Law Report, Nov. 16. (Before the LoSD CEHACELLOR, LoD WATSOL, LoP3 HERSCHELL, LoRD ACIAGTrEN, LoB;D &ORIS, an2d LORD DAvzy.) SALOMON (PAU) V. A. SALOMON AND CO. I U1-11"'ILT NTTEV." This was an appeal from a decision of the Court of Appeal dismissing an appeal from a judgment by Mr. Justice Vaughan Williams. The appellant,Aron Salomon, for about 30 years prior to 1802 earried on business as a leather merchant and bide factor and wholesale and export boot manufacturer, under the style of A. Salomon and Co. According to the evidence of the appellant and his son, the profits of the business were between ?1,000 and ?2,000 per annum. A limited company was formed in 1S92 to carry on the business, and the original sub- scribers to the memorandum of- association were the appellant, his wife and daughter, and his four sons,who each signed for oue sbhre. The appellant's business was sold to the company for ?38,782, of -which ?16,000 was to be paid in cash or debentures,and at the first meeting of the directors, who consisted of the appellant and two of his sons, it was resolved to pay the appellant ?6,000 in cash and ?010,000 in debentures. fWese debentures -were afterwards mortgaged by the appellant to one Edmund Broderip as a security for an advanee of .O,000, but eventually these debentures were cancelled and ?10,000 fresh debentures vere issued to Ednund Broderip. In October, 1893, an order was made for the wimdig up of the company, at vwbich date the company wvas indebted to unsecured creditors other than Aron Salomon to the amount of t7,733, the business of the company showing a loss of ?2,600 a year. An action was brought by the liquidator of the company against the appellant, which was tried before Mlr. Justice Vaughan Williams, who declared that the company were entitled to be indemnified by the appellant to the amount of ?7,733. This decision vas aflrmed by the Court of Appeal. The appellant now sought to have the latter judgment reversed. The case was argued some time ago, when judgment was reserved. The counsel wvho appeared in the case were Mr. Cohen Q.C., Mr. Buckley, (J.C., and Mfr. iluir Mackenzie for the appellant; and MIr. Farwvell, Q.C., and M1r. Theobald for the respondents. Their Lordships this morning delivered judgm,ent, re- versing the decision of tha Court below. The Loin CH takELO m.-The important question in this case, Thich e am not certain is the only question, is whether the respondent company was a company at all ohether, in truth, that artiscial crbayton oE the Legis- lature had been validly constitutedo in this instance - and, in order to determine thsat question, it is necessay to look at wehat the stwtute itself has determined in that respect. I have no right to add to the requirements of the statute, nor to take from the requlrements tnus enacted. The sole guide must be the statute itself Now, that there were seven actual living ptersons weho held shares in the company has not been doubted. ot to the proportionate amounts held by each I will deal presently; but it es important to observe tha this first condition of the statute is satisfied, anud it follos as a consequence that it wnould not be competent to any O9e and certainly not to these persons themselves, to deny that they wvere shareholders. I must pause here to point out that the statute e; acts nothing as to the estent or degree of interest whEich may be held by each of the seven, or as to the proportion ot interest or influence possessed by one or the majority of the shareholders over the others. One share is enough. Still less is it possible to contend that the motive of becoming share- holders or of making them shareholders is a field of inquiry which the statute itself recognzes as legitim3ate. If they are shareholders they are shareholders for all purposes, and, evend if the statute ws silent as to the recogition of trusts, I shonld be prepared to hold thast if st of them a iere the thatui qc trusts of the seventh, whatever might be their rights icrper te, the statute would have ,made them shartholders to all intents and purposes with their respective rights and liablites; and dealig with them in their aelation to the company, the only relations nuhch I believe the law would sanction wtould be that they were corporators of the corporate body. I am simplyhere dealing with the provisions of the statute, and if seems to me to bu essential to the artificial creation that the la y should recognize only that artifcial existence, quite apart from the motives or conduct of individual corporat-ors. In saying this-I do not at all meln to suggesS that if it could be established that this provision of the statute to which I am adverting hadnot been compLedwith,you couldnot go behind the certioctate of incorporation to shor that a fraud had been committed upon the offlcer intrusted with the duty of giving the certificate, and that bysome proceedigiro the nature of sire fachs you could not prove the fact that the company had no reaS legal existence. But short of such proof it seems to me impossible to dispute that once the company is legaly icorporated, it must be treated like any other independent person with 'its rights and liabilities appropriate to itself, and that the motives of those 'aho took part in the PromOtiO of the company are absolutely irrelevant i discussong what those rights and liahieitief are. I wil, for the sake of argument, assume the proposition that the Court of Appeal lays down, that the formation of the company was a mere scheme to enaSbe Axon Salomon to carry on business the name of the corpany. i am wholly unable to fo.Low the proposition that this was con- trary to the true intent and meaning of the Com- panies iLct. I Can only find the true intent and simeaning of the Act from the Act itself, and the Act appears to me to give a company a legal eristence with, as I have said, rights and liabilities of its own, whatever may have been the ideas or schemes of thnose who brought it mto existence. I observe that the learned Judge (Mr. Justice Vaughan Silliamn ) held that the bnusiness was Mir. Salomon's business and DO one else's, and that he chose to employ asl agent ilimitedoampany. A&nd he proceeded to argue that he was employing that limlited company as agent, and that he 'was bound to indemnify that agent-the company. I confess it seems to me that that very learnedi Judge becomes involved by this argument in a very singular contradiction. Either the luimitedcompany was a legal entity or it was not. If it was, the business belonged to it and not to Mr. Salomon. If it was uot there was no person and nothing to be an agent at a}l a pe it is impossible to say at the sa memtime that there is a eompany and there is not. Lord Justice Lindley, on the otherhand, aifions that there fere seven memcers of the company but, he isays, it is manifest that sis of them were members simply in order to enable the seventh himsetE to carry on business with limited liability. The object of the whole arrangement is to do the very thing which the Legislature litended not to be done. It is obvious to inquire where is that intention of the Legislature 1 manifested in the statnte ? Even if we 'were at liberty to insert words to manifest that inbention I should have great difficulty in ascertaining wshat the exact intention thus imnputed o the Legislature is or was. In this particular case it is 'the members of one family that represent all the sharesp; but if the supposed intention is not limited to so narrow a proposition as this, thst the sevch members must not be members of one family, to what extent may influence or authority or inteditional purchase f a majority among the shareholders be carried so as to brnmg it within the' supptosed prohibition? It is, of course, eay to say that at was contraryet to the intention of the Legislature-a proposi- 'tion which, by reason of its generality, it is difficut to bring to-the test; but when one seeks to put as n affirmative itroposition wiat the thing is 'which the Legislature has prohibited, there is, as it appears to me, an insuperable difficulty in the way of these who seek to insert by construction such a prohibition imto the statute. As one mode of testing the proposition it would be per- tinent to ask whether two or three, or, indeed, all seven, may constitute the whole oF the shareholders. lVbether they must be all independent of each other in the sense 'of each havin3 an~ mdependent beneficial interest-and this is a question that cannot be answered by the repnly that it Is a matter of degree. If the Legislature L- tended to prohibit something, yon. ought to linow what that something is. All it has said IS that one share is suficient to constitute a shareholder, thtough the shares may be 100,000 in number. Where am I to get from the statute itse e a lmitation of that provision that that shareholder must be an indeendent and beneiceially in- terested person P I find all tirough the judgment oi the -Court of Appeal a repetition of the same proposition to which I have olready adverted-that the business was the business of Aron Salomon, ad that the company ist 'variously described as a myth and a nction. LTrd Justice Lopes says:-" lhe Act contemplted the in- cwrporation of seven tindeedent bona-memb members, who had a nind and a will of their ownan, rnd 'ere not the mtere puppets of an individual whEo, radopting the machinery of the Act, carried on his old bcusiness in the |same'w^ay as before, when be was a sole trader." The words " seven independent deiue-ld.c members with a mind antd Will of thteir awn and not the Spupeta of an individual " are by construction to be read into the Act. Lord. Justice Lopes also said that the company wa^s a mere iWosiuits MIss T. ra Lord Justice Kay says . '" The statutes were intended to allow seven r more persons tesiefide associated for the purpose of trade to limit their liability nuder certain, conditions- and to become a corporation. But they ~were not intended to legaliee a preteuded- association for the purpose of enabling anx nuAdividual to cair&y on his own business with . : ,~~~~~~~~- limited liability-in the name of a joint stock company." I The learned Judges appear'to mc mot to have beeu abso- lutely certain in tbeir own minds wviether to treat the company as a real thing-or not. If it was a real thing, if it had a legal existence, and if, consequently, the law attributed to it certain rights and liabilities in its con- stitution as a company, it appears to me to follow as a consequence that it is impossible to deny the valdity of the transactions into which it has entered. 3r. Justice Vaughan Williams appears to me to bave disposed of the argument that the company, -which for this purpose he assumed to be lee!da entity, was defrauded into the purchase of Axon Salomon's business, because assumin" that the price paid for the business was an exorbitant one, -as to which I am myself not satisfied, but asilming that it was, the learned Judge most cogently observes that when all the shareholders are perfectly cognizant of the conditions under which the company is formed and the conditions of the pur- chase, it is impossible to contend that the company is being defrauded. The proposition laid down in " Erlanger v.the New Sombrero Phosphate Company " (L.I. 3, Appeal Cases, 1,218)-I quote the head-note- is that-"l?ersons who purchase propertv and then create a company to purcbase from them the property they possess, stand in a fiduciary position towards that com- pany, and must faithfully state to the company the facts which apply to -the property, and would influence the company in deciding on; the reasonableness of acqnirng it." But if everymember of the company, every shareholdez, Lnows exacty wvhat is the true state of the facts, which for this purpose must be assumed to be the case here, Mr. Justice Vaughan Williams's conclusion seems to me to be inevitable- that no case of fraud upon the company could here be established. If there was no fraud and no agency, and if the company wras a real one and not a fiction or a myth, every one of the grounds upon which it is sought to support the judgment is disposed of. The truth is tbat the learned Judges have never allowed in their own minds the proposition that the company has a real existence. They have been struck by what theylhave con- sidered the inexpediency of permitting one man to be, in influence and authority, the whole company, and assuming that such a thing could not have been intended by the lsegislature, they have sought various grounds upon which they mighti msert into the Act some prohi- bition of such a result. Whether such a result be right or wrong, politic or impolitic, I say, with the utmost deference to the learned- Judges, that we have nothing to do with that questioni if this company has been duly constituted by law, arnd, whatever may be the motives of those -who constitute it, I must decline to insert into that Act of Parliament limitations which are not to be found there. I have dealt with this matter upon the narrow hypothesis propounded by the learned Judges below, but it is, I think, only justice to the appellant to say that I see nothing wvatever to justi'fy the impu- tations which are implied in some of the observations made by more than one of the learned Judges. The appellant, in mv opinion, is not shobw to have done, or [to have intended to do, anything dishonest or unwvorthy, but to have suffered a great misfortune without any fault of his own. The result is that I move your Lord- ships that the judg-nent appealed from be reversed, but as this is a pauper case 1 legret to say it can only be with such costs in this House as are appropriate to that condition of things, and that this appeal be dismissed with costs to the same extent. LOR)D NWATsON.-- This appeal iaises some questions of practical imp ortane, depending upon the construction of the Companies Acts, which do not appear to have been settled by previous decisions. As X am not pre- pared to accept wvi-.hout resarvation all -the conclusions of fact which found favoulr with the Courts belowv, I shall, before adverting to the law,stte what I conceive to be the material facts established by the evidence before us. The appellant, Aron Salomon, for many years carried on business, on his own account, as a leather mercbant and wholesale boot manufacturer. With the design of transferring his business to a jomIt- stock comuany, whinchl was to tonsist exclusively of himself aiid members of his own famuilv, he, on July 20, 1892, entered -into a preliminary agreement with one Adolph Auholt, as trustee for the future com- pany, settling the terms unon svhich the transfer was to be made by him, one of its conditions being that, in part payment, he was to receive ?10,000 in debentures of the company. A memoranduam of association vas then executed by the appellant, his wife, a daughter, and four sons, each of them subscribing for one Ahare, in which the leading object for which the company -was formed was stated to be the adoption and carrying into effect, with such modifications (if any) as might be agreed on, of the provisional agreement of July 20. The memorandum was registered on July 28. 192 and the effect of registration, if otherwise valid, was to incorporate the comrany, Under the name of "Aron Salomon and Company (Limited)," -with lia- bility limited by shares, and having a nominml capital of ?40,000 divided into 40,000 shares of ?1 each. The company adopted the agreement of July 20, subject to certain modifications which are not material; and an agreement to that effect was executed between them and the appellant on August 2, 1892. WTithin a month or two after that date the whole stipulations of the agreement were fulfiRled by both parties. In terms thereof, 100 debentures, for ?100 each, were issued to the appellant, -who, upon the security of these docu- ments, obtained an advance of ?5,000 from Edmund Broderip. In February, 1893, the original debentbures were returned to the company and cancelled ; and in lieu thereof, with the consent of the appellant as bene- ficial owner, fresh-debentures to the same amount were issued to Mr. Broderip, in order to secure the repay- [ment of lis loan, with interest -at 8 per cent. In 1Sep- tember, 1892, the appellant applied for and obtained an allotment of 20,000 shares: and from that date umtil an order was made for its compulsory liquidation the share register of the compy remained unaltered, 20,001 shares being held by the appellant and si shares by his wife and family. It was all along the intention of these persons .to retain the business in their own hands, and not to permit any outsider to acquire an interest in it. Default having been made in the psy- ment of interest upon his debentures, Mr. Broderip, in September, 1893, mstituted an action in order to en- force his security against the assets of the comany. Thereafter a liquidation order was made, and a lqm- dator appointed, at the instance of unsecured creditors of the company. It has now been ascertained that, if the amount realized from the assets of the compauy were, in the first place, applied iu extinction of ?Ir. Broderip's debt and interest, there would reuain a balance of about ?1,0o5, which is claimed by the applicant as beneficial owner of the debentures. In the event of his claim being sustained there will be no funds left for payment of the unsecured creditors, whose debts amount to ;g7,733 Ss. Gd. The liquidator lodged a defence, in mame of the company, to the debentur suit, in which he counterelaimed against the applant (1) to have the agreements of July.20andAugust2, 1892 rescinded, (2) to have the debentures alreadymentioned delivered up and cancelled, (3) repetition of al sums paid by the company to the appellant under.these agree- ments, and (4) a lieu for these sums upon the business and assets. The averments made in support of these claims were to the efect ethat the price id by th'e company exceeded the real value of the business and assets by upwards of ?8,200 ; that the arrangements made by the appellant for the formation of the company were a fraud upon the creditors of the company ; that no boardofdirectorsofthecompanywere ever appointed, and that in any case such board' consisted entirely of the appellant, and there never was an independent board. The case went to proof before Mr. Justice Vaughan Williams, when the liquidator was examined as a witness on behalf of the company, whilst evidence was given for the appellant by himself and by his son, manuel fialomon, one of the members of the company who had been employed in the business for nearly 'l years. The evidence shows that before its transfer to the newt company the business had been prosperous, and had yielded to tne appellsnt annual lprolits sufficient to maintain hisuelf and family and to add to his napital. It also shows that at the date of transfer the business was perfectly solvent. The liquidator, whose testimonv was chiefly directed toward proving that the price paid. by the company was excessive, admitted on cross- examination that the business when transferred to the company was m a sound condition, and that there was a substantial surpolus. to evidence was led tending to - support the altegation that no board of directors was ever appointed or that the board consisted entirel- of the arfiellnt. The non-success and ultiniate insolvency of the busine, after it callme intm the hands of the company, asn attributed by the witnes Emanuel Salomon to a succession of sttikes in=the boottr de and there is not a tittUe of evidence tendig to modif or contradict hs statement. I think itsalsoappe rs from the evidence that all the members of the company were fully cognizant of the -terms of the agreements -of July 20 and August 2, 1892, and that they were willing to accept and did accept these terms. The ease zias heard defore the learned Judge wvho presided at the proof, who, at the ose of theam agamnt annoluced that he was not prepared to grant aie relief craved by the company. Se at the same time suggested that a different remedy might be ypen to the company, and, on the mobon oE their counsel, he alowed the cojunter- claim to be amended. In conformity with the suggestion thus made by the Bench, a new and alternative claim was added for'(1) a decaration that the appellantis liable to idemnty the cowmpany aganst tne whole of their unsecured debts, (2) judgment against him for ?7,733 8s. Sd.. being the amount of these debts, and (3) a lien for that aunount upon all arms which might he payable to the appellant by the company, in respect of his debentures or otherwise, mntil the judgment ws satisfied. There were aLso added averments to the ef.'ect that the company was formed by the appellant and that the debentures for 210,000 were issued . order that he might .carry on the business and take all the profits without risk to himLself. aMu also that the comnany ws theo " mere nomLinee and agent " of the appella'nt. The allegations of the compLny, in so far as they have any relation to the amended clai, their pith consisting in the avernents made on amendmnent, were meant to convey a charge of fraud, and it is unfortunate that they aLre framed in such loose and general terms. A relevant charge of fraud ought to. disclose the speific facts necessitating the inference that a fraud was per- petrated upon some person specified. Whether it was a fraud upon the comuany and its members, or npou persons who had dealngs with -the company, is not indicated, although there may be very different con- siderations applicable to those two cases. The res scstp which might imply that it was the ap?ellant, and not thecompany, who actually carried o en its business are mot set forth. kuy person who holds a preponderating share in the stock of a limited company has necessarily the intention of taking the lion's share of its profits without any risk beyond loss of the money which he bss paid for or is liible to pay upon his shares, ad the fact of his acquiring and holdmng debentures secured uoon the assets of the company, does not diminish that risk. N'hat is meant by the assertion ihat the compin y "w as the mere nominee or agent " of the appelant 1 cannot gather from the- record, and I am not sure thatl understand precisely in iwbat sense it wlsint.e preted by the leaned Judges ivhose decisions we hava to - con- sicer. No adclitional proof -was led after the amend- ment of the countercleim. The oral testimony las very 3ittle, if any, bearing upon the seconid claim,; and any material facts relatig to the frandulent objects whicci the appellant is said to have had in view,, and thg alleged position of the comnaLiyas his nominee 4r agento must be mere matter of inference derived from the sgreements of July 20 and Ancust 2, 1S921, the memo- random and articles of association, and the minute-book of the company. On rehearing the case br. Justice Vaughan WI 9MnLs, without disposing of the original claim, gave the company decree of imdemnity in terms of their amended claim. I do not profess my ability to follow accurately the -whole chaim of reasoning by-wlich the learned Judge arrived at that conclusion, but he appeas to lave proceeded mainly upon the ground that the appellant was in truth the company, the other members being either his trustees or mere " dummies," and consequently that the appellant carried on -what -vas truly his own business under cover of the name of the company, vhich vas nothim mere than an alies for Aron Salomon. On appeal from his decision, the Court of Appeal, consisting of Lords Justices Lindley, Lopes. and .gay, made an order fnding it mmecessary to aeal -with the oriinal claim, and dismissing the appeal in so far as it related to the amended claim: The ratio upon which that affirmsace proceeded, as embodied in the order, was, This Court, being of opinion -tht the formation of the compay,theagreeneutofAu.rst,189' and the issue of debentures to Aron Salomon pursuant to such agreement, weree a mere scheme to enable him to carry on business in the name of the company, -with limited liability, contrary to the intent and rmeaning of the Companies Act, 1862, and, further, to* enable him to obtain a preference over other creditors ot the coin- prny by prociring a first charge on the assets of the company by means of such debentures-" The opinions delivered by the Lords Justices are strictly in beeping with the reasois assigned in their order. Lord Justice Lindley, after observing " that the incorporation of the company cannot be disputed," refers to tle scheme for the formation of the company, and says (1895, 2 Ch.Div,377), " the object of the whole arrangement is to do the very tbing which the Legislature intended not to be done "; and he adds that " bt. Salomon's scheme is a device to defraud creditor3." Atssumin that the company was -well incorporated in terms of tbe Act of 1862, an assumption upoi -which the decisions appealed from appear to me to throw considerable doubt, I think it expedient, before considering the amended claim, to deal with the original claim for re- scission, which vas strongly pressed upon us by counsel for the company, under their cross appeal. Uipon that branch of the case there does not appear to me to be much room for doubt. With this exception, that the -word " exorbitant " appears to me to be too strong an epithet, I entirely agree -with Mtr. JuWstice Vaughan IlaRinins -when he says, " I ao not think that -when you have a private company, and ni the siare- holders in the company are perfectly cognizant ot the conditions nider which the company is formed, and the conditions of the purchase by -the company, yoe can possibly say that purchasing at an exorbitant p rice (and I have no doubt whatever that the purchase here was at an exorbitant price) is a fraud upon those share- holders or upon the company." The learned Judge goes on to say that the circumnstances might ha7le amounted to fraud if there had been an intention oIx the part of the original shareholders " to allot further shares at a later period to future allottees." Upon that point I do not fmd it necessary to express any opimon; because. it is not raised by the facts of the case, and, in any view, these considerations are of no relevanty in a question .as to rescission between the - company and the appellant. lit. 3Farwell argued that the agreement of August ' ought to be set as ide, upon the principle followved by this hvouse in " Erlanger v. New Sombrero ]Phosphate Company (Limited) " (3 Appeal Cases). In that case the vendor, who got up the company, with the view of selling his adventure to it, attracted shareholders by a prospectus -which was essentially false. The directors, who-were virtually his nominees, purchased from him withoout being aware of the real facbts; and on their assurance that, in so far as they knew;, all -was right the shareholders sanctioned the transaction. The fraud by -which the company and its shareholders haLd been misled -was directly tracashle to the vendor; and it was set aside at the nstance of the liquidator, the Lord Chancellor (Earl Car) e- pressing a doubt whether, even in those circumstances the remedy -was not too late, after a linuidation order Blt in this case the agreement of JulY -was, in the faU lowvledge of the facts, approved and adopted by the company itself, if there vas a company, and by all the shareholders who ever were or were liLely to be members of the compaun. In my opinion, therefore "l Bianger v. NeW Somibrero Phosphate Company " has no application, and the original claim of the liqut- dater is not maintainable. The Lords Justices of Adpeal, in disposing of the amended claim, have expressly found that the formation of the company, -vith limited liability, and the issue of ?10,000 -orth of its de- bentures to the appellant, -were " contrary to the true intent and meaning of the Companies Act, 1862." I hava had great difficulty in endeavouring to interpret that finding. I am unable to comprehend how a com- pany, which has been formed contrary to the true intent and meaning of a statute, andc (in the language of Lord Justice Lindley) does the very thing -which the Legislature intended not to be done, cau vet he held to have been legally incorporated in terms of the statute. II Intention of the le5islature " is a common, but very slippery phrase. -which, popilarly understood, may signify anytng from intention embodied in positive enactment to speculative opinion as to what the Legislature probably avould have meant, although there has been an omissioa to enact it. In a Court of law or equity, -what the Legislature intenided to be done or not to be done can only be legitimately ascertained from that -which it has chosen to enact, either in express words or by reasonable and necessary implication. Accordingly, if the wvords " intent and meaning," as they occur in the fmding of the Appeal Court, are used in their proper legal sense, it follo rs, in my opmion, that the company has not been well incorporated ; that, there being no legal corporation, there can be no liquidation under the CommPanes Acts, and that the counterclaim preferred by its liquidator must fail. In that case its creditors would not be left without a remedy, because its members, as joint tradera -without limitation of their liablHty, -would be jointly and severally responsible for the debts incurred by them in the name of the company. I can conceive that there might be a limited company formed and registered by a person who had the sole interest in it, the other sub- scribing members being persons who were his alioseB,and having no real existence - and in that case also (which does not occur here) there would be no legal company, and the real owner of the concern woufld be liable for its debts to the full extent of Eis meanms The provisions of the Act of 1862 which seem to me to have any bearing upon this point lie witbin a very narrow com- pass. Section 6 provides that any seven or more persons, associated for a lawfl purpose, ruch as the manufacture and sale of boots, may, by subscribing their names to a memorandum of association and other- wise complying with the provisions of the Act ian espec of registration, form a coinp any with or without limited liability; and section , -which preecribes the essentials of the memorandum in the case of a companyr limited by shares, iater atie, enacts that " no subscriber shall take less than one share." The frst of these enact- ments does not require that the persons ubscribin- shall not be related to each other, and the second plainly imports that the holding of a single share affords a sufficient qualification for membership ; and I can fid no other rule laid down or even suggested in the Act. N or does the statute, either expressli or byt implication, impose any limit upon the number of shares which a single member may sabseribe for or tike by allotment. At the date of registration all the requirements of the Act had been complied with; amnd, as matters then stood, there does not appear to hava been any room for the pleas now advanced by the lquidator. The company -was still free to modify or resect the agreement of July 20;- and the fruad of which the appellant has been held guilty by the Courb of Appieal, though it maLy have exsited in cn7i7no, hiaa not been carried into execution by the accepts-ned of the. agreement, the issue of debentures to the appella-at mn terms of it, and by his receiving aLn allotment of sharee which increased his interest in the company to ; of its actual capital. i have already intimatea my on the that the acceptance of the agreement is binding opinionl company; and nelther that acceptance, nor the pre: ponuemating share of the appell nt, nor is payment in. debentures, being forbidden by the Act, I do not think tha,t any one of these things could subXsenuently render' the registration of the company invalid lint Ifa willig to assume that proceedmngs which are penrmitted by the Act may be so used by the members of a liited. company as to constitute a fraud upon others, to -whom they in eonsegaeunce incur personal liabillity. In this case the fraud as found to have been committed by the appellant against the creditors of the compxany, but :.t i4 clear that if so, though he m^ay have been its origintors and the only person wvho took benefit from itt he could not have done any one of these things whath, takei, together, are said to constitute his fraud withoot the consent and prinity of the other shareholders. It seems doubtful whether a liquidator, ais repre5enting and ii, the name of rhe company, can sue its momnbers for redress againsi. a fraud whi;ch was cotmmitted liv the company itself and by all its shareholders. lowveer, i do not thik it necessary to dwell upon that point, because I am not satisied that the clharge of frandt egainst creditors has aiy foundation in fmat. The memo- rantdum of associ tion gave notice that tho main obiect for which the company was formed b was to adopt, cad carry into eifect, -with or wvithout modifications, th. agreement of Jnly 20, 192, in tsrme of gwhich the de-f tentures for r ed10,000 were subsequently f iven to the appellsnt m par paymen of the price. ib the artiles of asocuition-ahrtcle 6u2 t}the directors ere- anm poedrestopinssue mrtageo otiherwa oebentuesdrbod powserea to lasuo -morlsae or other debentures or bonde tar any debts due, or to beeome due, to the company and it is not alleged or proved that there ws any failure to comply with section 43 or the other clauses of P'art III. of the Act, whvich relato to the protection of creditors. The unpaia creditois of the company, 'whose unfortuLnate position has been attributed to tli4 fraud of the appellant, if they had thought fit to avail themselves of the mesas o? protfecing their -iuterest which the Act provides, could have informed themselves of the teems of purchase by the company, of the issue of debentures to the appellaut, and of the amount of shares held bv each member. In my opinion the statte casts upon them the duty of making inquiryi regard to these matters. 'Whatever may beotbe moral duty, of a limited company and its shareholders, when the tride of the company is not thriving,the law does not lay any obligation pon them to -ram those members of the public -ho eal -with them on credit that they rim th ris- of not 1eing paid. One of the learned Judges asserts, and I see no reason -to -question the accuracy of the register of debentures.. But thu apathy of creditor canuiot just-ify an ilpUtation of trd agis a limited company or itscmbemrs -ho hav provide all theo means of information whic the At Pof 8853 rares. Ad, in my oiion, a creditor who v.ill not take the trouble to usePhe mleans vihich the statute Tprovides for enabling him to protect himnself mist bear the conseqiuences of his owvn negligence. For these reasons I nave come to the conclusion that the orders appealed from ought to be reversed, with costs to the 'appeellnt here an in both Courts belolv. His costs in this House must, of course, be taxed in accordance with the rule applicable to pauper litigants. tOisD 11S CHELL.By an order of thc High Court, which Was affirmed by the Court of Appeal, it was declared that the respondent company, or the liquidator of that company, was entitled to be indemnisiedhb the appellant 'gainst the sum of ?7,733 Ss. 3d., and it was tradered that the respondent company should recover that sum against the appellant. 0iL Juily 2.8, 1892, the resPoneant- comPany wvas incorporated with a capital of ?40,000t divided into 40,00w) snares of 21 each. One of tne o jects for which the company was incorporated was to carry out an agreemeat, with such modifications therein as might be agreed to, of July 20, 1892, which had been entered into between the appelant and a trustee for a company intended to be formed for the acquisition by the company of the business then carried on by the appellant. 'T'he company was in fact formed for th purpose of taking o7er the appellant's business of leather merchant and boot mamnufacturer, which he had carried on for many years. The business had been a prosperous one, and, as the learned Judge who tried the action found, was solvent at the time when the com- pany was incorporated. The memorandum of associa- tion of the comDany was subscribed by the appellant, his, wife and iaughter, and his four sons, each sub- scribing for one share. The appellant aftervards had 20,000 shares allotted to him. For these he paid 21 per share out of the purchase money which, by agree- meIt, he was to receive- for the trausfer of his business to the company. The company afterwarda became in- solvent and went into liquidation. In an action brought by a debenture-holder on behalf of himself and all the other debenture-holders, including the appellant, the respondent company set up by way of counter-claim that the company was formed by Aron Salomon, and the debentures were issued in order that he might carry on the said busmess and take all the profits without risk to himself, that the company was the mere nominee and agent of Aron Salomon, and that the company or the liquidator thereof was entitled to bo inderriniaed by Aton Salomon against all the debts ooini by the com- pany to creditors other than Axon Satomoa. This counter-claim was not in the pleading as oritinally delivered; it was inserted by way of amendment at the suggestion of Vaughan lYilliams, J., before whom the action caf e on for trial. The learned Judge thought the lquidator entitled to the relief asked for and made the order coplained of. He Vaua of opinion that the company wbas only an alias for Salomon, that the in- tention being that he should take the profits without running the risk of the debts, the company was merely an agent for him, and h-ving incurred liabilities at his instance, was, like any other agent under such circe.m- -stances, entitled to be indemninied by him against them. On appeal the judgment of Vaughan Williains, J., was affirmed by the Court of Appeal, that Court" being of opinion that the formation of the company, the agrees meat of Agust, 1892, and the issue of anes uo Axon Salomon pursnant to such agreement were A mere scheme to enable him to carry on business in the name of the companywith limited liability contrary to the true intent andt meaning of the Companies Act, 1862, and further to enable him to obtaia a preference over other creditors of the compsny by procuring a first chsrge on the asets of the cominv y means of such debentures." The learned Judge3 m the Court of Appeal dissented firomn the fiew taken by Vaughan Williams, J., that the company was to be regarded as the agent of tho appellnnt. they considered the relation between them torbe that of trunstee and cosrpi oue trut, bat this diference of iew, of course, did not affect the con- delusion that the right to the indemnito claimed had been established. It is to be observed that both Courta treated the company as a legal entity distinct from Salomon and the then members who composed it, and therefore as a validly-constitted corporaion. Thins is indeed, necessarily involved in the judgment which delared that the company was entitled to certain rihots as buainst Salomon. Under these circumstances, I am at ailoss to luderstand what is meant by saying that A. Salomon aud Company (Limited) is bta an dZia, for A. Salomon. It is not anothcr name for the same -person; the company is ct thpethesi a distinct legal .Here,ni. As little am I ablo to adopt the saew that the company wvas the agent of Salomon to carry on his bustiess for hum. In a popular sense a company may in every case be said to carry on business for and onabeSl of Its shareholders, ut this certaily does not in point of law constitute the relation of prncipal and agent bcetween themn or render the shareholders liable to in- demnifcy the company agait the debts wbich it icurs. cpere, it is true, Salomon owned all the shares except rix so that if the business were profitable he would -b entitled, substantiall, to the whole of the profits. The other shareholders, too, are said to have been" dum- mies," the nominees of Salomr n. But rhen once it its Conceded that they were individual members of theo company distinct from Salomot , and sufficiently so to bring into existence in conjunction with him a validly constituted corporation, I am untable to see how the facts to which I have just referred can affect tho leeal position oE the company, or give it rights as against its hemebers which it would not otherw,Is possess. The Court of Acpapeal based their judgment on the proposi- hton that the formation of the compan, and all th followed it, were a mrer scheme to enable Ithe ppellant to carry on business i the name of the company, vith limited liability,contrary to the true intent and me of the Companies Act, 1862. The conclusion whimc they drew from this premiss was, that the compway was a trustee and Salomon their cpotio quc nrus I cannothe think that the conclusion follows ven if the premiss be sound. It seems to me that the logical result would be that the company had not been validly constithted, and therefore had no legal existenc. Bunt, apart from this it is necessary to examie the propopition on which the Court have rested their isdgment, as its effect would be far reaching. hIany industrinl and banking concerns of the highest standing and credit have, In recent yearI been, to use a common expression, converted nto joint stock companies, and oten into what are cahled "pri- vate'companies, whero the whole of the babes are held by the former partners. It appears to me that alL these might be pronouced " schemes to ecnable " them to oary on business i the nasme of the company, with olimted liability," T the very sense in which those words sre used in the judgment of the Court of Appea.' The profits of the concern carried on by the company wvill go to the persons whose busiess it was before the trans er, pad m the ame proportion s before, the only difference beig that the liabiLity of those who'I take the profits will no longer be unlimtitea. The ver object of the creation of the compan and the transfer to it of the business, is that,ehereas tha liability of the 0tners ofo debts incurred was without limit, the oriothy perse members for the debts incurred by the company shl b limited. In no other respect is ite ntended that thero shall' be anz differencem th conduct of the business and the divasion of the profits are itended to be the same as before. If the judgment of tho Court of Apped be pashed to its logiae l conuesion al these companes mnst, I think, be held to be trustees for th partners who transferred the business to them and those partners must be declared liable, without limit, to discharge the debts of the company. Por this is the effect of the Jndgmant as regards the respondent company. The position of the members of a company is just the same whether they are declared liable to pay the debts incurred by the company, or by way of indemnitn to furni sh the compla with the means of aying thiem. I do not think the learned Judges in the Court below have contemplated the application of their judgment to such cases as I have been considering, but I cau see no solid disttnction between those cases and the present one. It is said that the respondent comp ny is a " one-man " company, and that m this respect it differs from such comnpanes as those to which l have alluded. But it has often happened thab a business transferred to a joint stock company has been the property of three or four perSOnS only, and that the other subscribers of the memorandum have been clerks or other persons who possesslittle or no nterest onlg in the concern. I ana unable to see how it can he lawful for three or four or six persons to form a company for the urposeoof employing their capital in trading, with th eei f limited liability, and not for one parson to do so, provided, in each case, the requhrements of the ssatute have been complied with, tand the company has be'en validly constituted. Howv does it concern the creditor whether the capital 'of the company is owned by seven persons in equal shares, wiith the right to an equal share of tho profits, or whether it IS almost enltirely ow"ned by one person w-ho practically takes the wlhole of the profits ? The creditor hass notice that he is dealing with a company the liability of the members of which is limited, and the register of shareholdersi informs him howr the shares are held, and that they are sistantially in the hands of one person,. if this be the fact. The creditors in the present case gave credit to and contracted with a limited company,; the effect of the decision is to give them the benefit, as re ards cue of the shareholders, of unlimited liability. I havo said that the liability of- persons carrymg on business can only be limited provided the requirements of the statute be complied with, and tcis leads naturally to the mnqniry what are those requirements ? The Court of hpp as ^ declared that the formation of the resnondent comKpany, and the agreement to take over tho business of the appellant, were aw scheme " con- trary to the tru;e intent and meaning of the Companies Act." I know of no means of ascertaining iihat is the intent and meaning of the Companies Act escept by exmining its provisions and finding what regulations ft has imposed as a condition of trading with limited liability. The memorandum must tstate th amount of the capital of th company and the number of shares into which it is divided, and no subscriber is to take lessthan one share. The shares m ay, however, be of as small a nominal value as those who form the company please ; the statute prescribes no sinnimusm, and though there must be seven shareholders, it is enough if each of-them holds one share, however small its denomina- tion. The Leaeislature therefore clearly" sanctions a schem e by which all the shares, except rix, are owned by a single individual, and these six are of a value little more than nominal. It was said that in the present' case the six shareholders other than the appcllant were more dum mies, his nominees, and held their shares in trust for him. I will assume that this was so. In my opinion it makes no difference. The' statute forbids the entry in the register of any trest, and it certainly contains no enactment that each' of the seven persons subscribing the memorandum must be' benficialy entitled to the share or shares for which he subscribes. The persons who subscribe the memoran- dum or who have agreed to become m embers of the company, and wrhose names are on the register, are dalone regarded as, and in fact are, the shareholders. They are subiect to all the liibility which 'attaches to the holding if the share. They can be compelled -to make any.; paymnt which the ownership of a share involves.- lVhether they aroebeneficiti owners or bare ustucs is a m atte r withl Is n,t the oJn nor creditors have anything to do; it concerns only them and their ceutuis qua trudt if they have any. If, then, in the present case all the requirements of the statute wero complied with, and a company was effectu- ally constituted, and this is the hypothesis of the judg- ment appealed from, what warrant ia. there for saying that what was don, was contrary to the true intent and meaning of the Companies Act ? It may be that a company constituted like that under consideration was not in the contemplation of the Legislature at the time when tho Act authorizing limited liability was passed; that, if what is possible nnder the enactments as they stand had been foreseen,a minimum sum would have been fixed as the least denomination of share per- missible, and ib would have been made a condition that each of the seven persons should have a substantial interest in the company. But we have to interpret the law. not to make it; and it must be remembered that no one need trust a limited liability company unless he so please, and that before ho does so he can ascertain, if he so please, what is the capital of the company, and how it is held. I have hitherto made no reference to the debentukes which the appellant received in part payment of the purchase-money of the business which he transferred to the company. These are referred to in the udgment as part of the scheme which is pro- nounced contrary to the true intent and meaning of the Companies Act. But if aparb from this the conclusion that the appellant is bound to indemnify the company against its debts cannot be sustained, I do not see nowr tme circumstance that noe received these debentures ctn avail the respondent compRoy. The issue of debentures to the vendor of a business as part of the price is certainly open to great abuse, anl has often worked grave mischief. It may well be that some cimeck should be placed upon the practice, and that, at all events, ample notice to all 'who may have dealings with the company should be secured. BuS as the law at present staues there is certainl,y nothing unlawful in the crea- tion Of such debentures. For these reasdns I have come to the conclusion that the appeal should be allowed. It was contended on behalf of the company that the agreement between them and the appellant ought, at all events, to be set aside on the ground of fraud. In my opinion no such case has been made out, and I do not think the respondent company are enzitled to any such relief. 'The other noble and learned Lords having conourred, The decision of the Court below 'was reversed. (Before the LoBD CHANexLLon, LoBD WATSON, LORD HxlascHL, LoBD MloRRs, and LORD SnAceD.) CUBRIE v. I'XrCIGHT AND OTHERS. This 'was an appeal from i decision of tbe Second Division of the Court of Session in Scotland, in which judgment was reserved last session. The facts of the case sufficiently appear- in the judgments. Mr. Joseph Walton, Q.C., and Mr. A. S. D. Thomp- son appeared for the appellant; and the Lord Advocate and Sir Walter Philnimore for the respondents. LoBD WATsoN.-The steamship Dunlossit was sold under a warrant issuing from the Sheriff Court of Lanarksbire, at the instance of Samuel M'Knight, a mortgagee, now deceased, 'whose executors have been made respondents in this appeal. The price of the vessel having been paid into Court, a competition arose between the mortgagee and the present appellant, who holds a decree for damages against the registered owners of the Dunlossit, in respect of which he claims a preferable len attaching to the proceeds of her judicial sale as a surrogatum for the ship. The findings of the decree upon which the appe t's claim is founded show that during a night m November, 1893, three vessels were moored alongside of an open quay at Port Askaig, in the Sound of Islay, where there is no harbour. The Duilossit was in the centre of the tier the steamship Easdale, belonging to the appelant, being outside of her, and taoored to the quay by cables passing over the deck of the Dunlossit. There was a gale of exceptional violence during the night, which made the position of the vessels very insecure. In the morning the crew of the Dnnlczsit, which was in serious peril of damage from contact with tho vessels between which she lay, and the possibility of another vessel moored in front of ber coming into collision 'with her, got up steam, and, after notice of their intention, cut the mooring-ropes of the Easdale, and stood out to sea. The Easdale was shorthanded owing to the defec- tion of two of her crew, and, being unable to get up steam, waS driven ashore and damaged. The master of the Dunlossit acted solely for the protection of his ship against pre3ent and possible damage. The Pirst Division of tne Court, reversing the decision of the Sheriff-substitute, held that the cutting of the Easdale's ropes by the crew of tho Dunlossit was a wrongful act, for which her owners were responsible. That decree is final, and I have no right to express and am not to be understood as expressng any opinion with regard to its merits. The Sheriff-sabstitute, in the present suit, sustained the appellant's claim, being of opinion that, in the sense of law, the proceeding5 of the Dunlossit crew constituted an ant of the ship 'which was sufficient to oreate a maritime lien for the damage thereby occasioned to the Easdale. His decision 'was reversed, on appeal, by the Second Division of the Court of Session, who dismissed the claim. Three of the leared Judges held that, according to the law of Scotland, no lien attaches to a ship for damage wrongfully done by her to another vessel 'whether by collision or otherwise. Lord Ituther- furd Clark abstained from expressing any opinion upon that point, which did not appear to him to arise for decison. All of the learned Judges held that, assuming the same right of lien to exist in Scotland as in Eng- land, the injuries suffered bY the Easdale were not due to the fault of the Dunlossit as a ship. Both these grounds of judgment involve considerations, not of municipal, but of maritime law. Had they been con- fined to the second point I should have seen no reason to differ. But the first point is one of considerable im- portance to the shipping community; and I am unable to concur in the views which were expresse1 with regard to it by the majority of the Court. From the earsiest times the Court of Scotland, exercising jurisdiction in Admiralty causes, have disregarded the municipal rules of Scotch law, and have invariably professed to administer the law and customs of the sea generally prevailing among maritime States. In later times with the growth of British shipping, the Admiralty law of England has gradually acquired predominance and resorb has seldom been had to the laws of other Itates for the guidance of the Courts. Mr. Bell, who wrote more than 60 years aoo, states (II. Comm., 5th edit. p. G00) that the decisions wihich were at that time of the greatest authority in Scotch maritime Courts were those of the High Court of Admiralty of England. His statement is fully borne out by the authorities, to three of which I think it sufficient to refer. In 1788 the Court of Session, in a case relating to lien for furnish- ings made to s ship (" Wood v. Hamilton," Morr. Dict. 6, 260), ordered the opinion of Englsh counsel to be taken, to ascertain the practice of England in such cases, and thereafter gave judgment in accordance with that opinion, although it was contrary to previous decisions of their own Court; and their judgment was affirmed by this House (3 Paton, 148). In the well- known case of " Hay v. La Neve " the Courb of Session followed what they understood 'to be the rule of the English Admiralty Court; and, in moving the reversal of their judgment,Lord Gifford, who delivered the opinion of.the House, said, "We are here on the law of the Admiralty Of England " (2 Shaw, 403). In " Boebtcher v. Carron Companyu" (23 ess. Ca., 2nd teries, 333) the identity of the marhiime law of Scotland with that of Euld d bes distinctlv proclaimed by the late Lord Presiteat Inglis, hen lord Jutice Clerk, 'who 'was ceUtaitle not disposed to accept English law in any case whore it differed from the lawe of Scotland. After referrnmg to various canses which had contributed to produce that identity, his Lordship observed: I-" I would he surprising it, at the present day, ships, enjoy- ins the privileges and subject ao the conditions of British registry, should sai from the ports of the UJnited Kigdom under the same flag, and subject to the same stabatory regulations In al respects, and yet that, in cases of collision, the legal riehts of the parties might vary according as the case might be tried mi one Brntish AdmirSlty chourb or nother." It does not appear to be to me donbtful that if the Dunlossit had been so neeligently navigated as to run into and sink the Etsdale she would, in the absence of contribu- tory fault by the Easdsle, have been subject to a lien for the decgo occasioned to the latter vessel in any English port, vwhereas according to the law laid down in this case, o such ihen isould have attached to her in a Scottish harbour. That such a conflict should be possible is inconsistent with the vies expressed by the late Lord uPresiden in" Boectther v. Carron Coin- pdny," and also with the maritime code shich ought to prevail in both countries, which, in my oud e u on , is neither English nor Scotch, but British law. That there may be conflicting decisions by the Courts of the twro countries is possibly unavoidable, seeing that different conclusions may be arrived at even bvfCourts of the same country, administering the same lw * and I do not mean to suggest that a Scotch Admiralty Court is les5 free to examme the merits of an Enelis authority than an English Court is to estimate the value of a Scotch decision, and to accept or reject it according to its owvn viewr of the law maritime. But it does not followr that the lawr either is or ought to be different in the two countries. This House hEas nowv become the ultiniate forum in all maritima causes arising in the United Kingdom; and, as your Lordships are in my opinion bound to apply one and the same lawv to the decision of rdl such cases, your judgments unon a proper maritime question, 'whether given in an English or in aIcchap peal, must be of equal authorityi al the Admiralty Courts of thokingdom. The "Bold Buecleuch," wvhich 'was decided by the Judicial Commnittee of the riyCouncil affrming the judgment of Dr. Lushingtoni '(7 37core P. 6., 267), is the earliest English authority which distinctly' establishes the doctrine that, in ea cas of actual collision between two ships, if one ofthe'm only is to blame, she must bear a mnaritime Hien for the amount of the damage sustained by the other, which baa priority, not only to the interest of. her owner. hut of her mortgagees. Theprincipleof thait decision has been adopted in the American Courts ; and in the Admiralty Court of England it has for nearly 40 rears been followed in a variety of cases, in -which lien for damage done by the ship had beenp referred to claims f or salvage and seamen's 'wages, and upon bottomry bonds. In myL opinion, the substantial questien which your Lords!ips have to determine in thi-s case is whether the "1Bold Bucoleuch " 'was -,decided acco-rding to the maritime law of Britain. If it was, the rule 'which it lays down must apply, to all miaritime causes of a similar kind arising in the Courts of Scotland. It is unquestionably. within the authority of this House to reconisider and, if necesgary', to overrule the, judgmenTt of the Judicial Committee in the "1 Bold Bucce but it is no less clear that the opinions of the,eminent Judges who took part in the decision of that case ought not to be disregarded without good cause shown. To my mind their reasoning is satisfactory, and-'the result at which they arrived a ppears to rhe to be ntol consistent ,wZith the rn(mp,Ie~s of genral maritmla am co ~ge~L29es expediency. The great increase which bas taken place in th3 number of sea-going ships, propelled by steam power at hi&h rates of speed, bas multiplied to such an extent the risk and occurrence of collisions that it has become highly expedient, if not necessary, to interpret the rules of maritime liaility in the manner best fitted to seoure careful and prudent navigation. And, in my opinion, it is a reasonable and salutary role that, when a ship is so Carelessly navigated as to occasion injury to other vessels which are free from blame, the owners of the injured craft should have a remedy against the corpus of the offending ship, and should not be restricted to a personal claim against her owners, who may have no substantial interest in her, and may be ithout the means, of making due compensation. The other point, as to which the learned Judges of the Second Division were unanimous, relates to the limits of the shipping rule which was followed in the..case of the Bold Buecleuch. I think it is of the essence of the rule that the damage in respe-t of which a maritime lien is admitted must be either the direct result or the natural conseucuence of a wrongful act or manceuvre of the ship to which it attaches. Such an act or mauceuvre is necessarily due to the want'of skill or negligence of the persons by whom the vessel is navigated, but it is, in the language of maritime law, attributed to the ship, because the ship, in their 'negligent or unsadlful hands, is the instrument which causes the damage. In the present case, according to the findings of fact con- tained in the decree of the First Division, the injuries sustained by the Easdale were not owing to any move- ment of the Dunlossit; they were wholly occasioned by an act of the Dunlossit's crew, not done in the course of her navigation, but for the purpose of removig an obstacle which prevented her from starting on her voyage. Iamntherefore of opinion that, upon the second of these grounds, the interlocutor appealed from ought to he affirmed. L,onn HaasouaL-The question raised by the appeal is whether the appellaut is entitled to a maritimelien upon the vessel Dunlossit (or her proceeds), of which tfie original respondent, M'Knight, was the mortgagee. In November, 1893, the vessels Dunlossit and Easdale were lying alongside one another at Portaskaig Pier IsLay. A heavy gale was raging, which the Eadale was unable or unwiDling to face, the master of the Dunlossit being anxious to PUt to sea, and being unable to induce the master of thie Easdale to let go his moorings, cut them and sent her adrift- The result was that the Easdale drifted ashore and was damaged. The owner oE the Easdale, having obtained judgment against the owners of the Dunlossit for the amount of the damage thus sustained, sought by the present proceedings to maintain a maritime lien on the Dunlossit in respect of the damage done to the Easdale owing to the act of the master of the Dunlossit. I entirely agree with the Court below in thinking that no such lien can be sus- tained. In the Admiralty Court in England a maritine lien has frequently been enforced, in cases of collision, against the vessel which was in fault, but no case could be cited which was at all similar -to the present one. In all the cases referred to, the damage had been cansed either by a collisiou with the vessel which was to blame, or by that vessel having driven the other into collision with some third vessel or other object. The doctrine was originally asserted in cases of damage by collision with t1;e vessel which was dedared subject to the lien. It has since been apulied in cases in which the damage did not result from a collision with the vessel in fault, but in which, owing to the negligent navigatioD of that vessel, the injured sip was driven into collision vith some other vessel or object. Whether the circumstances have always warranted the conclusions arrived at, it is not necessary to innuire. I express no opinmon upon it- but the ground of 'the decision was in all cases this- that the vessel on which the lien was enforced had in maritime language done the damage. Here the Dun- lossit did no damage. It was not by reason of the negligent navigation of that vessel that the disaster occurred. It arose simply from the wrongful act of the master in cutting the Essdale adrift. I am not prepared to extend the doctrine of maritime lien to such a case. In the Court below three of the learned Judges held that the doctrine of maritime lien which exists in England in cases of collision is unknown in the law of Scotland. I entirely agree with the late Lord President Inglis, that much as the law of Scotland differs from that of England in many respects, the Admiralty law is the same in the two countries. The Courts of Scotland are, of course, not bound by the decision of an English Adniralty Court in any new case that arises. But, taking it to be established that the Admiralty law of the tbwo countries is the same, they would ,no doubt, hesitate to differ from a long course of decision by English Admiralty Courts of high authority. I think it right to add, as the matter is of much practical importance,that, in my opinion, the doctrine of maritime lien in cases of collision is. within the limits to which I have adverted, too well established to be now questioned. The other noble and learned LonDs having coneurred, the appeal was dismissed, with costs. (Bcfore the LoRD CHAirCxLLOR, LORD HERS CELL onD lAcNAGeTEi7, LORD SnHAiD, and LORD D?I)Sy.5 CLASRE V. THE EARBL OF IU2iRAVEy. This was an appeal, partly heard on Friday last, from an order of. the Court of Appeal reversing a judgment of the Admiralty Division. The action was brought by the Earl of Dunraven, the owner of the yacht Valkyrie, against Mr. Arthur D. Clarke, the owner of the-yacht Satanita, to recover the value of the former yacht which was sunik in a collision with the latter. The Ear of Dunraven claimed the full value of his yacht under the racing rules of the Yachting Association; but the defendant contended that, under the provisiows of the Merchant Shipping Act, his liability was limited to 28 a ton. The Probate Division dedded in favour of the de- fendant's contention; but the Court ofAppeal held that the parties were bound by the racing rules under which the race was to be sailed, and that the defendant was liable for the full agreed value of the Valkyrie, which was ?7,000.t a Sir It. Reid, Q.CJ., and Mr. Edward Pollard appeared for the appellant,; anDa Sir Walter PhiDlimore, Mr. Joseph' Walton, Q.C., and Mfr. L. Batten for the se- spondent. At the conclusion of the arguments late this afternoon, The LORD CIHMANLLOR said that the case would be in the paper on Thursday next, when they would announce whether they desired to hear the leaned counsel who appeared for the respondent argue the case. I LAW REPORT, NVov. 16. HOUSE OF LORDS.