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tical measures themselves, but strong enough to barricade to others the proper avenues to legislative reform. The great drums have been beaten, but the drummers have been as hollow as the drums. It is not for us to say how much this sad spectacle results from ignorance, or how far it has been a “ game of speculation."
\Ve do not conceal our opinion that the delusions (of which we doubt not he himself was also a victim) attempted by Sir II. M.‘C. Cairns to be practised on the Commons are, politically and socially, both a blunder and a crime—-a blunder, because the short-lived “ brilliancy ” of the parliamentary orator will be forgotten, whilst the falseness of the pretensions put forward will long be remembered: brumagem diamonds may once cheat the confiding customer, but what becomes of the character and future trade of the cheap jeweller?——a crime, because possible and real improvements of judicious reformers have been retarded, and confidence has been shaken in the good faith, probity, and ability of public men who profess to devise and carry out the rational requirements of the public.
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DIVORCE AND MA'PRIMONIAL
1. SMITH v. Smrn (28 L. J. Prob. and Mat. Court, 77)—Petition by Wife for Dissolution of Marriage-Desertion—Decree of the
remedy 0fJudicia.l Separation. . . . . . . . . . . . . 230
2. Scorn v. DIXON (Hil. Term, 1859, Q.B.—Not yet reported)Liability of Directors of Public Companies for Misrepresentations -—Fraud—Publication of Reports by Directors-—Evidence. - . 230
1. SMITH v. SMITH. 28 L. J. Prob. and Mat. Courts, 77.
Petition _by Wife for Dissolution of Jlarriage-—Dcserti0n—Decree of the remealy of Judicial Separation.
IN the above case the wife petitioned under 20 and 21 Vic., c. 88, s. 27, for a dissolution of marriage, on the ground of adultery, coupled with desertion, without reasonable excuse, for two years and upwards; and the prayer of the petition was simply for a dissolution of the marriage. T he respondent did not appear. The court (which was composed of the Lord Chancellor, Mr. Justice VVightman, and the Judge Ordinary) held that the adultery was proved, but that the desertion was not, as there were circumstances in the case leading to the belief that the petitioner and her husband parted by mutual consent. The Court was of opinion, however, “that although the petitioner may pray a dissolution of marriage, yet it is competent for the Court to grant such relief as the facts proved would warrant.” A judicial separation was therefore decreed, and the husband condemned in costs.
Liability of Directors of Public C'ompam'es for Misrepresentations—Fraud— Publication of Reports by Directors—Euidence.
Tum was when directors of public companies were assumed to be nearly, if not quite irresponsible, for all that they said or did whilst seated behind the board-room door. VVhen great companies failed, and gross frauds were found to have been committed by managers and directors, they escaped with comparative impunity. But then came the Royal British Bank swindle, and the law was awakened, and the public, laying to heart the verdict of “guilty” which in that case was returned, by a natural re-action began to think that they could hold any and every director of a company liable for every inaccurate statement made by any director or oflicer of that company as to its affairs.
The case of Scott v. Dixon, having been also cited in support of the above opinion, we now purpose giving an account of it, not so much on the ground of its involving any new doctrine in point of law, but to expound clearly for what class of misrepresentations, and on what evidence, the defendant in that case was held responsible.
The action was brought by John Scott and Robert Robinson, against Joshua Dixon, one of the directors of the Liverpool Borough Bank. The plaintiffs, by their declaration, sought to recoverlof the defendant damages for certain false representations as to the solvency and affairs of the bank, alleged to have been fraudulently and deceitfully made by the defendant to the plaintiffs, to induce them, and whereby they in fact were induced, to purchase shares in the bank, the purchase-money of which shares they lost, the bank being insolvent and the shares worthless, and in respect of which shares they were compelled to pay certain calls made after failure of the bank, as a contribution to its losses.
The defendants pleaded, 1st, not guilty; and 2nd, that the plaintiffs were not so induced as in the declaration alleged. .l‘he false representations complained of were contained in a report (set out in the declaration) presented by the directors to the shareholders on the 28th day of July, 18.57, which was as follows—
“According to the last report, the paid up capital of the Bank was £900,000, and the reserve fund was £101,775, 10s. 11d. _
“Since that date two calls of £1 per share have been paid upon the new shares, making the capital .£l,O00,000.
“ The nett profits of the past year, after payment of all expenses of management, and after deducting £45,825, 2s. ld. for losses by bud debts incurred during the same period, amount to - £69,312 12 8
Appropriated as fol1ows—3-lper cent. dividend upon £950,000 - £33,250 O 0 2-; ,, ,, ,, £1,000,000 - 25,000 0 0 Property tax paid by the bank - - - 3,629 6 8 i----- £61,879 6 8 Balance carried to reserve fund - - - - - - - £7,439 6 0
“ Nearly the whole of the losses above-mentioned have been caused by the frauds of a customer.
“ In winding up the affairs of 1851-, a year which it is well-known was most disastrous to those customers of the bank who were engaged in the colonial shipping trade, heavier loss has been sustained in the realization of the assets then taken over by way of security, and in the liquidation of estates then considered good, than could possibly have been anticipated.
“ The directors have thought it their duty at once to reduce the dividend to the rate of £5 per cent. per annum, on the grounds that, taking the most favourable view of the liquidation of these accounts, the whole of the reserve fund will be required to meet the losses incurred ; and that, on the other hand, taking the most unfavourable view consistent with probability, the good current business of the bank will, in their opinion, be sufficient to admit of the regular continuance of the dividend without encroaching on the capital at the same period in the ensuing year.
“ In laying this statement before the shareholders, the directors desire strongly to impress upon them that its unsatisfactory character is to be attributed to the affairs of 1854, and that, apart from these, the sound and legitimate business of the bank would have enabled it to pay the ordinary dividends, and also to add largely to the reserve fund, notwithstanding the losses that have been incurred subsequently to that year. They wish also to state their confident expectation, that the change they are making in the policy and regulations of the bank will efiectually guard against the recurrence of similar results.
“Mr. Smith having stated to the directors that his health would not longer permit him to undergo the labour of conducting the details of the manager's duties, and having in consequence requested to be relieved from his office, they have with reluctance complied with his wish, and have made arrangements that Mr. Thomas Sellar, who is in every respect eminently qualified for the post, shall, from the 1st of August next, assume the position of manager. Mr. Smith has, at the request of the directors, consented to take a place at the board, and to continue to give the bank the aid of his valuable assistance.
“The directors who go out of ofiice by rotation are Mr. Rathbone, Mr. Dixon, and Mr. Benn, who are eligible for re-election. '
“ Proprietors legally exempt from the income tax, will be furnished with a certificate of the proportion due on their shares, on application to the manager.
“ WILLIAM Rxrneonn, Chairman.”
The cause was tried at Liverpool, on the 26th August, 1858, before Mr. Baron Martin. ‘
The plaintiffs case was (according to the statement of his counsel, l\Ir. Edward James), that the defendant was a managing director of the company, having been appointed a director in 1354, and a managing director in July 1857, at the time the report of July 1857 was published, and had concurred in its publication ; and that that report was false in its statements as to the solvency and aifairs of the bank, on, amongst others, these grounds :— <
1. That the paid up capital of the bank was not £1,000,000, but £936,000.
2. That the report, by stating that a dividend was to be paid in respect of the half-year’s profits, £69,318, 12s. 8d., induced the public to believe that the bank was in a sound financial condition; whereas the fact was, that though there might have been that amount of profits for that particular half-year, therewas upon the whole account a deficit; the dividend, therefore, being in fact paid out of capital.
The plaintiffs further contended, that the defendant knew that such report misrepresented the facts; that such report was addressed not only to the shareholders, but to the public generally, and was intended to deceive them by concealing the state of the bank, and induce them to believe the bank to be in a sound financial condition; that the plaintiffs received the report, and, on the faith of its being true, bought ten shares in the bank, in August 1857, the damage to the plaintiffs being, that they lost the purchase-money of the shares, which were valueless (the bank failing on the 27th October, 1857), and were obliged, in respect of such shares, to pay calls made after the failure of the bank, as a contribution towards its losses.
In support of the case of the plaintiffs, the following evidence was given.
The above report of July 28, 1857, was put in.
The plaintiffs themselves were called, and proved that in August they applied to Mr. Brown, a stockbroker, for a report of the bank; ‘that he procured the report of July 28; that in consequence of reading that report, vouched by the names attached to it, they bought ten shares in the bank; that the shares became valueless when the bank stopped, and that they had to pay calls as a contribution to losses.
Mr. Tinley, a sharebroker, was called, and proved that he