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[VOL. X.
VOL. X.]
CHANCERY DIVISION.
451
M.E.
1878
In re
FOBEST OP
DEJAN COAL
MINING
COMPANY.
Argument.
Baveij, Q.O., and Bush, for Mr. Barrett, were not called on.
JESSEL,
M.E.:
Judgment.
452
M. R.
1878
j n re
DBANSCOAL
MINING
COMPANY.
Judgment.
CHANCERY DIVISION.
[VOL. X.
managing partners, it does not much matter what you call them
so long as you understand what their true position is, which is
that they are really commercial men managing a trading concern
VOL. X.]
CHANCEEY DIVISION.
453
CHANCEET DIVISION.
454
M. R.
1878
In re
FOREST OP
DEAN COAL
MINING
COMPANY.
Judgment.
[VOL. X.
that the trustees retire, and new trustees are appointed in their
place, who find the fund intact. One of the trustees is then told,
" I t is all right now, but the money has only been paid in live
years before," and is told that one of the former trustees had used
it in his trade. It is intolerable to suppose that the new trustee
should be made liable for not filing a bill, as it was formerly
under the old procedure, or bringing an action, as it is now, against
the former trustee, or his representative supposing he is dead,
with the view of getting from him either the extra interest over
and above the interest of the consols, or the profits he might have
made from the use of the money in his business. Is that sort of
liability on the part of a former trustee one which the new trustee
is bound to enforce, though no doubt it would be one which the
cestui que trust has power to enforce ? In my opinion it would be
extending the liability of trustees, which in my judgment is quite
heavy enough as the law stands, to a point to which, it has never
been stretched before; and, as I have said before, I think if there
has been any error at all in the course taken by the Courts of
Equity against trustees it has been in pressing honest trustees too
far, one result of which has been that it is now very difficult to get
people to accept offices of trust for which they receive no remuneration, and in respect of which they may be placed under great
liabilities. I am always ready to make, and have always been
desirous of making, a dishonest man liable for every farthing of
which, he has defrauded a trust, and of making him liable also to
pay exemplary damages or interest in every case in which the law
will allow it; but at the same time I have always thought it
would have been much more wise in Courts of Equity had
they been less strict as regards mere omissions, or even what
they have chosen to call neglect, on the part of persons who
endeavour honestly and faithfully to perform their trust, but who
notwithstanding, either from some mere mistake, or some error in
law or of judgment on the part of themselves or their legal
advisers, or of some defalcation on the part of their agents, have
been made liable sometimes for vast sums of money, although they
had taken every possible pains to appoint proper solicitors and
counsel^ and to engage proper agents to advise them, and to
manage the estates, and to receive the rents and profits of them.
VOL. X.]
CHANCERY DIVISION.
455
M.E.
1878
In re
FOBBST OT
DEAN COAL
MINING
COMPANY.
Judgment.
456'
M. R.
1878
^7e
CHANCERY DIVISION.
[VOL. X.
VOL. X.]
CHANCERY DIVISION.
that this retired butterman had in this way defrauded the company of 1000, for which he or his estate might be made liable ?
It would be obviously, to my mind, an extravagant proposition
that that director could be made liable for not disclosing the
knowledge so acquired by him at so long a period before he became
a director of the company.
This however has, of course, no relation whatever to cases where
the whole matter forms part of one transaction, and where there
has been some arrangement, some juggle by which the parties to
a fraud might say, " we will not go on the direction of the company until the fraud is completed," because the Courts are quite
strong enough to reach cases of that sort when they arise, but this
is a case where the man derived no benefit whatever from the
frauds of the promoters. It appears to me that I should tnot be
expounding or applying the law, but that I should be making
new law, if I were to hold directors liable for withholding their
knowledge from shareholders under such circumstances.
Then is Mr. Barrett liable in this case for not taking proceedings ? I do not think it is very likely that he would have succeeded at the board in persuading his co-directors to take
proceedings at all. I do not think the majority of the board
would have concurred with him without the sanction of the shareholders j but even supposing he could have got their concurrence, what would it have amounted to ? It appears to me it
would still fall within the range of the observations I have.
already made, and that is, that as there was no obligation upon
him to tell his brother directors the knowledge he had, so there
was no obligation upon him to initiate by resolution or otherwise
any attempt to sue the promoters; because it must be remembered, as I said before, that it is not an admitted debt; if the
transaction had occurred some time before, there would have been
probably a protracted and very hostile litigation about it, and it
by no means follows that at the end of the litigation any money
would have been forthcoming any more than there is now; and
any discreet or cautious director might very well have said, " It is
not wise to take proceedings in this matter; we shall probably not
get anything by it, and if we do, it will do the company a great
deal of mischief, and we had far better let bygones be bygones."
457
M, R.
1878
In re
FOREST OP
DEAN COAI,
MINING
COMPANY.
Judgment.
OHANOEEY DIVISION.
458
M. E.
1878
In re
FOBEST OF
DEAN COAL
MINING
COMPANY.
Judgment.
[VOL. X.
VOL.X.]
CHAJSTCEEY DIVISION.
459
M. E.
1878,
In re
FOBEST OF
DEAN COAL
MINING
COMPANY.
Judgment.