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CHAPTER VI.

ON THE DISSOLUTION OF RAILWAY COMPANIES, AND HEREIN

ON THE RIGHTS OF ALLOTTEES TO RECOVER THEIR DE

POSITS.

A RAILWAY company, acting under a special act of Parliament, is constituted a body corporate, and can only be dissolved by an act of Parliament, unless, indeed, such a company should fall within the provisions of the stat. 7 & 8 Vict. c. 111, s. 26, which enables her Majesty, in certain cases, to revoke and make void all powers conferred by Parliament on bankrupt companies (a).

But the great competition which has prevailed between the promoters of competing lines of railway, has led to the failure of many companies, which, from various causes, have been unsuccessful in obtaining acts of Parliament to enable them to carry their proposed undertakings into effect; and, as the Joint-stock Companies Act, 7 & 8 Vict. c. 110, under which these companies are provisionally registered, does not contain any provisions for dissolving such companies, it has been usual to insert a clause in the subscribers' agreement, authorising the managing directors to dissolve the company, if such a step should become necessary. But many companies having been established and conducted, under circumstances which rendered it a matter of extreme difficulty to wind up their affairs, a statute was passed in the session of Parliament, 1846, for the express purpose of dissolving certain railway companies. It will

(a) It is very doubtful whether a railway company is a commercial or trading company within the meaning

of this statute, see note (a), post, Ap

pendix, 74. A company within the purview of 9 & 10 Vict. c. 28, may clearly be made bankrupt, post, 674, note (p).

Dissolution of
Partnerships
Statutes.

be seen, however, that this act is only applicable to comotherwise than by panies which were in existence at the time of the passing of the act; and it is therefore necessary, before we proceed to detail the provisions of the statute, to make a few observations on the state of the law, as it respects the dissolution of partnerships generally; and the result appears to be, that, unless at some future time the provisions of the beforementioned statute are extended, so as to embrace all railway companies not incorporated by act of Parliament, considerable difficulties will occur in winding up the affairs of unsuccessful companies.

The usual mode of dissolving a partnership, in the absence of an agreement in the deed of partnership, is by applying to a court of equity; but it being a well-established rule in courts of equity, that, if a suit be instituted, seeking to wind up the affairs of a partnership, all persons interested must be made parties, however numerous they may be, it is almost impossible to dissolve a railway company by making an application to a court of equity. In Deeks v. Stanhope (b), one of the latest cases on the subject, Sir L. Shadwell, V. C. of England, lays down the rule above referred to, in the following language: "The difficulty in this case is, that the objection to the bill is made by some of the partners themselves; because it prays a dissolution of the partnership, without bringing all the parties before the Court. Now, there is a train of decisions which have held, that, where a bill is filed for the dissolution of a partnership, that cannot be effected unless you have all the parties interested before the Court. The case of Evans v. Stokes (c) was decided six years after the case of Long v. Yonge (d), and Lord Lang

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dale there says, 'It is perfectly obvious that a suit, where all

Dissolution of
Partnerships

Statute.

the accounts of the partnership are to be taken, and the otherwise than by rights of all the partners are to be determined, as between themselves, and under the various circumstances in which they stand in relation to each other (some of them, for instance, having paid their calls, and others having omitted to do so), cannot be prosecuted in the absence of any of those partners.' Then, after that, you have the commentary of Lord Cottenham, in Wallworth v. Holt (e); and Lord Cottenham, as I collect from what he said in that case, would, if the case before him had been different from what it was, have done that which he seemed very much inclined to do. But it must be observed, that, in the case of Wallworth v. Holt, the bill did not pray for a dissolution of the partnership. There being then an uniform series of decisions in support of the objection, I feel myself bound to allow it; for I have no authority whatever to alter the law established by a course of decisions."

It therefore appears to be quite clear, that if parties seek to dissolve an extensive company, by means of an application to equity, it would be utterly impossible to keep the record in such a complete state, with respect to parties, as would enable the plaintiffs to bring on their case for hearing; and the consequence is, that it has become the practice for persons connected with such companies, who apply to equity for relief, to confine the bill to the prayer that the account between the parties may be taken, without proceeding to pray for a dissolution of the company,-it having been decided that a bill of this description may be sustained by some of the partners, on behalf of themselves and others (f).

(e) 4 Myl. & Cr. 619.

(f) See Wallworth v. Holt, 4 Myl. & Cr. 619; Richardson v. Hastings, 7 Beav. 301; Deeks v. Stan

hope, 14 Sim. 57; Bisset on Partner-
ship, 338, also ante, 117. As Wyld v.
Hopkins, 10 Jurist, 1000, post, 700,
has decided, that no partnership or

Dissolution of

Partnerships

Statute.

Such being the difficulties attending an application for a otherwise than by dissolution to a court of equity, it is apparent how necessary a precaution it is, to insert a clause in the subscribers' contract which will authorise the managing directors to dissolve the company, if such a proceeding becomes necessary. It is not to be supposed that the insertion of such a clause will obviate all difficulties, if it should become necessary to dissolve the company; because it is now become a common practice, for parties who sign the subscribers' and parliamentary contracts, to dispose of the scrip in the market, and the purchasers seldom or never sign the subscribers' contract. And therefore, (and for other reasons which need not be here enumerated), the interference of the Legislature seems to be required for the purpose of enabling the promoters of an unsuccessful project to wind up their affairs in a summary manner; and the experience afforded by the working of the act of the last session of Parliament (9 & 10 Vict. c. 28) will probably suggest some judicious alterations, which may be incorporated in an act which should include all railway companies not incorporated by act of Parliament (g).

The statute above referred to is intituled "An Act to facilitate the Dissolution of certain Railway Companies,” and it provides, that the parties interested may either dissolve the company simply, or cause a fiat in bankruptcy to be issued. It also contains a very important provision, inserted for the purpose of enabling members of provisional committees to sue their fellows, for contribution, by an action at law; and this clause appears to affect, in a very important manner, the interests of all provisional committee-men who have not paid any part of the debts due from companies, which

quasi partnership exists in certain
cases, quære, whether a suit to dis-
solve such company will now be held

to be within the rules above laid down.

(g) See note (m), post, 674.

Bills of costs claimed

may avail themselves of the statute.
by attornies or solicitors, are also made liable to taxation.
We now proceed to state in some detail, the contents of

the statute.

Dissolution of Partnerships otherwise than by Statute.

Vict. c. 28.

Sect. 1 enacts, that when any persons or companies before Contents of 9 & 10 the 3rd July, 1846, shall have entered into a subscription contract or other agreement in writing, or otherwise, for the formation of a company or partnership for making any railway, which cannot be carried into execution without obtaining the authority of Parliament, and in respect of which an act shall not have been obtained, the company may be dissolved, whether or not such contract or agreement shall contain any provisions for dissolution; provided, nevertheless, that any provisions for dissolution in the contract or agreement contained, may be exercised at any time. before the parties avail themselves of the act; and it is also provided, that the provisions of the act shall apply to any contract or partnership for the making any railway, notwithstanding that the agreement or partnership may relate to any other objects in connexion therewith, and (unless a separate capital and separate subscription shall exist as regards the different objects) then, on a dissolution under the provisions of that act, the dissolution shall extend to the whole objects of the contract or partnership (j). It is also enacted, that the act shall be applicable to new undertakings promoted by companies actually incorporated, and seeking to raise a further capital (k).

For the purpose of enforcing the provisions of the act, it is enacted, that the committee, provisional directors, or other persons entrusted with the management of the undertaking, may call a meeting of the shareholders in London, or certain

(j) 9 & 10 Vict. c. 28, s. 1, post, App., 211.

(k) Ibid., s. 30, post, App., 218.

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