FAULDS v. HARPER.

Mortgagor and mortgagee-Sale-Purchase by mortgagee-Right to redeemStatute of Limitations.

In a foreclosure suit against the heirs of a deceased mortgagor, who were all infants, a decree was made ordering a sale; the lands were sold pursuant to the decree and purchased by J. H., acting for and in collusion with the mortgagee. J. H., immediately after receiving his deed, conveyed to the mortgagee, who thereupon took possession of the lands, and thenceforth dealt with them as the absolute owner thereof. By subsequent devises and conveyances the lands became vested in the defendant M. H., who sold them to the defendant L., a bona fide purchaser without notice, taking a mortgage for the purchase money. This suit was brought by the heirs of the mortgagor, some eighteen years after the sale and more than five years after some of the heirs had become of age, to redeem the lands.

Held, reversing the judgment of the Court of Appeal, 9 App. R. 537; 4 C. L. T. 203, that the suit being one impeaching a purchase by a trustee for sale, the Statute of Limitations had no application, and that, as the defendants and those under whom they claimed had never been in possession in the character of mortgagees, the plaintiffs were not barred by the provisions of R. S. O. cap. 108, sec. 19.

Held, also, that the plaintiffs were entitled to a lien upon the mortgage given by L. for the unpaid purchase money.

Held, also, that as it appeared that the plaintiffs were not aware of the fraudulent character of the sale until just before commencing their suit, they could not be said to have acquiesced in the possession of the defendants.

McCarthy, Q.C., for the appellants.
Street, Q.C., for the respondents.

PETRIE v. GUELPH LUMBER COMPANY.

Corporation-Promoters-Action against company and promoters for fraudulent misrepresentation-Action ex delicto for deceit-Fraudulent concealment.

A suit was brought against a joint stock company, and against four of the shareholders who had been the promoters of the company. The bill alleged that the defendants, other than the company, had been carrying on the lumber business as partners and had become embarrassed; that they then concocted a scheme of forming a joint stock company; that the sole object of the proposed company was to relieve the members of

the firm from personal liability for debts incurred in the business and induce the public to advance money to carry on the business; that application was made to the Government of Ontario for a charter, and at the same time a prospectus was issued which was set out in full in the bill; that such prospectus contained the following paragraphs, among others, which the plaintiff alleged to be false:-"“1. The timber limits of the company, inclusive of the recent purchase, consist of 222 square miles, or 143,400 acres, and are estimated to yield 200 million feet of lumber. 2. The interest of the proprietors of the old company in its assets, estimated at about $140,000 over liabilities, has been transferred to the new company at $105,000, all taken in paid up stock, and the whole of the proceeds of the preferential stock will be used for the purposes of the new company. 3. Preference stock not to exceed $75,000 will be issued by the company to guarantee 8 per cent. yearly thereon to the year 1880, and over that amount the net profits will be divided amongst all the shareholders pro rata. 4. Should the holders of preference stock so desire, the company binds itself to take that stock back during the year 1880 at par, with 8 per cent. per annum, on receiving six months' notice in writing. 5. Even with present low prices the company, owing to its superior facilities, will be able to pay a handsome dividend on the ordinary, as well as on the preference stock, and when the lumber market improves, as it must soon do, the profits will be correspondingly increased."

The bill further alleged that the plaintiffs subscribed for stock in the company on the faith of the statements in the prospectus; that the assets of the old company were not transferred to the new in the condition that they were in at the time of issuing the prospectus; that the embarrassed condition of the old company was not made known to the persons taking stock in the new company, nor was the fact of a mortgage on the assets of the old company having been given to the Ontario Bank, after the prospectus was issued but before the stock certificates were granted; that the assets of the old company were not worth $140,000, or any sum, over liabilities, but were worthless: and prayed for a rescission of the contract for taking stock, for re-payment of the amount of such stock, and for damages against the directors and promoters for misrepresentation. There was evidence to show that the promoters had reason to believe the prospects of the new company to be good, and that they had honestly valued their assets.

On the argument three grounds of relief were put forward:-1. Rescission of the contract to subscribe for preference stock. 2. Specific performance of the contract to take back the preference stock during the year 1880 at par. 3. Damages against the directors and promoters for misrepresentation. The company having become insolvent the plaintiffs put their case principally on the third ground.

Held, affirming the judgment of the Court below, 11 App. R. 336, that the plaintiffs could claim no relief against the company by way of rescission of the contract, because it appeared that they had acted as shareholders and affirmed their contract as owners of shares after becoming aware of the grounds of misrepresentation.

Held, also, as to the action against the defendants other than the company for deceit, that the evidence failed to establish such a case of fraudulent misrepresentation as to entitle the plaintiffs to succeed as for deceit.

Held, also, as to the alleged concealment of the mortgage to the Ontario Bank, it having been given after the prospectus was issued it could not have been in the prospectus, and moreover that the shareholders were in no way damnified thereby, as the new company would have been equally liable for the debt if the mortgage had not been given; and as to the concealment of the embarrassed condition of the old company, the evidence showed that the old firm did not believe themselves to be insolvent; and in neither case were they liable in an action of this kind.

McCarthy, Q.C., for the appellants.

Christopher Robinson, Q.C., and Cassels, Q.C., for the respondents.

BEATTY v. THE NORTH-WEST TRANSPORTATION CO. Corporation-Sale by director to company-Ratification of by-law by shareholders-Vote of owner of property.

A director of a joint stock company personally owned a vessel which he wished to sell to the company; he was possessed of a majority of the shares of the company, some of which he assigned to other persons in such numbers as qualified them for the position of directors. Upon a proposed sale and purchase by the company of the vessel, the board of directors, including the owner of the vessel, passed a by-law approving of such purchase by the company, and subsequently, at a general meeting of the shareholders at which the owner and those to whom he had transferred the portions of his stock were present and voted, a resolution was passed confirming the by-law, which resolution was opposed by a number of the shareholders representing nearly one half of the total stock of the company.

Held, reversing the judgment of the Court of Appeal, 11 App. R. 205, that the board of directors had no power to pass the by-law, and under the circumstances the resolution of the shareholders, confirming the bylaw, was invalid.

Mowat, Q.C., A. G., and James Maclennan, Q.C., for the appellants.
Robinson, Q.C. and McDonald, Q.C. for the respondents.

ONT. & QUE. RAILWAY CO. v. PHILBRICK.

Railway company-Lands taken for railway purposes-Arbitration-Award Matters considered by arbitrators-Costs.

A railway company, having taken certain lands for the purposes their railway, made an offer to the owner in payment of the same, which

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offer was not accepted, and the matter was referred to arbitration under the Cons. Railway Act, 1879. On the day that the arbitrators met the company executed an agreement for a crossing over the land, in addition to the money payment, and it appeared that the arbitrators took the matter of the crossing into consideration in making their award. The amount of the award was less than the sum offered by the company, and both parties claimed to be entitled to the costs of the arbitration; the company, because the award was less than their offer, and the owner because the value of the crossing was included in the sum awarded which would make it greater than the offer.

Held, affirming the judgment of the Court of Appeal, Gwynne, J., dissenting, that under the circumstances neither party was entitled to costs.

Geo. Tate Blackstock, for the appellant.

Dr. McMichael, Q.C. for the respondents.

STARRS v. THE COSGRAVE BREWING & MALTING CO. Surety-Contract of with firm-Continuing security to firm and member or members constituting firm for the time being-Death of partner-Liability of surety thereafter.

S. by indenture under seal, became surety to the firm of C. & Sons for goods to be sold to one Q., and agreed to be a continuing surety to the said firm or "to the member or members for the time being, constituting the firm of C. & Sons "for sales to be made by the said firm or 46 any member or members of the said firm of C. & Sons " to the said Q., so long as they should mutually deal together. P. C., the senior member of the firm, having died, and by his will appointed his sons, the other members of the firm, his executors, the latter entered into a new agreement of co-partnership and continued to carry on the business under the same firm name of C. & Sons, and subsequently transferred all their interests in the business to a joint stock company. An action having been brought against S. for goods sold to Q. after the death of the said P. C.,

Held, reserving the judgment of the Court of Appeal, 11 App. R. 150, and restoring the judgment of the Common Pleas Division, 5 Ont. R. 189, that the death of P. C. dissolved the said firm of C. & Sons, and put an end to the contract of suretyship.

James Maclennan, Q.C. and O'Gara, Q.C., for the Appellant.
Osler, Q.C., for the Respondents.

HOBBS v. NORTHERN ASSURANCE CO.

HOBBS v. GUARDIAN ASSURANCE CO.

Fire insurance-Condition in policy--Loss by explosion-Loss by fire caused by explosion-Exemption from liability.

A policy of insurance against fire contained a condition that "the company will make good loss caused by the explosion of coal as in a 19

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building not forming part of gas works, and loss by fire caused by any other explosion, or by lightning."

A loss occurred by the dropping of a match into a keg of gunpowder on the premises insured (a hardware shop) the damage being partly occasioned by the explosion of the gunpowder, and partly by the gunpowder setting fire to the stock insured. The company admitted their liability for the damage caused by fire, but not for that caused by the explosion.

Held, reversing the judgment of the Court of Appeal, 11 App. R. 741, Taschereau, J., dubitante, that the company were not exempt by the condition in the policy from liability for damage caused by the explosion. Gibbons, for the Appellants.

Marsh, for the Respondents.

BEATTY v. OILLE.

New trial-Verdict for the plaintiff—Technical breach of contract-Defendant entitled to nominal damages for.

In an action to recover the balance of the contract price for work done for the defendant, the evidence showed that there was a technical breach of the contract, by which, however, the defendant had sustained no substantial damage. A verdict was found for the plaintiff, and a rule for a new trial was refused by the Divisional Court, and this judgment was affirmed by the Court of Appeal.

Held, affirming the judgment of the Court of Appeal, that a verdict would not be set aside merely to enter a verdict for the other party for nominal damages.

S. H. Blake, Q.C., and McDonald, Q.C., for the Appellants.
Osler, Q.C., and Cor for the Respondents.

QUEBEC.]

GRAND TRUNK RAILWAY CO. v. BOULANGER. Accident-Loss of life at ferry-wharf-Company-Liability of—Damages. L. B. brought an action for damages against the G. T. R. Co. for the loss of her husband, L. H. F., who was drowned on the night of 6th November, 1883, by falling off the pontoon in the River St. Lawrence at the wharf owned by the Company, in the city of Quebec, when he was going to cross over to Levis, by the Company's ferry between Levis and Quebec, on his way to take the cars at Levis, and alleged that her hus band's death had been caused by the default and negligence, resulting from his own imprudence and of the Company's in not having put rails,