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TMI Blog1934 (11) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... nted so that we have not had the advantage of an argument in support of the position he would presumably have maintained. The plaintiffs are a limited company. The defendants are (1) a firm and (2) The Indian Bank Limited. The firm were at all material times acting as managing agents of the plaintiff company pursuant to an agreement. The terms of that agreement are scheduled to the articles of association and Article 132 provides inter alia that the firm 'shall be and are hereby appointed the agents of the company for the period and upon the terms, provisions and conditions set out in the Scheduled Agreement and the Board is hereby authorized to execute the said agreement on behalf of the company.' Article 149 provides that any p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the firm except such as went by way of remuneration under the terms of the scheduled agreement. The questions arise because in point of fact the scheduled agreement was never executed by the Directors. As a consequence the company now claims (1) all the moneys the bank has paid to the firm as a consequence of the firm operating on the company's account, (2) from the firm all the moneys so drawn by the firm from the bank. Counsel for the company-appellants very faintly argued the appeal as against the Bank very properly observing that if the bank could not be regarded as put on notice of the need to have the scheduled agreement executed (which notice would impose upon the bank the duty to ascertain that the agreement was execute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant proceed along the following well-known lines: (1)Prior to incorporation a company does not exist. Accordingly no contract can be made by it or for it. It cannot be in the position of principal and accordingly on incorporation it cannot ratify such an agreement. This position has been established law since Kelner v. Baxter [1866] LR 2 CP 174 . Accordingly no action lies for breach of such a contract: In re Northumberland Avenue Hotel Co In re [1886] 33 Ch. D. 16 . Bagot Pheumatic Tyre Co. v. Clipper Pneumatic Tyre Co. [1902] 1 Ch. 146 and Melhado v. Porto Alegre Railway Co. (2)After incorporation but prior to the certificate empowering it to commence business a company has no power to do business, contracts made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so far as the excerpt we now use is concerned, "This kind of equitable action, to recover back money, which ought not in justice to be kept, is very beneficial and therefore much encouraged. It lies only for money which ex quo aequo et bono, the defendant ought to refund. It does not lie for money paid by the plaintiff, which is claimed of him as payable in point of honour and honesty, although it could not have been recovered from him by any course of law, as in payment of a debt barred by the Statute of Limitations, or contracted during his infancy or to the extent of principal and legal interest upon an usurious contract, or for money fairly lost at play; because in all these cases the defendant may retain it with a safe conscience, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain event a Director shall vacate office. The event having occurred the office was ipso facto vacated and the board had no power to condone or waive. One such event was entering into a contract with the company. W a Director entered into a secret contract with the company. That contract commenced in December and ended in June. Thereafter he continued to draw his remuneration as Director. At the general meeting in July he retired in the ordinary way and was re-elected. That happened on two successive years. Then the secret contract was discovered. Then W ceased to act. Then W sought to sell his shares. The company claimed the remuneration back and a lien for remuneration paid under a mistake of fact for the two years. It was held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( supra ) , on this point because here there was no mistake. In that case everybody thought the Director was Director except the Director, who must have known that, having entered into a secret contract with the company, he was not a Director. Here everybody connected with the company ( i.e., the men whose knowledge could be imputed to the company) knew that the firm was not the managing agent under any express contract, knew that the firm was acting as managing agents, knew that the money was with the bank and was being operated upon by the firm and knew that expenses were being incurred and being paid by the firm with the money of the company. It may be said this knowledge is not proved (though we think it must be imputed). It is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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