that necessity or expediency, which must depend upon a multitude of circumstances

altogether extrinsic to the case.

The Plaintiff complains of the expense to which he will be put: but has any man a right to

complain of the natural consequences of his own act? He has chosen to file a bill against between two

and three hundred Defendants; he persecutes and harasses a multitude; and yet he expects to meet

with no more annoyance, in his turn, than if he had to do with a single opponent. It would have been

much more reasonable to have directed a reference to inquire, whether it was necessary or expedient

that the Plaintiff should have filed such a bill. Had we applied for such an inquiry, we should have

been told, that it was the right of a subject, who thought himself aggrieved, to bring his case before

the Court, and that the signature of counsel was a sufficient warrant that it was brought before the

Court in a proper manner. The right of the assailed is still more sacred than that of the assailant. The

Defendants admit that this is not the proper time for inquiring into the nature of the bill; but they say,

that neither is it the proper time for inquiring into the nature of their defence. They have put in such

a defence as the rules of the Court permit; and that defence has the same sanction of the signature

of counsel which gave credit to the bill. They think it hard that they should be compelled to answer

so absurd and vexatious a bill. They have, however, complied with the obligation which the law

imposes on them, and have complied with that obligation in such a form as is according to law.

THE LORD CHANCELLOR inquired, whether the Vice-Chancellor had been informed with what

ultimate view the motion was made; and, it being stated to him that nothing had been said on that

point, he requested Mr. Heald to inform him, with what view the Plaintiff had applied for such an

inquiry as had been directed.

Mr. Heald stated, that thereby a foundation might be laid for taking some steps against the solicitor

of the Defendants for an abuse of the rules and practice of the court.

THE LORD CHANCELLOR.

I hold an abuse of the rules of the court to be a very great offence, especially in an officer of the

court But if it is meant to make a case, or to lay a foundation for a case, against Wilkes, ought it not

to have been explained to the court, that it was with a view to a subsequent application against the

solicitor that the motion was made? and ought not the solicitor to have been a party to the motion?

Had Mr. Wilkes appeared by his counsel on this motion, he would have been told that he was himself

no party to the proceedings, but was merely the solicitor of the parties concerned. If a solicitor

misconduct himself in a cause, he may be made a party to any motion, which it may be thought his

misconduct makes advisable; and he ought to be made a party to such a motion, if it is made with a

view to any visitation upon him by payment of costs or otherwise.

If I am to direct a reference to the Master, I ought to see beforehand that I can do something

upon the report when made. Now suppose that the report of the master had been, that it was not

necessary or expedient, with a view to the defence of the cause, to file these fourteen separate answers,

what could I then have done? I never heard that the court would compel defendants to answer jointly;


226

and indeed dozens of acts of parliament have been passed with a view to provide a remedy in

particular cases for the acknowledged impossibility of getting on with a suit framed as this is. Another

consideration is this: ought the jurisdiction of the court, which can be administered usefully only

between a limited number of persons, to be employed for a purpose which it cannot by possibility

accomplish? Here is a bill with nearly three hundred defendants. How can such a cause ever be brought

to a hearing? and if the Plaintiff cannot show a probability of getting a decree, with what purpose,

except that of oppression, can the proceeding have been instituted? In such a suit the Plaintiff can do

nothing, except put himself and others to enormous expense.

The Plaintiff in person stated to the court, that he might amend the record by making it a bill ou

behalf of himself and the other shareholders

Mr. Heald, Mr. Pepys, and Mr. Knight, in support of the Vice-Chancellor's order.

The complaint made against the Defendants is substantially this; — that they have conspired to

conduct their defence in such a way as will render the prosecution of the suit impossible. Are

Defendants to be permitted to say, “We shall so act as to prevent the cause from ever coming to a

decision?” It is in vain to suggest, that the proper time for taking into consideration the conduct of

the parties as to the mode of shaping either the suit or the defence is at the hearing. Here our complaint

is, “You have done that which will prevent the suit from coming to a hearing; your conduct is so

improper as to require to be visited with punishment by the court; the impropriety is of such a nature,

that it operates to prevent us from reaching that stage of the cause, in which, according to the ordinary

course of procedure, it would come under the lash of the court; we therefore call on the court to

vindicate its own efficiency, and, for that purpose, to inquire whether you have been guilty of that

misconduct of which we give uncontradicted and prima facie evidence; and if the result of that inquiry

shall be such as we state, we have a right to expect that the court will enable us, in some way or other,

to prosecute our suit, without being subjected to extraordinary disadvantages by reason of the

extraordinary mode of defence adopted by these directors.”

The Plaintiff has made a strong prima facie case of flagrant misconduct, on the part of the fourteen

Defendants. When we look at the nature of the bill, which is a record bringing them before the court,

not on account of their individual acts, but merely in their capacity of shareholders and executors —

when we look further at the perfect similarity of the answers and schedules in substance and in words,

and at the enormous immediate expense which such a proceeding will create to all parties, without the

least tendency to promote any fair or useful purpose — when we take into consideration the language

of the solicitor who filed the answers, and the means he has employed in order to increase the evil, by

adding one more to the number of these answers, all facsimiles of each other; —it is impossible to

doubt that this line of conduct was followed solely for the purpose of stifling the suit. The honour

and dignity of the court require, that it should ascertain whether its rules have been abused for so

unworthy a purpose; and if the result of the inquiry should be, that they have been so abused, it will

easily find means to indemnify the Plaintiff for the oppression he has already suffered, and to protect

him against its effects for the future. Even if no steps should be taken against the solicitor, the court

might order the Defendants to make some satisfaction to the Plaintiff for the costs to which he has


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been put unnecessarily; or it might require the fourteen Defendants to furnish office copies of their

answers at their own expense; or it might direct that an office copy of one of the answers should be

sufficient, and that the Plaintiff might be at liberty to proceed, as if he had taken office copies of all

the answers.

It is true that the suit is in itself of such a nature, that the prosecution of it must necessarily be

attended with great difficulties. But the greater the difficulties are with which the plaintiff has to

struggle, arising out of the nature of the case; the stronger reason is there that the defendants should

not be permitted wantonly to throw artificial and unnecessary impediments, in his way.

The SOLICITOR-GENERAL, in reply.

There is nothing extraordinary in this case except what arises from the conduct of the Plaintiff

himself. He files a bill against two hundred and fifty defendants; and he complains that fourteen of

them have answered separately. What right has he to require or to expect that they should answer

conjointly? Even if their object were to throw difficulties in the way of the prosecution of his suit, he

has no just ground of complaint; for it is not vexatious in a defendant to protect himself, by all the

means which the rules of the court permit, from the prosecution of a vexatious bill; nor is it

oppression in him to endeavour to escape from the enormous expense which a plaintiff is trying to

heap upon him by involving him in an absurd suit. The bill is filed for the purpose of embarrassing

the company, and of extorting money from them; and it is fortunate for justice, if the rules of the

court enable a defendant to throw many difficulties in the way of a plaintiff aiming at such an object.

There is no case made against the plaintiffs, except that they have acted according to the practice

of the court; and it is new doctrine to say that regularity of procedure is prima facie evidence of an

improper purpose. As to the expressions in the letter of Mr. Wilks, which have been made matter of

blame, they are nothing more than an accurate description of the nature and tendency of a suit like

this; the utmost that can be said against them is, that they display some irritation; but any angry feeling

which may be traced in them, is not more than the occasion called for, and the tenor of the

correspondence set forth in the answer well justified. Even if Mr. Wilks has not been sufficiently

guarded in his words and temperate in his sentiments, it is absurd to make such a circumstance a

ground of imputation against the Defendants. The client is not to be answerable for the angry words

of the solicitor.


In this case, the papers, which I have before me, are, the second bill, which is the one that brings

forward a great number of parties as Defendants: the answer of one of the Defendants, which in

substance is the same, and, I believe, in words is so nearly the same, that it may be represented as the

same, with the other thirteen answers, and which refers to schedules (not before me), the same, I

understand, with the schedules annexed to those other thirteen answers; and also the affidavit made

by the Plaintiff, which, it is contended, establishes such motives on the part of the Defendants, as

make the order of the Vice-Chancellor a proper order, founded on the necessity of the interference

of the Court in matters of intended oppression. That bill, that answer, and that affidavit, I have


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thought it my duty to read very carefully; because I am clearly of opinion, that, unless the Court had

the substance of the bill and answers, as well as of the affidavit, under its view, it had not the means

of raising the question, whether such a reference, as has been directed, should or should not be made.

That reference, I have not the slightest doubt, was directed from an anxiety to promote an object

to which this Court ought to be very attentive, — namely, the prevention of oppression: but I entertain

very considerable doubt, whether that anxiety can be gratified consistently with perfect safety to those

principles on which every man in a court of justice is entitled to conduct his defence. The inclination

of my understanding to that view of the question may perhaps be deemed a prejudice; and I admit

that it is an opinion fixed in my mind by what I recollect to have passed in this Court during the last

forty or fifty years. For in that long period of time, though there has been over and over again, when

a cause came on to be heard, and all danger of doing prejudice to parties was over, a visitation for

oppressive and for causing unnecessary expense (a visitation, which I deem it a great duty of this

Court to inflict, as often as occasion for it arises);—I do not recollect a single instance, in which the

Court has been called upon, at this early stage of the cause, to say, that the manner in which the

Defendants have shaped their defence is such as to demand a special interference. I do not recollect

one single instance of an application, like that of the present Plaintiff, made at a time when it cannot

be known how the defence is in future to be conducted, or how it may be necessary to conduct it; and

when it is impossible to say what prejudice may arise to individuals, if you link them together, whether

they choose to be so associated or not.

I was also very anxious to know with what object the motion before the Vice-Chancellor was

made. I take it to be extremely clear, that, prima facie, and subject to what the Court might do at the

hearing in matter of costs, these fourteen gentlemen had a right to sever in their defence. Was it then

intended, if the master had reported that it was not necessary or expedient that the Defendants, with

view to their defence, should put in separate answers, to move that the answers should be taken off

the file, and that the Defendants should be ordered to answer jointly? That suggested another

question, which was this. If I were to make such an order, and these parties refused to join themselves

for better and for worse, throughout the whole cause, could I attach them or any of them for not so

joining in putting in their answers and in defending the suit? And my opinion is (if such were the

object of the motion), that I could do no such thing.

If that be not the object of the motion which was made before the Vice-Chancellor, what is its

object? To my inquiry upon this point Mr. Heald very candidly stated, that the object was to bring

before the Court evidence of a conspiracy to ruin the Plaintiff by the expense of the proceedings; for

such is the true amount of the case stated by the Plaintiff. With what view is that to be done? Is it that

something may be insisted upon as against the Defendants? If so, then the displeasure of the Court

must be visited upon the Defendants, by reason of what is proved either against them, or against the

person for whose acts they would be answerable, — the common solicitor of them all. But if we are

now to look, not only at the object of the application, but at the mode in which that object is to be

effected, which, in no way of putting the case, can be otherwise than by making the parties pay the

costs (for in a proceeding to which the solicitor is not personally made a party, I cannot make him pay

the costs nor strike him off the rolls), in what stage of the case is it most advantageous that that


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should be done? Most anxious am I to express my opinion, that, if there has been vexation, that

vexation ought not to be and will not be forgotten. But the question is, — In what stage of the cause

is it most wholesome that the interposition of the Court should take place, to punish proceedings

which have been improperly conducted?

I have already stated that one object of the Plaintiff may be, to make the Defendants pay the costs;

or it may be his object to make their solicitor pay costs, or to have him struck off the rolls; and I do

not say, that, in some stage of the cause, that may not be a proper application. But, in order to

accomplish either of these purposes, what is it that the Court proposes to do now? It does not merely

look at the bill, the answer, and the affidavit; but, in this early stage of the cause, it directs a production

of papers in the custody of the Defendants, and an examination of the Defendants on interrogatories.

That production may happen to furnish what is to be the parties' evidence in the cause: those

interrogatories may produce from the parties matter which may affect their evidence hereafter. What

else is this than by a side-wind to hear the cause upon a collateral motion?

In that point of view I am satisfied that the application of the Plaintiff ought not to be entertained.

When we have the practice of the Court for a long series of years before us, and when we find

ourselves getting beyond what that practice has hitherto sanctioned; we ought not to venture beyond

known limits, except with very great caution and with a clear certainty that we are not introducing

mischiefs much greater than the non-payment of the costs which the Plaintiff aims at recovering by

his present proceeding.

If we look at the answers as well as at the affidavit, we may find a great many reasons, which, on

the score of want of temper, may justify much of what has passed between these parties. Neither is

it to be forgotten that the suit itself may miscarry; and then there may be costs due to the Defendants

to be set off against the costs of these answers, supposing it right that some of the costs incurred in

this stage of the cause should be given to the Plaintiff. It is further manifest, that the demand for the

payment of the costs of these answers is to be founded on evidence which may anticipate every

species of defence which the Defendants may have to make. Therefore, without saying what may be

right to be done hereafter, with respect to the course which the pleadings have taken, further than

that, when the cause comes to be heard, it will be the duty of the Court to consider attentively and

anxiously what was unnecessary expense, and to visit that unnecessary expense upon those who have

created it; I am of opinion, founding myself on the established practice of the Court, that the order

made by the Vice-Chancellor is too hazardous a step, — if the object of the application be what I

suppose it to be, and which indeed is the only practicable object which the Court could at this moment

carry into execution, namely, making some order with respect to the costs of the answers.

I am further of opinion that I ought not, in this stage of the cause, to direct an inquiry which may

be attended with great expense to all parties, and on which the Court may, at last, not be able to do

any thing; or, if it can do any thing, may be able to do no more than what I have already stated.

Again, if this were a motion intended to lay a foundation for an order against the solicitor, and

not merely against the defendants, Mr. Wilks ought to have been made a party to it: and, when I am

told, as I have been told from the bar, that Mr. Wilks was advised not to make an affidavit against the


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application, that advice, I do apprehend, must have proceeded on the old established rule — that,

when the notice was given to Mr. Wilkes, only as solicitor for the parties, he had a right to consider

himself as not personally implicated in the result of the motion.

When a motion of this unprecedented nature is made, we are fully justified in looking at the case

itself. The bill is filed by Mr. Van Sandau, who, upon a prospectus being handed about proposing the

establishment of this company, was willing to become a member of the intended association. That

prospectus represented the company as in the course of being established. Three millions of money

were to be raised; no subscriber was to pay more than 50l. per share; and the first call was to be for

only 40s. on the share.

Now the history of these companies has been such, (and I have travelled a good deal among

them), that a lawyer, as this Plaintiff is, ought to have been not a little alarmed at parting with his

money to a body so formed. It is quite clear, that, in a commercial country like this, there may be many

undertakings and enterprises to which individual powers of mind or purse may be quite unequal; and

for such cases the constitution of the country has provided by giving the means of creating

corporations. It is within my own memory, that, when an application was made to parliament to

incorporate bodies, it was generally met with this short answer: “Why have you not gone to the crown

with your request? Why have you not obtained a charter?” However that mode of thinking has gone

by, and several acts of parliament have been passed, establishing companies similar to this one.

There were not many of those acts passed, before inconveniencies were found to follow. If a man

had occasion to bring an action against one of the bodies so constituted, he did not know how to

proceed, or against whom to bring his suit; and if he brought it, naming the Defendants who were

known to him, he was treated with a plea in abatement, which was a check-mate to his action. To meet

this inconvenience, it became necessary to introduce into those bills a clause, that the company should

sue and be sued by their clerk or secretary.

It was soon found that this provision did not set the matter right. The secretary on behalf of the

company sued a man of opulence; and, if he succeeded, he recovered not only judgment but payment

of the demand. On the other hand, when the secretary was sued, the person suing found, that, though

he had gotten an individual with whom he could go into a court of law or equity in order to enforce

a claim against him as defendant, yet, after he had gone thither, he frequently found that it would have

been better for him not to have stirred; for though the secretary, when he was Plaintiff, got the money

for which he sued, he was often unable, when made Defendant, to pay what the Plaintiff recovered.

That state of things suggested to a learned lord the necessity of making all the members liable, as

well as the secretary, for a demand against the company. Thus there arose a third class of acts of

parliament establishing companies; acts which made all the members, as well as the secretary, liable to

answer demands recovered against the company. Still this was not enough: for, as these acts did not

provide the means of letting the world know who the members were, the consequence was, that,

though all the members were liable, nobody, who had a claim against them, could tell, who the persons

were that were thus liable.


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Another improvement was therefore made. A proviso was introduced, requiring, that, before a

company was formed, or within a given time afterwards, there should be a register or enrolment of

the individuals of whom the company was composed; and it was thought, that thus, at last, the work

had been done completely, and that all was safe. Unfortunately, however, it turned out, in consequence

of sales and transfers of shares, that a person, who was a member of the company to-day, was not a

member of it to-morrow; the constituent members of the body were constantly changing; and a

Plaintiff did not know against whom to proceed, whether against the present or against former

members.

A further alteration was then made; the effect of which was, that those, who had been members,

should continue liable, although they had transferred their interest, and that those, who became

members, should also be liable; an enrolment of the names both of the one and of the other being

required. This had a very considerable operation; and it was wonderful to observe, how much, after it

was adopted, the passion for becoming members of these companies diminished.

One thing was still wanting. If the members of these bodies happened to quarrel among

themselves (which, though they came harmoniously together, was very likely to happen), how were

they to sue one another? And it was not till the latest stage of improvement, that that difficulty was

provided for. I believe it was in the act regulating the new banking establishments in Ireland that

provisions were for the first time made to meet all these difficulties; and similar provisions now form

part of the regulations, which are likely to take place in the banking establishments in England now in

contemplation.

There were some, (and many too, whose opinions were very well deserving of attention), who

declared,—that, if bodies were formed on such principles, that they could not, in the Courts of this

country and according to the laws of the country, effectually demand what they had a right to demand,

or be effectually sued for that for which they were liable —- the very circumstance of the existence

of that inability or incapacity, and the inconvenience or impracticability of dealing with them in a

court of justice, proved bodies of that kind to be illegal at common law. It was to make them legal,

that acts of parliament were passed containing one or more of the series of provisions which I have

mentioned.

In the present case the company was established by an act of parliament to this extent, — that an

act was passed to enable them to sue and be sued by their secretary or public officer; and, parliament

having given them a capacity to sue and be sued, it is too late to say that they exist illegally as a body.

But the capacity of suing and being sued, which the legislature has given them, does not in this case

remove the difficulty of suing; I do not mean, of going through the forms of suing, but of suing to

any rational purpose or with any good effect.

When application was made for the act of parliament, the jealousy of the legislature, with respect

to bodies of this kind being awakened, the committee of the House of Lords inquired, whether it

subsisted by any deed; and, and, if it did, called for proof of its existence and of its nature by the

production or that deed. And it was upon the faith of the deed produced being the deed which was

to constitute the company, that parliament passed the act. Thus it will come to be one great question,


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whether any man, calling himself a member of the company, can get himself out of the provisions

of the deed. The act was obtained by men who were the agents of those who had become or should

become members of the company; and the deed must be taken to have been presented to parliament

by those agents, on behalf of all who were or should become members, as the document which

shewed the constitution of the body. The Plaintiff contends, that a member may get himself out of

the obligations of that deed; and that, if he does not think fit to comply with all its clauses, he may

dissolve the company. That is one question; and it is a question which will depend very much on this

— whether it is possible to apply the common principles of partnership to such a state of

circumstances.

The bill proceeds on two grounds: one, that Mr. Van Sandau could by mere notice put an end to

the company; the other, that if notice alone was not sufficient for that purpose, yet there has been

such conduct on the part of the secretary and other members as to entitle the Plaintiff to call for a

dissolution; and, in either case, he prays that an account maybe taken of the partnership dealings and

transactions. Now, though, according to the law of the country, a company or partnership formed by

parties agreeing to become co-partners may be dissolved at any moment by one of the partners, and

though his co-partners cannot answer his notice of dissolution by saying, “Here is your money, get out

of the concern, and leave us to ourselves,” (because he has a right to have all the accounts of the

partnership dealings and transactions taken, up to that very moment); yet one difficulty which has

often occurred to me as of great weight in cases like the present, with reference to the dissolution of

the company by notice, is this : —what avails it that you give notice to A. B. of putting an end to the

company, if you do not give notice to the three hundred other individuals of whom it is composed?

Has not every one of these individuals the same common law right to notice, before the partnership

can be so dissolved? If, on the other hand, it is said, that it is not necessary to give notice to all the

partners, it must be on the ground that the deed has made some provision declaring that notice not

to be necessary, which, but for particular provisions, would be necessary; and that case must be proved

from the deed itself. But this Plaintiff asserts that the deed is not binding; and the deed, far from

giving any special right to dissolve the company, will, I apprehend, if looked into, be found to withhold

any such right.

I have made these observations on the substance of the case. Now look to the form of the

proceedings. The bill brings before the Court not only the directors but all the individual members, as

far as they are known to the Plaintiff, amounting to between two and three hundred. Now, can the

Plaintiff hope ever to bring to a conclusion a cause which is necessarily incumbered with so many

defendants? The share-holders, I take it, either by original contract or by what is found in the deed,

have or will have the right of selling their shares, subject or not subject, as the case may be, to

interposition by the directors; so that the interests may be changed from day to day. With the certainty

that individuals, who continue in existence, will thus cease to be members of the company, and that

those, who do not by their own acts withdraw from the partnership, will from time to time be removed

out of the world by death,—to say nothing of the other contingencies of human life, which will affect

the interests of individuals in the shares, —and with the necessity which will thus be created for a


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constant succession of bills of revivor and bills of supplement:— is it possible to hope, that a suit so

framed can ever come to a beneficial end?

I have not forgotten, that, in the course of the argument, Mr. Van Sandau stated, that, when he

got the answers of some of the Defendants, he could amend the bill by making it a bill on behalf of

himself and all others of the partners, except such of them as he should retain as Defendants. But in

my judgment that cannot be done.

Now if this suit should happen to appear to the Defendants to be as unmanageable for every

useful purpose as to me it appears to be, it is not surprising that they should be out of humour at

being visited with a suit, by which they and those who succeed them are to be kept in litigation in this

court for an unexampled period of time: and perhaps it is not the necessary conclusion, from any

intemperate words which they may use, that they mean to do gross injustice, when they seek to relieve

themselves from what they conceive to be great oppression. When we are looking at the motives of

the parties, there is a correspondence stated in the answers, which forms a material part of what is to

be considered in reference to those expressions disclosed in the affidavit, which have been represented

as manifesting a purpose of oppression, but which, in a milder way of stating the case, might be

regarded rather as the effect of irritation.

The Plaintiff has undoubtedly a right to come into this court, and may be very properly advised

to do so, though his suit may turn out to be such as cannot be maintained. For it would be a great deal

too much for counsel to take upon themselves to be judges, and telling the individual who applies to

them, that he cannot have relief, to refuse him the option of carrying his case into a court of justice,

or to withhold from him their assistance for that purpose. On the other hand, it is to be remembered,

that every subject has a right to conduct his defence in such manner and by such agents, so far as the

practice of the Court permits, as he may think proper. Whenever the cause comes to be heard, the

Court will not discharge its duty, if it does not take care that full compensation, for all that may have

been improper and oppressive in the conduct of the defence, be made to the party injured. But I dare

not interpose in this stage of the proceedings to punish that on which the imputation of oppression

is thrown, at the hazard of all the consequences that may follow in the future conduct of the suit. I

dare not go the length of directing inquiries, which call on individuals to lay open the whole materials

of their defence. The Court has never hitherto interfered in this stage of a cause by such an order as

the Vice-Chancellor has made here; and I will not make a precedent, not justified by any example or

principle which I know.

On these grounds, having before me fuller information in the cause than was presented to the

Court below, I cannot permit this order to stand.

Order discharged.

[Subsequently, the matter is brought back to the court to decide whether Plaintiff ’s bill against the

above-mentioned defendants may be dismissed without costs, on the application of the Plaintiff.]



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It wanted no authority to satisfy me that this Court has power, in proper cases, to dismiss a bill

without costs, on the application of the Plaintiff. If an authority were wanted on the subject, there

cannot be a clearer authority than the decision of Lord Thurlow in Knox v. Brawn…

Now the question is, —whether this is one of the cases, in which the Plaintiff ought to be

permitted, upon his own motion, to dismiss his bill without costs? As to the suggestion of directing

a reference to the Master, I do not see why the Court should be called upon to make any reference

with a view to modify the costs; for the Master cannot know more of the matter than the Court already

does.

I can well recollect the period when nobody thought of entering into a partnership with a number

of persons acting as a corporate body, unless under the authority of a charter or an Act of Parliament;

and it was always thought a very beneficial thing, that, when particular privileges and benefits were

given to bodies of men, the rest of the King's subjects should know with whom they had to deal

effectually, as often as it became necessary to enforce claims against such bodies, or to resist claims

made by them. This Court has departed in a certain degree from the strict application of its principles

in some of the cases in which it has permitted a few individuals to sue on behalf of themselves and

others; a departure, however, which affords an extremely salutary rule of practice, when a suit can be

so carried on with effect. But I may venture to say, that my predecessors were always of opinion, that,

if bodies of men, whether consisting, or not, of a great number of individuals, took upon themselves

to act as a corporation, no such form of record would do for them. There are, it is true, in this

metropolis, and throughout the country, a great many partnerships, consisting of a vast number of

persons: but they do not come into courts of justice; they act by a mutual understanding and a kind

of moral rule; and I believe that, in that way, they manage their affairs very well.

When these joint stock companies were first thought of, it is wonderful how little attention was

paid to their constitution. At first they were formed by a mere deed, though composed of a number

of persons too great to be brought into any of his Majesty's courts. Afterwards they were in the habit

of applying to the legislature for its sanction; and Lord Redesdale, after some experience of their effects,

took care to prevent any acts from being, passed, giving a legal existence to such bodies, unless there

were contained in them stipulations, that a memorial should be registered of the different individuals

who were partners in the concern. This did some good, but not enough; for though the memorial told

who the persons were with whom one had to deal, it gave you such a legion of names that it was to

no purpose to attempt to sue them all. Another mischief was, that the name, which was in the

memorial to-day, ceased to be in it before six months had expired; and those, who had claims on the

body, had no means of enforcing their remedies as against a person so withdrawing from the

association.

Then came the improvement of permitting the secretary or treasurer of these partnerships to sue

and be sued on behalf of the body. Unfortunately, however, it turned out, that the secretary, who sued

individuals, obtained payment from them; while, on the other hand, individuals, who sued the

secretary, got verdicts and judgments, and nothing more. This led to a further change, which made

every individual liable to execution, in consequence of a judgment recovered against the secretary.


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There was still one thing which had been totally overlooked. Though the secretary could sue and be

sued by an individual not a member of the company, there had not been devised any means by which

an individual, a member of the body, suing as an individual member, the other members, could

proceed. It was only in the course of the last year that this defect was removed.

I must here repeat that I have frequently ventured an opinion, in which I may be wrong (but in

expressing it I meant to do good), that the impossibility of suing with effect was with me a very strong

argument to prove, that such a constitution of a body could not be legal.

In the present case, the company consisting of a great number of persons, the plaintiff, who had

subscribed about 80l. to the speculation, filed his bill against the directors and the other members.

The solicitor of the directors, who, it is said, had previously used desperate threats, put in fourteen

answers, different and yet the same, and with the same schedules annexed to each. A motion was then

made before the Vice-Chancellor, which induced his Honour to direct a certain reference. When the

matter came before me, I was of opinion, that, if the master, upon the inquiries directed, had made a

report stating the result as the plaintiff would have wished him to state it; and if I had been asked,

what, under those circumstances, I was to do with the defendants; I should not have been able to have

said what I would have done. In fact my opinion was, that I should not have been able to have done

any thing upon the report: for the Court had not power to compel the defendants to put in a joint

answer; much less, when fourteen answers had been put in, had it power to take thirteen of them off

the file, or to melt them down into one, and to order the thirteen defendants to concur in and to swear

to that one answer. On the other hand, if the object of the reference were of a different nature, it was

at least expedient, before such inquiries went to the master, that the Court should have settled in its

own mind what it was to do, if the answer to the inquiries were such as he who applied for them

expected. If it were meant to be aimed against the solicitor, Mr. Wilks, that could not be done when

he was not brought personally before the court as solicitor; and I felt the more embarrassed, in

consequence of receiving information which the Vice-Chancellor did not possess. I found that the

fourteen answers were signed by the same counsel; and three or four as respectable counsel as ever

came into the court of chancery stood up in their places; one stating that he had advised the filing of

these fourteen answers, and the others that they had approved of it: how then could I visit the solicitor

for what had been done? If that sort of sanction will not do to let a solicitor go free out of this court,

I know not what sanction will.

It was said that this mode of conducting the defence had been adopted out of passion and

resentment, and that the Solicitor of the Defendant had threatened to have recourse to it, if Mr. Van

Sandau persisted in filing a bill. There was, however, no small degree of provocation that led to the

expressions, which have been so much relied upon as indicating an improper motive.

The point, then, that came to be considered was this: Could Mr. Van Sandau ever expect to

prosecute the suit with success, regard being had to the object with which the bill was filed? That he

had a right to ask the opinion of the Court upon the matter, I most readily admit; but it did appear to

me to be a suit which could have no end whatever; for the parties, who must be brought before the

Court, were so numerous, as to render it next to an impossibility that it could ever be brought to a


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conclusion, or made any use of, except as a means of expenditure in the shape of costs on the one

side or the other, until the parties were tired of it.

If I am right in this view of the suit, why am I to interfere to dismiss the bill, except on the

ordinary terms? If the Plaintiff has a mind to dismiss his bill in the usual way, let him do so; if he

does not, no order can be made upon this motion, except that he pay the costs of it.

__________________________________

Subsequently, the parties agreed to refer it to an arbitrator to settle the terms on which the Plaintiff

should be permitted to dismiss his bill.”

b. Duvergier v. Fellows (1828)91.

“Debt on the joint and several bond of the defendant, Jean Jacques Saint Mare and others, the

condition of which, as set out on oyer, appeared to be as [249] follows:—"Whereas the said Jean

Jacques Saint Mare, some time since, obtained three several letters-patent for the distillation of

potatoes; and whereas the said Jean Jacques Saint Mare, Stamp Brooksbank, and William Dorset

Fellows are now engaged in co-partnership together in carrying on a certain distillery to a very large

extent at Vauxhall, called the Belmont Distillery, according to the system and method of distilling, for

the use and exercise of which the said several letters patent were granted to the said Jean Jacques Saint

Mare, and which said distillery has been erected, set up, and established on certain leasehold premises

belonging to them the said Jean Jacques Saint Mare, Stamp Brooksbank, and William Dorset Fellows;

and whereas the said Jean Jacques Saint Mare, Stamp Brooksbank, and William Dorset Fellows have

it in contemplation to dispose of their shares and interest of, in, and to the said several patents, and

of, in, and to the distillery, premises, plant, and stock in trade in and upon the same, and to part with

the same to a company to be formed for that purpose; and whereas the said Jean Jacques Saint Mare,

Stamp Brooksbank, and William Dorset Fellows have applied to and requested Aime Duvergier to

exert his influence amongst his numerous connexions and friends, so as to form such company,

intended to be called "The Patent Distillery Company," who shall appoint directors and trustees for

the conduct and management of the said concern, which directors shall issue, under their hands and

seals, 10,000 shares of the value of 50l. each share; and whereas the said Aime Duvergier, in

consequence of his connexion with different merchants, brokers, traders and others in the city of

London, hath consented and agreed to form the said company, to be called “The Patent Distillery

Company,” among his own immediate connexions and friends, and to bring such [250] persons

together for the purpose of appointing directors and trustees for the government and management

of such distillery concern, and to procure purchasers for 9000 shares, of the value of 50l. each share;

and whereas the said Jean Jacques Saint Mare, Stamp Brooksbank, and William Dorset Fellows, in

order to induce the said Aime Duvergier to take the trouble of forming such company, and to use his

influence amongst his connexion and friends, and to indemnify him from the charges and expenses

91 5 Bing. 248. URL: http://goo.gl/jlyFS

http://goo.gl/jlyFS


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that he may be put to in and about the same, have proposed and agreed, as soon as he or his executors

or administrators shall have effected such object, and procured purchasers for 9000 of such 50l. shares,

and obtained for such company the first call upon such shares of 5l. each, that they the said Jean

Jacques Saint Mare, Stamp Brooksbank, and William Dorset Fellows, their heirs, executors, or

administrators, or some or one of them, shall and will pay to the said Aime Duvergier, his executors,

administrators, or assigns, the full sum of 10,000l. sterling, by three equal payments or instalments of

3333l. 6s. 8d., viz. the sum of 3333l. 6s. 8d. so soon as the first instalment on such 9000 shares shall

have been paid, the sum of 3333l. 6s. 8d. so soon as the second instalment on the same shares shall

have been paid, and the remaining sum of 3333l. 6s. 8d. so soon as the third instalment of the same

shares shall have been paid; now, therefore, the condition of the above-written bond or obligation is

such, that if the above-bounden Jean Jacques Saint Mare, Stamp Brooksbank, and William Dorset

Fellows, their executors or administrators, or any or either of them, do and shall well and truly pay or

cause to be paid unto the above-named Aime Duvergier, his executors, administrators, or assigns, the

full sum of 10,000l. of lawful money of Great Britain, in manner following, that is to say, the sum of

3333l. 6s. 8d., part thereof, on the said Aime [251] Duvergier, his executors or administrators, forming

the said before-mentioned company, and procuring purchasers for such 9000 shares, and payment of

the first instalment or call thereon; the further sum of 3333l. 6s. 8d. on the second instalment on such

shares having been paid; and the remaining sum of 3333l. 6s. 8d. on the third instalment on the same

shares having been paid; then the above-written obligation to be void and of no effect, or else to be

and remain in full force and virtue.

The defendant, after sundry pleas, on which issue in fact was taken, pleaded, fifthly, actio non,

Because certain of the said several letters patent in the said condition of the said supposed writing

obligatory mentioned, were letters patent of our sovereign lord the King, under the great seal of the

United Kingdom of Great Britain and Ireland, bearing date at Westminster on a certain day, to wit,

on the twentieth day of March, in the fifth year of the reign of our lord the King, whereby, after

reciting, amongst other things, that the said Jean Jacques Saint Mare had, by his petition, humbly

represented unto our said lord the King, that he was in possession of an invention of improvements

in the process of an apparatus for distilling, our said lord the King gave and granted unto the said Jean

Jacques Saint Mare, his executors, administrators, and assigns, his especial license, full power, sole

privilege and authority, that he the said Jean Jacques Saint Mare, his executors, administrators, and

assigns, and every of them, by himself and themselves, or by his and their deputy or deputies, servants

or agents, or such others as he the said Jean Jacques Saint Mare, his executors, administrators, or

assigns, should at any time agree with, and no other, from time to time, and at all times thereafter,

during the term of years therein expressed, should, and lawfully might, make, use, exercise, and vend

the said invention within that part of the [252] United Kingdom of Great Britain and Ireland called

England, our said lord the King's dominion of Wales, and town of Berwick-upon-Tweed, in such

manner as to him the said Jean Jacques Saint Mare, his executors, administrators, and assigns, or any

of them, should in his or their discretion seem meet, and that he the said Jean Jacques Saint Mare, his

executors, administrators, and assigns, should, and lawfully might, have and enjoy the whole profit,

benefit, commodity, and advantage from time to time coming, growing, accruing, and arising by reason

of the said invention, for and during the term of years therein mentioned; to have, hold, exercise, and


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enjoy the said license, powers, privileges, and advantages therein-before granted or mentioned to be

granted unto the said Jean Jacques Saint Mare, for and during and unto the full end and term of

fourteen years from- the date of the said last mentioned letters patent next and immediately ensuing,

and fully to be complete and ended according to the statute in such case made and provided: and it

was by the said letters patent provided, and the same were declared to be upon the express condition

that if the said Jean Jacques Saint Mare, his executors or administrators, or any person or persons who

should or might, at any time or times thereafter during the continuance of that grant, have or claim

any right, title, or interest in law or equity of, in, or to the power, privilege, and authority of the sole

use and benefit of the said invention thereby granted, should make any transfer or assignment, or any

pretended transfer or assignment of the said liberty and privilege, or any share or shares of the benefit

or profit thereof, or should declare any trust thereof to or for any number of persons exceeding the

number of five, or should open, or cause to be opened, any book or books for public subscription to

be made by any number of persons exceeding the number of five, in order to the raising any sum or

sums of money under pretence of carrying on the [253] said liberty or privilege thereby granted, or

should by him or themselves, or his or their agents or servants, receive any sum or sums of money

whatsoever, of any number of persons exceeding in the whole the number of five, for such or the

like intents and purposes, or should presume to act as a corporate body, or should divide the benefit

of the said last-mentioned letters patent or the liberties and privileges thereby granted, unto any

number of shares exceeding the number of five, or should commit or do, or procure to be committed

or done any act, matter, or thing whatsoever, during such time as such person or persons should have

any right or title, either in law or equity, in or to the same premises, which would be contrary to the

true intent and meaning of a certain act of parliament made in the sixth year of the reign of the late

King George the First, intituled "An act for better securing certain powers and privileges intended to

be granted by his Majesty by two charters for assurance of ships and merchandizes at sea, and for

lending money upon bottomry, and for restraining several extravagant and unwarrantable practices

therein mentioned," or in case the said power, privilege, or authority should at any time thereafter

become vested in, or in trust for more than the number of five persons or their representatives at any

one time, reckoning executors or administrators as and for the single person whom they represent as

to such interest as they were or should be entitled to in, right of such their testator or intestate, that,

then and in any of the said cases those letters patent, and all liberties and advantages whatsoever

thereby granted, should utterly cease and become void, any thing therein before contained to the

contrary thereof in anywise notwithstanding; 33, by the said letters patent, which said letters patent

the defendant brought into Court, might more fully appear: and the said defendant further said, that

others of the said letters patent, in the [254] said condition of the said writing obligatory mentioned,

were and are certain letters patent of our said lord the King, under the seal of our said lord the King

appointed by the treaty of union to be used instead of the grand seal of Scotland, bearing date on a

certain day, to wit, the 26th day of February, in the 5th year aforesaid; by which last-mentioned letters

patent our said lord the King gave and granted to the said Jean Jacques Saint Mare, his executors,

administrators, and assigns, by themselves or such other person as he or they might appoint or agree

with, and no others, from time to time and at all times thereafter, during the term of years in the said

last-mentioned letters patent expressed, that they might lawfully make, use, exercise, and vend an


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invention therein mentioned, of improvements in the process of, and apparatus for, distilling, within

that part of the United Kingdom of Great Britain and Ireland called Scotland, in such manner as to

the said Jean Jacques Saint Mare, his executors, administrators, and assigns, or any of them, should in

his discretion seem meet:

Then followed the extent and conditions of the Scotch patent, which were the same as in the

patent for England.

And the said defendant further said, that the said several terms of fourteen years each in the said

letters patent mentioned, at the time of the making of the said supposed writing obligatory, were, and

yet are, unexpired, and that the said company, in the said condition of the said supposed writing

obligatory mentioned, was meant and intended by the said Jean Jacques Saint Mare, the said plaintiff,

and defendant, at the time of making of the said supposed writing obligatory, to consist of more than

five persons, to wit, 10,000 persons, and to be formed for the purposes, amongst other things, of

using, exercising, and enjoying the said exclusive liberties and privileges in the said two several letters

patent in the said condition,, and in this plea mentioned, for the use [255] and benefit of the said

persons so exceeding the number of five, in that part of the said United Kingdom called England,

and in that part thereof called Scotland respectively, under colour of the said letters patent respectively,

to wit, at, &c. and so the defendant said, that the said supposed writing obligatory was and is void in

law, and this the said defendant was ready to verify; wherefore, &c.

The defendant pleaded, sixthly, actio non, because certain of the said several letters patent in the

said condition of the said supposed writing obligatory mentioned were letters patent of our sovereign

lord the now King, under the great seal of the United Kingdom of Great Britain and Ireland, bearing

date at Westminster, on a certain day, to wit, the 20th day of March, in the fifth year of the reign of

our sovereign lord the King, containing the like matters and things, and the like proviso and to the

same effect as the said letters patent in the said fifth plea first mentioned, as by the said letters patent

which the said defendant produced to the court might more fully appear; and the defendant further

said, that the said term of fourteen years in the said last mentioned letters patent mentioned, at the

time of the making of the said supposed writing obligatory, was, and yet is, unexpired, and that the

said company in the said condition of the said supposed writing obligatory mentioned was at the time

of the making thereof intended by the said plaintiff and defendant to consist of more than five

persons, to wit, 10,000 persons, and to be formed for the purpose, amongst other things, of using,

exercising, and enjoying the said exclusive liberties and privileges in the said last mentioned letters

patent mentioned, for the use and benefit of the said persons so exceeding the number of five, in that

part of the United Kingdom called England, under colour of the said last mentioned letters patent:

by means of which premises in this plea mentioned the said supposed writing obligatory was and is

wholly void, and this the said defendant was ready to verify, wherefore, &c.

The defendant pleaded, seventhly, and lastly, that certain of the said letters patent in the said

condition of the said supposed writing obligatory mentioned were letters patent of our sovereign lord

the now King, under the great seal of the United Kingdom of Great Britain and Ireland, bearing date

at Westminster, on a certain day, to wit, the 20th day of March, in the fifth year of the reign of our


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said lord the King, containing therein the like matters and things, and the like proviso, and to the same

effect, as the said letters patent in the said fifth plea first mentioned, as by the said last mentioned

letters patent, which the said defendant produced to the court, might more fully appear; and the

defendant further said, that the said term of fourteen years in the said last mentioned letters patent

mentioned at the time of the making of the said supposed writing obligatory, was, and yet is,

unexpired, and that the said company in the said condition of the said supposed writing obligatory

mentioned was by the said Jean Jacques Saint Mare, the said Stamp Brooksbank, the said defendant,

and the said plaintiff intended at the time of the making the said supposed writing obligatory to

consist of more than five persons, and to be formed for the purpose, amongst other things, of using,

exercising, and enjoying the said exclusive liberties and privileges in the said last mentioned letters

patent mentioned, for the use and benefit of the said persons so exceeding the number of five, in that

part of the United Kingdom called England, under colour of the said letters patent, and of the acting

as a corporate body, and dividing the benefit of the said last mentioned letters patent, and the liberties

and privileges thereby granted, into divers shares, exceeding the number of five, to wit, [257] 10,000

shares, to be transferable and assignable, without any charter from our lord the King, and that, before

the time of the making of the said supposed writing obligatory, to wit, on, &c.,at, &c, it was corruptly

and illegally agreed, by and between the said plaintiff and the said Jean Jacques Saint Mare, the said

Stamp Brooksbank and the said defendant, that the said plaintiff should form such company, as in

this plea mentioned, for the purpose in this plea mentioned, and should sell and dispose of divers, to

wit, 9000 of such shares as in this plea mentioned, being the shares in the said condition of the said

supposed writing obligatory mentioned, and should cause divers large sums of money to be subscribed

by public subscription by numbers of persons exceeding five, to wit, 9000 persons, in order to the

raising a large sum of money, to wit, 450,000l., under pretence of carrying on the said liberty or

privilege (amongst other-things) by the said last mentioned letters patent granted; such money to be

in part received by the said Jean Jacques Saint Mare, Stamp Brooksbank, and the said defendant, for

the purpose of carrying on the said liberty and privilege for the benefit of the said last mentioned

persons, so exceeding five; and that the said Jean Jacques Saint Mare, the said Stamp Brooksbank, and

the said defendant, should, in consideration thereof, pay to the said plaintiff the sum of 10,000l. of

lawful money of Great Britain, in the manner in the said condition of the said supposed writing

obligatory mentioned; and that for securing the payment of the sum of 10,000l. the said defendant

should make and seal, and as his act and deed deliver to the said plaintiff a writing obligatory, in the

penal sum of 10,200l., conditioned for the payment of the said sum of 10,000l. in manner aforesaid:

and the defendant further said, that in pursuance of the said corrupt and unlawful agreement, the said

defendant [258] afterwards, to wit, on, &c, at, &c, made and sealed, and as his act and deed delivered

the said supposed , writing obligatory in the said declaration mentioned, and the said plaintiff then

and there accepted and received the same of and from the said defendant, upon the said corrupt and

unlawful agreement: by means of which premises in this plea mentioned the said supposed writing

obligatory was and is wholly void, and this the said defendant was ready to verify, wherefore, &c.

Demurrer inde, and joinder.


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Wilde Serjt. in support of the demurrer. The substance of the seventh plea (which comprehends

also the matters contained in the fifth and sixth) is, that it was intended by the parties to do certain

acts, and, among them, to form a company which should act as a corporate body, and should transfer

and assign shares without charter from the crown.

But a mere allegation of intention is not sufficient to show that the bond was void, for the

intention to commit an illegal act is not necessarily followed by commission. If such an allegation be

sufficient, every existing corporation is open to the same objection, for there is none of which it may

not be predicated that before becoming a corporation it intended to become a corporation. The

intention, however, might be perfectly legal, for the parties might intend to become a corporation by

procuring an act of parliament for the purpose: a mode of becoming so, which is recognized in 6 G.

2. c. 18.; and when the defendant might have obtained such an act himself, it is not for him to object

that the plaintiff did not obtain it: therefore in Haines v. Busk, 5 Taunt. 521, where, in an action for

brokerage, the defence was, that the voyage [259] undertaken was illegal for want of a licence, the

Court held, that as the defendant ought to have procured the licence, he should not take advantage of

the want of it. Nor is it sufficiently shewn that the acts intended were illegal. The defendant should

have specified what the acts were, in order that the Court might judge whether they were acts peculiar

to a corporate body or not. The defendant might have been in error in supposing that certain acts

which he had in view were exclusively acts of a corporate body.

Acting as a corporate body, for instance, in private matters, would not render the parties liable to

a quo warranto; as, in the matter of a warren; Rex v. Cann, Andr. 15. At all events, by making the

allegation in this general way, the defendant offers matters of law to be tried by a jury. He ought to

have afforded the plaintiff an opportunity of taking issue on the acts impugned, and on the means by

which it might be proposed to justify them. The only act specified is, that it was intended the proposed

company should transfer and assign shares without charter from the King. But there is nothing illegal

in that. It might have been intended to transfer them under an act of parliament to be procured for

the purpose; and even without that, the mere transfer would not be in itself illegal, but only a symptom

that the body transferring was an illegal combination: Rex v. Webb and others, 14 East, 406. The transfer

would be legal, if the assignee took it subject to the original covenants: Pratt v. Hutchinson, 15 East,

511. A share in a partnership may be sold under an execution, and the assignees of a bankrupt may

carry on his trade. At all events a partner may assign the whole of his interest, although it may depend

on the terms of the partnership whether the assignee shall carry on business with the others or not.

[260] In Josephs v. Pebrer, 3 B. & C. 639, where a contract for shares in a joint stock company was

held void, the company was formed; and the case was argued on the provisions of 6 G. 1. c. 18., which

has since been repealed.

Taddy Serjt. contra. The demurrer admits that it was intended the company should act as a

corporate body, and should transfer shares without a charter from the crown; and that it was corruptly

and illegally agreed between the plaintiff and the defendant that the plaintiff should form the company

for those purposes. With such an admission, it would have been superfluous to have specified what


242

particular acts of a corporate body the company was to perform; for if it was corruptly and illegally

agreed, it could not have been intended that the company should act legally as a corporation.

But the allegation that it was intended the company should act as a corporate body is sufficiently

explicit, without specifying particular acts. The Courts take judicial notice of the functions and

privileges of corporate bodies as enumerated in Com. Dig. Franch. F. 1. 9 Rep. 25 b. 10 Rep. 33 b.

Connecting the seventh plea with the condition in the bond and the patent, it is clear the

transaction was illegal, even at common law.

The patent is declared on the face of it to be void, if, by any contrivance, assigned for the benefit

of more than five persons: by the condition of the bond the plaintiff was to procure purchasers for

10,000 shares in the projected company, who were to conduct the process described in the patent: by

that one act the patent would have become void, and the purchasers would have paid their money for

nothing: upon the face of the plea the agreement appears to have been a manifest fraud on [261] the

public, and the agreement is therefore void, as being inconvenient and contrary to public policy, as the

patent would also be, if attended with ill effects: 3 Inst. 184. But the extensive transfer of shares is of

itself inconvenient and illegal. A chose in action cannot be transferred. That rule was originally

established to prevent maintenance; Co. Lit. 214 a. 266 a.; and though maintenance be less dreaded in

modern times, suitors who have to contend against the joint stock purse of an opulent company are

exposed to the effects of disparity of means not experienced in contests between individuals.

Notwithstanding the stat. 6 G. 1. c. 18. has been repealed, an agreement such as that described in

this plea is illegal at common law, as tending to the prejudice and grievance of the King's subjects.

"The necessary effect of such a practice (the transfer of shares) is to introduce gaming and rash

speculation to a ruinous extent: in such transactions one cannot gain unless another loses; whereas in

fair mercantile transactions each party, in the ordinary course of things, reaps a profit in his turn. In

this case the association appears to be one of which the effect cannot but be mischievous." Per Abbott,

C.J. in Josephs v. Pebrer. In Kinder v. Taylor (a) Lord Eldon threw some doubt upon Rex v. Webb; that case,

he said, “was scanty in argument, and the common law was not considered in it, because it was an

indictment upon the statute. He spoke with all respect of Lord Ellenborough, who had decided the case,

and whose memory he venerated as a lawyer; but he should have been glad if his Lordship had taken

the trouble to state what was assuming to act as a corporation. For many [262] considerations, it would

have been very fortunate, if the Court had then looked at this as a distinct question, and had been

good enough to declare, 'this is not acting as a corporation, because to act as a corporation you must

act so and so.' It now, however, became necessary to declare, either by legal judgment or by a

declaratory act of parliament, what was the meaning of presuming to act as a corporation; and by

whomsoever it was declared, not only what was doing, but what had been done, must be attentively

regarded. It was for this reason, he thought, that the King v. Webb called for further explanation.” “His

opinion might be of use to nobody, but it was as well that the world should know it:” “That opinion

was, and he had taken some trouble to consider the question, that if it could satisfactorily be made

out to a jury that a party was opening books, raising a premium upon the shares, and then took care

to get himself out of the scrape, that was an indictable offence.” Such a company is illegal, even when


243

formed for useful purposes; as, for carrying on a private brewery; Buck v. Buck, 1 Camp. 547. And it

cannot be argued that the plaintiff was ignorant of the proviso limiting the assignment of the patent

to five, for the patent is referred to in the condition of the bond on which he sues. If the transaction

between him and the defendant had gone but a little further, it had been an indictable offence: Rex v.

Stratton and Others, 1 Camp. 549.

Wilde. The clear intention of the parties was to find purchasers for the premises where the distillery

was carried on, and for the business. The transfer of the patent was not the object of the transaction,

but the transfer of the business, which could not be transferred without communicating a knowledge

of the process by which it was carried on; and it was necessary that the [263] assignees should by

some means be protected against any charge of infringing the patent-right of the assignor. There is

nothing illegal in transferring shares in a business, subject to the original liabilities, and there was

nothing in this business prejudicial to the public interests. But the transfer of shares, and the raising a

capital by subscriptions, are in effect the only objections made by this plea against the intended

company; and with regard to the latter, even under 6 G. 1. c. IS., Lord Ellenborough says, in Rex v. Webb

and Others, "We think it impossible to say that it makes a substantive offence to raise a large capital by

small subscriptions, without any regard to the nature and quality of the objects for which the capital

is raised."

It nowhere appears in the pleadings that the plaintiff was aware of the proviso which rendered

the patent void upon transfer to more than five, and there is no law which requires that such a proviso

shall be inserted in a patent.

Cur. adv. vult.

BEST C. J. now delivered the judgment of the Court; and after reading the pleadings, and

particularly adverting to the condition of the bond, and the terms of the patent, as set forth ante, p.

438, proceeded as follows:—

It appears from the condition of the bond that the plaintiff was not entitled to any part of the

10,000l., which the obligors had bound themselves to pay him, until he had formed a company, and

procured purchasers for 9000 shares, and payment of the first instalments or calls on those shares.

The forming the company, the selling 9000 shares of what was to be called the stock of such company,

and the prevailing on the purchasers to pay one third of their subscriptions, or 150,000l., is a condition

precedent to the plaintiff 's right of action.

The proviso contained in the patent shews that the [264] plaintiff cannot perform this condition

without committing a fraud on a vast number of persons, and that if he could obtain any subscriptions,

the subscribers would be entitled to recover back the money paid on them, as being obtained by fraud,

or as money paid without consideration. The moment the company was formed, and the patents were

transferred to them, they would cease to exist as legal patents, for they would be destroyed by any

assignment to more than five persons, or to any persons in trust for more than five persons. The

condition of the bond shews, that the patents were to be assigned to a company to be formed by

subscription, and the shares in which were to be transferable. Any one of these circumstances would


244

render the patents void. This difficulty was felt by the counsel for the plaintiff, and he attempted to

extricate his client from it by insisting that it was not intended to convey the exclusive right of distilling

spirits from potatoes, secured by the patent, but only to free the intended company from being liable

to the patentee for using his invention. But it is clear from the terms of the bond that the object of

the parties was not to destroy the patents, but that they professed to assign the privilege granted by

them to the company which the plaintiff was to form.

The words of the condition of the bond are, “have it in contemplation to dispose of their interest

of, in, and to the several patents, and of, in, and to the premises and stock in trade, and to part with

the same to a company.” These terms indicate an intention not to destroy, but to transfer unimpaired

the monopoly secured by the patents. But it has been said it does not appear from the pleadings that

the plaintiff knew of this proviso in the patents, and that the insertion of such a proviso in patents is

not required by any law. But we must presume that he knew the contents of the patents referred to by

the bond on which he brings his action; [265] of the patents which, it appears by the same bond, he

undertakes the sale in the manner stated in that bond. Every man who undertakes to do a thing must

be presumed to know what he undertakes, unless he can shew that he has been deceived by the other

party. How could he undertake to negotiate for the sale of the patents, unless he had seen them and

knew their contents?

If the plaintiff knew the terms on which the patents were granted, he must know that what he

undertook to do could not be done. As he cannot legally perform his part of the contract, he never

can be in a condition to recover the compensation stipulated to be paid on its full and complete

performance. There are some old authorities which say, that if a man binds himself by the condition

of his bond to do what at the time he executed the bond it was impossible for him to do, the bond

shall be considered as without condition, and the obligee may recover the penalty. These authorities

are rather opposed to the plaintiff's claim; they apply only to cases where there is nothing to be done

by the obligee; here the plaintiff must do something before the bond can be enforced. If what he is

to do can never be legally done, the instrument must be inoperative. The plaintiff not having

performed the first condition, can never have a right of action on it. The situation of the plaintiff in

this case, is like that of the defendants in the cases alluded to. It is his fault that he has undertaken

what he cannot perform. In Pullerton v.Agnew, 1 Salk. 172, Holt C. J. said, “Where the condition is

underwritten or indorsed, there that only is void, and the obligation is single, but where the condition

is part of the lien itself, and incorporated therewith, if the condition be impossible, the obligation is

void.” In the case before us, the service of the plaintiff, and payment [265] for it by the defendant,

are incorporated together, and if the service cannot be performed, the whole instrument is a nullity.

But it is apparent from the facts disclosed by the condition of this bond and the patents that the

scheme in which the parties to this action were engaged was one of those bubbles by which, to the

disgrace of the present age, a few projectors have obtained the money of a great number of ignorant

and credulous persons, to the ruin of those dupes and their families, and by which a passion for

gambling has been excited, that has been most injurious to commerce and to the morals of the people.


245

What any one must discover from reading the instruments, the parties to them must be fully

informed of. It cannot be too well known, that there is no place for persons engaged in such

transactions in courts appointed for the decision of civil causes. Although the statute of 6 G. 1. be

repealed, the common law relating to such schemes is expressly reserved by the repealing statute, and

no one doubts, if it can be shewn, as it easily may, that such schemes are fraud-traps, and injurious to

the public welfare, that the forming of them is an indictable offence at the common law.

The seventh plea states, and the demurrer admits, that the plaintiff and the defendant intended

that the company which the plaintiff undertook to form should act as a corporate body without any

charter from the King, and that the benefit of the letters patent were to be enjoyed by this pretended

corporate body, and that the capital of this body was to be divided into 10,000 shares, which were to

be transferable and assignable.

It has been said at the bar, that the parties might intend to obtain an act of parliament to give this

body a legal existence. Nothing of this intention appears on the record.

[267] It has been further said, that the defendant should have shewn how the parties intended to

act as a corporation. If this is not correctly pleaded, advantage should have been taken of the technical

defect by special demurrer. If what they intended to do would not have been acting as a corporation,

they should have traversed the plea. By demurring, the plaintiff has confessed himself guilty of

intending to form a company that was to act as a corporation.

But the shares were to be transferable. There can be no transferable shares of any stock except

the stock of corporations, or of joint-stock companies created by acts of parliament. When it is said

the shares were to be transferable, that must mean, that the assignee was to be placed in the precise

situation that the assignor stood in before the assignment; that the assignee was to have all the rights

of the assignor, and to take upon him all his liability. Now the assignee can join in no action for a

cause of action that accrued before the assignment. Such rights of action must still remain in the

assignor, who, notwithstanding he has retired from the company, will still remain liable for every debt

contracted by the company before he ceased to be a member. Indeed, the members of corporations

cannot assign their interest, and force their assignees into the corporation, without the authority of an

act of parliament. Such authority is expressly given by the bank acts, the South Sea acts, and by other

statutes creating companies that possessed stock, which it was deemed proper to be rendered

transferable.

The pretending to be possessed of transferable stock is pretending to act as a corporation, and

pretending to possess a privilege which does not belong to many corporations. But this is put only as

one of the proofs of the intention of the projectors of this company that it should act as a

corporation. It is not necessary on these pleadings to decide whether the forming a [268] company

with such shares is of itself, without other circumstances, pretending to act as a corporation; because,

it is by the pleadings distinctly admitted, that the plaintiff and defendant intended that the company

should act as a corporation. Persons who, without the sanction of the legislature, presume to act as a

corporation, are guilty of a contempt of the King, by usurping on his prerogative. By the 9th of Anne,

c. 20, the Court may not only give judgment of ouster, but may fine a defendant convicted on a quo


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warranto. This shews that the usurpation is considered as a criminal act. But it has been insisted, that

the usurpation is only criminal where a party, without authority, acts in a public office, and that the

pretended corporation which these parties were to set up did not affect the public, but was a scheme

with which certain individuals only were connected. Most of the statutes relative to quo warrantos, from

the statute of Gloucester down to the 9th of Anne inclusive, have the words offices and franchises.

Franchises are privileges for the advantage of individuals. In Com. Dig. title Quo Warranto, many things

are mentioned as matters for which quo warranto will lie, which are valuable only to the individuals

who claim them against the crown, and are not connected with any public duty. But it concerns the

public that bodies, composed of a great number of persons with large disposable capitals, should not

be formed without the authority of the crown, and subject to such regulations as the King in his

wisdom may deem necessary for the public security.

The acting as such a corporation, without charter from the crown, is contrary to law, and no man

can maintain an action on a bond given to secure payment of a compensation to the obligee for the

formation of any such pretended corporations. For these reasons, judgment must be for the

defendant.

Judgment for defendant accordingly.”

c. Walburn v. Ingilby (1833)92

“The bill stated that about the close of the year 1824, a joint stock company was formed by certain

individuals in London, who afterwards became directors of the company, for the purpose of working

valuable mines of gold, silver, and other metals, in the province of Potosi la Paz, and elsewhere in Peru:

and it set forth a prospectus issued by the directors in April 1825, announcing to the public the nature

and objects of the association. This prospectus was headed “Potosi la Paz and Peruvian Mining

Association; the capital to be 1,000,000l. sterling; President, Don Juan Garcia del Rio, late Minister

Plenipotentiary for Peru to the Courts of Europe; Vice President, General James Parosien, also late

Minister Plenipotentiary from Peru to the Courts of Europe;” and, after describing in strong terms

the favourable circumstances under which the company was established, and the advantages which it

held out to speculators for a profitable investment of capital, and specifying the names of the persons

in whom, as directors, auditors, bankers, secretaries, and agents, the management of the concern was

vested, it proceeded [62] to explain the proposed constitution and regulations of the association, and

the conditions upon which the public were invited to become shareholders, in the following manner:

“The capital is to be 1,000,000l. sterling, divided into 20,000 shares of 50l. each: the first instalment

of 5l. per share is to be paid on or before the 30th of April instant, into the hands of either of the

bankers of the association, to the account of the directors, and the remaining 45l. per share by such

instalments as may be from time to time required by the directors, upon their giving twenty-one days

previous notice of each call. Qualification of a director thirty shares; of an auditor twenty shares. At

all meetings of shareholders each proprietor of ten shares to have one vote; of twenty and upwards,

92 l Myl. & K. 61. URL: http://goo.gl/B6obT

http://goo.gl/B6obT


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two votes: after the first six months from the date of the deed of association, shares shall not be

considered a qualification for voting until held for six calendar months. The directors are to appoint

three trustees from among themselves, in whose names all investments are to be made. The present

directors are to remain in office for the first five years; at the expiration of that time three are to go

out annually, but will be re-eligible. The capital may be increased, if deemed advisable by the directors

for the time being, and approved by a majority of the votes of the shareholders present at a general

meeting convened for that purpose. As soon as the directors shall consider that the concerns of the

association are sufficiently advanced to enable them to report thereon, a special meeting of the

proprietors is to be convened. Subsequently, a general meeting is to be held annually, when the

progress and state of the concerns are to be reported to them. The first dividend is to be made as

soon as a profit of 5l. per cent. has been realized; and subsequently, as circumstances may admit. No

shares are to be sold or transferred, nor shall any proprietor be entitled to vote, until he shall [63] have

paid all the previous calls thereon. No transfer made by a proprietor shall be valid at law or in equity,

unless the purchaser shall have approved by or under the authority of a board of directors, and the

purchaser shall have executed a proper instrument to bind him to the observance of the regulations

of the association. Provision is to be contained in all engagements to be entered into by the directors

in behalf of the association, that no shareholder shall be subject or liable beyond the amount of his

share or shares. A deed is preparing, and, when approved by a majority in number of directors, is to

be the deed for establishing the association; and it is to contain such covenants, resolutions, provisoes,

powers of reference to arbitrators, regulations for managing the concerns, forfeiture of shares, and

dissolution of the association, and such other powers, stipulations, conditions and clauses, as the

directors, or major part in number of them, shall deem best adapted to effectuate the object of the

association. The deed is to be executed by each proprietor within twenty-one days after notice shall

have been given in the London Gazette, and two daily newspapers, of its being ready for signature,

on penalty of the forfeiture of the shares allotted to him, and of the instalment paid thereon. The

deed is to be subsequently enrolled in the High Court of Chancery.”

The bill then stated that the Defendants, together with Hunter, who had since become bankrupt,

and obtained his certificate, were the original directors, and still continued to be directors of the

association, and that in that character they had ever since continued to possess the exclusive

management of the association; that they opened a banking account with Curtis and Co., and Glynn

and Co., in behalf of the association, and that all [64] monies paid in respect of the association were

placed to their account with those banking houses, as such directors. That a great number of persons

were induced by the confidence they had in the directors, who were men of great credit and

respectability in London, and by the favourable accounts given in the prospectus, to make application

for shares in the association, and that the number of shares so applied for and issued, amounted to

11,210. That when any person became a share-holder, he received from the directors a written paper,

stating the number of shares he held, and on taking that paper to the bankers, and paying the first

instalment of 5l. on each share, he received in exchange for it a scrip receipt in the following form:—

“No. Potosi la Paz and Peruvian Mining Association. Received the day of 182 of the Directors

of the Potosi La Paz and Peruvian Mining Association, the sum of l. to account for on demand.”

That the proprietors of the aforesaid 11,210 shares accordingly paid into one or other of the banking


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houses the first instalment of 5l. on their several shares, and received in exchange paper scrip receipts,

and the sums so paid were carried to the account of the directors with such banking houses. That the

plaintiff purchased at various times, for valuable consideration, 2,000 of the 11,210 shares, upon which

2000 shares the said first instalment of 5l. per share had been duly paid, and he had ever since been,

and now was the holder of such shares.

The bill went on to state that the application for shares, before and after they were appropriated

and allotted, became general and urgent, and that the scrip receipt in a short time rose greatly in value,

and before the said shares were appropriated, the same bore a premium of from 4 to 9 per cent., and

after the appropriation [65] was made the scrip receipts bore a premium of 10 per cent.

The bill further stated, that since the Plaintiff became a shareholder, and very lately, he had

discovered, that on finding the rise which had taken place in the value of the stock, the directors, in

pursuance of a private agreement among themselves, kept back and retained the remaining 8,790

shares, with a view to apply to their joint use and benefit the profits to be made upon the shares so

retained, and they appropriated to applicants 11,210 shares only, although the demand on the part of

the public would have exhausted a supply of 50,000 shares and upwards: That subsequently to the

appropriation of those 11,210 shares, various persons applied to the directors for the purpose of

having some of the remaining 8,790 shares allotted to them, and would have paid the requisite

instalments thereupon, but that the directors untruly stated, in answer to such applications, that the

whole of the 20,000 shares, of which the stock of the association consisted, had been already disposed

of.

The bill charged, that it was the duty of the directors to have paid up the instalments of 5l. upon

the retained shares, but that they had never made any payments into the banking houses of the

association on that account, and that the first instalment upon those shares remained wholly unpaid:

that the funds of the association were greatly diminished in consequence of such conduct, and that

the deficiency of the proposed capital was one of the causes of the association not being properly

carried on: that the directors being unwilling to pay the first instalment on the retained shares, and to

bring them into the market while they were at a discount, [66] entered into an arrangement among

themselves, by which they expected to defraud the Plaintiff, and the other bona fide shareholders, with

a view to enhance the value of the 8790 retained shares, and to obtain an opportunity of disposing

of them to their own advantage.

That in pursuance of that arrangement, they determined to reduce the whole number of shares

in the association from 20,000 to 10,000, and the value of each share from 50l. to 15l.; and in order

to give a colour to the reduction, and to deceive the public and the bona fide shareholders, they caused

an advertisement to be inserted in the Times newspaper of the 28th of April 1827, as follows:—

“Potosi La Paz and Peruvian Mining Association.” Notice is hereby given, that it has been resolved by a

great majority of the proprietors of this association to reduce the number of shares from 20,000, of

50l. each, to 10,000 of 15l. each, by which the capital will be limited to 150,000l. instead of 1,000,000l.

This resolution the directors have no hesitation to comply with, as the nature of the contracts of the

mines render the amount of the original capital unnecessary. The holders of the bankers’ receipts are


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therefore requested to apply at the office of the association, No. 1, Great Winchester Street, for the

purpose of exchanging such receipts for consolidated shares, any day between the hours of ten and

four o'clock, on or after the 7th of May next. By order of the board,

John Channon, Secretary.”

The bill further charged that no meeting of the proprietors took place preparatory to the said

change, and that the assertion that the change was resolved on by a great majority of the proprietors

was untrue: that the directors formed the design of selling in the shape [67] of consolidated shares

the 8790 shares which they had retained, and on which no instalments had been paid; and that they

accordingly, in the month of April 1827, signed upwards of 5000 consolidated shares, and left them

with their secretary for the purpose of being disposed of.

That the consolidated shares were in form as follows: “Potosi La Paz and Peruvian Mining

Association, one share, capital limited to 150,000l., consolidated share 15l., London, April 1827. This is

to certify that the bearer is a proprietor of the share No. , in the capital of the Potosi La Paz

and Peruvian Mining Association, in April 1825, upon which 10l. has been paid, which share is

exchanged for receipt No. , signed by three Directors. Entered,

John Channon, Secretary."

That the directors, in furtherance of the aforesaid arrangement, entered into extensive

speculations with respect to consolidated shares, and employed certain agents, whose names were

unknown to the Plaintiff, who were to watch the value of those shares in the market, and to sell them

when the price was at the highest, for the benefit of the directors, and that 4000 and upwards of such

shares were sold accordingly, and the profits arising therefrom received by the directors for their joint

use and benefit.

That each of such consolidated shares represented that the instalments of 10l. had been paid

thereon, and that the same was exchanged for receipts as herein-before set forth, but that such

representations were untrue. That scrip receipts for 2000 shares were sent in by bona fide holders, and

were exchanged for 1000 consolidated shares, and that the [68] Plaintiff at various times became the

holder for valuable consideration of 1000 consolidated shares, for which scrip receipts appeared to

have been duly exchanged by the bona fide holders thereof, and that he had ever since been, and then

was, the holder of such consolidated shares.

The bill also contained a charge that the shareholders were so numerous that they could not be

made parties to the suit, and that their names and places of abode were unknown to the Plaintiff.

The bill prayed a declaration that the directors had been guilty of a fraud upon the Plaintiff and

the other shareholders in not paying up the instalments of 5l. per share upon the 8790 shares retained

by them, and that they were jointly and severally liable to pay and make good to the association, either

the sum of 43,950l., being 5l. per share upon that number of shares, or otherwise, the sum of 40,000l.,

being 10l. per cent upon the 4000 consolidated shares, with interest at 5 per cent., into one of the said

banking-houses, on account of the association.


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To this bill all the directors, with the exception of Hunter, who had subsequently to the formation

of the association become a bankrupt and obtained his certificate, were made Defendants.

Several of the Defendants put in a general demurrer for want of equity; and they further

demurred, on the ground that the rest of the shareholders, and the assignees of the director Hunter,

were not before the Court. A demurrer was also taken ore tenus, on the ground that the original holders

of whom the Plaintiff purchased his derivative shares were not made parties. [69]

Mr. Tinney, Mr. Skirrow, Mr. Wright, Mr. Lloyd, and Mr. Wigram, for the different parties who

demurred.

Although the Bubble Act is now repealed, that act was declaratory only. This association is illegal

at common law; the King v. Dodd, Josephs v. Pebrer, and a court of equity will not recognize or assist it.

The multitude of the parties in a joint stock company of this description, the impossibility, where the

company is not incorporated by act of parliament or royal charter, of doing complete justice between

the different partners, and the open encouragement which it consequently holds out to every species

of fraud and dishonesty, render it nothing better than a public nuisance, which courts of equity instead

of upholding, will be disposed to check and discountenance. That was the view taken by Lord Eldon

in the analogous case of Vansandau v. Moore, as well as in Kinder v. Taylor, and Lord Tenterden's opinion

seems to have been similar, Josephs v. Pebrer. The clause contained, in this prospectus, that no proprietor

should be liable beyond the amount of his shares, is a fraud upon the world, and an attempt to evade

the salutary principle upon which every partner is liable for the whole debts of the concern. The

shares are stated to amount to 20,000, and the number of shareholders must be very great to make it

hopeless ever to bring a cause to which they are all parties, to a hearing. The single exception to the

rule with respect to parties, is where, as in Lloyd v. Loaring one partner who can represent the rights

and interests of all, contests [70] them against a stranger. But here the act of the directors in

consolidating the shares was perfectly valid against such proprietors as consented or did not complain,

though bad against others who refused their consent. There is, therefore, a particular equity among

the several partners, differing it may be, in each individual case; and as it is impossible to do complete

justice, without making all the shareholders parties, so on the other hand it is equally impossible, from

the nature of the company, and the number of its partners, to bring all those shareholders before the

Court much more to bring them to a hearing; and that, of itself, is a sufficient reason why the Court,

finding its powers inadequate to grapple effectually with a subject of such magnitude, should refuse

to entertain the suit at all.

Supposing, however, that difficulty could be got over, still it is manifest that there are in this

concern two classes of persons whose interests are distinct, and very probably opposed, the holders

of original, and the holders of consolidated shares, whose respective situations and equities must be

totally different, and yet the present Plaintiff takes upon himself to represent and sustain the interests

of both classes.

This is a mere partnership for the conduct of a mining speculation, and the case made is one of

fraud against certain of the members. Now, it is settled, that one partner cannot by a bill bring the

management of the partnership transactions before the Court, without at the same time praying a


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dissolution. The doctrine of Lord Eldon, in Forman v. Homfray, has been since followed by his Lordship

in Kinder v. Taylor, and by the Vice-Chancellor in Russell v. Luscombe; [71] and the decision in Harrison

v. Armitage, if properly understood, rather confirms than impeaches the principle. The case of Hichens

v. Congreve which will be relied upon on the other side, is really no exception to the rule; for there every

shareholder stood precisely in the same situation, and the directors were trustees for the whole society,

so that substantially the bill sought nothing but to enforce the contract of the shareholders.

As to certain shares, the Plaintiff states himself to have purchased them from other persons, who

were the original holders, but he does not state (and the fact is known to be directly otherwise) that

the sanction necessary to complete his title, has been given by the directors to the transfer, and till that

has been obtained, the Plaintiff can have no locus standi here, suing as an alleged partner, whatever

remedy he might have against the persons of whom he purchased.

It is not alleged, nor does it appear upon this bill that the Potosi Mining Association is a subsisting

concern. In point of fact, its operations have long since ceased; and it is vain and ridiculous now to

pray, that sums of money may be paid into a banking-house, for the benefit of a partnership which

has been virtually broken up and abandoned.

Besides the general objection already urged for want of parties, there are other objections of

similar kind, though less extensive in their nature. There is a distinct demurrer, on the ground that the

assignees of the bankrupt director, Hunter, are not made defendants; and [72] what is still more

material, the persons from whom the Plaintiff obtained his derivative shares, some of which are stated

to be consolidated, are not before the Court. Now if the case of fraud and breach of trust, made by

the bill, be good against the rest of the directors, it must be equally good against Hunter, and the

defendants are entitled to have the representatives of their co-trustee brought before the Court, that

his estate may be charged with his proportion of the liability. Again, it is a settled rule in pleading, that

whenever the title to equitable rights is in question, the legal owner must be made a party: the equitable

owner alone cannot sustain the interests in contest, because there may be equities affecting the former,

by all of which the assignee will be bound. Redesdale on Pleading. Cathcart v. Lewis. The title of the

Plaintiff to his derivative shares, whether consolidated or not, is merely equitable, Perring v. Hone, the

more so as it is not stated to have been perfected by receiving the sanction of the directors: in equity

he stands precisely in the same situation as his assignors, the legal owners, who, for any thing that

appears, may have been consenting parties to the consolidation, and who ought, in justice to the

directors, to be specified by name, and brought before the Court, that the directors may be able to set

up in their defence whatever equities may exist capable of affecting them.

Sir E. Sugden and Mr. G. Richards, in support of the bill. .

Joint stock companies of this description are now perfectly legal, whatever they may have been

while the [73 ] bubble act was in force.

Lord Eldon, it is well known, had a strong prejudice against them, which he expressed in Vansandau

v. Moore, and Kinder v. Taylor; but even he felt bound to recognize and uphold them when they were

brought judicially before him. Indeed the numerous private acts passed for incorporating similar


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associations (the Arigna Mining Company for example), which if they were a nuisance or a violation

of the common law, never could have obtained the sanction of the Judges and the legislature, prove

that there is nothing unlawful in their character.

The clause attempting to restrict the liability of the shareholders, till confirmed by parliament, was

of course only binding among themselves, and nugatory as to strangers; but it is clear from The King

v. Webb and Pratt v. Hutchinson, that its insertion in the prospectus, or even in the partnership deed,

could not affect the general legality of the company or its acts. It is because such companies are legal,

and are considered beneficial to the community, that parliament invests them with extraordinary

powers and privileges, and enables them to sue and be sued by their secretary, in a manner unknown

to the common law.

If this were a bill seeking to administer the equities between the different partners, the argument

that all the shareholders are not before the Court might have some weight; though even then, where

it is necessary for the purposes of substantial justice, the Court has been frequently induced to relax

the rigour of the rule, and has allowed the interests of a large body of proprietors to be represented

by a few, leaving the rest to come in and prosecute their rights under the decree. Adair v. [74] New

River Company, Cockburn v. Thompson, Good v. Blewitt, Grey v. Chaplin, Bromley v. Smith, Blain v. Agar, and

the late case of Small v. Attwood in the Exchequer, where the same objection was strenuously urged,

but without success. But here the argument had no application; for the object of this suit is not to

administer the equities between the individual partners, or between the various classes of shareholders,

but to restore to the partnership fund, for the benefit of the whole body of proprietors according to

their respective interests, sums which a fraudulent contrivance of the directors has enabled them to

abstract, and appropriate to their own use. Sickens v. Congreve, where this very ground was taken and

over-ruled, is a direct authority for the frame of the present suit, and it furnishes a complete answer

to the objection that the bill contains no prayer for a dissolution. Such a prayer would have been

destructive of the very purpose of the suit, a suit not for a general account, but seeking to charge

persons, in the character of trustees, with a breach of trust for which they are responsible to their

constituents, the partnership at large.

The Plaintiff states himself to be the holder of certain shares, some original, and others derivative,

in the Potosi Mining Association, and upon that general statement, until the contrary is shewn, the

Court is bound to presume that the Plaintiff has done every thing formally and regularly in order to

qualify himself as a partner, and that his title is lawful and complete. If the fact were otherwise, it

could only be taken advantage of by a plea, or established by evidence at the [75] hearing. For a similar

reason it was quite as unnecessary, and would have been improper for the Plaintiff to specify minutely

and in detail, the manner in which he obtained the different shares, and the names of the persons of

whom they were severally purchased; more especially in a bill which has for its object, not to set up

any private claims of the Plaintiffs own against the partnership, but to call upon trustees guilty of a

fraud, to account to the general body of the partners for the profits arising from the breach of trust.

If then the assignment be, as it must be assumed to be, complete, it is a mistake to suppose that any

interest, legal or equitable, still remains in the assignors. By the very act of transfer a change in the

partnership was effected, quoad the rights and liabilities of the original holders, and a new partnership


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created: their interest, legal as well as equitable, was thereby conveyed to their assignee, who thereupon

become to all intents a partner, both at law and in equity, to the extent of the assigned shares. With

respect to the absence of Hunter's assignees, it is perfectly settled that it is competent for a cestui que

trust, suing for a breach of trust committed by several trustees, to proceed against any of them at his

discretion. It will still be open to the Plaintiff, after he has established the amount of the claim in this

suit, to go before the Commissioners in bankruptcy, if he chooses, and prove for it against Hunter's

estate.

Mr. Tinney, in reply.


I am of opinion that this demurrer must be allowed.

[76] If I had only agreed with the Defendants in the point made of the company being illegal at

common law, independently of the 6 G. 1., now repealed, or had thought that question doubtful, I

might have been disposed to let the case proceed, by disallowing the demurrer, and suffering the point

to be afterwards raised and decided. Had the demurrer rested there however, there seems to be no

reason for allowing it.

To hold such a company illegal, would be to say that every joint stock company not incorporated

by charter or act of parliament is unlawful, and, indeed, indictable as a nuisance, and to decide this for

the first time, no authority of a decided case being produced for such a doctrine. The clause intimating

that each subscriber is only to be liable to the extent of his share is not enough to make the association

illegal; such a regulation is wholly nugatory, indeed, as between the company and strangers, and can

serve no purpose whatever, unless to give notice. In that light it is not to be viewed as criminal or as

a means of deception; for the publicity of it may tend to inform such as deal with the company, and

a proof of that publicity in the neighbourhood of parties so dealing might go to fix them with notice.

For any other purpose, for the purpose of restricting the liability of the shareholders, it would plainly

be of no avail; and whosoever became a subscriber upon the faith of the restricting clause, or of the

limited responsibility which that holds out, would have himself to blame, and be the victim of his

ignorance of the known law of the land.

On this ground, then, I do not think the demurrer can be sustained. Nor do I think it can he

sustained upon the other ground, that the bill does not pray for a dissolution of partnership; for this

is no suit for a general account, but only a complaint of a fraud. [77] Neither can it be held demurrable

on account of the nonjoinder of Hunter's assignees as defendants, for the Defendants were severally

liable; nor on account of the other shareholders not being made parties, after the decision by Lord

Lyndhurst, in Hickens v. Congreve acted upon, as I have understood, more recently in Small v. Attwood; to

say nothing of the class of cases where the making all partners parties has been dispensed with, in

companies of which the shareholders are so numerous as to render that impossible, or at least highly

inconvenient.

But there is one ground of demurrer which I cannot get over. The Plaintiff alleges his title to be

as a shareholder by purchase, and he does not set forth how. He does not derive his title. He merely says


254

that he purchased for valuable consideration divers shares, upon which the instalment of 5 per cent.

had been paid, and that he ever since has been, and now is, the holder of such shares. Now in another

part of the bill it is alleged, that by the rules of the association, as set forth in the prospectus, no

transfer of shares could be valid in law or equity, unless the purchaser was approved by a board of

directors, and signed an instrument, binding him to observe the regulations. Is this merely directory

or is it a condition precedent? I am of opinion, that it is a condition precedent, and that the

performance of it should have been alleged. A demurrer, it is true, admits all facts that are well pleaded;

and it is contended, that here the allegation of the Plaintiff having purchased shares and being a

shareholder is admitted, and that therefore the rules must be assumed to have been complied with.

Nothing to the contrary appears on the face of the bill, to which of course we are confined. This,

however, depends wholly upon the purchase and holding of the shares being well pleaded. But share-

holding is not sufficiently known in the law to make the mere [78] allegation of it intelligible without

more. Nor are shares, or the purchase of shares, things known in law. The shares may be any thing,

and may be quite different in different companies; the modes of holding them may be divers. The

manner of transferring them may be indefinitely varied, even where the interest is one recognized by

law, and the thing is well known; as in the case of the transfer of a promissory note, which is a transfer

of a chose in action legalized by express enactment, or the case of an assignment of a reversion at

law, the title of the Plaintiff must be set forth specially, and if there be any conditions precedent, the

performance of them must be alleged.

Even if the demurrer on this ground should be overruled upon the argument that it was sufficient

to allege the share-holding, the Defendants would only be driven to raise the same question in a

different shape by pleading. But as I have no doubt that the allegation here is imperfect, and

consequently the share-holding not admitted by the demurrer, I must consider the case on the

omission of the material affirmation that the condition precedent had been performed, and it

therefore stands that the Plaintiff has not alleged any title. The demurrer is perhaps sustainable upon

the other ground,—that those from whom the Plaintiff brought have not been made parties. But into

this there is no occasion for entering, as it was not set down among the special grounds of demurrer.”

d. Blundell v. Winsor (1837)93

From the allegations in the bill, it appeared, that in 1833 a joint-stock company was formed, under

the name of The Anglo-American Gold Mining Association, for the purpose of working gold mines in the

United States of America.

By their deed of settlement, dated the 1st of November 1833, after stating the object of the

company, and appointing John Penman, Esq. superintendent, G. A. Muskett, Esq. trustee and treasurer,

and Muskett and Penman directors, it was agreed, that the capital of the company should consist for the

present of 6,000l., in sixty shares of 100l. each, but power was reserved to the shareholders to create

any additional number of 100l. shares, as the company might from time to time think desirable, which

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new shares were to be offered in the first instance to the holders of the old shares at par, although

they might be at a premium in the market. It was also provided, “that the shares of the company, as

well original as additional, should and might be assigned and disposed of by deed or will, or otherwise,

to any other person or persons, at the discretion of the holders thereof; but no share should be

divisible into any fractional part.” It did not appear that there was any restriction on the right of

transferring the shares. And, it was agreed, that Penman should forthwith go over to America, and

endeavour to discover some eligible situation for carrying on the operations of the company, and he

was authorized to draw bills on the treasurer and trustee. The deed contained the usual clauses for

regulating the affairs of the company, and for winding them up in the event of a dissolution.

At a meeting of the shareholders, held in September 1834, Muskett resigned his offices of trustee,

treasurer, and director, and was discharged by the company from all liabilities, and he soon afterwards

sold his shares, and the plaintiff and two of the defendants were appointed to succeed him. At the

same meeting, 140 new shares of 100l. were created, which were sold to various persons, and the

whole amount paid.

In December 1835 the shareholders discharged Penman, who had expended considerable sums out

of the company's funds. At the latter end of 1836, eleven more new shares were created and sold. On

the 14th of March 1837, at which time the company had, in fact, become insolvent, a resolution was

duly passed by a majority of the shareholders, and in the manner required by the deed of settlement,

that the company should be dissolved, which resolution was confirmed by another meeting, held on

the 29th of the same month; and the plaintiff and two other shareholders were desired to carry the

resolution into effect. There were at that time 211 shares in the company, which were on the 29th of

March, and at the time of filing the bill, in the hands of the plaintiff and the defendants; and the bill

stated, that, “except the plaintiff and the defendants, there was no person who was then in any way

interested in or liable in respect of the affairs of the said company as shareholders or otherwise as

partners in the said company.” The plaintiff stated, that he had applied all the funds of the company,

and some of his own monies, in discharging the liabilities of the company; and that he was totally

unable to carry into effect a proper and complete dissolution of the company.

Winsor, one of the defendants, who was a holder of one share, had brought an action [365] at law

against the plaintiff and two other of the shareholders for a sum of 300l. The bill prayed for a

dissolution of the company—for an account of its debts and liabilities, and of all its transactions from

its formation; that Winsor and the other shareholders might be decreed to contribute their

proportional shares of the losses of the company; and that Winsor might be restrained from

proceeding with his action.

To this bill Winsor put in a general demurrer for want of equity; and also demurred for want of

parties, on the ground, that Muskett and all the parties who had originally been shareholders were

necessary parties to the suit, notwithstanding they had assigned their shares to other persons.

Mr. Knight and Mr. H. W. Cole, in support of the demurrer. —Under the deed of settlement of

this company, the shares were to be transferred without any restriction at the will of the owner. The


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company thereby assumed to act as a corporate body, and thus their constitution was rendered

illegal…

When the Bubble Act, 6 Geo. 1. c. 18. was repealed by the 6 Geo. 4. c. 91, Lord Eldon expressed

a decided opinion, that the common law was sufficient, without that statute, to prevent the formation

of such companies as the present— George on Joint Stock Companies, p. 80. This suit is also defective

for want of parties. Muskett, and all other original shareholders, who have now ceased to hold shares,

are still necessary parties; because, the transfer of their shares did not relieve them from liability to

third persons in respect of debts due from the company; and, if they were called on to discharge any

of those debts, they would be entitled to contribution from the other shareholders, who might thus

be subject to a multiplicity of suits; whereas, the whole matter might be at once determined in a suit

which was properly constituted. It ought also to have been set forth by what means Winsor acquired

his shares—

Mr. Jacob and Mr. W. T. S. Daniel, in support of the bill.—Most of the cases which have been cited

were decided before the repeal of the Bubble Act, and therefore do not apply to this case; for, it can

scarcely be supposed, that when the legislature took the trouble to repeal that statute, it was intended,

that no benefit should arise from the repeal, but that all undertakings which were within its operation,

were still to be illegal at common law. In Walburn v. Ingilby, the capital was to be 1,000,000l., divided

into 20,000 shares, and the company would be a much less manageable body than the present one;

yet, that company was not declared to be illegal, but the demurrer was allowed on other grounds. Here,

the capital was never more than 21,100l, and the number of shareholders was only about twenty-five.

There is no common law by which a partnership of twenty-five persons is illegal; and, if they choose

to agree that one partner may assign without the privity of the others, what objection is there to such

a contract? In partnerships in mines and collieries, such a proviso is frequent. It appears sufficiently

on the face of the bill, that Winsor is a shareholder. With respect to Muskett and the other original

shareholders, there are before the Court all the existing shareholders; and the bill alleges, that there

are no other persons who have any interest in the affairs of the company. Neither is a shareholder

liable for any loss that takes place after he has assigned his shares; and there is nothing on the face of

this bill which shews that the company had sustained any loss before those parties ceased to be

partners. But, supposing a company to have been legally constituted, if all the persons who ever held

shares in it, or their representatives, were necessary parties to a suit, it would be impossible to wind

up the affairs of a [366] company of any magnitude, which had existed forty or fifty years—Vigers v.

Solari.

THE VICE CHANCELLOR.—This appears to me a very plain case. I cannot but think that this

deed of the 1st of November 1833 is, on the face of it, illegal. It proposed that certain persons should

form a company to work gold mines in North America; and it is provided, all persons who should

become shareholders should, so long as they held any shares of the company, be considered as

copartners in the company. Then, although the shares in the first instance were not to exceed sixty, it

appears, that there might exist an unlimited number of shares, because it was provided by the deed,

that the shareholders might increase the number of shares at any time they should think proper, and

it appears, that a great number of additional shares were subsequently created by the company. The


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deed also contained a clause to the effect, that those persons who were holders of the original shares,

as well as of the additional shares, should be at liberty at any time, and without any restriction whatever,

to assign or transfer their shares to any person they thought fit.

Now, it appears to me, that the fair inference to be drawn from this deed is, that certain persons

were to form a company, which might be increased to an unlimited amount, and that every shareholder

should have the power to transfer his share to whomsoever he pleased without control; and that the

deed necessarily represented that the person who assigned the shares, would thereby get rid of his

liabilities, and that the person to whom the shares were assigned, would take all the liabilities attached

to them. Now, this is a thing which could not, by any means, be done at law. It does, therefore, appear

to me, that the deed, on the face of it, did hold out to the public something fraudulent, to induce

persons, in the hope of getting profit by working gold mines, to take shares in the company, and

thereby become partners, under an impression, that they might continue to be such partners as long

as they pleased, and then get rid of their liabilities by assigning their shares. I conceive the language

of Lord Chief Justice Best in his judgment in Duvergier v. Fellows, is quite correct, in which he says,

“There can be no transferable shares of any stock, except the stock of corporations, or of joint-stock

companies, created by acts of parliament: when it is said, that the shares were to be transferable, that

must mean, that the assignee was to be placed in the precise situation that the assignor stood in before

the assignment: that the assignee was to have all the rights of the assignor, and to take upon him all

his liability.” All this appears to me applicable to this case; and, my notion is, that this deed is illegal,

not only because, to use the language of Mr. Justice Best, it usurps on the prerogative of the Crown,

by attempting to make a body —not a corporate body—not having the protection of the King's

charter—exercise the power of a body corporate, but because by holding out to the public that the

shares could be assigned in the manner before referred to, when no such thing could be done, a

fraudulent representation was practised on the public.

My opinion is, that the more such schemes as this are checked in a court of justice, the better it

will be for her Majesty's subjects; and, I think, that this demurrer ought to be allowed with costs.

Demurrer allowed.

e. Garrard v. Hardey (1843)94

“ASSUMPSIT, for money lent, interest, and money due upon an account stated.

The defendant pleaded—to the whole declaration,— secondly, as to the sum of 500l., parcel &c,

that on the 10th of October 1839, from thence until the 6th of June 1840, the plaintiff, the defendant

and other persons did illegally associate together in a certain illegal undertaking, project, and attempt,

tending to the common grievance, prejudice, and inconvenience of the subjects of our Lady the

Queen, in general, and great numbers of them, in their trade and commerce; that is to say, that the

plaintiff, the defendant and the said other persons did, during the time aforesaid, act as a corporate

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body, and pretend to be a trading corporation, by and under the name and style of “The Limerick

Marble and Stone Company,” and did then also pretend to raise and transfer stock in the said company,

and that the said stock consisted of 50,000£, divided into five hundred shares of 100l., and did then

also pretend to transfer and assign shares in such stock without legal authority, either by act of

parliament, or by charter from the crown, or by letters patent under the great seal, or by any other

lawful authority whatsoever, to warrant such acting as a corporate body, or the raising of transferable

stock, or the transferring of shares therein; whereof the plaintiff then had notice: that the plaintiff,

well knowing the premises, for the furthering, countenancing, and promoting of such illegal

undertaking and project, to wit, on the 10th of October 1839 aforesaid, lent and advanced to the

defendant a certain sum of money, to wit, 500l., and he the defendant then received the same, for the

purpose aforesaid, and then with the knowledge, privity and assent of the plaintiff, paid, laid out, and

expended the same upon and for the furthering, aiding, and promoting of the said illegal undertaking

and project: and that the last mentioned sum of 500l. so lent and advanced as aforesaid was the same

cause of action in the introductory part of this plea mentioned, and whereof the plaintiff had above

in his said first count complained against the defendant. —Verification.

Thirdly, that the said sum of 500l., parcel &c, was lent by the plaintiff to the defendant for the

purpose of carrying on a certain trading copartnership before then entered into between the defendant

and certain other persons, under the name and style of “The Limerick Marble and Stone Company,”

and the same was then expended by the defendant in and about the said copartnership, and the

carrying on thereof: that, after the last-mentioned sum had been so lent and expended as aforesaid, to

wit, on &c. the plaintiff became and was a member of the said copartnership, and so remained and

continued from thence until &c.: that the plaintiff on divers days and times, whilst he was such

member of the said copartnership as aforesaid, and before the commencement of this suit, received

divers sums of money, in the whole amounting to a large sum of money, to wit, 1000l., on the account

and for the use of the said copartnership, and that divers complicated [473] accounts then arose

between the plaintiff and defendant in respect of and relating to the said copartnership, which

accounts included, amongst others, the said sum of 500l., parcel &c. in the introductory part of this

plea mentioned: and that no settlement or adjustment of the said partnership accounts had been at

the time of the commencement of this suit nor hath yet been made, but that the same were at the

commencement of the suit and still were open, depending, and unliquidated. —Verification.

The fourth and fifth pleas, pleaded to the second count only, were, respectively, similar to the

second and third pleas pleaded to the interdiction.

Replication to the second plea; that the plaintiff, the defendant, and the other persons did not

associate together in the undertaking, project, and attempt in the said plea mentioned, and did not act

or pretend in manner and form as therein mentioned; and that the sum of 500l., in the said second

plea mentioned, was not lent and advanced to the defendant, nor was the same received by the

defendant for the purpose in the said plea mentioned; nor was the same with the knowledge, privity,

and assent of the plaintiff paid, laid out, and expended, in manner and form as the defendant hath in

the said plea in that behalf alleged; conclusion to the country. (There was a similar replication to the

fourth plea.)


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To the third and fifth pleas, the plaintiff replied de injuria.

Special demurrer to the replication to the second plea, assigning for causes, that the said replication

was multifarious and double, and that the plaintiff had thereby attempted to put in issue several

distinct matters, namely, whether the plaintiff, the defendant, and other persons associated together in

the undertaking, [474] project, and attempt in the plea mentioned, and also —— whether they acted

or pretended in manner and form as therein mentioned; and also whether the said sum of 500l. in the

said plea mentioned was lent and advanced to the defendant, and received by him for the purpose in

the said plea mentioned; and also whether the said sum was, with the knowledge, privity, and assent

of the plaintiff, paid, laid out, and expended, in manner and form as the defendant had in the said

plea alleged: that the replication was an informal mode of pleading the general replication de injuria,

which last-mentioned replication could not, by the rules of law, be pleaded to the said second plea:

that the plaintiff had in and by his said replication attempted to raise certain immaterial, superfluous,

and complex issues, that is to say, he had traversed the allegation that the plaintiff and defendant acted

and pretended as in the said plea mentioned, which fact was involved in, and arose out of, the question

— whether or not the plaintiff and defendant associated together in such undertaking &c, as is in the

said plea mentioned: that the plaintiff had traversed, and attempted to put in issue, the purpose for

which the said sum of 500l. was lent by the plaintiff to the defendant; whereas if the said sum was,

with the knowledge &c. of the plaintiff, paid &c. by the defendant in the said illegal undertaking &c,

the fact of the said sum not having been lent and advanced to the defendant, or received by him, for

the purpose in the said second plea mentioned, was wholly immaterial: that the traverse taken by the

replication was too large, in this, to wit, that it attempted to put in issue the fact — whether or not

other persons were associated with the plaintiff and defendant in the said undertaking &c, which fact

was wholly immaterial to the defence set up: that the replication was uncertain, inasmuch as the

defendant could not thereby know whether the [475] plaintiff meant to deny that he associated with

the defendant, or that he associated with other persons, or that he associated with the defendant and

other persons, in the said undertaking &c.

(There was a demurrer to the replication to the fourth plea, upon which the defendant assigned

the same causes of demurrer as upon the demurrer to the replication to the second plea.)

Special demurrer to the replication to the third plea, assigning for causes, that the third plea did

not consist of matter of excuse, so as to entitle the plaintiff to adopt such general form of replication:

that the defendant by his said plea claimed a title and interest in the said sum of 500l. therein

mentioned, and set up a right to retain the same: that in the same plea authority was alleged to have

been derived from the plaintiff: and that the plea was double and multifarious. (There was a similar

demurrer to the replication to the fifth plea.) Joinder in demurrer.

The case was argued in Hilary term last.

Talfourd Serjt. (with whom was Hurlstone), in support of the demurrers, The replications to the

[476] second and fourth pleas put in issue at least two things which are immaterial, — first, the fact

that the plaintiff and defendant did associate with other persons; and, secondly, not only the purpose

for which the money was lent, but also that for which it was applied. [Cresswell J. Is it open to the


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defendant to say that these allegations are immaterial, when he himself has put them on the record?]

A plea is not made bad by the introduction of immaterial circumstances; nor can the plaintiff make

such matter material by traversing it; Regil v. Green, Moore v. Boulcott. [Cresswell J. In the last-cited case

the defendant pleaded to an action on an attorney's bill, that the bill was for work at law and in equity,

and was not delivered a month before action brought. The replication, that the bill was not for work

at law and in equity, was held bad, not because it contained two answers to the plea, but because it

contained none.] That case shews it is not enough merely to traverse an allegation in the very terms

of the plea.

As to the replications to the third and fifth pleas, it is now settled that de injuria is admissible in

assumpsit; Isaac v. Farrar, Griffin v. Yates, Purchell v. [477] Salter, but subject to the rule in Crogate's case,

that such general form is only allowable where the plea sets up matter of excuse, and not of discharge.

An excuse must arise before, or at the time, the contract is broken, but a discharge must be afterwards.

The third plea in this case does not consist of matter of excuse; it admits the cause of action,

namely, the loan; and it does not insist on the illegality of the contract. [Tindal C.J. The question is,

whether that plea contains any answer to the action. It admits the loan, and then states a subsequent

'partnership with the plaintiff, and that the money previously lent by the plaintiff was mixed up with

the partnership accounts. That does not appear to be any answer to an action to recover the loan.

Erskine J. At present, I believe, we all think that the plea is bad.] Perhaps it may amount to a special

set-off. [Cresswell J. In what manner? The defendant does not say which way the balance of the account

would be. Tindal C. J. A set-off can only be maintained on an ascertained debt. But here the defendant

expressly says that the debt is not ascertained.] The learned serjeant then admitted he could not

support the third and fifth pleas.

Channell Serjt. for the plaintiff. Assuming that the second and fourth pleas are good, the

replications to them are sufficient, as they put in issue all the facts which those pleas set up as

constituting one defence. If an alleged immaterial fact is so mixed up in a plea with others which are

material that together they form part of the whole defence, the plaintiff has a right to traverse the

plea in its terms. (Upon this branch of the argument he cited Clugas v. Penaluna, Biggs v. [478] Lawrence,

Waymell v. Reed, Benison v. Thelwell, Webb v. Weatherby, Bell v. Tuckett, and Duvergier v. Fellows. [Tindal C.J.

The pleas in question comprise three separate allegations: first, that the plaintiff had entered into an

illegal company; secondly, that the money lent was part of the stock of such company; and thirdly,

that the money was applied to illegal purposes with the privity of the plaintiff. Of these three

allegations two at least contain each a distinct answer to the action. If the illegal company was not

formed, the plea falls to the ground. If the money was not lent for an illegal purpose, the same result

would follow. These are separate and distinct allegations which the plaintiff has included in his

replication; and as at present advised, I should say it would be better to see whether the pleas are

good.]

The pleas cannot be supported. The facts which they set out as constituting the illegality of the

association are, in terms, the same as those mentioned in the bubble act (6 G. 1. c. 18. s. 18.) But that

act was repealed by the 6 G. 4. c. 91. The demurrer admits, not the illegality of the company, but


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merely the facts from which the court will decide whether or not it was illegal. But the facts stated do

not shew any such illegality. They merely disclose a method of forming and dissolving a joint stock

partnership by transferring stock. It is not stated that the company acted as a corporation in any illegal

way, or that they affected to use a corporate seal. There is nothing to shew the company was illegal at

common law; R. v. Webb. [479] The pleas, in substance, only state that certain persons formed an

association for the purpose of trading in marble, and raised a capital by shares; but this is no offence

at common law.

Talfourd Serjt. in reply. The second and fourth pleas disclose a sufficiently good ground of defence

upon general demurrer. The grounds upon which the judgment of this court proceeded in Duvergier

v. Fellows are in favour of the defendant. It was there held that the pretending to be possessed of

transferable stock was pretending to act as a corporation. In this case the pleas shew that the parties

not only pretended to act, but did in fact act, as a corporation. [Cresswell J. Duvergier v. Fellows was

affirmed by the King's Bench upon error. But it is not quite clear that the judgment of this court was

adopted to the full extent. Channell Serjt. The judgment was indeed also supported in the House of

Lords; but upon quite different grounds.] In R. v. Webb the particular association was held legal; at

least the parties were held not to be liable to an indictment. But that was under peculiar circumstances.

And the authority of R. v. Webb was doubted in Kinder v. Taylor. A question arose in that case as to the

legality of a company calling themselves the Real del Monte Mining Company; and Lord Eldon C. is

reported to have said, “The question as to what was assuming to act as a corporate body, was rendered

still more important to be decided, because it was impossible to read the 6 G. 1., and the clauses of

exceptions contained in it, without seeing that the legislature thought itself bound to except even some

legally chartered companies. The case of R. v. Webb was scanty in argument, [480] and the common

law was not considered in it, because that was an indictment upon the statute. He spoke with all respect

for Lord Ellenborough, who had decided the case, and whose memory he venerated as a law-giver; but

he should have been glad if his lordship had taken the trouble to state what was assuming to act as a

corporation.” [Cresswell J. Here the defendant has not taken the trouble to state what he means by

acting as a corporation.] It is submitted that he has in terms stated sufficient to bring the case within

the principle of Duvergier v. Fellows. Lord Eldon added, in Kinder v. Fellows, "For many considerations it

would have been very fortunate if the court had then looked at this as a distinct question, and had

been good enough to declare, 'this is not acting as a corporation, because, to act as a corporation, you

must act so and so.' It now, however, became necessary to decide, either by legal judgment or by a

declaratory act of parliament, what is the meaning of presuming to act as a corporation; and by

whomsoever it was declared, not only what was doing, but what had been done, must be attentively

regarded. It was for this reason he thought the case of R. v. Webb called for further explanation." And

his lordship, after commenting upon the 6 G. 1., stated, that “he was of opinion, and he had taken

some trouble to consider the question, that if it could satisfactorily be made out to a jury that a party

was opening books, raising a premium upon the shares, and then took care to get himself out of the

scrape, that was an indictable offence.” Josephs v. Pebrer, and Pratt v. Hutchinson, are authorities to shew

that a company which professes to raise and transfer stock is illegal. [Tindal C. J. When those cases

were decided the 6 G. 1. was in full force.]


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[481] The learned Serjeant then proceeded to argue that the replications to the second and fourth

pleas were bad for multifariousness, and as involving an immaterial issue. It was immaterial whether

other persons were associated with the plaintiff and defendant, as there might be a fraudulent

company consisting of two parties only. [Tindal C. J. It is not very likely. The 6 G. 1. seems to point to

associations formed by great numbers of persons. Erskine J. In order to render a proposition

objectionable, is it sufficient that it is immaterial? Must it not also tend to embarrass the opposite

party? That seems to be the ground upon which Regil v. Green was decided.] If the contract was

unlawful in its origin, the subsequent application of the money would make no difference; Thurman v.

Wild. [Cresswell J. Suppose the money had been originally lent for an unlawful purpose, and the plaintiff

had repented and demanded back the money, but had afterwards sanctioned its improper application.]

If the contract was originally unlawful he could not recover the money. This is an action for money

lent. It is p sufficient answer that it was lent in furtherance of an illegal contract. The subsequent

application of the money is quite immaterial.

TINDAL C. J. now delivered the judgment of the court.

The questions before us in this case arise on the replications put in by the plaintiff to the second,

third, fourth, and last pleas of the defendant. But as the third and last pleas were abandoned by the

defendant upon the argument, and as we think the second and fourth pleas are also bad in point of

law, it will be unnecessary to say any thing as to the replications: and the second [482] and fourth pleas

being pleaded in the same form, the one to the action generally, the other to the second count, it will

be necessary to consider the first only of those pleas.

That plea is framed upon the very words of the statute 6 Geo. 1. c. 18. s. 19.. It states that the

plaintiff, and the defendant, and others, did illegally associate themselves together in an illegal

undertaking, project, and attempt, tending to the common nuisance, prejudice, and inconvenience of

the subjects of our lady the Queen in general, and great numbers of them in their trade and commerce.

It is obvious, that, if the plea had stopped here, such a general allegation of an illegal association

would not have been sufficient, even if the statute above referred to had been still in force and

unrepealed: and consequently the plea proceeds to describe the particular illegal association intended,

and alleges it to consist in this, that the plaintiff, the defendant, and those other persons, did act as a

corporate body, and pretend to be a trading corporation, under the name of "The Limerick Marble

and Stone Company," and did also then pretend to raise and transfer stock in the said company, and

that the said stock consisted of 50,000l. divided into 500 shares of 100l., and did pretend to transfer

and assign shares in such stock, without legal authority by act of parliament, charter from the crown,

or letters patent under the great seal, or by any lawful authority whatever, to warrant such acting as a

corporate body, or the raising of transferable stock, or the transferring shares therein. Now assuming,

for the sake of argument, that this description would have been sufficient to bring the case within the

statute, yet, as that clause of the statute has been expressly repealed by the 6 Geo. i. c. 91., the question

becomes this, whether such an illegal association is described on the face of this plea as to constitute,

at common law, a nuisance, and to [483] be indictable as such. The raising and transferring of stock

in a company cannot be held, in itself, an offence at common law: such species of property was

altogether unknown to the law in ancient times; nor indeed was it in usage and practice until a short


263

period antecedent to the passing of the statute; as is evident from the preamble to the 18th section,

which recites that it is notorious that these projects and undertakings, which it is the object of the

clause to put down, had been contrived and practised within the kingdom since the 11th of June,

1718; evidently shewing that the act was looking to some grievance of late introduction. And as that

clause has been repealed, we find no authority for holding that an allegation that the parties raised and

transferred stock is simply, and per se, without any statement of the mode by which it injures or

defrauds the public, an indictable offence at common law. And, laying that allegation out of the way,

the plea really states no more, in substance, than that the plaintiff and the defendant "and other

persons" (which allegation would be satisfied if there were two only in addition to themselves),

pretended to act as a trading corporation, under the name and style of "The Limerick Marble and Stone

Company." The plea states no illegal mode or means by which they pretended to act as a company, as,

by usurping a common seal, or the like; nothing more is stated than their assuming the style and firm

of a company. It is not even alleged that this took place and was carried on in England, or within the

Queen's dominions, which would seem from the preamble to the 18th section of the statute to have

been necessary, at least, to constitute an offence under that statute.

The case of Duvergier v. Fellows has been cited, and relied on as an authority in point that the mere

[484] presuming to act as a corporation is of itself alone an illegal act, and indictable. It should be

observed, however, that the plea in that case did not state simply the fact of formation of a pretended

corporate body, but the formation of it for a purpose confessedly illegal, namely, the purpose of

enjoying the benefit of certain letters patent, by the condition annexed whereto the letters patent were

to become void if assigned to more than five persons. And this is the precise ground upon which the

judgment was affirmed both in the court of King's Bench and in the House of Lords, where the case

was removed by writ of error; not to mention also, that, in the plea of the defendant in that case, so

much of the detail and management of the pretended company was stated as might perhaps be

sufficient to shew a project which would necessarily operate to the fraud and deceit of the subjects of

this kingdom.

It is enough, however, to say, on the present occasion, that there is an absence in this plea of any

statement of facts from which an illegality at common law is necessarily to be inferred; and, unless

such common law offence appear sufficiently stated on the plea itself, we are not to infer it.

We think, therefore, the second and fourth pleas are also bad, and that judgment on the four

special pleas must be given for the plaintiff.

Judgment for the plaintiff.”

f. Harrison v. Heathorn (1843)95

ASSUMPSIT. The declaration contained a special and three indebitatus counts, as already stated.

The defendants Magnus, Cohen, Isaacs, Harris and Neumagen, suffered judgment by nil dicit, Longstaff,

95 6 Man.& G. 81. URL: http://goo.gl/NOHUH.

http://goo.gl/NOHUH


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Hart, the Heathorns, Tait, Muskett, and the Blundells, pleaded non assumpsit. Joseph L. Heathorn, besides

his fifth and sixth pleas upon which the plaintiffs obtained judgment on demurrer, pleaded, secondly,

to the first of the making of the agreement and promise in that count mentioned, partners or

shareholders in the company or association called The Anglo-American Gold Mining Association, modo et

forma; concluding to the country; thirdly, to the first count, that the plaintiffs did not take up or

discharge for the honour of the drawer, the bills of exchange in the said first count mentioned, or any

of them, or any amount thereof, or incur the said costs and expenses or any part thereof, as in that

count alleged; concluding to the country; fourthly, to the first count, that the bills of exchange in that

count to have been taken up by the plaintiffs were not, nor were, nor was any of them, drawn by

Penman upon H. Blundell on account or the company; nevertheless, the plaintiffs did not give notice to

the company and the directors, or to any of them, three calendar [82] months before the

commencement of the suit, to pay, and that the plaintiffs required payment of, the sum so alleged to

have been advanced by them on taking up the said bills, and the said interest for the same, and the

amount of the said costs and expenses of the plaintiffs, or any of them or any part thereof, modo et

forma; concluding to the country; eighthly, to the whole declaration, that the company or association

in the said first count mentioned, was and is an illegal company, association or partnership, consisting

of divers persons shareholders therein, formed for the alleged purpose of working gold mines in the

United States of America, and the reduction and sale of the said precious metals and other valuable

products of the said mines, and presuming to act as if they had been and were a corporate body,

without any legal authority or any act of parliament or charter from the Crown for so doing; and also

presuming and pretending, without any legal authority, act of parliament, or charter from the Crown,

for so doing, to raise, and being constituted and formed with a view to raise, and with provisions for

raising, a transferable and assignable stock and capital to a large amount, to wit, 6000l. sterling, to be

considered as divided into sixty shares of 100l. each, with power for the shareholders of the company,

at a special meeting to be called for that purpose, at any time and from time to time to increase the

capital of the company to any amount that might be agreed upon, by creating an additional number

of 100l. shares, and all which several shares, as well original as additional, were to be, and are,

transferable and assignable from the holders thereof by deed or will, or otherwise, to any other person

or persons at the discretion of the holders thereof, to the common grievance, prejudice and

inconvenience of the liege subjects of His late Majesty King William the Fourth, and our Lady the

Queen, in their trade, [83] commerce, property and lawful affairs; that before and at the time of the

making of the agreement and promise in the said first count mentioned, and at the times the plaintiff

lent and paid the respective monies in the second and third counts mentioned, the plaintiffs had notice

of the several premises in this plea mentioned; that the said loans and advances and payments in the

second and third counts mentioned, were respectively made by the plaintiffs for the purpose of taking

up and paying the said bills of exchange under the said agreement in the first count mentioned, and

that the said agreement was made and entered into, and the payments in the first count mentioned,

and the loans, and advances, and payments in the second and third counts mentioned were respectively

made by the plaintiffs, and the said costs and expenses in the first count mentioned attending such

bills were incurred, in order, and for the purpose, and with intent, to support and continue the said

company or association, and for furthering, countenancing, and proceeding in, the said undertaking


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and attempt; to the common grievance and nuisance of the liege subjects of His said late Majesty and

our Lady the Queen; whereby the said agreement was and is void in law; and that the account in the

said last count mentioned was stated solely of and concerning the payments in the said first count

mentioned to have been made by the plaintiffs of and concerning the said monies in the said second

and third counts alleged to have been lent and paid by them respectively, and not of or concerning

any other monies or matters, and the sum in the last count mentioned to have been found due, was

so found due in respect of, and was and is the amount of the sums so paid as in the first count

mentioned, and so lent and paid as in the second and third counts mentioned respectively; and which

several payments and loans were made upon and for the illegal [84] purpose and consideration in this

plea before mentioned. Verification.

Ninthly, to the whole declaration, that the said company and association was and is an illegal

company, association or partnership, consisting of divers persons, shareholders, therein presuming to

act as if they had been and were a body corporate, without any legal authority, or any act of parliament,

or charter from the Crown, for so doing, and also presuming and pretending, without any legal

authority, act of parliament, or charter from the Crown for so doing, to raise a large transferable and

assignable stock in shares transferable at the will of the holders thereof, for the pretended object or

purpose of working gold-mines in an immense and extensive territory in parts beyond the seas, to wit,

the United States of America, and the reduction and sale of the said precious metals and all valuable

products of the said mines: whereas, in truth and in fact, at the time of the formation of the said

company or association, and for a long time afterwards, no gold-mines in the said United States had

been or were discovered by the persons who projected, formed, or constituted the said company or

association, or by any of them, or by any person or persons on behalf of the said company, nor had

any goldmine in the said United States been purchased or hired by or on behalf of the persons who

projected, formed, and constituted the said company or association, or by or on behalf of the said

company or association, or by or on behalf of the said company, nor were such persons or the said

company possessed of any such gold-mine, nor in negotiation for the purchase or hire thereof; and

the locality or particular nature of the situation for communicating and carrying on the operations of

the company remained to be discovered and selected; and the objects of the said company were and

are fanciful, visionary, and uncertain, and delusive, fraudulent, and [85] deceptive, and the company

or association was and is by reason of the several premises, an undertaking, association, and attempt

tending and calculated to cheat and defraud the subjects of His said late Majesty King William the

Fourth and of our Lady the Queen respectively, of their moneys, tending to the common nuisance,

grievance, prejudice, and inconvenience of the liege subjects of His said late Majesty King William the

Fourth and our Lady the now Queen respectively, in their trade, commerce, and other lawful affairs.

That before and at the time of the making of the agreement and promise in the first count mentioned,

and at the time the plaintiff lent and paid the respective moneys in the second and third counts

mentioned, the plaintiffs had notice of the several premises in this plea mentioned. That the loans and

advances and payments in the second and third counts mentioned were respectively made by the

plaintiffs for the purpose of taking up and paying the said bills of exchange under the agreement in

the first count mentioned, and that the said agreement in the first count mentioned was made, and the

said payment and loans and advances in the first, second, and third counts mentioned were made, by


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the plaintiffs, and the said costs and expenses in the first count mentioned attending such bills were

incurred, in order and for the purpose, and with intent, to support and continue the said company or

association, and for furthering, countenancing, and proceeding in the said undertaking and attempt;

to the common grievance and nuisance of the subjects of His said late Majesty and our Lady the

Queen; whereby the said agreement was and is void in law; and that the said account in the last count

mentioned was stated solely of and concerning the payments in the first count mentioned to have

been made by the plaintiffs, and of and concerning the said moneys in the said second and third

counts alleged to [86] have been lent and paid by them respectively, and not of or concerning any

other moneys or matters; and that the sum in the last count mentioned to have been found due in

respect, and was and is the amount, of the sums so paid as in the first count mentioned, and so lent

and paid as in the second and third counts mentioned respectively; and which several payments and

loans were made upon and for the illegal purposes and consideration in this plea before mentioned.

— Verification.

Tenthly, as to the sum of 2000l., parcel of the said monies in the said fifth and last counts

mentioned, payment and acceptance of that sum in full satisfaction and discharge of the said sum of

2000l., parcel, &c., and the causes of action in respect thereof. Verification.

Tait pleaded, secondly, to the first count, that the defendants were not partners or shareholders in

the company or association called The Anglo-American Gold Mining Association, modo et forma; concluding

to the country.

Thirdly, to the first count, that the plaintiffs did not at the several days and times in that count

mentioned, or at any other days or times, pay, lay out, or expend the said sums of money in the first

count mentioned, or any of them, or any part thereof, in or about taking up and discharging, for the

honour of the drawer, the bills of exchange in the declaration mentioned, or any of them, or incur

such costs and expenses as in that behalf in the first count mentioned, or any part thereof, modo et

forma; concluding to the country.

Fourthly, to the first count, that the plaintiffs did not, nor did any of them, give the said notice to

the company and directors to pay the said sum of 5500l., or the other sums of money in the first

count respectively mentioned, or any other sum or sums of money, or require payment [87] thereof,

or of any part thereof, modo et forma; concluding to the country.

Fifthly, to the first count, that the plaintiffs, on the 10th of March 1836, became, and were, and

thenceforth had been, and still were, shareholders and partners in the company, and that they, on the

said 10th of March 1836, duly elected to take the said sixty shares according to the said agreement,

and gave the company and the directors due notice thereof: without this that the plaintiffs gave due

notice to the company and to the directors, that they, the plaintiffs, declined to take the said sixty

shares in, or to become members of, the company, and then elected not to take, and had not taken,

such shares and become such shareholders as in the first count of the declaration mentioned, modo

et forma; concluding to the country.


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Sixthly, to the first, second, and third counts, that the company in the first count mentioned, before

and at the time of the making of the agreement in the first count mentioned, and before and at the

respective times of the lending and paying in the said second and third counts respectively mentioned,

was, and thence always hitherto had been, and still was, a company and partnership between the

defendants and divers and very many other persons, to wit, during all the time aforesaid, presuming

to act and acting as if they were and are a corporate body, and pretending to raise a transferable and

assignable stock without any act of parliament, or any legal authority, and without any charter from

the Crown, for so doing; of all which several premises in this plea mentioned the plaintiffs, before and

at the time of making the agreement in the first count mentioned, and before and at the respective

times of lending and paying the said sums in the said second and third counts respectively mentioned

had notice, and at those respective times well knew the same, and [88] the plaintiffs, to wit, then

entered into the said agreement in the said first count mentioned, and lent and paid the money in the

said second and third counts respectively mentioned, with such full knowledge as aforesaid; and for

the purpose of furthering, continuing, and proceeding in the said company, partnership and

undertaking, and with a view of assisting and supporting the same; and the said agreement in the first

count mentioned was entered into by all the parties thereto, and the sums in the second and third

counts mentioned were lent and paid, for the furthering, continuing, and proceeding in the said

company, partnership, and undertaking, and with such notice and knowledge as aforesaid.

Seventhly, — to the first, second, and third counts,— that the said company and partnership in

the said first count mentioned, before and at the respective times of making the agreement in the first

count mentioned, and the lending and paying the said sums in the second and third counts respectively

mentioned, was, and from thenceforth had been, and still were, a new and unlawful undertaking,

tending to the common grievance, prejudice, and inconvenience of great numbers of the liege subjects

of this realm in their trade and commerce, that is to say, an undertaking for the purpose and object

of purchasing and working mines, and of raising metal ores, and of smelting, refining, and

manufacturing and selling, and disposing of the said metal to be obtained and raised from such mines;

and which undertaking, before and at the time of making the agreement in the first count mentioned,

and before and at the respective times of lending and paying the respective sums in the second and

third counts respectively mentioned, and thenceforth had been, and still was, a public undertaking

then and during all the time last aforesaid, and still relating to affairs in which the trade, and welfare,

and [89] commerce of great numbers of the liege subjects of this realm had been, during all the time

last aforesaid, and still were concerned; and which undertaking, at the time of making the agreement

in the first count mentioned, and at the times of the lending and paying in the said second and third

counts respectively mentioned, and thenceforth had been, and still was, a common nuisance to the

liege subjects of this realm; of all which several premises in this plea mentioned the plaintiffs, before

and at the time of making the said agreement in the first count mentioned, and before and at the said

respective times of lending and paying the said sums in the second and third counts respectively

mentioned, had notice, and at all times well knew the same; and the plaintiffs then entered into the

said agreement and lent and paid the respective sums with such knowledge as last aforesaid, and for

the purpose of furthering, continuing, and proceeding in the said company, partnership and

undertaking, and with a view of assisting and supporting the same and the illegal objects thereof; and


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the said agreement was entered into by all the said parties thereto, and the sums in the said second

and third counts mentioned were respectively lent and paid by the plaintiffs for the furthering and

proceeding in the said company, partnership, and undertaking in this plea mentioned, and with such

full knowledge of the premises in this plea mentioned as aforesaid. — Verification.

Eighthly, as to so much of the fourth count as related to 2000l. parcel of the sum of money in

the fourth count mentioned, and therein supposed to have been received to the plaintiff's use; that the

said sum of 2000l. was a sum formerly, and before the said supposed receipt thereof, paid, by the

plaintiffs, to the said company in the said first count mentioned, as the consideration for the purchase

of a certain tract of land [90] sold to the company by and under a certain written agreement, which

was afterwards, and before the receipt of the said 2000l., to wit, on the day and year last aforesaid,

rescinded, and that the plaintiffs claimed the same as so much money received to their use on and by

reason of the rescission of the said agreement, and on the implied promise supposed to arise in law

upon such rescission, and in no other way and on no other ground whatsoever; nor was there any

express promise to pay the same, or any part thereof. That the company before and at the time of the

making of the last-mentioned agreement and the payment of the said 2000l., was and from that time

always had been, and still was, a company and partnership between the defendants and divers other

persons, during all the time last aforesaid presuming to act, and acting, as if they had been and were a

corporate body, and pretending to raise a transferable and assignable stock, without any act of

parliament, or any legal authority, and without any charter from the Crown, for so doing; of all which

several premises the plaintiffs before and at the time of the making of the last-mentioned agreement

and the payment of the said 2000l. had notice, and then well knew the same, and the plaintiffs then

entered into the last-mentioned agreement, and paid the said 2000l. with such knowledge as last

aforesaid, and for the purpose of furthering, continuing, and proceeding in the company, partnership

and undertaking in that plea mentioned, and with a view of assisting and supporting the same.

Verification.

Ninthly, as to so much of the fourth count as related to 2000l. parcel, &c. That the said 2000l. was

a sum formerly paid by the plaintiffs to the company, as the consideration for the purchase of a certain

tract of land sold to the company by and under a certain written agreement, which was afterwards,

and before the receipt of the said 2000l., to wit, on &c. rescinded, and [91] that the plaintiffs claimed

the same as money received to their use on and by reason of the rescission of the last mentioned

agreement, and on the implied promise supposed to arise in law upon such rescission, and in no other

way whatsoever, nor was the same or any part thereof due in any other way whatsoever, nor was any

express promise ever made to pay the same, or any part thereof. That the company before and at the

time of the making of the last-mentioned agreement and the payment of the said 2000l., was and

from that time always had been, and still was, a new and unlawful undertaking tending to the common

grievance, prejudice^ and inconvenience of great numbers of the liege subjects of this realm, in their

trade and commerce, that is to say, an undertaking for the purpose and object of purchasing and

working mines, and of raising metal and ores, and smelting, refining, and manufacturing, and selling

and disposing of the metal to be obtained and raised from such mines; and which undertaking before

and at the time of making of the last-mentioned agreement, and the payment of the last mentioned


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2000l., was and thenceforth had been and still was a common nuisance to the liege subjects of this

realm; of all which premises the plaintiffs before and at the time of making the last-mentioned

agreement, and the payment of the said 2000l. as last aforesaid had notice, and then well knew the

same, and the plaintiffs then entered into the last-mentioned agreement, and paid the said 2000l. as

last aforesaid, and for the purpose of furthering, continuing, and proceeding in, the said company

partnership and undertaking, and with a view of assisting and supporting the same and the illegal

object thereof. Verification.

The plaintiffs joined issue on the first, second, third, fourth, and seventh pleas pleaded by Joseph

L. Heathorn, [92] replied de injuria to the eighth and ninth, and traversed the payment alleged in the

tenth.

The plaintiffs also joined issue on the first, second, third, fourth, and fifth pleas of Tait.

To the sixth, the plaintiffs replied that the company in the first count mentioned at the time of

making the agreement in that count mentioned, and at the respective times of the lending and paying

in the second and third counts respectively mentioned, was not, nor had it been, nor was it, a company

and partnership between the said defendants and divers other persons presuming to act and acting as

if they were a corporate body, and pretending to raise a transferable and assignable stock, modo et

forma; concluding to the country.

To the seventh plea the plaintiffs replied, that the company and partnership in the first count

mentioned at the respective times of making the said agreement in the first count mentioned, and the

lending and paying the said sums in the second and third counts respectively mentioned, was not, nor

had it been, at any part of the time in the seventh plea mentioned, nor was it still, a new and unlawful

undertaking, tending to the common grievance, prejudice, and inconvenience of great numbers of the

liege subjects of this realm in their trade and commerce; nor was the same undertaking at the time of

making the said agreement in the first count mentioned, and before and at the respective times of

lending and paying the respective sums in the second and third counts respectively mentioned, an

undertaking for the purpose and object in the plea mentioned; nor was it a public undertaking then or

at any part of the time in the seventh plea mentioned, or still relating to affairs in which the trade and

welfare and commerce of great numbers of the subjects of this realm were concerned; nor was the

same undertaking, at the time of making the agreement in the first count mentioned, and at the [93]

times of the lending and paying in the second and third counts respectively mentioned, nor

thenceforth had it been, nor was it still, a common nuisance to the liege subjects of this realm, modo

et forma, concluding to the country.

To the eighth plea the plaintiffs replied, that the company, at the time of the making of the

agreement in that plea mentioned, and the payment of the said 2000l. therein mentioned, was not, nor

from that time had it been, nor was it still, a company and partnership between the defendant and

divers other persons presuming to act and acting as if they were a corporate body, and pretending to

raise a transferable and assignable stock, modo et forma.; concluding to the country.


270

To the ninth plea the plaintiffs replied, that the company, at the time of making the agreement in

that plea mentioned, and of the payment of the said 2000l. in that plea mentioned, was not nor from

that time had it been, nor was it still, a new and unlawful undertaking, tending &c; nor was the same

undertaking, at the time of making the last-mentioned agreement and the payment of the said 2000l.

in that plea mentioned, nor thenceforth had it been, nor was it, a common nuisance to the liege

subjects of this realm, modo et forma; concluding to the country.

At the trial before Tindal C. J. at the London sittings after Michaelmas term, the signatures of the

defendants to the agreement of the 24th of December 1835, were proved, and it was shewn that the

plaintiffs had paid bills drawn by Penman on Henry Blundell to the amount of 5500l.; that they declared

their intention not to take shares in the company; and that they gave notice that they required to be

reimbursed the amount of their advances with interest and costs.

The plaintiffs then put in the deed of settlement of [94] the association, bearing date the 1st of

November 1833, between Penman of the first part, Muskett of the second part, the defendant, Henry

Blundell and six other persons, of the third part, and Bridges of the fourth part, by which, after reciting

that the several parties thereto of the first, second, and third part, had then lately agreed to form a

company for the purpose of working gold mines in the United States of America, and that they were

desirous that such deed of settlement should be made and executed for the purpose of ascertaining,

defining, and settling their respective rights, interests, and liabilities, in the undertaking, it was thereby

declared and agreed by and between the said several parties, inter alia, in manner following:

1. That the several parties hereto of the first, second, and third parts, and all persons who shall

hereafter become subscribers to, or interested in, the capital of the company hereby intended to be

formed under the provisions hereinafter contained (and who are hereby described as shareholders),

shall, so long as they possess any sum or share of the capital of the company, be and continue, until

dissolved under the provisions hereinafter contained, a company or partnership under the name of

“The Anglo-American Gold Mining Association.”

2. That the object of the company shall be the working of gold mines in the United States of

America, and the reduction and sale of the precious metals and all other valuable products of the said

mines.

4. That the present capital of the company shall consist of 6000l. sterling, which shall be

considered as divided into sixty shares of 100l. each, all which shares have been taken and subscribed

for by the parties hereto of the first, second, and third parts in the several numbers and proportions

agreed upon between them.

5. That it shall be lawful for the shareholders of the company, at a special meeting of shareholders

to be [95] called for that purpose, in manner hereinafter mentioned, at any time, and from time to

time, to increase the capital of the company to any amount that may be agreed upon, by creating an

additional number of 100l. shares.

11. That each shareholder (as well the present as all future additional shareholders and all persons

becoming entitled to shares upon any change of ownership as hereinafter provided for) shall, upon


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application to be made by him to the trustee and treasurer of the company, be entitled to receive for

every share to which such shareholder shall appear by the book called the “Share Registrar Book”

hereinafter particularly mentioned to be entitled, a certificate signed by the said trustee and treasurer,

in the words and figures, or to the effect, following:

“Anglo-American Gold-Mining Association.

Shareholder's Certificate.

"This is to certify that A. B. of &c, is the proprietor of the share No. , in the capital of this

association, as established by deed of settlement bearing date the 1st day of November 1833; that the

said share stands in —— name in the 'Share Register Book,' as the proprietor thereof; and that the

sums specified in the margin hereof have been paid on account of the said share.

Given, under my hand, in London, this_____ day of______ .

“Signed, G. A. Muskett,

Trustee and Treasurer.

“N. B. The holder of this certificate will not be entitled to any of the privileges of a shareholder

until the share has been transferred to him in the books of the company.”

12. That a sufficient number of printed forms of shareholders' certificates shall be provided by

the [96] trustee and treasurer, and kept by the solicitor, of the company for the time being; and such

certificate shall be filled up and delivered by the solicitor to the shareholders entitled to the same upon

their application, provided nevertheless that the shareholders' certificate shall be evidence of the title

to the share mentioned therein, of that person only who shall therein be stated to be the proprietor

thereof in the “Share Register Book,” and such certificate shall not entitle any other person who may

be the holder thereof (whether for valuable consideration or otherwise) to any right or interest in, or

lien upon, the share to which the same relates, or in any way give to such holder a right to participate

in the profits or advantages of the company, or to interfere with or be concerned in the management

of the affairs thereof.

15. That the shares in the company, as well original as additional, may be assigned or disposed of

by deed, or will, or otherwise, to any other person or persons, at the discretion of the holder thereof;

but that no share shall be divisible into any fractional part.

16. That upon any change taking place in the ownership of any share in the company, whether

such change be effected by act of the law or by act of the parties, the party or parties claiming to be

entitled to any share or shares in respect of any such change, shall produce his, her or their title to

such share or shares to the solicitor of the company for his examination and approval; and such

solicitor, upon being satisfied of the sufficiency of such title, shall cause the name, place of residence,

and occupation of the party or parties so making out title as aforesaid, together with the number of


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shares to which a title shall be so made out, and the numbers of such shares respectively, to be entered

in the “Share Register Book.”

19. That the entries contained in the “Share Register Book” shall, for all the purposes of the

company, and [97] these presents, be conclusive as to the parties entitled to shares, their places of

residence, and occupation, the number of shares held by them respectively, and the respective numbers

of such shares.

20. That no person shall be entitled to any of the rights or privileges of a shareholder, or be in

any way interested or concerned in the management of the affairs of the company, in respect of any

share or shares, his title to which shall not have been duly examined and entered in the “Share Register

Book.”

21. That any person upon ceasing to be a shareholder and payment and discharge of all money,

and other liabilities charged upon, or due in respect of, the shares possessed by him, shall, if he require

it, receive from the trustee and treasurer of the company a certificate, in the words and figures, or to

the effect, following : —

“Anglo-American Gold-Mining Association.

Certificate of Discharge.

I do hereby certify that A. B. of &c. has ceased to be a shareholder in the above-named company,

and that he is discharged from all liabilities on account of the shares formerly held by him. Witness, my hand

this________ day of________ .”

38. That John Penman shall be the present superintendent of the company, and shall be subject to,

and bound by, the several rules, regulations, and provisions next hereinafter contained; that is to say,

First, as the said parties hereto of the second and third parts have been mainly induced to become

shareholders in the company upon the statements and representations of Penman that there are gold-

mines in various parts of the United States of America, which may be taken, and profitably worked,

by the company, and [98] that he is competent and willing to superintend and conduct the actual

working of the said mines and the general management of the affairs of the company in America, it is

hereby agreed between the parties hereto, and Penman doth hereby for himself, his heirs, executors and

administrators, expressly covenant with the said G. A. Muskett, his executors and assigns, that he

Penman will, as soon as conveniently may be after the execution of these presents, repair to the United

States of America; and upon his arrival there, use his best endeavours to discover, with as little delay

as possible, some situation eligible and advantageous for carrying on the operations of the company.

Secondly. That Penman shall be unfettered in his judgment as to the locality or particular nature of

the situation to be selected by him for commencing and carrying on the operations of the company,

and to that end, shall be at liberty to engage one or more situation or situations containing gold mines,

either opened or unopened, and either to make arrangements for the entire working of the said mines,

or only for the smelting and reduction of the ore, the main object of the company being the obtaining

and sale of gold ore; and it being expressly agreed by the parties hereto of the second and third parts,


273

that it shall be left to the discretion and judgment of Penman to advance and effectuate such object in

such manner, and in all respects, as he shall think most advisable. Provided nevertheless, that it shall

be lawful for the shareholders at any half yearly, or special, meeting, to be held in manner hereinafter

directed, to prescribe all such directions and regulations as to the working of any mines to be taken

by Penman, and the management by him of the affairs of the company in America, as they shall, from

time to time, resolve and agree upon; and which directions and [99] regulations, when duly made and

forwarded to Penman, he shall observe, conform to, and be bound by

Thirdly. That Penman shall be at liberty to contract for the occupation of any situation for the

purposes of such company, for such period as, in his judgment, shall be sufficient to try the eligibility

thereof; and the terms of such contract shall be left entirely to his discretion, except that he shall not

be at liberty to make any contract for the absolute purchase of any situation without the express

authority of the shareholders, to be given at a half-yearly meeting to be held for that purpose in manner

hereinafter directed.

Fourthly. That in case any directions or instructions shall at any time be given to Penman as to

making any further contracts for the occupation or purchase of mines in pursuance of the provisions

in that behalf hereinafter contained, Penman shall, in all things, observe such directions and instructions

and immediately use his best endeavours to do, or procure to be done, every act necessary to the

perfect completion of such contracts respectively, according to the laws and municipal regulations of

the particular state or territory in which the subject matter of such contracts respectively shall be

situate.

Fifthly. That in case any lands shall at any time be purchased by Penman on behalf of the company,

in pursuance of directions or instructions for that purpose as aforesaid, and the laws or municipal

regulations of the particular state or territory in which such lands shall be situate, shall prevent or

forbid the conveyance of such lands being taken or held in the name of the company, such conveyance

shall be made to Penman, but nevertheless to be held by him his heirs and assigns in trust for the

company.

Sixthly. That when and so soon as Penman shall have arranged for the occupation of any situation

or [100] situations for commencing the operations of the company, he shall hire all such workmen

and servants, and provide all such implements and stores, and do all such other acts whatsoever, as

may be necessary or proper for commencing such operations as speedily and efficiently as possible.

Seventhly. That when and as soon as Penman shall have entered into such contract for occupation

as aforesaid, he shall draw up a report containing an accurate and detailed description of the premises

to be occupied, and their probable means of profit and advantage to the company, and transmit such

report, together with a copy of such contract, to the trustee and treasurer of the company for the

time being.

Fifteenthly. That for the purpose of enabling Penman to commence the operations of the company,

the trustee and treasurer thereof may forthwith advance to Penman any sum not exceeding 600l.: and,

in order to carry on such operations, Penman may be at liberty to draw upon the trustee and treasurer thereof,


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by bills at not less than sixty days' sight, for such sums as he shall from time to time require; and the

amount of such bills shall be applied by Penman in payment of the expenses of promoting the

operations of the company.

39. That Muskett shall be the present trustee and treasurer of the company, and shall be bound by

the rules, regulations and provisions next hereinafter contained, one of which was, that the said trustee

and treasurer shall apply the moneys from time to time in his hands belonging to the company in

payment of such bills or drafts as the superintendent, in pursuance of the powers and provisions

hereinbefore in that behalf contained, shall draw upon him.

45. The fourteen days' notice of the time and place of holding all meetings of shareholders, as

well half-yearly as special, shall be given by a circular, to be sent to each [101] shareholder of the

company at his place of residence as entered in the “Share Register-Book;” such circular, as to half-

yearly meetings, to be signed and sent by the trustee and treasurer of the company for the time being;

and such circular, as to special meetings, to be signed and sent by the party or parties respectively

calling the same, and to state the particular business to be taken into consideration thereat.

52. That any shareholder may vote by proxy, such proxy to be in writing held by some other shareholder,

except in the case of the superintendent, whose proxy may be held by a stranger.

54. That all questions and resolutions shall be decided at the meetings, as well half-yearly as special,

by the majority of the votes of shareholders appearing in person or by proxy.

55. That at the special meetings of the shareholders no other business shall be discussed and

resolved upon besides the particular matters of business stated in the circulars calling the same.

57. That the shareholders of the company may, at any time, and from time to time as often as they

shall think proper, by resolutions to be passed at special meetings, to be duly held and convened for

that purpose, according to the regulations hereinbefore contained, alter and vary the regulations of

the company and the rights and interests of the shareholders therein, and prescribe and establish any

new or other mode of management of the affairs of the company as they shall from time to time

think proper or expedient; and such new or altered rules, regulations and provisions, shall, so long as

they remain in force, be as binding upon all the shareholders as though all had concurred therein, or

the same had been introduced into, and formed part of, these presents.

59. That an absolute and entire dissolution of the company may take place by a resolution of the

majority [102] of the shareholders present at three successive meetings, to be held for that purpose,

the last of which meetings shall appoint three of the shareholders, of whom the trustee and treasurer

for the time being shall be one, for the purpose of carrying such dissolution into effect, and the affairs

of the company shall be thereupon wound up; and the assets of the company, after satisfying their

debts and liabilities, shall be divided among the shareholders in proportion to their shares, and any

special meeting of the shareholders duly convened for that purpose, may declare the accounts of the

company finally closed, and the assets fully administered, and the superintendent, trustee and treasurer,

and all other parties released and discharged from all future liabilities and engagements, actions, suits,

claims and demands under or by virtue, or in consequence, of the deed, or of any other deed or


275

engagement entered into by them in connection with, or reference to, the affairs of the company; and

that the superintendent, trustee and treasurer, and all other parties, shall be released and discharged

according to such resolution, and on the terms and under the modifications thereof.

On the 29th of September, 1834, the defendant Henry Blundell and two others were appointed

trustees and treasurers instead of Muskett.

The several defendants attended several meetings, and otherwise took part in the proceedings of

the company, with the exception of J. L. Heathorn. The only evidence to connect him with the

undertaking was that, on the 17th of December, 1835, he attended a special meeting of the association.

It was not shewn whether a sufficient number of shareholders was present, without reckoning J. L.

Heathorn, to transact the business for which they were convened.

At this meeting, the following resolution was passed: —

[103] 17th of December, 1835.

Anglo-American Gold-Mining Association.

“At a special meeting of this Association, held this day at &c. in London, in pursuance of a circular,

dated 1st of December, 1835.

PRESENT Shares PROXIES Shares

Henry Blundell 26 David Wilson 6

James Magnus 47 Henry Heathorn 5

William Smith 10 Israel Isaacs 5

John Tait 6 Joseph Blundell 12

Solomon Cohen 7 George D. Longstaff 7

Abraham Hort 11

Samuel Magnus 6

Joseph L. Heathorn 1

Leopold Neumagen 1

Abraham Harris 2

Henry Blundell, Esq. in the chair.

The circular convening this meeting, and the correspondence of Mr. Penman, and letters from Dr.

E. S. Blundell, and Messrs. Samuel Hicks and Sons & Co. having been read,

It was unanimously resolved —

That the contract entered into by the directors for the sale of the Henderson mine and saw mill to

Mr. Harrison and others, be confirmed.

That in case the directors shall not be able to effect the sale of the Alexander mine in the course

of the present week, they be authorised to sell any number of new or additional shares, not exceeding


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100, as may be necessary for enabling them to repay their respective advances, and to pay the bills

drawn by Mr. Penman upon Mr. Blundell.

That Mr. Penman having failed to make the monthly reports to the directors, as provided by the

deed of settlement, and having, on the 29th of June last, written [104] to Mr. Magnus, as one of the

directors of the company, that he had then drawn on Mr. Blundell, in favour of Mr. H. W. Olcott, on

account of the company, bills to the amount of 3500l.; whereas he had given to Mr. Olcott such bills

to the amount of 5500l., and having, until they were presented for acceptance, wholly suppressed the

fact that the additional bills of 2000l. had been drawn; and having, by his said letters of the 29th of

June last, and another addressed to Mr. Magnus of the same date, led the directors to believe that 3500l.

would be all he should have occasion to draw on them for on account of the company, and having

since drawn on Mr. Blundell, and given to Mr. Olcott, Messrs. Hick and Sons and Dr. E. S. Blundell, bills

to the extent of 9500l.; and having thereby drawn on Mr. Blundell, on account of the company, bills

of exchange far exceeding the amount of the subscribed capital, and also having expressed his

intention of withholding the company's property unless an exorbitantly large sum of money shall be

paid to him, — the appointment of Mr. Penman as a director, and superintendent, &c are hereby

revoked, &c.”

At a special meeting of the association held on the 9th of April 1836, which was attended by all

the defendants, except J. L. Heathorn, Isaacs and Harris, a report of the directors, dated the same day,

was received, read and entered on the minutes. The report stated that

“At the December meeting 100 new shares were created, the sale of which the directors hoped would

enable them to meet all the exigencies of the company.

Of these shares sixty were offered to S., F., and H. (the plaintiffs); but those gentlemen at that

time refused to make an absolute purchase of them, and they proposed to retire, for the honour of

the drawer, bills then outstanding drawn by Penman on Mr. H. Blundell to an amount not exceeding

6000l., the directors and shareholders being made jointly and individually responsible [105] for their

reimbursement, with interest, and all costs attending such bills, at any time after the 1st of October next,

unless they should make their election to accept of shares at par in lieu of being repaid in money.”

With the sanguine picture before them of the company's prospects which Penman had drawn, and

which would have been destroyed if the bills in question had been returned to America protested, the

directors did not hesitate, on behalf of the company, to give the undertaking required by S., F., and

H., who, accordingly, retired bills to the amount of 5500l.; and the time is now at hand when they are

to exercise their option; and this forms one of the large items of debt which it is necessary to be

prepared to repay.

A verdict was taken for the plaintiffs, subject to the questions, whether J.L. Heathorn was a

shareholder and proprietor at the time the contract was entered into with the plaintiffs—whether it

was made with his authority—and whether the association was illegal; with power to the court to draw

inferences as a jury.


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In the following term, rules were obtained on these points by Sir W. W. Follett S. G., on behalf of

the defendant J. L. Heathorn; and by Kelly, on behalf of the defendant Tail. Against these rules

Sir T. Wilde Serjt. shewed cause in Trinity term, 1842. J. L. Heathorn was properly made a co-

defendant. He was present at the meeting of shareholders at which the liability of the shareholders to

pay the bills in question was distinctly recognised. [Cresswell J. Was there any evidence that the statement

— which appears on the minutes— that J. L. Heathorn was a shareholder, was read at the meeting?]

There was not. But it must be understood that the minutes were taken down in the usual way. This

was a meeting, not for the purpose of [106] considering whether a company should be formed, but

“a special meeting” of an existing company, held “in pursuance of a circular dated” &c. It has been

suggested that the meeting was not regularly called, but whether that be so or not J. L. Heathorn

attended. [Tindal C. J. Was the meeting held at the office of the company in Copthall Court or at the

office of the solicitor?] It was at the office of the solicitor. [Tindal C. J. That makes it stronger.] The

parties met only to discuss the existing state of affairs. No shares were afterwards issued. The question

is, not whether it was not open to J. L. Heathorn to explain all this, but whether, unexplained, it was

not sufficient prima facie evidence of his being an assenting party, and what inference a jury would be

justified in drawing from the evidence. As Penman was the only party allowed to attend by a proxy, not

being a member of the association, J. L. H. could only have attended as a member, a character which

he could not afterwards repudiate. Being present, the presumption is that every thing was done which

would be necessary to render the proceedings of the meeting effectual. J. L. H. claims to be a partner,

he is acknowledged to be a partner, and he acts as a partner. In taking the present objection, J. L. H,

in effect, says, “I will not shew you what, but I ask you to assume that something has been omitted

which ought to have been done to constitute me a partner.”

The next question is, whether the association was illegal. This objection is not very creditable to

the commerce of the country. This was a bona fide investment of actual capital, not a bubble scheme

holding out that only small sums are to be advanced. There can be no objection to sending agents to

look out for mines. There [107] has been no publication for the purpose of creating a delusion. The

object of the association involved nothing injurious to the people of this country. No attempt was

shewn to bring in unwary persons by false and delusive statements. If any delusion had been practised,

the defendant had the full means of shewing it. None of the characteristics of a bubble concern are

to be found. [Tindal C. J. As far as it appears the bills were drawn as a regular mercantile transaction.

Maule J. referred to Ex parte Bolitho. Cresswell J. Is there any allegation in the pleas that the holders of

the bills had notice of any illegality in the transaction?] None. The illegality charged in the plea is, the

presuming to act as a body corporate without legal authority, &c. [Tindal C. J. These are words

introduced by the bubble act. I am not aware that presuming to act as a body corporate was an offence

at common law.] The acting here is in a form which would not bind a corporation. The bills in question

were drawn upon three individual directors by name. There is nothing illegal in dividing a partnership

into shares, or in making the shares transferable. The provisions of the bubble act are out of the

question. To shew illegality there must be a nuisance to the public. The mere power of transferring

shares from A. to B. is not illegal. To make an association illegal it must be accompanied with delusion.

This was a private partnership deed, not a prospectus held out to the public. It is not something


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published to get deposits and lay hold of money. One of the objections is, that it is required that

certain forms should be gone through. But any such impediments to the free transfer of shares would

have excluded this association even [108] from the operation of the bubble act, supposing that statute

not to have been repealed. The certificate is not to discharge from liability. It would only do so after

payment of what was due from the party at the time he retired from the association, and could

therefore occasion no injury to the public. The illegality of these transactions has always consisted in

stating that the party transferring his interest was to be discharged. There is no stipulation that the

transferee shall be in the same position as the transferor. It is not very material to consider whether if

the agreement was illegal the defendant had notice of it. The last stipulation of the deed, the fifty-

ninth article, deserves particular attention. It appears to have been misunderstood. There is no ground

for saying that the effect of this clause is to discharge the partners, as against the public, though, in

the case of Blundell v. Winsor in the Chancery Reports, this clause is printed in italics. Among other

objections which were raised, an objection was taken as to the illegality of the company. In his

judgment Shadwell V. C. says, “I cannot but think that the deed of November 1833, by which the

company was established, is, on the face of it, illegal. It proposes that certain persons should become

partners for the fanciful purpose of working gold mines in North America; and it provides that the

parties to the deed of the first, second, and third parts, and all persons who should become subscribers

to or interested in the capital of the company, should, so long as they possessed any share of the

capital, be and continue a company or partnership under the name of The Anglo-American Gold Mining

Association. It then provides that, in the first instance, the shares should not exceed sixty; but, in the

subsequent part of the instrument, the shareholders are [109] empowered to increase the number of

shares to an unlimited extent; and a great number of additional shares have been, in fact, created. The

deed also provides that the shares, as well original as additional, may be assigned or disposed of by

deed or will, to any person or persons, at the discretion of the holders. The fair inference to be drawn

from the provisions of this deed is, that certain persons were to form a company, which might be

increased to an unlimited extent, and that the shareholders were to have the power of transferring

their shares to whomsoever they pleased, without any sort of control. The deed, therefore, necessarily

represents that the persons who should assign their shares, would get rid of all the liabilities attached

to them; and that the persons who should take their shares, would take them just as the assignors held

them. It is clear, however, that this could not be done. In my opinion, therefore, the deed held out to

the public, as an inducement to them to become partners in the working of these imaginary gold

mines, a false and fraudulent representation that they might continue partners in the undertaking just

as long as they pleased, and then get rid of all the liability that they had incurred, by transferring their

share to some other person.” Was it ever heard that a partnership deed is to be considered as a matter

held out to the public? It was not, as alleged in the judgment, determined that they should sell single

shares. It is difficult to see how the Vice-Chancellor could possibly have arrived at the conclusion to

which he came. There was not a tittle of evidence to shew that the plaintiffs had notice of the

supposed illegality. The judge misapprehended the contents of the deed, and the effect of the facts

stated as to the proceedings of the association. He professes to found his decision [110] upon the

judgment of this court in Duvergier v. Fellowes; which, if properly considered, affords no ground for

such decision. In that case a bond had been given to the plaintiff, conditioned for the payment to the


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plaintiff of 100,000l., upon his forming a company for the carrying on of a distillery according to a

process for which a patent had been taken out, and obtaining purchasers for 9000 shares. The plea

was, that the patent contained a proviso for making it void in case the patentee should transfer the

benefit thereof to more than five persons, and that, at the time of the making of the bond, it was

intended that the company should consist of more than five persons, and that it should be formed for

the purpose of using the privileges of the patent, and of acting as a corporate body, and dividing the

benefit of the patent into 10,000 shares, to be transferable and assignable, without any charter from

the King; and that it was illegally agreed between the plaintiff and the defendant that the plaintiff

should form the company for such purposes. That plea was, on demurrer, held to be good, and an

answer to the action. Best C. J. in delivering the judgment of the court says, “The seventh plea states,

and the demurrer admits, that the plaintiff and defendant intended that the company which the

plaintiff undertook to form, should act as a corporate body without any charter from the King; that

the benefit of the letters patent was to be enjoyed by this pretended corporate body; and that the

capital of their body was to be divided into ten thousand shares, which were to be transferable and

assignable. It has been said at the bar, that the parties may have intended to obtain an act of parliament

in order to give the body a legal existence; but nothing of this intention appears on the record. It has

been [111] further said, that the defendant should have shewn how the parties intended to act as a

corporation. If this is not correctly pleaded, advantage should have been taken of the technical defect

by special demurrer. If what they intended to do would not have been acting as a corporation, the

plaintiff should have traversed the plea;” — which here, the plaintiffs have done. — “By demurring

generally he has confessed himself guilty of intending to form a company that was to act as a

corporation. But the shares were to be transferable. There can be no transferable shares of any stock

except the stock of corporations, or of joint-stock companies created by act of parliament. When it is

said that the shares were to be transferable, that must mean that the assignee was to be placed in the

precise situation that the assignor stood in before the assignment; that the assignee was to have all the

rights of the assignor, and to take upon all his liability. Now the assignee can join in no action for a

cause of action that accrued before the assignment; such rights of action must still remain in the

assignor, who, notwithstanding he has retired from the company, will yet remain liable for every debt

contracted by the company before he ceased to be a member. Indeed, the members of corporations

cannot assign their interest, and force their assignees into the corporation, without the authority of an

act of parliament. Such authority is expressly given by the Bank acts, the South Sea acts, and the other

statutes creating companies that possessed stock which it was deemed proper to render transferable.

The pretending to be possessed of transferable stock, is pretending to act as a corporation, and

pretending to possess a privilege which does not belong to many corporations. But this is put only as

one of the proofs of the intention of the projectors of this company that it should act as a corporation.

It is not necessary on [112] these pleadings to decide whether the forming a company with such shares,

is of itself, without other circumstances, pretending to act as a corporation; because it is, by the

pleadings, distinctly admitted that the plaintiff and defendant intended that the company should act as a

corporation.”

In the King's Bench, and also in the House of Lords, the judgment of this court was affirmed

solely on the ground that the plea shewed, and the demurrer admitted, that the company had been


280

formed for the purpose of dividing the benefit of the patent amongst a greater number of persons

than the patent authorised. That case was very different from the present. There, the decision

proceeded upon an admission of those very facts which are here denied and disproved. The decision

in Duvergier v. Fellowes has therefore really nothing to do with the present question. Whether the setting

out of a fact, and alleging that fact to be illegal, is sufficient to stamp such fact with the character of

illegality, where the truth of the plea, if sufficient, is admitted by the demurrer, is quite another

question. Josephs v. Pebrer was decided upon the express provisions of the bubble act, a few months

before that act was repealed; and the only question was, whether that case came within the act. The

argument was very short. The counsel for the defendant were stopped. Abbott C. J. says (6), "If the

projectors, before the association has been sanctioned either by an act of the legislature or by a royal

charter, make shares in the concern transferable without any restriction, at the mere will of the holder,

and provide that the purchasers shall render themselves liable to regulations to be framed by certain

persons styling themselves a committee of management or directors, then the association [113] assume

an unlawful shape. The words of the 6 G. 1. c 18. are large and comprehensive, although not altogether

free from obscurity.” This judgment therefore proceeds solely on that act; and the circumstances

which gave rise to the passing of the act, were particularly referred to. In The King v. Dodd Lord

Ellenborough says, “Independently of the general tendency of schemes of the nature of the project now

before us, to occasion prejudice to the public, there is besides in this prospectus a prominent feature

of mischief; for it therein appears to be held out that no person is to be held accountable beyond the

amount of the share for which he shall subscribe, the conditions of which are to be included in a deed

of trust to be inrolled. But this is a mischievous delusion, calculated to ensnare the unwary public As

to the subscribers themselves, indeed they may stipulate with each other for this contracted

responsibility; but as to the rest of the world, it is clear that each partner is liable to the whole amount

of the debts contracted by the partnership.”

The King v. Webb decided that the mere power of creating transferable shares did not make the

undertaking illegal. That was also a case under the bubble act; and it never occurred to the learned

counsel who appeared for the prosecution, to contend that the defendant had been guilty of an offence

at common law. In that case, where a large capital was to be raised by numerous small subscriptions

in transferable shares, it was held that as the shares were transferable to a limited extent only, and not

at the unrestricted option of the holders, there was not a raising or a pretending to raise a transferable

stock within the meaning of the act. In Walburn v. Ingally Lord Brougham C., speaking of companies

having transferable shares, says, “To hold such a [114] company to be illegal would be—to say that

every joint-stock company, not incorporated by charter or act of parliament, is unlawful, and, indeed,

indictable as a nuisance, — and to decide this for the first time, no authority of a decided case being

produced for such a doctrine.” In The London Grand Junction Railway Company v. Freeman, the court of

error appears to have wished to avoid being thought to adopt the decision in Josephs v. Pebrer, Duvergier

v. Fellowes, and Blundell v. Winsor. In Nockels v. Crosby it was held that a scheme for raising money by

small subscriptions, to be laid out at interest for the benefit of the surviving subscribers, and where

transferable shares were to be issued, was not illegal, even whilst the bubble act was in operation.

Here, there is nothing which is hurtful to the public. There is no seeking to entrap the unwary by

holding out delusive prospects of gain. The capital is to be increased by the creation of additional


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shares only in the event of such capital becoming bona fide required by the real money transactions

of the association.

This association is in the nature of an ordinary trading partnership. The authority which partners

possess to bind one another by their contract, is well expressed in Sandilands v. Marsh. It was there held

that partners are bound by the contract of a co-partner, as to the terms on which any business shall

be transacted, although such business be not in their usual course of dealing, provided the business

be afterwards transacted with the knowledge of the other partners. The public are not bound to see

that each partner is dealing within the terms of his authority: it is sufficient if they see that he is acting

[115] in a partnership matter. Then, does the contract declared upon in this case, relate to a partnership

matter? The arrangement for retiring these bills was strictly connected with the business of the

partnership. The partners possessed the same authority for sanctioning this mode of meeting a

partnership liability as they would possess and exercise in the ordinary case of overdrawing their

banker to pay a partnership debt. The banker might recover from the partnership, the amount of the

money so overdrawn by an individual partner. Here, however, the contract declared upon is one which

the directors were specifically authorised by the shareholders to enter into. It was a contract to pay

money to discharge a debt of the company in pursuance of a unanimous resolution of the

shareholders. It is not material that, at the last meeting, J. L. Heathorn was not present. The public, in

dealing with the partnership, are not bound to know, whether a meeting of the partners has been

properly convened. Here, however, there is nothing to shew that the meeting was not regularly

convened. In Cannan v. Bryce it was held that money lent for the express purpose of paying differences

on illegal stock-jobbing transactions, to which the lender was no party, could not be, after repayment,

recovered back by the borrower, although the money was lent for the very purpose of enabling the

latter to make a payment which he ought not to have made; which is not the character of the present

case. If this company was illegal the plaintiff's right to recover would not be impeached. The object

of the advance was to enable the association to pay an honest debt. Dickinson v. Valpy is inapplicable

to the present case. There, the question was as to the power of one director to accept a bill for himself

and his [116] co-directors, so as to make those co-directors liable upon the bill. Here, the contract is,

for raising money to pay the amount of bills, upon which a joint liability is admitted to have existed.

Wintle v. Crowther. Hawtayne v. Bourne was the case of an agent, not of a partner. This is rather like the

cases of Loyd v. Freshfield, and Rothwell v. Humphreys.

…

[120] Sir W. W. Follett S. G. (with whom were Richards and J. L. Adolphus), in support of the rule

obtained on behalf of J. L. Heathorn. J. L. Heathorn, who was not a party to the agreement, is sought

to be made liable as a partner. This action is, in fact, brought by the other defendants for the purpose

of relieving themselves at the expense of J. L. Heathorn. (This was denied by Sir Thomas Wilde Serjt.)

The illegality of this association has been established by the decision of the Vice-Chancellor of

England, upon a bill filed by one of the present defendants. This is an association for working mines

in America, a foreign country; a circumstance which may be material to be considered with reference

to the cases that have been decided. There are certain modes by which parties may become partners;

one is, by executing a partnership deed. Here, though a partnership deed is shewn to have existed, it


282

was not executed by J. L. Heathorn. The question here is, whether J. L. Heathorn was an actual partner;

there being no pretence for saying that he held himself out to the public or to the plaintiffs, as a

partner. [Tindal C. J. There was no holding out except the appearing at the meeting and being registered

as a person attending there as a partner.] It is not shewn that he knew that he was so registered. The

contract with the plaintiffs was entered into on the credit of those who were parties to the deed. (This

statement was denied by Sir T. Wilde Serjt.) This is not an ordinary partnership, but a joint-stock

company, with transferable shares for the introduction of new partners. By the fifth clause of the deed

the shareholders may [121] increase the capital of the company to any amount, by creating an

additional number of 100l. shares. The power of doing this is not even restricted to the directors, but

is left to the decision of a special meeting of the shareholders. [He then called the attention of the

court to the sixth, seventh, eighth, ninth and tenth clauses.] By the eleventh clause those persons only

can take an interest in the association whose names are entered in the share register-book; and the

thirteenth provides that shares shall not be divided into fractional parts. It appeared that the

shareholders had ordered additional shares to be issued. To make J. L. Heathorn a partner he must be

either an original subscriber or the holder of an additional share, or an assignee of shares. The court

will remember that the solicitor of the company was the principal witness for the plaintiffs. The

sixteenth clause requires that every proposal for a transfer shall be laid before the solicitor of the

company. And by the nineteenth section the entries made by the solicitor are to be conclusive. By the

twentieth clause no person is to be entitled to the right and privilege of a shareholder of the company

or be in any way interested or concerned in the management of the affairs thereof in respect of any

share or shares, his title to which shall not have been entered in the share register-book. There was no

proof that the name of J. L. Heathorn was entered in the share register-book. He was bound to produce

his title to the solicitor. There could be no dispensation with the terms of the deed except with the

consent of every individual member of the association. It must be taken that the names of the parties

present at the meeting of the 17th of December were not read over; as if they had, it cannot be doubted

that the question would have been put to the witness by the plaintiff's counsel upon his examination

in chief. Nor was any question put upon [122] re-examination as to the names of the persons who

were there. We should have objected to the reading of the names and the number of shares set

opposite to those names, if it had appeared that the list was meant to be read as evidence to shew that

J. L. Heathorn attended the meeting as a shareholder. [Tindal C. J. In what way would you have objected?

Do you say that he was there by accident?] There are cases to shew that mere presence at such a

meeting will not bind the person attending it as a partner. The witness, who had previously been

examined on behalf of the plaintiffs, was hostile to the defendants. It would have been madness on

their part to cross-examine such a witness with a view to negative that which had not been proved.

The witness was the brother of a party deeply interested. No circular was shewn to have been sent

giving notice of the intended meeting. Numerous meetings of the shareholders appear to have been

held, at only one of which J. L. Heathorn was shewn to be present. This very question has been decided

by the court of Exchequer in the case of The East India Shipping Company v. Lord Charleville, in perfect

conformity with prior decisions. It has been said that some of the cases in which it has been held that

presence of a party at a meeting does not shew him to be a partner, were cases in which the company

had not been yet formed. That undoubtedly must be admitted. Thus, Dickinson v. Valpy is not an


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authority for the defendants, that presence at a meeting of an existing company would not be sufficient

to charge the party. But both that case and Fox v. Clifton shew that the liability of a member of a joint-

stock company cannot be established by evidence which would be sufficient to create a liability as a

member of an ordinary trading [123] partnership. In Fox v. Clifton the evidence against the defendants

was materially strengthened by a variety of acts done by them. It was held, however, that the question

whether the defendants were or were not partners in the particular concern, was not a mere question

of fact for the discretion of the jury, but one depending upon the legal result of the facts found by

them; and it not being shewn that the defendants had held themselves out as partners, the court

decided that the defendants were not liable.

Supposing it to be made out that J. L. Heathorn was a shareholder, he was not bound by this special

contract. No authority was given to pledge the liability of the individual shareholders. The bills were

drawn by Penman upon H. Blundell. [Cresswell J. Then the question would be whether abroad, Penman

was not the company.] The effect of the resolution is this—Penman has deceived the company and has

drawn bills which he was not authorised to draw, and the company authorise the creation of new

shares for the purpose of taking up those bills. But looking at the deed the directors had no power to

bind the shareholders by thus increasing the amount of shares. If the directors had any authority to

enter into this contract on the part of the shareholders, it must have been from some power previously

conferred upon them, or by the recognition supposed to have taken place at the meeting of September

1836, at which J. L. Heathorn was not present. [Coltman J. Would not the directors have had power,

under their general authority, to pay these bills if they had had funds of the company in hand?] It is

submitted that they would clearly have had no such power. Their authority is by deed, and is this, —

to apply the moneys from time to time in their hands belonging to the company, in payment of such

bills as Penman, in pursuance of the powers and provisions therein in that behalf contained, should

draw [124] upon them. The moneys which they are so to apply are to be moneys previously received

from the shareholders. Penman was not to purchase without the assent, not of the directors but of the

shareholders. The duties of the different officers are defined by the deed—those of the trustee and

treasurer by the 8th clause. The company would not be bound by a borrowing of money by the

directors. No power of any kind is given to the directors. These bills were drawn by Penman upon H.

Blundell in his private capacity. [Maule J. The bills would be more negotiable in America by reason of

their being so drawn.] In an ordinary partnership there is an implied authority to draw bills. In Dickenson

v. Valpy the judgment of Bayley J. does not, as has been supposed, proceed upon the nature of the

undertaking. His words are, “The only question which could be submitted to the jury was, whether

companies instituted for similar purposes, had constantly been in the habit of drawing and accepting

bills, or whether it was absolutely necessary, for the purpose of carrying on the concern, that there

should have been such a power.” The directors of such a company ought to take care to have ready

money to answer all demands upon them. In Bramah v. Roberts it was held that one director of a joint-

stock company has no implied authority to bind his co-directors or the shareholders, by accepting bills

of exchange. If that case be law, how can these gentlemen, having no power to contract on the face

of the deed, bind the shareholders by entering into the special contract declared on? That contract is

indeed directly in the teeth of the directions given at the meeting of the 17th December 1835.


284

[125] The directors ought to have issued new shares and have raised money in the mode authorised

by the share holders. [Maule J. I rather think that my impression at the trial was that it was a question

of fact; but the court of Exchequer appear to have considered that such a question would be a

question of law. Coltman J. The resolution of the 17th December 1835 may be an adoption of Penman's

act. It points out special modes of raising money to meet the bills, but does not exclude every other

mode of providing for the bills.] In Ducarrey v. Gill it was held that an agent, authorised to draw bills

on behalf of a joint-stock company, cannot bind the shareholders by bills drawn in his own name,

though drawn and negotiated for the purposes of the association. It has been contended that the

recognition of the contract at the meeting of the 9th September 1836 is binding. But J. L. Heathorn was

not present at that meeting. It was objected at the trial, that no circular for convening the meeting of

the 9th September, 1836, had ever been sent to J. L. Heathorn, and that therefore he was not bound by

any proceeding which took place thereat. The deed contained no power to enter into any contract

except by the act of the shareholders themselves.

J. L. Heathorn was not a shareholder. If a shareholder, he was not bound by this contract. The

question of illegality turns upon this particular, whether before the passing of the bubble act this

association would have been illegal. That it would have been illegal under the statute, there can be no

doubt.

J. L. Adolphus on the same side. It must not be assumed that the names of the parties present at

the [126] meeting of the 17th of December 1835 were read over at the same meeting. That is not the

usual course pursued at public meetings. [Wilde Serjt. I will put the whole Heathorn case upon the fact

of J. L. Heathorn being a registered partner. This was declined by Kelly.] In Flemyng v. Hector it was held

that the members of a club were not, as such, liable for work done or goods supplied by order of the

committee for the use of the club, in the absence of any express authority conferred upon the

committee. The creditor is bound to inquire whether those with whom he contracts have power to

bind any others than themselves. Attwood v. Munnings shews that it lies upon the party contracting with

those who assume to possess a power to bind others, to inquire whether the power exists, and whether

it has been properly pursued. In Hawtayne v. Bourne it was held that the resident agent of a mining

company has no implied authority to bind the shareholders by borrowing money on their credit, for

the purpose of meeting any emergency, however pressing —as the payment of wages due to labourers

who had obtained warrants to distrain upon the materials of the mine.

Kelly, in support of the rule obtained by the defendant Tait. The question now for the decision of

the court upon the defence of illegality, which is not pleaded by the other defendants, is, not whether

the eighth plea of the defendant Tait is good or bad, but whether the verdict ought to be entered for

the defendants upon the issue taken upon the replication to that plea. [Tindal C. J. To make out the

truth of this plea there should be some such state of facts as would support an [127] indictment for

a misdemeanor at common law.] (He then adverted to the sixteenth, seventeenth, and eighteenth

clauses of the deed,) The judgment of the court in Duvergier v. Fellowes is strictly applicable to this case.

There, one of the objections taken was, the power of creating new shares. [Maule J. Is not the creation

of new shares by subdividing the part-ownership of a ship legal?] That is by act of parliament, [Maule

J. No, it is at common law.] An interest in a mining speculation is, however, very different from a share


285

in a chattel. The contract in question was entered into without any assent on the part of the

shareholders, either expressed or implied. [Maule J. What difference does it make whether the assent

was before or after the arrangement with the plaintiffs for taking up Penman's bills?] If an unchartered

unincorporated company possesses these powers, where is the necessity for the constant interference

of the legislature on their behalf? [Cresswell J. To enable them, where the members are numerous, to

sue and be sued, without making all the members parties. Coltman J. Does not the plea import that

the company assumed to create transferable shares by which the parties transferring their interest to

others would be discharged from liability?] It imports that it was meant to give rights to the assignees

which the law would not give them. (He then referred to the fifteenth clause of the deed,) There was

a clear misrepresentation as to the means of obtaining a discharge from future liability.

J. L. Heathorn was not liable upon this contract; and if he was not, Tait is entitled to a verdict upon

the plea of non assumpsit, which can be found for the plaintiffs [128] only in the event of all the

defendants being liable as joint-contractors. Four different acts are required by the deed of settlement

to be done in order to constitute a party a shareholder. Each of these acts might have been proved on

the part of the plaintiffs, if J.L. Heathorn was a regularly admitted shareholder. The East India Shipping

Company v. Lord Charleville shews that attendance at a meeting even of an existing company is not

sufficient to fix a person as a shareholder. [Tindal C. J. The present case is very different from one

where there is a large public body. Coltman J. No objection was taken at the trial to the admissibility

in evidence of the fact that J. L. Heathorn was present at the meeting of the 9th of December 1835.]

That objection could not have been taken, as the proceedings at the meeting were evidently against

the other defendants. [Cresswell J. Not more so than as against J. L. Heathorn, unless we are to presume

that the other defendants had due notice of the holding of the meeting.]

TINDAL C. J. We wish to be furnished with copies of the pleadings — of the deed of settlement

— of the resolutions of the 9th of December 1835 —of the agreement of the 24th of December 1835

— of the proceedings at the members of the 17th of September 1836 — and of the short-hand writer's

notes.

Cur. adv. vult.

TINDAL C. J. now delivered the judgment of the court.

This was an action of assumpsit against Henri Heathorn and twelve other defendants; and the

declaration, in the first count, stated that the defendants were partners in a company called the Anglo-

American [129] Gold-Mining Association, and that by an agreement in writing, of the 24th of December

1835, purporting to be made between Henry Blundell, one of the defendants, and certain other persons,

being the agents of the other defendants, for and on behalf of themselves and the said company of

the one part, and the plaintiffs of the other part, after reciting that the members of the company

proposed to the plaintiffs to become shareholders and directors in the said company, and that the

plaintiffs, having found that disputes were pending between the said company and one John Penman,

its late superintendent or agent in North Carolina, who had drawn bills of exchange to a large amount

on the defendant Henry Blundell, on account of the company, declined to become shareholders until

they had had an opportunity of ascertaining the state of the company in reference to the disputes so


286

referred to; but that the directors and members of the said company, being desirous that the bills so

drawn by J. Penman on H. Blundell should be taken up, for the honour of the drawer, under the

guarantee and indemnity of the directors and of the company, the plaintiffs consented to take up the

said bills, to an amount not exceeding 6000l., upon the footing so proposed; and that the sum to be

so advanced by them, together with such further sum, if any, as should be required to make up the

said sum of 6000l. should, in the event of their determining to join the company, go in payment of

shares to that amount to be taken by them accordingly; and after reciting that at a meeting of

shareholders, duly held on the 17th of December 1835, it was resolved that one hundred additional

shares of 100l. each, should be created and disposed of by the directors for the benefit of the

company, and that sixty of such shares had been set apart with a view to, and in compliance with, the

proposal before mentioned, — it was witnessed that it was agreed as follows, that is to say, [130] that

bills not exceeding 6000l. drawn by J. Penman on H. Blundell on account of the company, should be

taken up by the plaintiffs for the honour of the drawer, and that the plaintiffs should follow the

instructions of the company, or of its agent or agents duly authorized, as to proceeding against J.

Penman or against the property of the company, or otherwise, in respect of the bills; and that in the

event of the bills not being paid, and of the plaintiffs not making their election to take the sixty shares,

so reserved and set apart for them, the defendants engaged and agreed for the payment of such bills

or bill, with interest at five per cent on the amount advanced, and all costs and expenses attending

such bills, at any time after the 1st day of October then next, on the company, and the directors having

three calendar months previous notice requiring the same; and that in case the plaintiffs, or any of

them, should, within two months after receiving from the directors a communication of the result of

the said operations or differences between the company and J. Penman, and of the state of the said

company's affairs (and which communication the said directors were to make in as full and explicit a

form, and at as early a period, as should be in their power), or at any earlier period, determine to take

the sixty shares so reserved and set apart, they or he should be at liberty so to do; and that in that case

the money so advanced in taking up the bills, with such further sum, if any, as should be necessary to

make up the sum of 6000l., should go in payment of such sixty shares; but that the plaintiffs should

in that case be entitled only to the costs and expenses of the bills, and not to any interest; and it was

further agreed that, in the event of the plaintiffs, or any of them, taking the said sixty shares, they or

he should, if they or he, at the time of taking such shares, should declare such to be their or his wish,

be elected directors or a director of the company jointly with the [131] then directors. The declaration

then proceeded to allege mutual promises; and that the plaintiffs paid a large sum, to wit, 5500l. in

taking up, for the honour of the drawer, bills drawn by J. Penman on H. Blundell for and on account of

the company; which bills had been dishonoured and not taken up by any of the parties thereto; that

the plaintiffs had always been ready to follow the instructions of the company and their agents; and

that afterwards, and more than three calendar months before the commencement of this suit, they

gave notice to the company and the directors, that they declined to take the said sixty shares, or to

become members of the company, and gave notice to the company and the directors to pay the

advances, interest, and expenses; and they assign, as a breach, the nonpayment thereof. Counts for

money lent, money paid, and money had and received, and upon an account stated, were added to the

special count.


287

Three only of the thirteen defendants, viz. Joseph L. Heathorn, J. Tait, and G. A. Muskett, appear

before the court upon the present rules; which were granted upon the ground that Joseph L. Heathorn

was not a shareholder, and was therefore not a party to the promise stated in the declaration; and also

that the company was an illegal association; and it will therefore be unnecessary to advert to the

pleadings of the other defendants. The only plea pleaded by the defendant Muskett, is non assumpsit.

Joseph L. Heathorn pleaded ten pleas, of which the first, second, eighth and ninth only are material

to the present inquiry. The first is non assumpsit. The second traverses that the defendants, at the time

of making the agreement in the first count mentioned, were partners or shareholders in the supposed

company or association, modo et forma. The eighth plea, which is pleaded to the first, second, third, and

last counts [132] of the declaration, alleges that the company or association in the first count

mentioned, was an illegal company, presuming to act as a corporate body without any authority, and

also presuming to raise, and constituted to raise, transferable and assignable stock and capital to any

amount, transferable at the discretion of the holders, to the common nuisance of the subjects of the

Queen: and the eighth plea then proceeds, by proper allegations, to apply itself to the second, third,

and last counts of the declaration. The ninth plea is pleaded to the same counts, and is similar in

substance to the eighth, except that it adds that, at the time of the formation of the company no gold

mines had been discovered, and alleges that the objects of the company were fanciful, visionary, and

fraudulent, tending to the common nuisance &c. of the Queen's subjects. To each of these last two

pleas the plaintiffs replied de injuria, &c

The defendant Tait pleaded nine pleas. Those which are material to the present purpose are, the

plea of non assumpsit, the traverse of the partnership, the sixth plea, which alleges in substance that

the company was an illegal company, presuming to act as a corporation, and pretending to raise

transferable stock (which is denied in the replication thereto), and the seventh plea charging the

company to be a common nuisance to the liege subjects of the realm; which is also denied in the

replication.

Five of the defendants suffered judgment by default.

Upon this state of the pleadings, and on the evidence given at the trial, three questions arose,

according to the determination of which by the court, it was agreed that they should direct in what

manner the verdict should be entered on the several issues; the court being at liberty to draw such

inferences from the facts proved as a jury might do, viz., first, whether the defendant Joseph L. Heathorn

was a partner or shareholder in [133] the company; secondly, whether admitting him to be such, the

defendant H. Blundell and the other persons parties to the agreement set out in the declaration of the

first part, had any authority, express or implied, to enter into the agreement stated in the declaration

as agents on behalf of the company; and, thirdly, whether the company in question was an illegal

company.

Upon the first question we think the evidence given at the trial was sufficient for the jury to find

the issues which rest upon that question, in favour of the plaintiffs.


288

The objection taken was, that there was no proof that the defendant Joseph L. Heathorn ever signed

the deed, or applied to have his name inserted in the share register book, nor was any transfer, or will,

or any register of shares, produced. And undoubtedly there was no such evidence. But upon the

evidence the question before us is, whether the defendant Joseph L. Heathorn did not, by his conduct,

distinctly admit himself to be a partner and shareholder; for if such admission was proved before the

jury, no proof of a formal title to the shares was necessary for the purpose of making him liable. Now

the evidence as to that point was, that on the 17th of December 1835, he attended a special meeting of

the Anglo-American Gold-Mining Association, — which had been called by a circular, — at the office of

their solicitors. In the minute of that meeting the names of the several shareholders are inserted, with

the number of shares each person held placed opposite to his name; and amongst such names is that

of the defendant Joseph L. Heathorn, with one share opposite thereto. It can scarcely be reconciled with

any other supposition than that of his being a shareholder, that he should have been present at all

upon such an occasion, or that he should have been permitted to remain there by the other

shareholders, the number of shareholders actually present being ten only including himself; so [134]

that he could not have been overlooked; and his right to be present, unless he was a shareholder, must

have been questioned. It is further to be observed that the business transacted at that meeting was of

an important and confidential character: amongst other things, that of confirming the sale of one

mine, and that of empowering the directors to sell another; the sending out of a new agent for the

company, on a very weighty mission; and the providing for the payment of the very bills which form

the subject of the agreement. And, lastly, it was proved that the minute was read to the assembled

shareholders. We think these circumstances might fairly be held, and ought to have been held, by the

jury, to amount to an admission by the defendant J. L. Heathorn, that he was a holder of one of the

shares in the concern; and we think that such admission dispensed with the necessity of any more

formal or additional proof of that fact, by shewing that he had conformed to the requisites of the

deed or otherwise; and the case of The Sheffield and Manchester Railway Company v. Woodcock, appears a

sufficient authority in support of this conclusion.

The second question which has been argued before us is, whether, admitting the defendant J. L.

Heathorn to be a shareholder, the defendant H. Blundell and the other persons parties of the first part

to the agreement set out in the declaration, had any authority, expressed or implied, to enter into the

agreement as agents on behalf of the company.

Upon this point the objection taken on behalf of J. L. Heathorn is, that although he attended the

meeting of the 17th of December 1835, yet no authority was given at the meeting by the shareholders

to H. Blundell, or to any others, to enter into the agreement upon which this [135] action is brought;

that although on the 9th of September 1836 there was another general meeting of the shareholders, at

which the contract or agreement entered into between the directors and the plaintiffs was sanctioned,

yet that the defendant J. L. Heathorn was not present at that meeting, and was therefore not bound by

its proceedings; and that there can be no implied authority for the shareholders present at that meeting

to bind the other shareholders, the powers of part of the shareholders of joint-stock companies to

bind the rest not being analogous to those of partners in ordinary trading concerns.


289

It appeared that, at the time of the agreement entered into between H. Blundell and the other two

directors on behalf of themselves and the company on the one part, and the plaintiffs of the other

part, J. Penman, the agent of the company in North America, had drawn bills on H. Blundell on account

of the company, exceeding the amount of 6000l. which were then in the hands of bona fide holders for

value, and which had been sent to this country for acceptance and payment; and it further appeared

that the directors, at the time of the arrival of the bills, had no funds of the company wherewith to

meet them. It is obvious, that the return of those bills protested to America would have been

destructive of the prospects of the company; and the plaintiffs having offered to retire them to the

extent of 6000l. for the honour of the drawer, upon the directors and shareholders being made jointly

and individually responsible for the reimbursement of the plaintiffs, the agreement was signed by H.

Blundell and two other directors, in order to carry such plan into effect.

Now we hold it to be unnecessary, upon this occasion, to enter into the question, how far

shareholders in a joint-stock company may, without any express regulation in the deed of settlement

or without an express [136] assent to that purpose, bind the others by a contract to reimburse third

parties for advancing money to take up bills which have been drawn on account of the partnership

concern; because we think, that on the present occasion, there was sufficient evidence for the jury to

find that this defendant J. L. Heathorn did, in fact, give his consent that the bills drawn by J. Penman on

account of the company should be paid in the manner in which such payment took place; for he was

actually present, as a shareholder, at the meeting held on the 17th of December 1835; and we cannot

suppose, upon any reasonable construction of the evidence given, that he was an idle or indifferent

observer of that which took place on that occasion, but that he was, like any other shareholder, alive

to his own interests and those of the concern; and at that meeting, after reading the circular convening

the meeting, and the correspondence of J. Penman and other letters, it was unanimously resolved,

amongst other things, “that in case the directors should not be able to effect the sale of the Alexander

Mine in the course of that week, they should be authorized to sell any number of new or additional

shares, not exceeding 100, as might be necessary for enabling them to repay their respective advances,

and to pay the bills drawn by J. Penman upon Blundell.” And we think a jury might, from this resolution,

infer a direct admission on the part of the shareholders present, that the bills in question had been

drawn for and on behalf of the company, and that they were bills for which the company was bound

to provide payment,—in fact, that they adopted the bills; and although a specific mode of payment is

pointed out in that resolution, namely, first by the produce of the sale of the Alexander mine, and next

by the sale of the new shares, yet that such resolution amounts to a direct admission by all the

shareholders who were actually present at the meeting, of their [137] liability upon these bills. And we

think that a jury might, further, well infer, after such an admission, that it must necessarily have

occurred to, and been present to the minds of, all the shareholders who constituted that meeting, that

the mine might not be sold, and the new shares might not find purchasers, and that the shareholders

in such event assented to the payment of the bills by the usual and ordinary means, and the only way

of relieving themselves from their own admitted liability, that is, by borrowing the money from others,

which was, in substance, the transaction with the plaintiffs. And upon this ground, viz. the assent on

the part of the defendant J. L. Heathorn, we think the jury would be warranted in finding those issues

which depend on the second question, in favour of the plaintiffs.


290

Upon the third question we are called upon to decide in which way the jury should have disposed

of the issues upon those pleas that state the company to have been an illegal company and a common

nuisance.

It is to be observed that, at the trial of the cause, no evidence whatever was produced on the part

of the defendants; and as the affirmative of those pleas is to be made out by them, the question will

depend entirely on the evidence called by the plaintiffs, and the inferences which the jury ought to

have drawn, from such evidence of the plaintiffs, in support of the pleas; and as the illegality of the

company is set up by the very persons who constitute that company, in order to avoid the payment of

a demand just in itself, it may be fairly required that the affirmative of the pleas should be established

by satisfactory evidence.

In the case of Duvergier v. Fellowes, upon which great reliance is placed on the part of the

defendants, the question arose upon a demurrer, which admits all [138] the facts that are well pleaded.

Accordingly, it was observed by the Chief Justice in giving the judgment of the court, “that by

demurring, the plaintiff has confessed himself guilty of intending to form a company that was to act

as a corporation.” And again, “It is not necessary on these pleadings to decide whether the forming a

company with such shares (i.e. transferable without limitation or restriction) is, of itself, without other

circumstances, pretending to act as a corporation; because it is by the pleadings distinctly admitted

that the plaintiff and defendant intended that the company should act as a corporation;” whereas, on

the contrary, in the present case, the replication expressly denies this allegation contained in the plea.

Indeed the case of Duvergier v. Fellowes cannot be considered as a decisive authority upon the point of

the illegality of the present company, because, in that case, the plea disclosed the invalidity of the

assignment of the patent granted to the plaintiff, which formed the consideration for the contract,

and such invalidity was, of itself, a sufficient ground for the judgment of the court. And when that

case was removed by writ of error, first to the court of King's Bench and afterwards to the House of

Lords, the judgment of the court below was affirmed expressly on the latter ground, without any

opinion being pronounced upon that of the illegality of the company.

The sixth plea of the defendant J. L. Heathorn, — which does not substantially differ from the

other pleas on the record that set up the illegality of the company, — states that it is an illegal company,

formed for the alleged purpose of working gold-mines, “and presuming to act as if they were and are

a corporate body, without any act of parliament,” &c. The plaintiffs deny this allegation; and the

question is, what is the proof of the allegation? Proof that a certain number of persons in partnership,

called themselves by the name of the Anglo-American [139] Gold-Mining Association, would surely not,

by itself, be sufficient to warrant the jury in finding that those per sons “presumed to act as a

corporation.” Partners in trade who carry on business under the name of an expired firm might, upon

that ground, be subjected to the same charge. The having a common seal has always been held one

incident to a corporation; Co. Litt. 30b.; and the power of doing no act except under such common

seal, another. But in this case there has been no assumption of any seal, nor was any act whatever

done except in the individual names of agents or directors. The plea then goes on to allege another

character of the illegality of the association, viz. “and also by presuming and pretending, without any

act of parliament, &c., to raise, and being constituted and formed with a view of raising, a transferable


291

and assignable stock and capital to be considered as divided into sixty shares of 100l. each, with power

for the shareholders of the company at a special meeting of shareholders to be called for that purpose,

at any time, and from time to time, to increase the capital to any amount that might be agreed on by

creating an additional number of 100l. shares, and all which several shares, as well original as additional,

were to be and are transferable and assignable from the holders thereof, by deed or will, or otherwise,

to any other person or persons, at the discretion of the holders thereof, to the common grievance,”

&c.

The deed by which this company was established does certainly appear to make out the allegation

above set forth; the only restriction being, that the transferee shall have no right to act or receive any

benefit until his title shall be approved of by the solicitor of the company, — a matter of regulation

more properly than of restraint. The plea is framed upon the very words of the 6 Geo. 1. c. 18. s. 18.,

by the nineteenth section of which act the several illegal companies described in the [140] eighteenth

section are declared to be all common nuisances, and are made punishable by indictment. Even if

those clauses had not been repealed, — as they have been in terms by the 6 G. 4. c. 91.— a question

would have arisen whether the facts given in evidence at the trial were sufficient to shew that the

defendants had committed an indictable offence within the statute. And, looking at the doctrine laid

down in the case of The King v. Webb as to the objects and purposes of companies falling within the

meaning of the statute, it would have been a question, whether the facts warranted a finding that the

defendants had been guilty of an offence within that statute. But that statute having been repealed,

the question is now altered; and we have to determine whether such a company as the present has

been shewn to be a nuisance and public grievance at common law. The raising of transferable shares of

the stock of a company can hardly be said to be of itself an offence at common law; no instance of

an indictment at common law for such an offence can be shewn, the raising of stocks with transferable

shares being indeed a modern proceeding; and the very great particularity with which it is described

in the statute seems to shew that it was an offence created by the statute only. If there had been any

evidence in this case that the creation of these assignable shares had been productive of injury or

inconvenience to numbers of the Queen's subjects, so as to make or occasion a common nuisance or

grievance in fact, the jury ought to have found the issues for the defendants. But there was no evidence

of the sort; and in truth the whole number of owners of the shares of this company of whom any

evidence was given, was very limited indeed, and those composed not of low and ignorant persons,

likely to be imposed upon, but, as far as [141] appeared, of men acquainted with the business of the

city. Unless, therefore, the nature of the undertaking was such as imposed upon the judge the necessity

of telling the jury that the defendants had set up and established an undertaking which was a public

and common grievance and nuisance at the common law, there was no evidence to shew that it was

one in fact; and as we consider the former proposition is not maintainable, we think the verdict on

those issues which raise the question of illegality, must be entered for the plaintiffs.

Rule discharged.

Chapter 11. Parliamentary Resistance to Granting the Incidents of

Corporateness

a. Incorporation and Exclusive privileges (1810)

MARINE INSURANCE COMPANY96.

Mr. Manning rose to bring forward his motion, in consequence of the petition he had presented

a few days since, praying for a Bill to establish a New Marine Insurance Company. He spoke at

considerable length, but in so low a tone, that it was impossible to collect even the substance of his

speech with any degree of accuracy. We understood, however, that he made a chronological statement

of similar institutions already adopted, from time to time, in this country, and their inadequacy to meet

all the objects of commercial men. With respect to the design of the merchants who had signed this

petition, any man who read the list must be confident they were not men likely to be actuated by mere

views of personal interest; but that they chiefly contemplated the general interests and

accommodation of the mercantile world. He then went into a comparative statement of the amount

of insurances at the different offices annually, and shewed that in the two now in existence, which

offices possessed exclusive privileges, namely, the Royal Exchange and London Assurance, their

amount of risk on vessels was so limited, that neither would exceed 10,000l. upon any one ship; and

that ship-owners, whose vessels greatly exceeded that value, were obliged to run their own risks.

There was another point extremely to be desired by merchants, namely, that they [400] should be

always assured of the ability of those who subscribed to policies, fully to meet the risk; a point not

easily known by the present mode. Merchants were obliged to apply frequently to a number and variety

of underwriters at Lloyd's, upon risks of any large amount; and the consequence often was, a

considerable loss to the party so insured; insomuch, that at the peace of Amiens, he knew one

gentleman insured for 36,000l. who was forced, through the insolvency of several of the underwriters

at Lloyd's, to sit down with a loss of one-third of the whole amount insured. A regular company,

composed by persons of known respectability, carrying on their business in one house, and under the

management of directors, was the kind of establishment most desirable to commercial men. The

subscribers to this petition had already subscribed a sum of five millions, which they could increase

to any extent required; so that instead of being confined, like the two present companies, exclusively

chartered, to a risk of about three millions, or three parts out of one hundred, constituting the total

of the insurances of London in each year, the proposed company might insure to any extent required.

The establishment he proposed would not injure the interests of any other, for the increased

commerce of this country would afford business enough for all; and the establishment might be made

to answer, not only for England, but for every nation of the globe, and thus attract a most lucrative

branch of business to this country. He trusted the House would see the importance of the proposition.

He would not conclude his speech upon the subject in the usual way, by moving for leave to bring in

96 HC Deb 14 February 1810 vol 15 cc399-424 399. URL: http://hansard.millbanksystems.com/commons/1810/feb/14/marine-insurance-company. Contains Parliamentary information licensed under the Open Parliament Licence v1.0.

http://hansard.millbanksystems.com/commons/1810/feb/14/marine-insurance-company


11. Parliamentary Resistance to Granting the Incidents of Corporateness

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a bill, because he thought it more decorous to consult in the first instance, the deliberative wisdom of

a committee of the House, who should inquire fully into the necessity and expediency of the measure,

and report their opinion. The hon. member concluded by moving "That a select committee be

appointed to take into consideration the act made in the 6th of George the first, for granting exclusive

privileges for marine insurances, to the Royal Exchange and London Assurance companies, and also

to consider the best means of effecting marine insurances, and report their opinion to the House."

Mr. Marryat rose, and spoke as follows: Mr. Speaker; For the better elucidation of the [401]

motion now before the House, it will be necessary to state, more particularly than has hitherto been

done, the nature and object of the petition with which it is connected, and on which it is founded.

This petition is signed by a great number of very respectable individuals in this metropolis, describing

themselves as merchants and others having assurances to make, who are desirous of forming

themselves into a company, with a capital of five millions, for the purpose of effecting assurances;

and praying that they may be enabled so to do, either by the repeal of the exclusive privileges granted

to the two existing companies, by the Act of the 6th Geo. 1, or by being permitted to make such

assurances as a company, notwithstanding the said recited Act. Thus the supporters of this petition

are in a situation of some embarrassment as well as awkwardness; for they must first persuade the

House that insurance companies, possessing exclusive or particular privileges, are prejudicial to the

public interests, in order to induce us to deprive those now existing of their chartered rights; and then,

requesting us to forget all they have said on this subject, they must take up the contrary side of the

argument, and persuade us that such companies are advantageous to the public interests, in order to

induce us to establish their intended new company on the ruins of the old companies. They endeavour,

indeed, to draw a distinction between this new company and the present chartered companies, by

declaring that they renounce all pretensions to a charter—that they require no monopoly; but the

explanation they give of their views and objects, by no means accords with these declarations.—Parties

who apply for an incorporation can have but two objects in view; to obtain either exclusive or

particular privileges, and to obtain an exemption from responsibility beyond the amount which they

engage to invest as a capital in the intended undertaking. The plan of this new company comprises

both these objects; for the petitioners pray that they may have the privilege of doing that, which the

law as it now stands prohibits them from doing, effecting marine insurances as a company; and they

farther pray, that they may be exempted from responsibility beyond the amount of their intended

capital. Whether these advantages [402] are given them by a charter, or by an act of Parliament, the

mode indeed may vary, but the effect will be the same; and therefore, there is nothing to distinguish

this case, from other cases of applications made by individuals for privileges not enjoyed by the

community at large. It is obvious that the grant of any such privileges or immunities to any set of

men, is an injury to all those by whom they are not enjoyed; and therefore it is an established principle

that they ought never to be granted, but in order to procure some advantage for the public, which

cannot be procured by any other means. To use the words of lord Coke, (3rd Inst. 184), "there must

be, urgens necessitas, et “evident utilitas.” These pleas have been justly admitted in the case of several

corporations lately established, not only in this metropolis, but in the out-ports; I mean the Dock

Companies. The urgent necessity and evident utility, of giving adequate security to the public revenue

and to private property, was so strongly felt, that Parliament thought it advisable to encourage these


294

undertakings, by the exclusive privilege of warehousing certain commodities, at certain rates, for a

certain, period; but at the same time, with a due regard to the interests of individuals, they indemnified

every description of persons who might be deprived of their accustomed occupations and profits by

this new change of system. If we try the merits of the petition now before the House, by the principles

here laid down, it is impossible that we can accede to it; for no case has been made out, either of

urgent necessity or evident utility. The parties merely propose to do that as a company, for their own

emolument, which is already done by individuals; and this, too, without making any provision to

compensate those who would be deprived of their present means of subsistence, by the intended

innovation.—It has been urged in favour of the present application, that the preamble of the Act of

6th Geo. 1, by which the two Marine Insurance Companies now existing were established, expresses

itself in language favourable to chartered and joint stock companies. If, however, we look into the

history of that Act, we shall find that the application of these companies for a charter, was in the first

instance rejected: but that the civil list being soon afterwards much in arrear, and the proprietors

offering 600,000l to supply this deficiency, the minister of the day, anxious to provide [403] means

for defraying the too lavish expenditure of the court, without imposing new burdens on the people,

exerted all his influence in favour of the measure; and that then this Act was carried through the

House. Thus the existing companies owe their establishment to a job; and this surely is no very great

recommendation to the pretensions of any new companies of a similar description.—Indeed,

although the preamble of this Act justifies the establishment of these two companies, in consequence

of the numerous failures which had then recently taken place among the underwriters (a consideration

by no means applicable to the present times), yet, in the subsequent clauses, it provides that his Majesty

may revoke their charters, if they are found inconvenient of hurtful to the public; enacts, that no other

such corporations shall ever be established; and recognizes the general principle, that all joint stock

companies "manifestly tend to the common grievance, prejudice, and inconvenience of great numbers

of his Majesty's subjects, in their trade or commerce, and their other affairs;"' declares them to be

public nuisances; and parties engaged in joint stock companies without the sanction of the legislature,

are liable to prosecutions under this very Act.—If we refer to other Parliamentary authorities, we shall

find that grants of exclusive or particular privileges, have ever been viewed by our ancestors with great

jealousy, and have frequently excited their just reprehension. In the reign of queen Elizabeth, the

House of Commons voted such grants to be breaches of the privileges of the people; and the Queen,

in consequence, annulled the greater number of them, and subjected the rest to the controul of the

laws. When she received the thanks of the House for so doing, she gave them in return her "hearty

commendations, for having recalled her from an error, proceeding from her ignorance, not her will,

and acknowledged that these things would have turned to her disgrace, had not such harpies and horse

leeches," (as the good Queen termed these monopolizers), "been made known and discovered to her,

by her faithful Commons." (Rapin, A. D. 1600.) James I, confined his grants of monopoly to foreign

trade only; and Mr. Hume tells us, that "by this enormous grievance the trade of England was reduced

to a very low ebb, “being [404] brought into the hands of a few rapacious engrossers.” At length

Parliament interfered again, and an Act was passed in the 21st year of that King's reign, by which all

monopolies were condemned, as contrary to law and the known liberties of the people: an Act, which

sir John Sinclair observes, ought for ever to have put an end to so destructive a grievance. Charles I,


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among other expedients to raise money, resorted to that of granting exclusive and particular privileges;

but as soon as Parliament met, they protested against these grants as one of their greatest grievances,

and passed a resolution, that all members having a share in them, directly or indirectly, should be

incapable of holding a seat in the House. Many in consequence vacated their seats, and those who did

not, were expelled. (Rushworth, 4. page 37. Whitelocke, page 38.) This may be no bad lesson to some

gentlemen concerned in the present undertaking; for certainly the principle of exclusion may be much

more justly applied to those who obtain particular privileges by grants from the crown, than to those

who take contracts by public and open biddings, in the disposal of which the crown has no influence

whatever. I shall not trespass on the patience of the House, by citing more parliamentary or historical

authorities, nor by giving quotations from writers on political economy, all of whom concur in the

injustice and impolicy of establishing companies with exclusive or particular privileges; but conclude

my observations upon them with the just and emphatic sentiment of Dr. Adam Smith, who says, that

"they are nuisances in every respect."—If I am asked why I, who profess myself inimical to all such

companies, object to the appointment of a Select Committee, to consider of the Act of the 6th Geo.

I, by which the exclusive privilege of effecting marine insurances, as companies, was granted to the

two companies now existing, I answer, because the limited extent of the influence and interest of

these companies, renders them much less exceptionable than this intended New Marine Insurance

Company, which, we are told by its advocates, comprises 9-10ths of the whole commercial interest of

this metropolis; because I am not so inveterate a system-monger as to wish to subvert old established

institutions, although I disapprove of the principles on which they were founded, when experience

has shewn that they are not inconvenient nor hurtful in practice; and [405] because I will not lend

myself to the views of those, who, under the specious pretext of redressing existing grievances, would

introduce others infinitely more intolerable in their stead; and who are pursuing their own private

interests, under the pretence of the public good.—If I am asked why I object to the other part of this

motion, the appointment of a Committee to consider of our present means of effecting marine

insurances in Great Britain, I answer, because the subject was completely investigated so lately as July,

1806, by the Committee appointed on the Globe Insurance Company's Bill; before whom it was so

satisfactorily proved, that our means, both in point of extent and solidity, were completely adequate

to every possible occasion, that the parties abandoned their application to Parliament. I am aware that

one of the gentlemen who gave the most decided testimony before that Committee, is a subscriber to

the petition now before the House, and one of the intended directors of the New Company; but this

circumstance does not prove that any change has taken place in his sentiments: it only proves that he

has discernment enough to know, that an establishment which may be a very bad thing for the

community, may be a very good thing for individuals. I am aware too, that the names of many

subscribers to Lloyd's are to be found annexed to this petition; but I know that the greater part of

them joined this new company only because they thought it impossible successfully to oppose the

powerful interests by which it was supported, and considering the ruin of all individual underwriters

as inevitable, were willing to save something out of their own wreck.—In order to put the House in

possession of the real merits of this case, it will be necessary to explain the mode in which marine

insurances are at present effected in this metropolis. Exclusive of the two chartered companies, there

are about 1,500 subscribers to Lloyd's, the greater number of whom daily attend there for the purpose


296

of transacting insurance business. The merchant, when he receives an order to effect insurances from

his correspondents abroad, or has occasion to cover property shipped by himself at home, applies to

an insurance broker, who transacts the business either with the public companies, or with individual

underwriters, according as he finds it most to the advantage of his employer. The House will see [406]

the extent to which competition is carried by this mode of effecting marine insurances. The merchant

is aware that his credit with his foreign correspondents depends upon his executing their orders on

the best terms possible. The broker is equally aware that his credit with his employer, the merchant,

depends upon the same circumstance. The underwriter is also aware, that unless he writes at the very

lowest current premium, the brokers, who are in the habit of shewing him their policies, will transfer

their accounts to other underwriters; and from this consideration, he frequently accepts a premium

which in his best judgment, he considers as inadequate to the risk, rather than lose his connections.

Thus competition is carried to the highest possible pitch; and thus has the reputation of this country

for effecting marine insurances on the most reasonable terms been so universally established, that

orders from every part of the globe are sent here, the property annually insured in this kingdom

amounting to nearly two hundred millions, as is proved by the duty paid for stamps upon policies.*—

But, it is contended that greater facility is wanted in effecting insurances, and will be given by the

establishment of this new company. A reference to the evidence given before the committee on the

Globe Insurance Bill, on this particular point, in July, 1806, completely disproves this assertion;

*Amount of cash received for sea policy stamps, delivered to

individuals in the year 1809, from the office

£312,251 311

Amount of cash received for sea policy stamps, delivered to the

chartered companies,

12,577 00

324,828 311

Add for the out-ports and Ireland, estimated at one-fourth of the

above,

81,207 10

£.406,035 411

Four-fifths foreign insurance, or £.324,828 duty, at 5s. per cent.

will cover property to amount

£.129,931,200 00

One-fifth Irish and coasting trade, or £.81,207 duty, at 2s. 6d. per

cent. will cover property to amount of

64,965,600 00

Total amount of property insured in Great Britain in 1809 £.194,896,800 00


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and, since that period, the number of underwriters has increased in a far greater [407] proportion

than the extent of business. Indeed, it will at once appear evident, that no such facility is wanting, and

that our present means of effecting marine insurances are equal to every possible occasion, from the

following statement. The number of subscribers to Lloyd's is about 1500; supposing them to write

only 300l. each on a policy, the amount would be 450,000l.; but many of them are in the habit of

writing 1,000l. 2,000l. and even 5,000l. on a single risk. There can, therefore, be no difficulty in insuring

with individual underwriters, a much larger sum than ever was embarked in any one bottom, even

without the present public offices, much more without the establishment of any new public offices.—

It has also been contended, that greater competition would be excited by the establishment of this

new company, and thus the general interests of commerce be benefited. This I deny, on irrefragable,

evidence—the experience of the past, by which we are best enabled to form a sound judgment of the

future. The two public offices already in existence, so far from coming into competition with Lloyd's,

in any beneficial way to the general interests of the public, confine themselves to what are called

regular risks, in effecting which to any possible extent there is no difficulty whatever; but in what are

called cross risks, in those new and perilous modes of carrying on commerce, to which the state of

Europe has lately obliged us to resort, the public offices come into no competition with Lloyd's; for

they refuse to write them at any premium. During the whole of the last year, they refused to insure

vessels trading to or from the Baltic, unless warranted free from capture and seizure in the ports of

the enemy, the great risk against which the parties interested wished to be covered: and this branch of

commerce, which extended the export of our manufactures and produce to an unprecedented

amount, and secured us an abundant supply of naval stores, so indispensably necessary to the support

of our maritime greatness, would never have been carried on, (for unless it could have been insured it

could not have been carried on,) but for the spirit and enterprise of the underwriters at Lloyd's. Every

man there ventured a certain sum upon these risks, such as he could afford to pay in case of loss; and

thus the whole property was covered, and these [408] invaluable national benefits were obtained. The

public companies depend upon their regular business, which enables them to pay a very handsome

dividend to their proprietors; and if more of these companies were to be established, and more of

the regular business were monopolized, individual underwriters would be discouraged from pursuing

their avocations, and competition be lessened instead of being increased. It would be absurd to expect

any public office to act on any other system; for it is impossible that the acting director or secretary

of a public office, should possess the same knowledge, as to the nature and extent of every new

description of risk, the same information as to the means by which the decrees of the enemy may be

eluded, as 1,500 underwriters, mostly men of commercial habits, and consequently commercial

knowledge, daily collected together for the purpose of communicating and receiving intelligence;

whose judgments on these subjects are formed and confirmed by constant habits of individual

application and mutual discussion, and who concentrate the scattered rays of information, as it were,

into one focus at Lloyd's. On this conviction the public offices, very wisely, refuse to undertake what

they do not understand; and wholly decline the only species of competition with Lloyd's, which could

in the smallest degree conduce to the public advantage.—Another argument urged in favour of

establishing this new company is, that greater security is offered to the public by them, than can be

given by individual underwriters. It is not necessary for me to undertake to disprove particular


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instances that may be brought forward of the insolvency of underwriters, or to contend that they are

immaculate as a body, either in property or character; but, this I will assert, that a man who suffers by

the insolvency of underwriters at Lloyd's, suffers, generally speaking, strange as it may appear, with

his own concurrence. A broker will tell his merchant, that he cannot complete his insurance with good

men, unless he will give a higher premium. The answer frequently is, you must not give more, for such

a house has effected the same risk at the same premium; therefore, get the best names you can; and

thus the merchant frequently sets the advantage to be gained by the reduction of premium, against

the risk to be run from the want of solidity in the underwriters. No merchant who offers a fair

premium, and [409] whose business is transacted by brokers of respectability, is ever under the

necessity of taking a doubtful name on his policy; and I maintain, that Lloyd's offers better security

to the assured than can be given by any chartered company. I say so, for this plain reason, that every

man at Lloyd's is responsible for his engagements to the last shilling of his fortune, while the members

of an incorporated company are responsible only for the amount of the capital originally invested;

and the capital of the underwriters at Lloyd's infinitely exceeds that of any chartered company

whatever. For instance: the capital of this new company is intended to be five millions, of which only

one million, I understand, is to be actually advanced. In point of fact, then, the one million so

advanced, is the whole extent of the security offered to the public; for though the original subscribers

to this undertaking are men of fortune and able to pay the other four millions in case of need, yet

they, from various motives, may be induced to sell out, and may sell to men of straw, mere speculators,

who would not be able to pay the other four millions. But giving them the whole advantage of this

argument, and taking their capital at five millions, that sum bears no proportion to the aggregate capital

of the underwriters at Lloyd's; for could name fifty out of the 1,500 subscribers to that house, who

could pay down these five millions at any time, without the smallest inconvenience, leaving the capital

of the other 1,450 subscribers wholly untouched. Events have occurred within these few years, that

would have more than swallowed up the capital of this company, and yet have scarcely occasioned the

failure of a single individual at Lloyd's; for every prudent underwriter regularly classes all his risks, and

proportions the amount he hazards on those of each particular description to his means of payment

in case of loss; a precaution which could not possibly be observed in the vast mass of business that

would be undertaken by this new company. The events to which I allude, are the detentions and

subsequent condemnation of the Dutch ships, in consequence of the hostilities that took place

between this country and Holland, in the year 1794; the capture and condemnation of American

vessels by France and Spain, in the year 1797, on the plea of their navigating [410] without the role

d'equipage required by treaty; and the seizure of all the British ships in the ports of Russia, by the

emperor Paul, in the year 1799. Had this intended new company been established previous to either

of those periods, comprehending within itself, as the proprietors themselves declare it does, 9-10ths

of the commercial interest of this metropolis, and of course doing 9-10ths of the business, and

sustaining 9-10ths of the losses, it must have been totally ruined. But, the proprietors, sheltered under

that limited responsibility which is the great object of their present application to parliament, would

still have continued men of opulence: their carriages would still have roiled along the streets, and have

splashed with mire the unfortunate individuals, who had been ruined by their insolvency as a company.

When these disasters happened, some underwriters certainly failed; but the number was comparatively


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small: the blasts that would have torn up this company by the roots, scarcely brought down a leaf

from the tree at Lloyd's. Whether, therefore, we consider the amount of the capital employed at

Lloyd's, or the subdivision of risks attended to by the individual underwriters there, it is obvious that

the public security, so far from being augmented, would be diminished, by 9-10ths of the insurance

business being transferred to this great and chartered company.—It is also asserted, that much

litigation would be prevented, and losses be recovered with greater facility and promptitude from this

new company than from the underwriters at Lloyd's, who are accused of being litigious, and even

unprincipled, in the defences they set up against just demands. That some individuals have at times

availed themselves of points of law, of which underwriters in general have not taken advantage, I

admit; but there are very few men whom interest, if not principle, would not prevent from selling their

good name for any sum they could possibly gain by evading the payment of a loss. Underwriters,

speaking of them collectively, are much more sinned against than sinning; no set of men on earth are

so much the dupes of fraud and villany. They have paid, not only for vessels purposely lost, but on

cargoes of stones and brick bats, packed up as bale goods; nay, even for vessels which it afterwards

appeared never were in existence, though forged invoices, bills of lading, certificates of their having

sailed, and every [411] requisite document, were regularly transmitted; and in order to prevent

suspicion, one of the most respectable houses in the city was made the innocent instrument of this

nefarious transaction. Such impositions practised upon men naturally tend to make them suspicious,

and sometimes they certainly are so without just ground; but the question is not as to the positive

degree of facility with which losses can be recovered at Lloyd's, but as to the comparative degree of

greater facility with which they can be recovered at public offices. It is true that in settling with a public

office, the assured has only to settle with a single person, instead of having to settle with the various

individuals who have underwritten his policy; but this task is one which requires neither much time

nor trouble, for almost all the parties sit under the same roof, and when the first underwriter on a

policy has settled the loss, the others generally follow without any investigation of the papers. On the

other hand, public offices are necessarily governed by certain fixed rules, and will not settle without

regular documents, the production of which is frequently dispensed with at Lloyd's. Public offices will

not pay on missing ships till the period is expired when the loss can be recovered by law; the

underwriters pay without insisting on this delay, on an undertaking from the assured, that if the vessel

should hereafter appear, he will put them in the same situation as if the loss had never been settled.

Claims of liberality, which could not be maintained by law and which could not, perhaps, with

propriety be admitted by the directors of a public company, acting for others, are frequently admitted

at Lloyd's by individuals, each of whom is acting for himself. But, it is said that underwriters frequently

go to law in order to put off the payment of losses, and that in such cases an action must be brought

against each individual; whereas, if the insurance was effected with a public office, a single action

would decide the contest, and thus much money now spent in litigation would be saved. That much

money is now unnecessarily spent in litigation the underwriters know to their cost, for it is spent at

their expence. The solicitor to the assured commences proceedings against every underwriter; the

underwriters apply for a rule to consolidate, which the judge grants on condition of their paying all

the charges hitherto incurred, and these fall so heavy, that an underwriter, [412] where a case is

doubtful, will frequently rather pay than litigate the demand. The public offices are not influenced by


300

this consideration in the same degree, for they can contest a loss of 100,000l. at as little expence as an

individual underwriter can contest his subscription of 100l.; and it is not very reasonable to expect

that those parties will be least disposed to be litigious who have the strongest temptation to be so,

unless we believe the directors of this new intended Marine Insurance Company not to be men of

like passions with ourselves.—One of the allegations in the petition of this intended new company is,

"that the trade and commerce of these kingdoms have increased so much since the two existing

companies were incorporated, that these two companies do not at present insure more than three

parts in one hundred of the ships, goods, and merchandize insured in Great Britain." On this it may

be observed, that if the trade and commerce of these kingdoms have increased, the number of

underwriters has increased in a still greater proportion; for the number of subscribers to Lloyd's in

the year 1771 was only 79, and the present number is near 1,500. The small proportion of insurance

business effected by the public companies, shews the general preference given by the commercial

world to individual underwriters; and is the strongest proof that could possibly be adduced, not only

of more moderate rate of premiums at which they transact business, but of the general confidence

placed both in their probity and solidity—The petitioners also state, “that several insurance companies

have been established in the East and West Indies, and America;” and seem to wish to have it inferred,

that these companies have been established for want of more insurance companies in Great Britain.

Insurance is a natural appendage to commerce; and the establishment of insurance companies, or of

individual underwriters, in every commercial country, may be sufficiently accounted for, by the desire

merchants feel to transact their own business, rather than pay a commission for having it transacted

by others; and the satisfaction they derive from holding in their own hands the policies of insurance

by which their property is secured, instead of confiding the important trust of recovering upon them,

in case of loss, to their foreign correspondents. Independent of these general considerations,

circumstances of a local [413] and peculiar nature, will shew the indispensable necessity of such

establishments being formed, in all the countries named by the petitioners. In the East Indies,

opportunities of writing to England for insurance occur so seldom, that many voyages, more

particularly those from one port to another, or country voyages as they are called, must be insured

upon the spot, or not at all. It is also to be considered, that parties resident in India, if they insure

there, recover a loss without delay; but if they insure in Great Britain, they cannot recover, and realize

their funds, in less than eighteen months or two years; and this circumstance, coupled with the high

rate of interest paid for money in India, will account for their preferring to insure there rather than in

Europe: nor would the inducement so to do be at all lessened, by the establishment of this, or any

other new insurance companies. In the West Indies, vessels going from one island to another, or from

any of the islands to America must be insured there unless one of the packets, which sail only once a

month, should happen to be on the eve of her departure when the voyage commences; otherwise the

issue of it may be known in England before the order for insurance arrives there. With respect to

America, it is not to be expected that a country rising so fast into commercial importance, should form

none of those establishments by which alone commerce can be secured; and it is also to be remarked,

that our law-prohibiting the insurance of enemies' property, not only prevents property really

belonging to the enemy, but property liable to be suspected of belonging to the enemy, from being

insured here; for as British underwriters cannot pay in case of British capture, parties whose vessels


301

are brought in for adjudication, might, if they insured here, be ruined for want of their funds while

the cause was pending, and therefore they insure in countries where there is no bar to their immediate

recovery. From these observations, it appears that the extension of the insurance business in America

is to be attributed to various causes, but more particularly to this law, which sacrifices commerce to

policy; and that the case would not be altered by the establishment of this new company, unless, which

I cannot suppose, they mean to insure against British capture, in violation of the law of the land.—

The only advantage that I can discern in the establishment of this new company, is an [414] advantage

of which the gentlemen concerned have told us nothing, but which I shall now endeavour to develope;

the advantage that would accrue to themselves. Their plan is to unite a very great proportion of the

leading mercantile houses in this metropolis into a company, for the purpose of effecting their own

marine insurances; and thus to retain, and divide among themselves, the emoluments hitherto made

by the insurance brokers and underwriters at Lloyd's. They would retain the profit of the brokers, by

effecting their own insurances at their own office; and as proprietors of that office, they would also

divide among themselves the profit of the underwriters. They propose, too, acting on a scale hitherto

unprecedented in point of extent and magnitude. Thus, by the boldness of their speculations, their

profits may be increased to an almost incalculable amount; while their losses cannot possibly exceed

the sum they offer to invest as the capital of their undertaking.—Before the House give their sanction

to this measure, I trust they will seriously listen to the objections that offer both on public and private

grounds, to the carrying it into effect.—The first objection that I shall state, is founded on its

interference with the rights of individuals. Every profession, trade, or calling, requires some previous

study and qualifications; and all writers on political economy agree in considering the time thus

bestowed, and the expence thus incurred, by every individual, as a part of the useful productive capital

of the state, as well as the just property of the party, in the enjoyment of the fruits of which he is

entitled to legislative protection. I am aware that the occupations of an insurance broker and

underwriter are generally considered as requiring but very superficial attainments; but a candid

investigation of the subject will prove this idea to be erroneous. An insurance broker can only qualify

himself for his business by considerable study and application: he must learn how to fill up policies

of every description, with all the various clauses adapted to every possible circumstance; he must be

able to make accurate declarations of interest, so as to cover the parties in case of loss, and yet not

expose them to the payment of any unnecessary premium in case of arrival; he must know how to

make up complex statements of [415] average and partial losses on every species of merchandize, and

on the various principles applicable to every different case. He must be informed of the current rates

of premiums on every voyage, in order that he may be enabled to transact the business entrusted to

him to the best advantage; and he must be well acquainted with the character of the different

underwriters, to guide him in the selection of the names he takes upon his policies. The underwriter

must possess every species of knowledge requisite for the broker, (except indeed as to the solidity of

his brother underwriters;) it being his province to examine all his papers and statements; in addition

to which, he must be well versed in geography; must be informed of the safety or danger of every

port and road in every part of the world; of the nature of the navigation to and from every country;

and of the proper season for undertaking different voyages; he should be acquainted, not only with

the state, but the stations of the naval force of his own country, and of the enemy; he should watch


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the appearances of any change in the relations of all foreign powers, by which his interests may be

affected; and in short, constantly devote much time and attention to the pursuit in which he is engaged.

Those who commence underwriters without the necessary qualification, or continue underwriters

without the necessary caution, generally soon find their error, in their own ruin, and the injury of

those with whom they are connected. The gentlemen who have subscribed to this new company, wish

to become brokers and underwriters, without loss of time or hindrance of business; to put themselves

in possession of their emoluments, without that study and labour, or those qualifications, by which

alone they can be fairly acquired. Archimedes told Hiero, who wished to be a great mathematician all

at once, that there was no royal road to geometry; and this observation may be justly applied to the

acquirement of any other species of knowledge, or to the fruits of that knowledge. But the subscribers

to this new company are endeavouring to find out a royal road to the profits of the insurance brokers

and underwriters; and this royal road is an act of parliament, enabling the king to grant them a charter

of incorporation.—The effect of establishing a company possessing such vast influence within itself,

must be that this great leviathan will swallow up all the [416] small fry; that it will deprive the insurance

brokers and underwriters of those avocations to which they hare devoted their time, in which they

have embarked their fortunes, and by which they have maintained themselves and their families. But

it is contended, that these consequences will not ensue; that this New Marine Insurance Company

will, on the contrary, encourage the insurance trade, by the increased facility and advantage it will

afford; and that thus more new business will be brought to Lloyd's than will be taken away. They who

so argue, if they believe what they say, must be weak indeed. The principle of this company is not

competition, but combination; it even precludes all possibility of competition; for the proprietors tell

you, that they possess nine-tenths of the commercial interest of the City of London, and that they

wish to form themselves into a company, for the purpose of effecting their own insurances. Who then

can wrest them out of their hands? Besides, if this company be incorporated, on what grounds can

incorporations be refused to any other set of men? Every out-port will have its Marine Insurance

Company; and if the merchants of this metropolis, who are not interested in this establishment, have

sufficient business among them to form a second company, a second company will be established

here, and thus the whole business of underwriting by individuals will be altogether annihilated.—

Great as I consider the evil of this intended establishment to be in itself, I consider it as greater still,

when I reflect on the ruin that it will inevitably bring on a numerous class of meritorious individuals,

who, I may say, have more than ordinary claims to public consideration. The subscribers to Lloyd's, in

promoting their own interests, have at the same time promoted those of their country; they have

increased her revenue, and raised her commercial character as well as her prosperity. With a liberality

not always found in public bodies, they freely and gratuitously communicate that intelligent e to others,

which they daily procure at a heavy expence to themselves. By a standing regulation of the house,

access is given to their books in the non-subscribers' room, to every individual whose interest, or

whose anxiety for his absent friends, may bring him there. The editors of the public papers constantly

resort there also, and all the information the public receive respecting shipping concerns comes [417]

from Lloyd's. The subscribers to Lloyd's have, at all times, been ready to set an example to their

countrymen of public spirit and liberality. Their hands and hearts have ever been open to relieve the

distress of those who have suffered, and to reward the valour of those who have distinguished


303

themselves in the cause of their country. More particularly at the commencement of the present war,

at a period of great and general public alarm, when every man expected to be obliged to contend for

British liberty on British ground, they stood nobly forward; by a well-timed and spirited effort, they

infused energy and confidence into the public mind, and gave an impulse to patriotism, which was

felt, and most beneficially felt, to the very remotest comer of the British dominions. One unanswerable

objection to this new company arises from the illegality of the principle on which it is founded. As

the law now stands, if a merchant chooses to underwrite those policies of insurance which he is

ordered by his correspondents to effect, he can only do so on the following terms:—if losses happen,

he must pay those losses; but if the vessels arrive he cannot recover his premiums. So justly tenacious

is the law of the great and salutary rule, that no man shall be at the same time agent and principal; that

he shall not have an interest contrary to that of the party for whom he acts. This company is founded

on the direct violation of this rule. Every member is to throw his policies into the common stock of

the company, in which he is a proprietor, and thus to have an interest diametrically opposite to that

of the party for whom he acts. Opposite in a double respect: in the first place, as the higher premium

he pays, the greater will be his own profit; and in the next place, as if losses happen, it is his interest

not to recover them, because they must come, in part, out of his own pocket. Nothing can be so

indefensible, as for men thus to place themselves in a situation, where their interest draws one way,

and their duty another. It is what the law positively forbids, and the whole object of this application

to Parliament, is to enable the petitioners to do that as a company, which the law prohibits them from

doing as individuals.—Let us now examine the consequences of this measure, as it would affect the

general interest of commerce and of the public. Instead of 1,500 individual underwriters, we should

probably have five or six insurance [418] companies, each represented and conducted by a secretary

or managing director, as he may happen to be denominated. The whole race of insurance brokers too

would be at an end; the merchants who now employ them retaining their profits also among

themselves by effecting their own insurances at their own office; and instead of that system of fair

and open competition which now prevails, we should have a system of close and secret combination.

The secretaries of the different offices, by a good understanding with each other, might regulate the

premiums as they pleased; and the merchants, the proprietors of these companies, could not be

expected to be very active in reducing profits, which they would divide among themselves. The result

of these practices would soon be, that foreigners would discover they could effect their insurances

cheaper elsewhere, and would no longer send their orders to Great Britain. Thus even the parties

themselves, though they might for a while reap the advantage of that high reputation which has been

established by others, would not long profit by their own wrong: the revenue would be injured, by the

diminution of the present duty on policy stamps; and the public would be injured, by paying a higher

price for every commodity imported, in consequence of the advance on premiums; it being art axiom

in trade, that all charges fall ultimately upon the consumer.—But, if the prayer of these petitioners be

granted, will the mischief end here? On the same principle that a few companies are permitted to

engross and monopolize all the insurance business, why may not a few other companies be permitted

to monopolize all the other business of this metropolis, and render individual merchants and traders

as useless, as these petitioners seek to render individual underwriters and insurance brokers? Why may

not the hon. member who brought up this petition, follow it up by another petition, praying for leave


304

to incorporate at company of merchants trading to the West Indies? And why may not another hon.

member, who has taken a very active part in supporting this petition, bring up another petition, praying

for leave to incorporate a company of merchants trading to the United States of America? These

gentlemen, with a few of their friends, might set on foot companies trading to every part of the globe,

and divide the commerce of the whole world among them. Every argument [419] that can be urged

in favour of the present plan, might be urged with equal force in favour of these new projects.

Instances might be brought forward of the insolvency of some individual merchants, of the

dishonesty or ignorance of others; and the advantages that would result both to the character of the

nation, and the interests of all those connected with it, by placing the whole foreign trade in the hands

of men, possessed of large capital, enjoying an unblemished reputation, and distinguished for high

mercantile knowledge, might be urged as unanswerable reasons in favour of this new system. If any

poor individual who was not taken under the shadow of the wing of one of these great companies,

presumed to complain, he might be told, as the insurance brokers and individual underwriters are now

told, that more commerce than ever would be brought to this country by this wonderful improvement,

and that it was impossible his interests could suffer by a measure so fraught with public good.

Unfortunately for such reasoning, but, happily for us, if we are wise enough to profit by experience,

this experiment has already been tried, and the result stands recorded in history: for Mr. Hume tells

us, that, during the reign of James I. in consequence of similar incorporations, “the trade of this

kingdom was brought into great decay, being put into the hands of a few rapacious engrossers.” Let

us then guard against the beginning of these evils by discountenancing the present project. It is by the

competition of individual exertions, that Great Britain has risen to her present unexampled height of

commercial prosperity; and in proportion as that system is exchanged for a system of monopolizing

combination, that prosperity will again decline.—Not merely the interest, but, the moral character of

the nation, is at stake upon the issue of this measure. The great æra of these incorporated companies

was the year 1720, when the spirit of adventure in speculations of this sort inflamed the minds of the

people to such a degree, that all sober industry and patient application were despised, and every man

was intent upon making his fortune in a moment, by encaging in some of these undertakings. Not

merchants alone, but many of the most ancient and noble families in this kingdom, as we read in the

history of those times, were totally ruined by this epidemical madness. I shall not repeat the history

of the South Sea Company, and [420] twenty other companies, which rose like bubbles and like

bubbles burst, to the great emolument of the first projectors, and the ruin of the infatuated public,

who purchased shares in them at a most enormous advance. More to my purpose is the history of the

marine insurance companies, which were established at that very period. I find, in reading the records

of those days, that in July, 1720, a very few months after the Loudon Assurance Company received its

charter, and before any considerable profits could possibly have been realized, the stock, on which

only ten per cent. was paid, rose to 120, and even to 160—sixteen times the capital. That in the month

of October in the same year, a hurricane, which destroyed part of the home-ward-bound Jamaica

fleet, reduced their stock to sixty per cent.; and that other losses happening soon afterwards, it fell

before the end of the year to 15, and even 12 per cent. The historian adds, that for years afterwards

nothing more was heard of this Company except in the perpetual complaints of the proprietors, that

they were cheated by the directors; and yet, Sir, this Company, like the intended New Marine Insurance


305

Company, was first set on foot, by honourable men, lords and members of parliament. Even our

prudent neighbours, the Dutch, were infected by the same mania; and with precisely the same result.

A marine insurance company was established in 1720, at Rotterdam, and their actions or shares soon

rose to 1,000 percent. The shares of one established at the same time at Gouda, rose in a few months

to the almost incredible premium of 3,000 per cent. on the capital advanced; and before the end of

the same year, fell again to their original value. Another set up at Delft, experienced the same reverses

within the same space of time; and, we read, that the avarice and gambling spirit of the proprietors,

in every one of these companies, was ultimately punished by the entire loss of all their capital. The

present scheme takes a more daring flight than any of its predecessors; it embraces a larger interest,

professes to act on a wider scale, and is therefore more calculated than any plan ever hitherto projected,

to dazzle the ignorant, and entrap the unwary.—That I may not be accused of having exaggerated in

these statements, I refer those who hear me to [421] Postlethwaite's Dictionary of Commerce, under

the articles Actions, Bubbles and Companies; and it is not unworthy of remark, that the able author

of that work, considers the two latter words as synonymous terms; for under the article 'Bubble.' he

says, see 'Companies.'—It is far from my meaning to impute any sinister or unworthy motives to the

gentlemen who have engaged in the present undertaking. On the contrary, I know many of them, with

whom I have the honour of being acquainted, to be incapable of acting, but with the most laudable

intentions. But, I believe they have engaged in it unadvisedly, and without due consideration of the

consequences to which it would lead; and against those consequences it is my duty to guard the House.

If this scheme is carried into effect, and the shares of the company rise, as I believe they will, to a

price far beyond their real value, the present proprietors, as prudent men, will, like their predecessors,

avail themselves of the public credulity, and sell out; the concern will fall into the hands of speculative

adventurers, lose its present commercial influence, be misconducted, and the bubble will shortly burst,

to the ruin of thousands. If this company obtains the sanction of parliament, the rage for these

undertakings will be rekindled; other companies will be formed, and the capital of the country will be

diverted into new channels, to the injury of all regular trade and solid property. No money will be

obtained either on personal or landed security, and all the evils of the memorable year 1720 will be

again renewed—Marine insurances are effected in this country on more reasonable terms, and on

more solid security, than in any other country upon earth. Neither the necessity nor the utility of this

new company has been proved. On the contrary, I flatter myself I have shewn, that it is pregnant,

both with private injury and public danger; and, therefore, that the prayer of these petitioners ought

not to be granted. I am well aware of the inordinate influence possessed by the members of this

intended new company; and, when I reflect, that there is scarcely a commercial member of this House

who has not been offered, and that there are very few who have not accepted, shares in this

undertaking, I almost tremble for the result, and anticipate the calamitous consequences which an

eminent writer says [422] will inevitably ensue, "whenever commercial opulence shall became the

accomplice of political power, for the purpose of obtaining undue advantages." But, I confide in the

wisdom and justice of this House, to avert those consequences. I trust, that a project so exceptionable,

will not receive their countenance in any stage whatever; and, therefore, that they will reject the motion

of the hon. member for the appointment of this select committee.


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Mr. A. Baring thought, that the arguments urged by the hon. gent. against monopolies, strongly

applied against the matters complained of in the petition. When his hon. friend had stated that three-

fourths of the mercantile body in London were in favour of the petition, it was his opinion that he

might, with equal truth, have asserted, that 99 out of every 100 of that body were friends to it. He

knew of no house in the city that was not strongly interested in the accomplishment of the object of

the petitioners. The only question, then, before the House was, whether the petition should be referred

to a select or to an open committee. For his own part, he was inclined to the select Committee. The

whole course of precedent in the proceedings of that House lay that way. He was equally disposed to

approve of the mode in which it was proposed to compose the Committee, because every disposition

had been manifested in the selection of the members to provide with fairness for the interests of all

the parties concerned. The case of the Globe Insurance Company would not apply, because that

company extended its insurances to fire and lives. The petition before the House complained that the

two chartered companies in existence were not able to afford the necessary facility for effecting marine

insurances, and therefore prayed that further means should be provided, in any way which to the

wisdom of the House might seem meet. If parliament were of opinion that this could be best effected

by incorporated companies, as at the passing of the act of George the First, then he would be disposed

to say, that the new company should be incorporated; not for the purpose of giving any opinion on

the propriety or policy of such exclusive institutions, but with a view to extend the means of effecting

marine insurances. His own opinion was decidedly, that the better mode would be to throw the

business open generally. If, however, it should be thought expedient to establish another company, he

[423] conceived that it should be confined altogether to marine insurances. As the other companies

extended their assurances to fire and for lives, they must be materially prevented from attending

sufficiently to the marine insurance branch. By the existing law, a law enacted for the purpose of giving

an exclusive monopoly to the two chartered companies, no two men could join their capital for the

purpose of insurance; but the vast accumulation of trade rendered it impossible for these companies

to meet the full extent of the exigency. He could not but remark, in this place, the inconsistency into

which the hon. gent. had fallen, by representing the capital of the proposed company as too small

compared with the capital at Lloyd's to add much to the facilities of insurance, and afterwards arguing

against the proposed company on the ground that it would bring ruin upon many of the underwriters

at Lloyd's. It had been fairly stated that, generally speaking, an individual cannot stand against a

company; but he would ask, whether upon the hon. gent.'s own reasoning that could be the case in he

instance adverted to. His impression unquestionably was, that very considerable additional security

would be afforded to merchants, if several individuals combined, and only one was to effect the

insurance. The complaint of the merchants was, that the names of the underwriters had increased to

such an ex tent, as no longer to afford them the same security as before. The great augmentation of

trade, therefore, obliged the merchants often to take names on their lists which presented not the same

assurance of security. In presenting their petition to the House, the merchants meant to be understood

as impressed with a conviction, that, as the reserve had been made in the act, for putting an end to

the charters granted by it, the period had arrived for acting upon that reserve. This they wished to

have an opportunity to prove by evidence before a Committee They also desired to shew that they

wanted some sufficient security in the course of their business in respect to insurances. If the


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underwriters wanted capital, they were driver to dispute the claims fop fair losses; and this furnished

an interior description of lawyers with opportunities of hunting out materials for vexatious litigation.

All they wanted was to be allowed to prove their case, and upon [424] these grounds he should vote

for the appointment of a Select Committee to examine into the matter.

b. Control of the Affairs of a Partnership and Limited Liability (1819)

PARTNERSHIPS IN IRELAND BILL97.

Mr. Alderman Wood moved for leave to bring in a bill, similar to that which he had introduced

last session. The object of it was, to induce men of large capitals to vest part of them in trade or

manufactures in Ireland, without fear of subjecting themselves to the operation of the bankrupt laws.

By this bill, sleeping partners might invest money in trade without being considered as acting partners,

or being liable for more than the sums invested by them. The worthy alderman concluded with moving

"for leave to bring [125] in a bill to promote the employment of persons in the Fisheries, Trade, and

Manufactures of Ireland, by regulating and encouraging Partnerships in that part of the United

kingdom."

Mr. Plunkett said, that the House were not, perhaps, aware that an act had existed upwards of

forty years in Ireland, which had been acted on, and had become a part of the system of equity in that

country, enabling persons to invest money in trade without becoming liable to the operation of the

bankrupt laws. This was called an anonymous partnership in Ireland. These anonymous partners,

however, did not engage in the trade themselves, and had no control over it, but were mere lenders of

money. But by the bill of the worthy alderman, the persons who advanced money might have the

substantial control of the trade. Now he held this to be a dangerous principle. Persons might appoint

an acting partner entirely under their control, and might, with little or no capital, have the entire benefit

of the trade, with a limited responsibility to the public. This was directly contrary to an established

principle of mercantile law. It was obvious, that under this bill men of straw would be appointed as

acting partners, and the persons who had the entire control and direction of the trade would only be

liable to the extent of the sums advanced by them. If an amendment of the existing law were only

proposed, he should be heartily glad to accede to it; but the bill would go to repeal the existing law on

the subject.

The Chancellor of the Exchequer observed, that the principle of this bill was repugnant to the

general principles of commercial law in this country. Ireland had separate laws on this subject, which

were well understood, and which were not without their advantage in a country deficient in capital. In

most countries on the continent, persons were allowed to vest sums in trade on a similar principle;

but a system of this kind required to be acted on with great caution. Persons might acquire a false

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credit by a connexion of this nature with capitalists, the extent of whose liability might not be known

to the public. In point of fact, this was an unlimited allowance of small joint stock companies;

companies of such a description were viewed with great jealousy in this country. This jealousy,

however, might be carried too far. He thought the bill might be productive of advantage, but it should

undergo [126] considerable alterations.

Mr. Foster entered into a history of the law in Ireland, respecting anonymous partnerships. It was

drawn up, he said, by one of the ablest men of Ireland, and was passed in the Irish parliament in 1781.

The idea of it was taken from a French law-book. When sent over to England; it was submitted to the

attorney and solicitor-general of that day, and by their advice, rejected as contrary to the practice of

this island. On a remonstrance from Ireland, that the bill was necessary for the encouragement of the

manufactures of Ireland, it came back and was passed into a law, and had been productive of great

benefit. He was sorry however to say, that there was as much necessity now for capital for encouraging

manufactures in Ireland, as there was then. He should recommend to the worthy alderman to bring

in a bill for amending the existing law, rather than to repeal it.

Mr. Leslie Foster said, the bill of the worthy alderman was well deserving of the consideration

of every Irishman. He was not sure that he understood his right hon. friend correctly. It seemed to

him that his principal objection was, to a principle which already existed. By the existing law, dormant

partners might invest money to any amount, derive a share of the profits, and yet not be liable beyond

the sums invested by them.

Mr. Plunkett said, his objection was, to the effective control which this bill would give to sleeping

partners, without subjecting them to any losses.

Mr. Alderman Wood acknowledged, that the principle of the bill would give this control; but

then half the profits would remain to be added to the capital. Thus, if the profits were 10 per cent. 5

per cent could only be drawn by the partners.

Sir J. Newport thought it would be better to repeal the former act, and to consolidate its

provisions in the present, the former being an act of the Irish parliament. It would be better that all

the regulations on the subject should be incorporated into one act of the imperial parliament.

Leave was given to bring in the bill.

c. Parliamentary Resistance to Legislative Incorporations (1824)

CORPORATE COMPANIES98.

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§ Lord Stanley having moved the second reading of the bill for incorporating the Manchester and

Salford Loan Company,

Mr. Huskisson said, that he should certainly object to bills of incorporation, unless where charter

was first regularly obtained from the Crown. This was the old and the regular course of parliamentary

proceeding.—Having obtained their charter from the king in council, the company came to the House

of Commons for [609] further powers; and he saw no reason for deviating from the established

practice. Legislative incorporations involved numberless difficulties, many of which could scarcely be

dealt with. A charter from the Crown might be revoked, if it was abused, or if the company failed to

fulfil their undertakings with the public; but this could not be done in the case of a legislative

enactment. To authorize an unlimited number of trading companies in such a manner, would be to

do a material mischief to the country. He held in his hand the charter of the first company formed

for lighting London with gas. According to the letter of that document, the power was given by the

king and might be revoked in case the company abused it. Here, then, was a means by which that

particular company could be dealt with; but how could government deal with about forty companies

(not royally chartered) which had been since formed for lighting different parts of England by gas?

companies were going on to form themselves into corporations for every purpose—no matter what—

of trade. How was the public to proceed in case they neglected to fulfil their conditions? Parties might

go to law, and get a verdict; but how and where were they to levy? He would not object to giving

bodies who might be about to do business on a large scale, the power of suing and being sued

collectively; but he certainly should oppose the taking every wild and idle speculation that might offer

itself, out of the general operation of the laws of the country.

d. Resistance to Incorporation and the Interests of Creditors (1824)

GENERAL GAS COMPANY'S BILL99

The Earl of Lauderdale, on the order of the day for the second reading, being moved, said, that

he intended to move that this bill be read that day six months. Throughout the whole country, there

was no place which had heard of the bill which had not petitioned against it. He objected to the

general principle of giving such powers to any corporate body as this bill purported to convey. The

granting of a monopoly of this kind would take away all the check which arose from competition.

The most advantageous mode of supplying gas to towns would be, to allow those who had an interest

in their being well lighted to become the contractors.

The Earl of Limerick supported the bill. It had, he said, been brought into the House of

Commons on February, and no opposition was there made to the measure. The bill was, not to destroy

competition, but to enable another company to enter into competition with those already established.

Nor was it meant to injure other companies. An objection had been made to the bill, on the ground

of its enabling the company, as a corporate body, to escape the bankrupt laws. He was authorised by

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those who introduced the bill to say, that they were ready to give up this protection; and were also

willing that the name of any town where gas companies were established should be exempt from its

operation.

The Earl of Rosslyn objected to the principle of the bill, as he must to all bills which went to

establish joint-stock companies, without a very strong case being made out. He saw no necessity for

the present company, and no prudence in establishing it, contravening, as it did, the principles of the

common law, that when any man engaged in trade, he was [791] answerable to his creditors with the

whole of his property.

The Lord Chancellor thought, that if their lordships understood the true state of the case with

respect to this bill, it would be impossible for them to pass it. He was against the powers given to

companies of this description; more especially I when they were not incorporated by charter. There

was a practice, with respect to speculations of this kind, which called loudly for some legislative

prohibition. Persons formed schemes for the establishment of a company, and while they speculated

on obtaining a charter, went into the market with shares which were sold at a given price, though they

might, in the result, prove to be of no value whatever. This was a subject not undeserving of their

lordships' attention: it was worthy of their consideration whether it would not be proper to annul, by

a legislative act, all such contracts. The present bill was for the purpose of lighting all towns with gas,

except London and ten miles round it. This measure, it seemed, had passed the House of Commons

without opposition, which was very extraordinary: but that was no argument in its favour; for, the

moment the public attention was called to it, numerous petitions were presented against it. The learned

lord alluded to the circumstance which he had formerly noticed respecting the capital of the company.

It was provided, that it should not exceed one million sterling; but how much it really was to be did

not appear. In such cases persons subscribed certain sums; there was a name in one column of half a

sheet of paper, and a certain sum in another: but the amount of the subscription did not show the

state of the funds of the company, for their lordships were well aware that subscribing and paying

were now-a-days two very different things. In going over the clauses of the bill, he saw none which

afforded any efficient remedy against the company. There was one by which creditors might proceed

to levy by distress; but the proceeding was one which would probably produce most distress to the

creditor, for he would find nothing to carry away but a gasometer and inflammable air. It was said that

the partners were to be made liable to the full extent of their subscription; but, how was the creditor

to get at the parties? In these incorporating bills a clause was introduced, [792] providing that the

company might sue and be sued by their treasurer. This was very well for the interest of the company;

but of what advantage was it to any body to get a verdict against the treasurer, if he had no funds?

He had, on a former occasion, proposed, with respect to these bills, that a clause should be inserted,

enabling the person who obtained a verdict against the treasurer to levy the amount by distress on any

individual partner, leaving it to that individual to seek his remedy against the company. He repeated

his objection to the incorporation of any company, except by a charter from the Crown. In that case,

if the company acted improperly, the Crown could at once put them down, by withdrawing the charter;

but when they were established by act of parliament, it required the passing of another act to repeal

the former, before any remedy could be applied to the evil. He did not mean to say, that there might


311

not be cases in which it would be proper to pass measures similar to the present bill; but their lordships

ought to be extremely cautious how they established companies, with powers which might prove

seriously injurious to the interests of individuals.

The Earl of Lauderdale's motion was agreed to; and, of course, the bill was thrown out.

e. Shareholders’ Unlimited Liability as a Condition to Incorporation (1824)

ALLIANCE ASSURANCE COMPANY BILL100.

On the report of this bill being brought up,

Mr. Grenfell begged to know what security the public had with respect to these companies? If,

for instance, a Secretary or other public officer of such company were to be proceeded against, and a

verdict obtained, he wished to know how far the company, individually or collectively, were liable?

Mr. Huskisson said, that as he understood it, under these bills of incorporation, in case of

judgments obtained against the treasurer, and their not being made good, the individuals who might

obtain the verdicts would be at liberty to select any one or more of the [843] members of that

incorporation, upon whom he might levy for full satisfaction of his claim. Without such a clause

attached to it, no bill of that nature would be allowed to pass. He would propose, for the public

convenience, another clause, which would require the names of all the parties to be enrolled at the

Stamp-office; and none of the proceedings of the association should be held good in law until such

enrolment had been effected.

f. Except in Scotland, Partnerships Should not be Capable of Suing and Being Sued

(1825)

PARTNERSHIPS SOCIETIES (SCOT- LAND) BILL101.

On the order of the day for the third reading,

Mr. J. P. Grant said, that the bill had been brought in without due consideration. Its preamble

recited that to be true which was manifestly false; and declared that to be law which the decision of

the House of Lords, in a recent case, had declared not to be law. If this bill should pass, it would hold

up this House to absolute ridicule. The bill set forth, that, by the law of Scotland, partnerships, or

commercial associations of individuals, might sue and be sued in respect of debts, bonds, &c.: but, so

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far from this being the case, decisions of the courts of session in Scotland had repeatedly held, that

such partnerships could neither sue nor be sued.

The Lord Advocate contended, that, by the law of Scotland, as it had existed for upwards of a

hundred years, partnerships might sue and be sued. Authority, too, was given by the same law to record

bills of exchange, in further extension of the principle that partnerships might sue and be sued. The

records of parliament would show innumerable instances of appeals carried on in the names of such

joint partnerships. He would further observe, that this was not a declaratory but a prospective bill.

The measure was one of the utmost importance to the commercial interests of Scotland; and he might

say, that they would be excessively alarmed if they heard that the question had been made matter of

doubt.

Mr. T. Wilson supported the bill, and was so convinced of its beneficial tendency, that he should

be glad to see a similar measure introduced into our own commercial law.

Mr. Scarlett would be sorry to see any such thing introduced into the law of England. It would

lead in its operation to a great deal of fraud; for if all partners in a partnership were able to sue or to

be sued, what would be the condition of a defendant, who having been proceeded against by all of

them, should have judgment in his favour? What would he do, in very many cases, for his costs? How

would he be able to recover them? It was to be hoped, therefore, that no such measure would be

engrafted upon the law of England. As to the bill itself, it was clearly declaratory.

Mr. Baring said, that the learned lord had intimated, that in Scotland the bill was absolutely

necessary; a learned friend of his had just declared, that he should be sorry to have it [1280] introduced

into the law of England, because it would be productive of fraud; and that observation had been

cheered by the Attorney-general. Now if, as he himself believed, this would be a beneficial measure

for one part of the empire, why would it not be also for another? This was another instance in which

lawyers had shown that they were not the best judges of what laws would be most beneficial for

merchants. In Ireland an old law existed, authorizing individuals to form partnerships with a limited

responsibility; but in England the matter remained in a state of doubt and difficulty, which he had no

doubt the lawyers considered to be the perfection of all law; because hon. and learned gentlemen had

never taken any objection to it. Against the present bill, however, he was disposed to vote, seeing that

it did not apply to all parts of the United Kingdom.

The Attorney General said, it had been considered by those who introduced this bill, that they

were proceeding upon what was law, and had been considered to be law in Scotland for a hundred

years and upwards. At the suggestion of some commercial men, he himself had lately entertained

some thoughts of proposing a similar measure in respect to England; but when he came to look more

carefully at its necessary operation in this country, and to consider how wide a difference the very

existence of such a court as the court of Chancery made between the two kingdoms in respect of the

expediency of such a law (which court Scotland did not possess), he was convinced that it was not

advisable to introduce any such measure into the law of England. The present bill did not establish

any new principle; but was only brought in for the purpose of removing any doubts about that which

was already law in Scotland.


313

The bill was read a third time and passed.

g. Fear of Granting Advantages that will Result in Monopoly (1833)

ST. GEORGE'S STEAM PACKET COMPANY102.

Lord Sandon, in moving the third reading of the St. George's Steam Packet Company's Bill,

stated, that in the original Bill there were some clauses to which objections had been made, as they

gave a power to that Company over several others; but as the Bill stood [994] at present, it was simply

to enable the Company to sue and be sued, and to make some other regulations for the management

of its concerns. The only reasonable objection that could now be made to it was, that it placed the

Company in competition with others; but in his (Lord Sandon's) opinion, so far from its giving the

Company greater powers than others were invested with—it, in fact, contained less provisions to that

purport than other Companies had. It would be a new line of policy if the Legislature were to

discourage the formation of Joint Stock Companies, but he would wait until he heard what objections

were to be offered against the Bill before he presumed to go at any greater length into the subject.

Mr. Wallace said, the object of the Bill throughout was to give the St. George's Steam Packet

Company the power to increase their capital to an immense extent, though it was not yet subscribed.

The Bill had for its chief object to obtain a monopoly of the transmission of goods and passengers

across the Channel. He contended that the preamble, which stated them to be a Joint Stock Company,

was not proved. They claimed to be an Irish Company, but on reference to the list of subscribers, he

found the balance as nearly as possible between England and Ireland, for he found that eighty-seven

of the subscribers belonged to Ireland and seventy-four to England. It could not, therefore, be called

an Irish Company. It could not be said, that his objections were made with the view of protecting

Scotch interests, for he found that the English subscribers belonged chiefly to the western coast,

namely, from Cornwall round to Liverpool—so that it was very natural that the inhabitants on that

coast, including Wales, would not offer any objections to the Bill. The Company claimed the power

of chartering all other vessels that professed to go on the same line as their vessels, and therefore a

monopoly would be established, by which they might charge what prices they pleased. A more

predetermined system of monopoly was never heard of. It was a frequent ground of complaint against

encouraging the accumulation of large masses of wealth by any one Company; but the present Bill

would have the effect of enabling the Company to accumulate very great wealth, as it would enable

them to increase their capital by [995] 30,000l., and to form a sinking fund from various sources, of

80,000l.; and that, too, in the face of the Standing Orders of Parliament, which required a certain sum

to be already subscribed. It would act as an exceedingly hard measure on all the other Companies, if,

indeed, it did not entirely prevent those Companies' vessels from navigating altogether. The St.

George's Steam Packet Company was already a very powerful Company. He had no doubt of the

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314

respectability of the subscribers; but he felt hound to oppose the Bill, conceiving it to be an injurious

monopoly. He concluded by moving that it be read a third time that day six months.

Mr. Fergus O'Connor declared that the Bill came before the Committee originally in the most

exceptionable form, such as must have convinced any man of the motives of the promoters. The hon.

Member stated the advantages derived by competition, since the original establishment of steam-

packets between Liverpool, Bristol, Dublin, Cork, and other places in that Channel. It was stated, he

said, that the Bill was intended to facilitate commerce; but this could not be the case when the effect

of the monopolies already existing was to keep the freight of Irish produce to this country, of pigs in

particular, as high as 30s. per ton. The noble Lord who moved the third reading of the Bill had said,

that it asked for no immunities but such as were possessed by other companies; but this was no

argument, as the House was not bound to follow a bad principle; and that, too, just at she time when

the House was doing away with other corporations. This Bill did, in fact, go to establish a corporation

on the high seas. [Lord Sandon: It is a Joint Stock Company.] Whatever it might be called, it was in

effect a corporation. Although much altered in the Committee, the Bill was still, in its present form,

as likely to be of as much injury as in its original shape; and, he should, therefore, second the

Amendment of the hon. member for Greenock.

Mr. Wilson Patten asked what monopoly the Bill would give which was not enjoyed by the

Company already? As to the bye-laws of the Company, they would not be at all affected by the passing

or rejection of the Bill, the provisions of which merely gave the Company the power of suing and

being sued as a body. He would admit that several petitions had [996] been presented against the Bill;

but the clauses of which these petitions complained, had been expunged; and he could now see no

objection to the Motion of the noble Lord, that the Bill be read a third time.

Mr. Anthony Lefroy objected to the Bill as giving to the Company a much greater capital, and

consequently, reducing the scope for competition, by which alone the public could be benefited. From

Water-ford and other places, petitions had been presented against the Bill, which objected to it as a

whole, as well as to certain clauses which had been expunged.

The Earl of Ormelie considered that, although the Bill only asked for an increase of 30,000l. to

the capital of the Company, it was still most objectionable in principle. As far as the Bill went, it was

pro tanto a monopoly; for the provision for suing and being sued was a privilege beyond the common

law. Not a single public ground had been adduced in support of the Bill, upon which alone it should

be granted. The object and the practice of the Company had been to throw out every competitor, and

the parties now came to Parliament to enable them to perpetuate the system. He drew a marked

distinction between bills for Steam Packet Companies, and those for Railways: in the former, all parties

could plough the ocean without hindrance; in the latter, it was necessary that the sanction of the

Legislature should be given before the grounds of private individuals could be cut through.

Major Beauclerk supported the Amendment. Every one would see, that the consequence of

giving a monopoly to this Company would be, that they would run down all smaller Companies; and

it appeared to him extraordinary, that this Bill should now be pressed forward, at a lime when the


315

House was anxious to do away with all monopolies. He therefore, hoped that hon. Members who were

opposing monopolies would not give their sanction to this Bill.

Mr. Jervis said, the House should protect the public, and take care the public should have as cheap

and expeditious a conveyance from one part of the country to another as possible. It had been said

that what the Company were seeking to do by this Bill they could do without; but their comings to

this House for powers which they could not do without [997] proved quite the reverse. In his opinion,

this Company ought not to be countenanced in keeping up their unnatural coalition, which would

have the power of ruining other Companies, and prevent the public from having a cheap, and what

was more material, a safe conveyance. In his opinion, no sufficient reason had been given why they

should have a privilege which they could not have without the assistance of the House. But it had

been said this Company was composed of different persons who had subscribed their money to keep

up the concern. It was merely in effect this—that certain persons who had been proprietors of vessels,

were willing to contribute their vessels, to keep up the competition, and to that extent, and to that

extent only, they were willing to become shareholders. These individuals wished to have the assistance

of the House to carry on their coalition, and that being the case, he should certainly give his support

to the Amendment.

Mr. Baldwin also felt it his duty to oppose the third reading of this Bill, because it would have

the effect of completely putting down all sailing vessels trading between England and Ireland.

Mr. Barron thought that no man, after reading the Resolutions of the Company itself, could

doubt that their object was monopoly, and that they would, as a matter of course, do away with all

minor companies, by which the public would be exceedingly injured; and not merely the public, but

all the great outports of the United Kingdom; and that this company would charge whatever price

they pleased. He should, therefore, support the Amendment.

Lord Sandon, in reply, hoped the House would not be led away by the vague cry of monopoly,

which in no way whatever had been proved as to this Bill. The Bill had been subjected to the adverse

investigation of a scrutinizing Committee for many days; and the Company did not claim a limited

liability. On the contrary, every proprietor would be liable to the whole amount of his property.

The House divided on the question, that the Bill be now read a third time—Ayes 24; Noes 47:

Majority 23.

Chapter 12. First Attempts at Reform of the Law Applicable to Companies

a. Adoption of the First Trading Companies Bill (1834)103

AN ACT to enable His Majesty to invest trading and other Companies with the Powers necessary

for the due Conduct of their Affairs, and for the Security of the Rights and Interests of their Creditors.

(15th August 1834.)

_________________________

ABSTRACT OF THE ENACTMENTS.

1. His Majesty empowered, by letters patent, to grant to trading companies not incorporated

certain privileges for protection of themselves and of the public.— Name of any member may be

joined with principal officer in suits in equity.—-No privilege to be granted until after three months’

notice in Gazette.

2. Entry of grant of letters patent to be made in the office of Clerk of the Patents, and a

memorandum thereof published in the London Gazette and in mic newspaper in the neighborhood

of the association.

3. Decrees, judgements, &c. given against said company to extend to the property of such

company and to the person and effects of every member thereof.

4. List of members’ names, with their places of abode, to be filed with Clerk of Patents, and be

open for inspection.

5. Saving privileges of existing companies.

By this ACT,

After noticing that by an Act, 6 Geo. 4. c. 91, intituled, “An Act to repeal so much of an Act passed

in the Sixth Year of His late Majesty King George the First as relates to the restraining several

extravagant and unwarrantable Practices in the said Act mentioned, and for conferring additional

Powers upon His Majesty with respect to the granting of Charters of Incorporation to trading and

other Companies,” it is amongst other things enacted, that in any charter hereafter to be granted by

His Majesty, his heirs or successors, for the incorporation of an company or body of persons, it shall

and may be lawful in and by such charter to declare and provide that the members of such corporation

shall be individually liable in their persons and property for the debts, contracts, and engagements of

such corporation, to such extent, and subject to such regulations and restrictions, as His Majesty, his

103 4 & 5 Will 4 c. 94. URL: http://goo.gl/42Nwh. Paragraphs added.

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12. First Attempts at Reform of the Law Applicable to Companies

317

heirs or successors, may deem fit and proper, and as shall be declared and limited in and by such

charter, and the member of such corporation shall thereby be rendered so liable accordingly:

And that divers companies and bodies of persons do and may from time to time associate

themselves together for trading. charitable, literary, or other purposes, which associations it would be

inexpedient to incorporate by royal charters, granted either according to the rules of the common law,

or in pursuance of the said recited Act, although it would be expedient to confer upon such

associations, or some of them, some of the privileges of and incident to corporations created by royal

charters, and especially the privilege of maintaining and defending suits, actions, prosecutions, or other

legal proceedings, in the name or names of some one or more of the principal officers for the time

being of such associations respectively :—

It is Enacted,

I. That it shall and may be lawful for His Majesty, his heirs and successors, by letters patent to be

from time to time for that purpose issued under the Great Seal of the United Kingdom of Great

Britain and Ireland, or in Scotland under the seal appointed by the Articles of Union to be used, and

instead of the Great Seal thereof, to grant to any company or body of persons associated together for

any trading, charitable, literary, or other purposes, and to the heirs, executors, administrators, and

assigns of any such persons, although not incorporated by such letters patent, any privilege or

privileges which, according to the rules of the common law, or in pursuance of the said recited Act,

it would be competent to His Majesty, his heirs and successors, to grant to any such company or body

of persons in and by any charter of incorporation, and especially the before-mentioned privilege of

maintaining and defending actions, suits, prosecutions, and other proceedings, both at law and in

equity, in the name or names of any one or more of the principal officers for the time being of any

such associations respectively, which privileges shall be granted in and by such letters patent, in such

manner and form, and upon such conditions for the prevention of abuses in the management of the

affairs of any such associations, and for the security of the rights and interests of their creditors, and

for the protection of the public at large, as His Majesty, his heirs and successors, shall by any such

letters patent as aforesaid see fit from time to time to prescribe and impose; and any letters patent

which shall be so granted and issued as aforesaid shall, to the extent of the privileges thereby granted,

and subject to the conditions to be thereby imposed, be as valid and effectual in the law as if such

privileges were granted and such conditions were imposed by any Act passed for granting and

imposing the same:

Provided always, that in all cases where such letters patent shall be granted to any such company

or body of persons, it shall and may be lawful, in all suits or proceedings in equity commenced or

instituted against the principal officer or officers of such company or body of persons, to join, for

the purpose of discovery, in such suits or proceedings, any member or members of such company as

the nominal defendant or defendants for or on behalf of such company or body of persons, subject

to the payment by the plaintiffs of such costs as the Court in which such proceedings may be had

shall in that behalf order or direct:


318

Provided always, that nothing in this Act contained shall enable His Majesty to grant to any

company or body of persons any privilege under this Act until after notice in the Gazette shall have

been given three months that it is intended to grant such privilege or privileges.

And to the end that the issuing of such letters patent, and the name or names of the principal

officer or officers for the time being of the several associations thereby constituted, may be made

known to the public:——

It is Enacted,

II. That an entry of the grant of such letters patent, and of the name or names of the principal

officer or officers therein designated, or who may from time to time be appointed by virtue of the

powers for that purpose contained in such letters patent, shall be made in a book to be kept for that

purpose in the office of the Clerk of the Patents, and that the same shall be open for inspection at all

reasonable times, by any person requiring the same, on payment of a fee of 1s. only; and further, that

a sufficient notice or memorandum of such letters patent, together with the name or names of such

principal officer or officers, be advertised in the London Gazette within one calendar month from the

date of such letters patent, and also in some one newspaper published or circulating in the county or

place where the meetings of any such association shall he usually held; and also, that upon the death,

or change from any other cause whatever, of any such principal officer or officers, notice thereof, and

of the name or names of the person or persons succeeding him or them, shall in like manner be

recorded in the office of the Clerk of the Patents, and advertised in the London Gazette and in some

one newspaper as aforesaid; and the officer or officers so from time to time recorded and advertised

shall, for all intents and purposes, be held and considered as the party or parties entitled to sue and to

be sued on behalf of his or their respective associations, within the meaning of this Act, and of any

patent or patents to be from time to time granted by virtue thereof.

III. That any decree, judgment, order, or interlocutor made or pronounced in any such action, suit,

or proceeding in any court of law or equity against any officer of any such company, body, or

association named as aforesaid, shall have the like effect and operation upon and against the property,

funds, and effects of such company, body, or association, and upon and against the persons and

property of any and every member thereof, as if such company, body, or association, and such

member or members thereof, had been a party or parties to such action, suit, or proceeding, and as if

such decree, judgment, order, or interlocutor had been pronounced against such company, body, or

association, or against every or any such member or members thereof; provided that no diligence or

execution shall pass or be issued thereon without leave first granted in open court by the Court in

which such decree, judgment, order, or interlocutor was made or pronounced, and which motion shall

be made on notice to the person or persons sought to be charged, nor after the expiration of three

years next after such person or persona shall have ceased to be a member of such company, body, or

association.

IV. That the principal officer or officers for the time being of such company or body of persons

to whom such letters patent shall be granted shall, in the first week of the month of June and in the

first week of the month of December in each year during the continuance of such letters patent,


319

cause a true list of the names of all the then existing members of such company or body of persons,

with their respective places of abode and description, to he filed with the Clerk of the Patents, and

that the same shall be open for inspection at all reasonable times by any person requiring the same.

V. That nothing in this Act contained shall authorize or he construed to authorize the grant to any

company or body of persons of any privilege in derogation of any exclusive privileges now enjoyed

by any company or corporation under any Act or Acts of Parliament.

b. Second Trading Companies Act (1837)104

Chartered Companies Act 1837

1837 CHAPTER 73

An Act for better enabling Her Majesty to confer certain Powers and Immunities on trading and

other Companies.

[17th July 1837]

WHEREAS divers Associations are and may be formed for trading or other Purposes, some of

which Associations- it would be inexpedient to incorporate by Royal Charters, although it would be

expedient to confer on them some of the Privileges of and incident to Corporations created by Royal

Charters, and also to invest such Associations or some of them with certain other Powers and

Privileges: And whereas it would also be expedient to extend the Powers of Her Majesty in reference

to the Creation of Corporations, and to the conferring of Privileges upon Corporations, and upon

other Bodies or Companies enabled to sue and be sued: And whereas by an Act passed in the Sixth

Year of the Reign of His Majesty King George the Fourth, intituled An Act to repeal so much of an

Act passed in the Sixth Year of His late Majesty King George the First as relates to the restraining of

several extravagant and unwarrantable Practices in the said Act mentioned; and for conferring

additional Powers upon His Majesty with respect to the granting of Charters of Incorporation to

trading and other Companies, it was amongst other things enacted, that in any Charter thereafter to

be granted by His Majesty, His Heirs or Successors, for Incorporation of any Company or Body of

Persons, it should and might be lawful in and by such Charter to declare and provide that the Members

of such Corporation should be individually liable in their Persons and Property for the Debts,

Contracts, and 'Engagements 01 such Corporation, to such Extent, and subject to such Regulations

and Restrictions, as His Majesty, His Heirs Or Successors, might deem fit and proper, and as should

be declared and limited in and by such Charter, and the Members of such Corporation should thereby

be rendered so liable accordingly : And whereas by an Act passed in the Session of Parliament held in

the Fourth and Fifth Years of the Reign of His late Majesty, intituled An Act to enable His Majesty

to invest trading and other Companies with the Powers necessary for the due Conduct of their Affairs,

and for the Security of the Rights and Interests of their Creditors, His Majesty, His Heirs and

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320

Successors, were empowered to grant to unincorporated Companies and Associations certain

Privileges in such last-mentioned Act set forth : And whereas the aforesaid Provisions of the said

recited Acts have not been found effectual for the Purposes thereby intended, and it is therefore

expedient to repeal the same, and to make such Provisions in reference to the several Matters aforesaid

as are herein-after contained: Now therefore be it enacted by the Queen's most Excellent Majesty, by

and with the Advice and Consent of the Lords Spiritual and Temporal, and Commons, in this present

Parliament assembled, and by the Authority of the same, That so much of the said Act of the Sixth

Year of the Reign of His Majesty King George the Fourth as is herein-before set forth, and also the

said recited Act of the Session of Parliament held in the Fourth and Fifth Years of the Reign of His

late Majesty King William the Fourth, shall be and they are hereby respectively repealed.

II. Privileges may be granted by Letters Patent to Persons associated for trading or other

Purposes.

And be it enacted, That it shall and may be lawful for Her Majesty, Her Heirs and Successors, by

Letters Patent to be from Time to Time for that Purpose issued under the Great Seal of the United

Kingdom Of Great Britain and Ireland, or in Scotland under the Seal appointed by the Articles of

Union to be used instead of the Great Seal thereof, to grant to any Company or Body of Persons

associated together for any trading or other Purposes whatsoever, and to the Heirs, Executors,

Administrators, and Assigns of any such 'Persons, although not incorporated by such Letters Patent,

any Privilege or Privileges which, according to the Rules of the Common Law, it would be competent

to Her Majesty, Her Heirs and Successors, to grant to any such Company or Body of Persons in and

by any Charter of Incorporation.

III. The Letters Patent so granted may provide that Suits shall be carried on in the Name

of One of the Officers of any Company appointed for that Purpose.

And be it enacted, That in any such Letters. Patent so to be granted as aforesaid by Her Majesty,

Her Heirs or Successors, to any such Company or Body of' Persons so associated together as aforesaid,

but not incorporated, it shall and may be lawful, in and by such Letters Patent, either expressly or by

a general or special Reference to' this Act, to provide and declare that all Suits and Proceedings,

whether at Law, in Equity, or in' Bankruptcy or Sequestration, or otherwise howsoever, as well in Great

Britain and Ireland as in the Colonies and Dependencies thereof by or On behalf of such Company

or Body, or any Person or Persons as Trustee or Trustees for such Company or Body, against any

Person or Persons, whether Bodies Politic or others, and whether Members or not of such Company

or Body, shall be commenced and prosecuted in the Name of one of the Two Officers for the Time

being to be appointed to sue and be sued on behalf of such Company or Body, and registered in

pursuance of the Directions of such Appointment and Registration respectively herein-after

contained; and .that all Suits and Proceedings, whether at Law or in Equity, by or on behalf of any

Person or Persons, whether Bodies Politic or others, and whether or not Members of such Company

or Body, against such Company or Body, shall be commenced and prosecuted against one of such

Officers, or if there shall be no such Officer for the Time being, then against any Member of such

Company or Body : Provided nevertheless, that nothing in this .Act or in such Letters Patent contained


321

or to be contained shall prevent the Plaintiff from joining any Member of such Company or Body

with such Officer as a Defendant in Equity, for the Purpose of , Discovery, or in case of Fraud.

IV. Individual Liability of Members of a Company may be restricted by Letters Patent.

And be it enacted, That it shall and may be lawful, in and by such Letters Patent so to be granted

to any such Body or Company as aforesaid, to declare and provide that the Members of such Company

or Body so associated as aforesaid shall be individually liable in their Persons and Property for the

Debts, Contracts, Engagements, and Liabilities of such Company or Body to such Extent only per

Share as shall be declared and limited in and by such Letters Patent; and the Members of such

Company or Body shall accordingly be individually liable for such Debts, Contracts, Engagements,

and Liabilities respectively to such Extent only per Share as in such Letters Patent shall be declared

and limited; such Liability nevertheless to be enforced in such Manner and subject to such Provisions

as are herein-after contained.

V. Deed of Partnership to be executed.

And be it enacted, That every such Company or Body to which any such Privileges or Powers as

herein-before mentioned shall be granted under the Authority of this Act shall be entered into or

formed by a Deed of Partnership or Association, or an Agreement in Writing of that Nature ; and

the Undertaking shall by such Deed or Agreement be divided into a certain Number of Shares to be

there specified; and in such Deed or Agreement, or in some Schedule thereto, there shall be set forth

the Name or Style of the said Company or Body, the Names or Styles of the Members of the said

Company or Body, the Date of the Commencement thereof, the Business or Purpose for which the

said Company or Body is formed, and the principal or only Place for carrying on, such Business; and

in such Deed or Agreement there shall also be contained the Appointment of Two or more Officers

to sue or be sued on behalf of such Company or Body in manner herein-after mentioned.

VI. Return to be made as herein-after mentioned of the granting of Letters Patent, and

Style of Company.

And be it enacted, That such Company or Body as aforesaid shall, within Three Calendar Months

after the Grant of such Letters Patent as aforesaid, make or cause to be made a Return, to such one

of the Offices for Enrolment herein-after mentioned as shall be required under the Provisions of this

Act, containing the Date of the Grant of such Letters Patent as aforesaid, the Name or Style of the

said Company or Body, the Business or Purpose for which the said Company or Body is formed, the

principal or only Place for carrying on such Business, the total Number of Shares in the said Company

or Body (and each of which Shares is to be distinguished by a separate Number in regular Succession),

the Amount to which each Share shall render the Holder thereof liable, the Names and (except as to

Bodies Politic) the Places of Abode of all the Members thereof, and the distinctive Number or

Numbers of the Share or respective Shares which each Member holds ; and such Company or Body

shall also at the same Time make a Return of the Names and Descriptions of the Officers appointed

by such Company or Body to sue and be sued on behalf thereof in manner aforesaid; such Return to

be made in the Form in the Schedule (A.) to this Act annexed.


322

VII. Name of Company sot to be changed after Registry. If Place of Business changed,

Return to be made.

And be it enacted, That during the Continuance of any such Company or Body after it shall have

been so registered no Change shall be made in the Name or Style thereof; and if the principal or only

Place for carrying on the Business of the said Company or Body shall be changed the said Company

or Body shall within Three Calendar Months after such Change make or cause to be made a Return

to the said Office as aforesaid of such Change in the Form in Schedule (B.) to this Act annexed.

VIII. When Persons cease to be Members of Company or Corporation, except by Transfer

of Shares, or of Change of Name of Member, Company to make Return within Three

Months.

And be it enacted, That in case any Person shall cease to be a Member of such Company or Body

(except by means of the Transfer by Deed or Writing of any Share therein), or in case of the Addition

of any Person thereto (except by means of the-Transfer of any Share as aforesaid), or of the Change

of the Name of any Member thereof by Marriage or otherwise, the said Company or Body shall,

within Three Calendar Months after Information shall be received by the said Company or Body of

any Person so ceasing as aforesaid, or of such Change or Addition as aforesaid, make or cause to be

made a Return to the said Office as aforesaid, containing the Names and Places of Abode of all

Persons having ceased to be Members thereof (except as aforesaid), and the Names and Places of

Abode of all Persons having become Members thereof (except as aforesaid), and specifying any

Change in the Name of any Member thereof by Marriage or otherwise ; such Return to be made in

One of the Forms in the Schedule (C.) to this Act annexed, as the Case may be.

IX. On Transfer of Shares, Notice to be given to the Company or Corporation by

Transferee.

And be it enacted, That on the Transfer by Deed or Writing of any Share in any such Company

or Body as aforesaid, a Notice in Writing, specifying the Date of such Transfer, the distinguishing

Number of the Share transferred, the Name and (except in the Case of a Body Politic) the Place of

Abode of the Person by whom or on whose Behalf and of the Name and (except as aforesaid) the

Place of Abode of the Person to whom such Transfer is made, shall be given to the said Company or

Body, by leaving the Transfer, when executed by both Parties, or some Note or Memorandum thereof

signed by them, at the principal or only Office of the said Company or Body.

X. Company or Corporation to make Return within Three Months after receiving Notice

of Transfer.

And be it enacted, That in case of the Transfer of any Share in such Company or Body, the said

Company or Body shall, within Three Calendar Months after receiving such Notice as aforesaid of

such Transfer, make or cause to be made a Return to the said Office as aforesaid, containing the Date

of such Transfer, the distinguishing Number of the Share transferred, the Name and (except in the

Case of a Body Politic) the Place of Abode of the Person by whom or on whose Behalf such Transfer

is made, and of the Person to whom such Transfer is made, in the Form in Schedule (D.) to this Act


323

annexed; and such Company or Body are hereby required, on the Request in Writing of either of the

Parties, forthwith to make such Return accordingly.

XI. Any Person having made Payment in respect of a Share in a Company under any

Judgment against such Company to make a Return thereof to Court of Chancery.

And be it enacted, That where the Extent per Share of the Liability of the individual Members of

any such Company or Body shall have been limited by Letters Patent as aforesaid, it shall be lawful for

any Person who shall or may from Time to Time have advanced or paid any Sum in consequence or

by virtue of any Execution or Diligence issued against him in respect of any Share in such Company

or Body, under any Judgment, Decree, Interlocutor, or Order to be obtained against any Officer of

the said Company or Body, or any Member thereof, in manner herein-after mentioned, to make a

Return thereof to such Office as aforesaid in the Form in Schedule (E.) to this Act annexed; and every

such Return shall be accompanied with a proper Voucher or Vouchers of the Fact of such Payment,

without which the same shall not be registered as herein after mentioned.

XII. Company to make Return when Repayment is made of Money so advanced by any

Person.

And be it enacted, That if ally Sum or Sums shall at any Time be repaid by any such Company or

Body as last aforesaid in respect of any such Sum which may have been so advanced or paid by virtue

of such Execution or Diligence, the said Company or Body shall forthwith make or cause to be made

a Return to such Office as aforesaid, specifying the Amount of such Repayment, in the Form in

Schedule (F.) to this Act annexed.

XIII. On Death, Resignation, or Removal of Officer appointed to sue and be sued on

behalf of Company or Body, another to be appointed, and Return made.

And be it enacted, That in case of the Death or Resignation or Removal of any Officer appointed

to sue and be sued on behalf of any Company or Body to be formed in pursuance of any of the

Provisions of this Act, the said Company or Body shall forthwith appoint in his Stead another Officer

to sue and be sued on behalf of such Company or Body, and shall, within Three Calendar Months

after the Death, Resignation, or Removal of such Officer as aforesaid, make or cause to be made a

Return to the said Office as aforesaid, containing as well the Name and Description of the Person

who has ceased to be such Officer in manner aforesaid as the Name and Description of the Officer

who has been appointed to sue and be sued on behalf of such Company or Body ; such Return to be

made in the Form in Schedule (G.) to this Act annexed.

XIV. Returns how to be signed and verified.

And be it enacted. That all Returns to be made in manner aforesaid by such Company or Body

shall be signed by One of such Officers, and shall be verified by a Declaration of such Officer made

pursuant to the Provisions of the Statute of the Fifth Year of His late Majesty's Reign, intituled An

Act to repeal an Act of the present Session of Parliament, intituled' An Act for the more effectual

Abolition of Oaths and Affirmations taken and made in various Departments of the State, and to


324

substitute Declarations in lieu thereof ' and for the more entire Suppression of voluntary and extra-

judicial ' Oaths and Affidavits;' and to make other Provisions for the Abolition of "Unnecessary Oaths,

except that if there shall be no such Officer, or such Officer shall refuse to act, then such Return shall

be sighed and verified as aforesaid by some Member of the said Company or Body.

XVII. By whom Returns are to be registered.

And be it enacted, That all such Returns as are hereinbefore directed to be made to the Enrolment

Office of the Court of Chancery in England shall be registered by the Clerks of Enrolments in

Chancery, or their Deputy, and that all such Returns as are herein-before directed to be made to the

General Registry Office at Edinburgh shall be registered by the Lord Clerk Register or his Deputy,

and all such Returns as are herein-before directed to be made to the Enrolment Office of the Court

of Chancery in Ireland shall be registered by the Clerks of Enrolments in Chancery in Ireland, or their

Deputy, in Books to be by them respectively kept for that Purpose, and that an alphabetical Index

shall be kept of the Names of such Companies or Bodies, with References to such Returns, and that

there shall be paid for the registering of each Return a Fee of Sixpence per Folio, and no more; and

that any Person shall be at liberty to inspect such Books and Index, and that there shall be paid for

such Inspection a Fee of One Shilling, and no more; and that any Person shall be at liberty to require

a Copy of any such Return, to be certified by the said Clerks or their Deputy, and that there shall be

paid for such Certificate a Fee of One Shilling and Sixpence for each Folio of such Copy, and no

more; and the Day of the Registration of every Return to be made in pursuance of this Act shall be

written on such Return by the said Clerks or their Deputy.

XVIII. Certified Copy of such Return, &c. to be received in Evidence.

And be it enacted, That a Copy, so certified as aforesaid, of such Return, including the Date to be

marked on such Return, shall be received in Evidence in all Proceedings, whether Civil or Criminal,

and shall also be received as Evidence of the Day of the registering thereof.

XX. No Person entitled to share in Profits till registered as a Member.

And be it enacted, That no Person becoming a Member of any such Company or Body by the

Transfer of any Share therein, or otherwise, shall be entitled to sue for or recover any Share of the

Profits thereof, unless and until a Return of the Transfer or other Fact whereby he shall so become a

Member shall be registered pursuant to the Provisions herein-before contained.

XXI. Person ceasing to be a Member to continue liable till Transfer, &c registered.

And be it enacted, That any Person ceasing to be a Member of any such Company or Body,

whether by the Transfer of any Share therein, or by Death or otherwise, shall be considered for all

Purposes of Liability as continuing a Member of such Company or Body until a Return of the

Transfer or other Fact whereby he shall have so ceased to be a Member shall be registered pursuant

to the Provisions herein-before contained.

XXII Proceedings, commenced in the Name of Officer not to be abated by his Death, &c.

or by Change of Members of Company.


325

And be it enacted, That no Action, Suit, or Proceeding, whether Civil or Criminal, commenced

either by or against any such Company or Body (whether in the Name of one of the Officers,

appointed to sue and be sued as aforesaid, or of some Member of such Company or Body, in the

Case and in manner aforesaid), shall be abated or prejudiced by the Death or by any Act of such

Officer or Person, or by the Resignation or Removal .of such Officer, either before or after the

Commencement of such Action, Suit, or Proceeding, or by any Change in the Members of such

Company or Body by the Transfer of Shares or otherwise, but that the same shall be continued in the

Name of such Officer or Member (as the Case may be) notwithstanding such Death or Act, or such

Resignation or Removal, and notwithstanding such Change in the Members of such Company or

Body.

XXIII. Evidence of Officer or of Member of Company admissible.

And be it enacted, That in all such Actions, Suits, and other Proceedings, whether Civil or Criminal,

the Evidence of any-such Officer as aforesaid, or of any Member of such Company or Body, shall be

admissible in the like Manner as if such Officer or Member were not an Officer or Member of such

Company or Body.

XXIV. Effect of Judgments against Company.

And be it enacted, That all Judgments, Decrees, Inter, locutors, and Orders obtained in any such

Actions, Suits, or other Proceedings as aforesaid against such Officer or Member in manner aforesaid,

whether such Member or Officer respectively be Party to such Actions, Suits, or Proceedings, as Plain

tiff, Pursuer, Petitioner, or Defendant or Defender, shall have the same Effect against' the Property

and Effects of such Company or Body, and also (to the Extent herein-after mentioned) against the

Persons, Property, and Effects of the individual existing or former Members thereof, respectively, as

if such Judgments, Decrees, Interlocutors, or Orders had been obtained against such Company or

Body in Suits or Proceedings to which all the Persons liable as existing or former Members of such

Company or Body had been Parties, and that Execution or Diligence, or Executions or Diligences,

shall be issued thereon accordingly: Provided nevertheless, that where the Extent per Share of the

Liability of the individual Members shall have been limited by any Letters Patent as aforesaid, no such

Execution of Diligence shall be issued against any such individual existing and former Member of

such Company oi Body as aforesaid for a greater Sum than the Residue, if any, of the Amount for

which, by virtue of such Letters Patent as aforesaid, such individual Member shall be liable in respect

of the Share or Shares then or theretofore held by him in the said Company or Body, after deducting

therefrom the Amount, if any, which shall appear by such Register as aforesaid to have been advanced

and paid in respect of such Shares or any of them by himself or herself, or any previous or subsequent

Holder of the same Shares or any of them, or the Representatives of any such Holder, under by virtue

of any former Execution or Diligence, and not repaid at the Time of issuing such subsequent

Execution or Diligence.

XXV. Bankruptcy of Officer of Company not to affect Company or Liabilities of

Members.


326

And be it enacted, That the Bankruptcy, Insolvency, or stopping Payment of any Officer or

Member of such Company or Body in his individual Capacity shall not be construed to be the

Bankruptcy, Insolvency, or stopping Payment of such Company or Body ; and that the Property and

Effects of such Company or Body, and the Persons, Property, and Effects of the individual Members

or other individual Members thereof (as the Case may be), shall, notwithstanding such Bankruptcy,

Insolvency, or stopping Payment, be liable to Execution or Diligence in the same Manner as if such

Bankruptcy, Insolvency, or stopping Payment had not taken place.

XXVI Service of Notice on the Company.

And be it enacted, That in all Cases wherein it may be necessary for any Person to serve any

Summons, Demand, of Notice, Or any Writ or other Proceeding at Law or in Equity, or otherwise,

upon the said Company or Body, Service thereof respectively on the Clerk of the said Company or

Body, or by leaving the same at the head Office for the Time being of the said Company or Body, or

in Case such Clerk of the said Office shall not be found or known, then Service thereof on any Agent

or Officer employed by the said Company or Body, or by leaving the same at the usual Place of Abode

of such Agent or Officer, shall be deemed good and sufficient Service of the same respectively on

the said Company or Body.

XXVII. Service of Notice by the Company.

And be it enacted, That in all Gases wherein it may be necessary for the said Company or Body

to give any Summons, Demand, or Notice of any Kind whatsoever to any Person or Corporation,

under the Provisions or Directions contained in this Act, such Summons, Demand, or Notice may be

given in Writing, signed by the Clerk, Attorney, or Solicitor for the Time being of the said Company

or Body, without being required to be under the Common Seal of the said Company or Body.

XXVIII. Determination of Company not to prevent the winding up of their Affairs.

And be it enacted, That in Case of the Determination of such Company or Body such Company

or Body shall nevertheless be Considered as subsisting, and to be in all respects subject to the

Provisions of this Act, so-long and so far as any Matters relating to such Company or Body shall

remain unsettled, to the End and Intent that such Company or Body may do all Things necessary to

the winding-up of the Concerns thereof, and that it may be sued and sue under the Provisions of this

Act in respect of all Matters relating to such Company or Body.

XXIX. Duration of Charters of Incorporation may be limited.

And be it also enacted, That it shall be lawful for Her Majesty, Her Heirs and 'Successors, in any

Charter of Incorporation to be hereafter granted, to limit the Duration thereof for any Term or

Number of Years, or for any other Period whatsoever; and also in any Charter of Incorporation

(whether in Perpetuity or for any Term or Period), either by Reference to this Act or otherwise, to

make the Corporation thereby formed, and the Officers and Members thereof, subject to all of the

Provisions, Liabilities, and Directions hereinbefore authorized to be imposed on or required from any

unincorporated Company or Body, or its Officers or Members, and also to confer on such Corporation


327

or its Members and Officers all the Powers or Privileges herein-before authorized to be conferred on

any unincorporated Company or Body, or its Officers or Members; and all the Powers, Provisions,

Clauses, Matters, and Things herein-before contained in reference to unincorporated Companies or

Bodies shall accordingly in such Case, and so far as the same may be applicable, be considered to

belong and apply to such Corporation.

XXX. Limitations as to Exemptions to be granted to Companies by Letters Patent.

Provided always, and be it enacted, That nothing in this Act contained shall authorize or be

construed to authorize Her Majesty, Her Heirs and Successors, by any such Letters Patent, to exempt

any Company or Body of Persons associated as aforesaid from the Necessity of entering into a Deed

of Partnership, from making the Return of the Patent to the Enrolment Office of the Court of

Chancery, from the Necessity of, carrying into execution the Provisions of this Act in respect to

Change of Name or Style of the Company or Body associated, in respect to the Cessation, or to the

Addition or to the Change of Name of any of the Individuals of the Company, or to the Transfer of

Shares and to the Notices to be given thereof, or to the Payment of any Sum by any Shareholder on

account of any Preferment against such Company or Body, or to the Returns to be made to the

Enrolment Office of such Payment, or of the Repayment thereof, or from making a Return to the

said Office of the Name of the Officer appointed by said Company to sue and be sued on its Behalf,

in case of the Death, Resignation, or Removal of the one registered, or to exempt any Company or

Body so associated from the Provisions of this Act in relation to the Period at which its several

Members shall become entitled or shall cease to share in the Profits thereof, the whole as required by

the Provisions of this Act.

XXXI. Act not to affect existing Privileges.

Provided always, and be it enacted, That nothing in this Act contained shall authorize or be

construed to authorize the Grant to any Company or Body of Persons of any Privilege in derogation

of any exclusive Privileges now enjoyed by any Company or Corporation under any Act or Acts of

Parliament.

XXXII. Notice of Application for Letters Patent to be inserted in the London Gazette, &c.

And be it enacted, That whenever an Application shall be made to Her Majesty to grant Letters

Patent or a Charter of Incorporation to any Company or Body of Persons associated together for any

Purpose of Trade, and such Application shall have been referred by Her Majesty to the Committee

of Privy Council for Trade and Plantations, then, before any Report shall be made to Her Majesty,

and before any such Letters Patent or Charter shall be granted, Notice of such Application shall be

inserted by the Parties applying Three several Times in the London Gazette and in One or more of

the Newspapers circulating within the County in which it is proposed that the principal Place of

Business of such Company shall be established, at Intervals of not less than One Week.


328

c. Defeat of An Attempt to Amend the Trading Companies Act (1838)

TRADING COMPANIES105.

The Lord Chancellor moved the second reading of the Trading Companies Bill.

Lord Brougham totally objected to the bill which passed that House last year upon this very

subject. It passed that House per incuriam without ever having obtained any consideration from the

law lords, when the House was under the terrors of a dissolution, on their death bed, and,

consequently with but little time to attend to their temporal concerns. A worse bill, and one which

introduced more mischievous changes in commercial law, it would be impossible to frame. The bill

gave power to the Crown, without an act of Parliament, to make one, two, or three persons in the

country a trading company. The Secretary of State and the President of the Board of Trade, without

any judicial advice or assistance, had it in their power, under the bill, to erect those persons into a

trading company, and exempt them from the operation of the bankrupt laws, limiting their

responsibility to a certain amount, contrary to the whole genius and spirit of the English law, and

contrary to the genius and spirit of the constitution. Whether the principle of the French law of

partnership, commandite, should be adopted in this country or not, was a question which had been

much discussed, but all the great luminaries of political science were against it; and after what

professor M'Culloch had said against it, he had come to the conclusion that if this principle was

introduced into the English commercial law, it would be impossible to enumerate the evils which

would follow its introduction. For these reasons he would do nothing whatever to extend the operation

of the bill passed last year.

The Lord Chancellor said, that no opposition whatever had been offered to this bill in the House

of Commons. It had certainly not passed without observation, but it had not been opposed. Whatever,

however, might be the merits and demerits of the system of commandite, the present question was

whether the present bill should or should not be permitted to pass in order to correct omissions and

defects in the law as it stood.

The Duke of Wellington. observed, that he was not all satisfied with the bill which [841] passed

last year, and he wished that some discussion should take place on this bill.

Debate adjourned.

TRADING COMPANIES106.

Lord Brougham. I should hope that the noble Lord on the woolsack does not mean to press this

most exceptionable bill, founded on a principle the most abominable, for carrying into effect the bad

act of last Session, giving rise to every species of fraud and dishonesty. It has not answered in France.

105 HL Deb 31 July 1838 vol 44 cc840-1 840. URL: http://hansard.millbanksystems.com/lords/1838/jul/31/trading-companies#S3V0044P0_18380731_HOL_14. Contains Parliamentary information licensed under the Open Parliament Licence v1.0. 106 HL Deb 14 August 1838 vol 44 cc1207-10 1207. URL: http://hansard.millbanksystems.com/lords/1838/aug/14/trading-companies#S3V0044P0_18380814_HOL_20. Contains Parliamentary information licensed under the Open Parliament Licence v1.0.

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329

A man of straw is set up, and all the rest are answerable only to the amount of about 100l. I hope the

present Trading Companies Act will not pass, and if it is brought forward now, I shall move that it be

read a third time this day three months.

The Lord Chancellor. I cannot give up the Bill.

Lord Brougham. Then, my Lords, I move that the Bill be read a third time this day three months.

The Lord Chancellor. My Lords, in order to accommodate my noble Friend, as he appears rather

anxious to quit the House, I will at once move the order of the day for the third reading of the Bill.

Lord Brougham. Then, my Lords, I move as an amendment, that the Bill be read a third time

this day three months. The object of the Bill is to enable the Crown to constitute any three or twenty

persons a corporation for the purpose of carrying on a trade; at the same time making those persons

liable only to the amount they have embarked in that trade. Now that, my Lords, in my opinion, gives

a licence to every species of fraud. The last Bill that has been introduced on this subject has been

productive of the worst results, and the effect of the present measure will be to make that which was

bad enough before, ten times worse.—Therefore it is that I hope your Lordships will not allow this

measure to be read a third time.

The Lord Chancellor. My Lords, the bill of last year requires great alterations, and the object of

the present measure is to supply its omissions and defects. The Act of the [1208] last Session

authorised the Crown to sanction the incorporating associations of persons for effecting, by their

joint capital, public works and objects, but it did not comprehend companies formed prior to the Act.

The object of the present bill was to remedy that defect upon all companies complying with the

regulations laid down by the act that was now in force. There is sometimes great difficulty in making

corporations pay the demands against them, because very often their property is not to be found; by

the present bill, every person must register their shares; parties, therefore, well know the extent to

which they are liable, and the public will be aware of the persons with whom they have to deal.

Lord Brougham. My Lords, I have already stated to your Lordships the objections I entertain to

this measure, and also to the bill of last year. That measure gives to the proprietors of Trading

Companies only a limited responsibility, and relaxes that care and vigilance which every partner in a

concern ought to keep over the whole of his partners. The result of which is, my Lords, that for want

of that vigilance many a concern will be brought to a stand still, and many hundreds of individuals

will be ruined. Oh! but, says my noble and learned Friend, the names of all the shareholders must be

registered. Now, I think there is very little in that. We all know the effect of great names, such as

Baring, Mellish, and others. A man when he gets a bill of theirs, does not go inquiring about their

respectability, because he knows he can get the money for that bill at any time; so with respect to many

of these companies, people don't go to the Register to see who are proprietors and who are not. They

see great names attached to the direction, in many instances without the sanction of the parties, they

give them credit, they advance them money, and probably the next day they find them all in the

Gazette.—Now, a law on the same principle has been tried in France, and most signally failed. It is the

practice often in companies, for some of the acting partners to fabricate accounts of fictitious


330

property, and to make it appear that they are able to pay a dividend of twenty per cent, for the present

year, and a similar dividend for the next, and so they go on till the whole capital is absorbed, while all

the time there has been nothing [1209] but loss instead of profit. It is very easy, my Lords, to produce

mystification and delusion by means of accounts, when persons are disposed to do so; and, therefore,

it becomes necessary that means should be taken to prevent such proceedings. Under the good old

system, in case of a defalcation, the directors were made to disgorge their profits if it should be proved

that they had not acted fairly, but under the new French system they are allowed to pocket their own

accounts, to the ruin of the other shareholders, and are not to be liable beyond the extent of 100l. I

think, as I have clearly shewn, that the result of this system in France has been most mischievous,

your Lordships will hesitate long before you make it effectual in England—and that being the object

of the present bill, that you will reject it altogether.—The measure, my Lords, was originally resorted

to in a poor country, where the means were required to draw capital into trade, but that is not the case

in England, for here there is too much disposition to invest capital in trading speculations. My Lords,

it is far from my wish to check the spirit of fair speculation, but I cannot but think that the present

bill if it become law, would tend to encourage the investment of small sums in enterprises which

would neither afford benefit to those engaged in them or the community at large.—For these reasons

I trust that your Lordships will reject the bill.

The Lord Chancellor. My Lords, the observations of the noble Lord may apply very well to the

ordinary matters of trade, but they can have no reference at all to great public works. My Lords, I

would ask your Lordships whether there are no Railway Companies and no Canal Companies whose

directors deal fairly with their proprietors? The real question for your Lordships is, whether the

proposed system is not better for the individuals concerned and the community at large, than that of

placing their capital in the hands of Corporations, against whom the individual creditors could not

enforce their claims?

Lord Brougham. I beg to say it is not. Five hundred persons cannot form themselves into a

company—they must have an Act of Parliament, and the Act of Parliament almost always gives them

a general responsibility, and hardly one of them are liable. If Railway and other Companies go on well,

much of this is to be attributed to the wisdom of Parliaments and the new rules of the House, by

which the merits of every private bill are fully and [1210] accurately sifted. By the present bill the

whole details are taken out of the hands of Parliament, and transferred to the discretion of two or

three private individuals, who may perhaps be influenced by party or personal motives.

The House divided. Contents 10; Not Contents 12; Majority 2.

Bill thrown out.

Table of cases

Blundell v. Winsor (1837) .............................................................................................................................................. 254

Clarke v. Powell (1833) ................................................................................................................................................... 110

Dominus Rex v. Caywood................................................................................................................................................ 93

Duvergier v. Fellows (1828) ........................................................................................................................................... 236

Ex parte Dyster in the Matter of Moline .................................................................................................................... 117

Garrard v. Hardey (1843) ............................................................................................................................................... 257

Harrison v. Heathorn (1843) ......................................................................................................................................... 263

Highmore v. Molloy (1737)............................................................................................................................................ 106

Janssen v. Green (1767) .................................................................................................................................................. 106

Josephs v. Pebrer (1825) ................................................................................................................................................. 187

Nockels v. Crosby (1825) ............................................................................................................................................... 189

Pratt v. Hutchinson (1812)............................................................................................................................................. 184

Rex v. Dodd (1808) ......................................................................................................................................................... 173

Rex v. Webb (1811) ......................................................................................................................................................... 177

Van Sandau v Moore (1826) .......................................................................................................................................... 222

Walburn v. Ingilby (1833) ............................................................................................................................................... 246

Wilkes v. Ellis (1795)....................................................................................................................................................... 108

332

Table of statutes

Act to restrain the number and ill practice of brokers and stock-jobbers, 8 & 9 W. III c. 32

(1697)

2

An Act for enlarging the Capital Stock of the Bank of England, 8 & 9 W. III c. 20 (1697) 3

An act for repealing the act for the well garbling of spices, 6 Anne, c. 16 (1707) 11

The Cards and Dice Act, 10 Anne, c.19 (1711) 14

An act to reduce the rate of interest, 12 Anne Stat. 2, c.16 (1713) 15

Bank of England Act, 5 & 6 W. & M., c. 20 (1694) 17

An Act for enlarging the Capital Stock of the Bank of England, 8 & 9 W. III c. 20 (1697) 23

South Sea Company Act, 9 Ann., c. 21 (1711) 26

Act to enable the South Sea Company to redeem the public debt, 6 Geo. I, c. 4 (1720) 36

The Bubble Act, 6 Geo. 1 c. 18 (1720) 74

Act to extend the Bubble Act to the American Colonies, 14 Geo. II c. 37 (1741) 93

Barnard’s Act, 7 Geo. II. c. 8 (1734) 100

An act to repeal Sir John Barnard’s Act, 23 & 24 Vic., c. 28 (1860) 101

An act to create the Company of Proprietors of the Warwick and Birmingham canal navigation,

33 Geo. III c. 38 (1793)

136

An act to create the Wisbeach Canal Company, 34 Geo. III 92 (1794) 139

An Act to enable The Globe Insurance Company to sue and be sued, 47 Geo. III, c. 30 (1807) 154

An Act to alter and explain An Act to enable The Globe Insurance Company to sue and be

sued, 49 Geo. III, c. 122 (1809)

156

An Act for establishing an Agreement with the Bank of England, 39 & 40 Geo. III, c. 28 (1800) 158

An Act for the better regulating Copartnerships of certain Bankers in England, 7 Geo. IV, c.

46 (1826)

166

The Act to repeal the Bubble Act, 6 Geo. 4, c. 91 (1825) 220

Trading Companies Act, 4 & 5 Will 4 c. 94 (1834) 315

Chartered Companies Act, 7 Will 4 & 1 Vict. c. 73 (1837) 318

333

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