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TMI Blog1934 (12) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed as the plaintiff failed to obtain the leave of the Court to institute the suit as part of the cause of action arose outside the jurisdiction, was abandoned by learned Counsel. The real defence to the suit is that the agreement sued upon was procured by the plaintiff by fraud and in collusion with one A.M. Murray, and particulars of the fraud and collusion are set out in great detail in para. 7 of the written statement. The defendant company also denies that it ever entered into the agreement in suit as A.M. Murray ceased to be a director on November 1932. The defendant company also contends that A.M. Murray who signed the agreement was not a director and that W.E. Rivers and Murray had no authority to enter into the agreement on behalf of the company, and, further, that neither the company nor its director sanctioned or authorised the execution of the agreement. The defendant company also denies the payments set out in para. 2 of the plaint. The plaintiff filed a written statement as a reply denying that the agreement was obtained by fraud and collusion and all the specific allegations contained in para. 7 of the written statement, and also pleading that as the company d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to Burma. Rivers returned to Burma by the Gloucestershire and reached Rangoon on October 3, 1931. On the voyage Rivers appears to have discussed the subject of running the Kyauktaga grant with a fellow passenger Clark, a Ceylon planter and Clark's advice to him was that a visiting agent was what the grant needed and after Clark left the boat at Colombo, Murray another fellow passenger, discussed the grant with Rivers and mentioned that he had heard Clark's advice regarding a visiting agent and said that he knew the very man for the post, mentioning Charles Joseph, the plaintiff. Murray and Rivers after arrival in Rangoon stayed at the Strand Hotel. On October 17, 1931, Mylne and Joseph arrived by the same Bibby boat. Rivers met Mylne on board and took him over to the Strand Hotel and there introduced him to Murray. There Mylne learnt all about Joseph from Murray. Joseph was subsequently inroduced to Mylne and Rivers and shortly afterwards Joseph was asked whether he would take up the management of the grant. Joseph ultimately agreed to do so provided his representative's report was favourable. Mylne had agreed to give Rivers a third share if he went into partnership with him. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues to be now considered: Issue No. 3 and Issue No. 7. (3) Was Murray a director of the company at the time of the execution of agreement on November 21, 1932, and was he so held out by the defendant company. Under the Articles of Association of the defendant company Murray was one of the then directors, the other two being Mylne and Rivers. Under Article 19 Murray was to hold office for one year, but would be eligible for re-election. It is admitted that on the date the agreement was executed the one year had expired. Learned Counsel for the defendant company contends that at the meeting at which the agreement in suit was arrived at Murray had not been re-elected a director and therefore all acts done at that meeting were ultra vires of the company and it follows that the agreement in suit cannot be binding on the company. There is nothing in the evidence of Rivers or Murray to shew whether Murray had been re-elected a director or not. The plaintiff states that he had no knowledge that Murray had ceased to be a director and he believed at the time that Murray was a. director. In Murray's evidence he states that they had a meeting of directors in London in October 1932, Mylne, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the express purpose of entering into the agreement in suit. There can be no doubt that Mylne believed that Murray was a qualified director at the time. He also gave-Rivers a power-of-attorney to act for him, Exhibit 2-U. There can be no doubt on the evidence that Mylne ratified the agreement. He says: "I gave a power-of-attorney to Capt. Rivers when he came out at the end of 1932 to effect the third agreement. Exhibit 2-U is the power-of-attorney I gave him. After the completion and execution of the third agreement, Exhibit 2-D, Capt. Rivers informed me that he had effected it. He was acting for me at that time and I approved of his action at the time." There is also a letter, Exhibit 2-T, dated December 20, 1932, from Mylne to Joseph, in which he states: "It is awfully good of you to fall in with his plans and agree" to the changes, and he explains this in his evidence meaning: It is awfully good of Joseph to agree to Murray's suggestion and agree to the terms of the third agreement." Now, as regards Rivers there can be no doubt that he regarded Murray as a director as he actually allowed him to be the chairman of the meeting. That this agreement was acted upon by both M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the directors in that case having full knowledge of defects in the appointment and being warned that they had no authority to act continued to do so. That was a case where all parties were fully aware that the persons who acted as directors were never so appointed. Here, however, there is no question that all parties believed that the directors were duly appointed and had power to act. In these circumstances I do not see the relevancy of this authority to the present case. The next case is that of Mahony, P.O. v. East Holyford Mining Co., Ltd. [1876] 33 L.T. 383. This case deals with the question of contracts between the company and third parties. Here certain persons assumed the office of directors without having been properly appointed and communicated to the bankers of the company an alleged resolution in accordance with the articles as to the form in which cheques would be drawn. The bank acted upon this communication and honoured cheques drawn in the manner described. In the action brought by the Official Liquidator of the company to recover the amount paid upon these cheques it was held: "that, even without the validating clause, as the bank had dealt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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