1871 Phosphate of Lime Co. v. Green. after so long an acquiescence, be allowed to rip up the transaction and call upon the defendants to pay back the money, without at least restoring them the shares the cancellation of which formed the basis of the arrangement which was made by the resolution of the 10th of July, 1866, and confirmed by the resolution of the 24th. It is unnecessary to go into the authorities which were cited in the course of the argument, because I do not think any one of them affects the principle upon which our decision is founded, and from which I feel the great danger of departing. The case which was mainly relied on for the plaintiffs was that of Spackman v. Evans. (') That was a case of very great hardship: a forfeiture of shares was unripped after the lapse of ten years, because contrary to the deed of association. Lord St. Leonards and Lord Romilly differed from the majority of the peers, not so much upon the application of the general principle of law as to acquiescence or ratification, as upon the conclusion to be drawn from the facts then before them. Balance-sheets had been put in from time to time, in the ordinary course of business, to which the attention of the shareholders might have been called, and which contained entries calculated to invite them to examine the books of the company, but not containing information as to extraordinary transactions such as those which occur in this case, of a nature to induce particular inquiry and criticism. The majority of the peers were of opinion that they ought not from the facts to draw the inference of notice, or to hold that the shareholders were to be "deemed to have had notice." Lord St. Leonards thought it was enough to *show 60] that they had the means of knowledge, and that, if the means of knowledge existed, notice ought to be imputed. I do not understand their lordships as laying down in that case any principle which should be binding as matter of law, but merely what was the inference which they, as judges of the law and the facts, ought to draw from the evidence before them. No one of the cases referred to seems to me to be at all like the present. I think the cardinal fact of the transfer of the old business of the Phosphate of Lime Company to the Sombrero Company, under the circumstances before stated, makes an end of the matter; and that the transaction as to these shares could (1) Law Rep., 3 H. L., 171. Phosphate of Lime Co. v. Green. 1871 not and did not escape inquiry. Upon the best consideration, therefore, which I can bring to this case, I come unhesitatingly to the conclusion that there was evidence from which the jury might properly hold that the condition of ratification was fulfilled, and that the verdict ought to be supported. KEATING, J. I am of the same opinion. This was an action for money lent; and the only plea we have to consider is one of accord and satisfaction. To prove that plea, the defendants showed an accord and satisfaction with the directors of the company by the delivery up to them of 400 shares to be cancelled, and the acceptance thereof by the directors. To meet that, it is alleged on the part of the company that what the directors did was ultrà vires and in excess of their authority. The answer of the defendants is twofold; first, that the directors did not exceed the authority vested in them by the articles of association; and secondly, that, if they did, the company,that is, the shareholders,- with full knowledge of what the directors had done, ratified and confirmed their act. As to the first question, I agree with the impression of my Brother Willes, that the transaction with respect to the cancellation of the shares would amount to a sale, and so fall within the prohibition of article 19. But I also agree with him that it is unnecessary to determine that, because I am clearly of opinion that there was evidence from which the jury might properly find that the company ratified the act of the directors, with full knowledge of all the facts; and that is the sole ground upon which my judgment is founded. If the question before us had been that which was before the *House of Lords in the cases [61 referred to, I must confess I should have felt some difficulty in coming to the conclusion that it was proved to my satisfaction that the shareholders, with full knowledge of the transaction, ratified that which the directors had done, with the intention of ratifying and confirming it. But that is not now the question; it is simply whether or not there was evidence upon which the jury might find acquiescence. It must be assumed that the jury have found the fact; and the only question is whether there was evidence to warrant their finding. That relieves us from all embarrassment which might otherwise have arisen from the decisions in the House of Lords. 1871 Phosphate of Lime Co. v. Green. The material facts of the present case were these:-There was a general meeting of the shareholders, convened in the usual way, at which a report was made by the directors distinctly informing the shareholders of the forfeiture or cancellation of these 400 shares, and of the diminution of the capital of the company of which the shareholders would derive the benefit, and of the proposed amalgamation or absorption of the original company into the Sombrero Company. The transfer from the old to the new company took place upon the footing of that diminution of capital, which to the extent of 4000l. was due to the cancellation of the shares in question. The accounts of the Phosphate of Lime Company were produced at that meeting, and the shareholders invited to investigate them, so that every one of them might, if he were so minded, have informed himself of the whole transaction; and no shareholder was called at the trial to say that he had not notice of it. The transfer and cancellation of the 400 shares took place in July, 1867, and down to the month of May, 1870, the shareholders in the extinct company have derived the benefit resulting from the consequent. diminution of capital in the increased dividends on their shares in the Sombrero Company. That the jury, under these circumstances, would have found that there was a ratification, if the question had been left to them, I cannot for a moment doubt. The plaintiffs' counsel elected not to go to the jury, but preferred coming to the Court; and all that we can be called upon to say is, whether or not there was evidence of ratification for a jury. I entirely concur with my Brother Willes that it would be inequitable and unjust to come to any 62] other conclusion; and I should have much regretted *it if I had felt myself compelled to disturb the verdict which has been entered. BRETT, J. The first point to be considered in this case is, what was the real effect of the leave reserved at the trial. The case of the plaintiffs was launched, and was mainly attempted to be maintained, upon the supposition that the compromise with the defendants was the result of a fraud on the part of the chairman of the company. That ground entirely failed; and, considering that the shares in question were cancelled so long Phosphate of Lime Co. v. Green. 1871 ago, and that the plaintiffs have had all the benefits of their cancellation, and are now seeking to enforce payment of the 65001. without offering to give back the 400 shares to the defendants or to pay them the dividends, it seems to me to be clear that the real and understood effect of the reservation was that the verdict upon the plea of accord and satisfaction was to stand, unless the Court should be of opinion that there was no evidence to support that plea. If, therefore, there was any evidence of ratification so as to bind the company, this rule must be discharged. The question, then, is, whether there was evidence of such a compromise in July, 1866, as was binding upon the company either by reason of the directors having had authority at the time to make the compromise, or by reason of a subsequent ratification by the company with knowledge of the facts. That the directors had authority to make the compromise is a proposition which I think cannot be sustained. The 18th sub-section of article 84 would seem to give the directors a limited authority to make compromises, but not to make such a compromise as this, because it would be contrary to the proviso that "the same be not repugnant to law or to any of the provisions of these articles," and a purchase of shares, which this would seem to amount to, is expressly forbidden by article 19. Although the directors had some authority to make compromises under article 113, I do not think this transaction was warranted by that article. It comes, therefore, to the question whether the act of the directors with reference to these 400 shares was ratified by the company. Now, in order to establish a case of ratification, it seems to me that it was not necessary to prove absolute knowledge on the part of every shareholder. As is pointed out by Lord St. Leonards in *Spackman v. [63 Evans (1), it was not necessary to show that every shareholder had actual notice. "It is said," he observes, " that the absent shareholders in this case are not bound by the arrangement unless the appellant can prove that every one of them knew the exact nature of the transaction. How can he prove this at the close of so many years? In Brotherhood's Case (2), it was held that they had notice,- not that, in point of fact, such notice was proved." It is impossible to prove that every shareholder had (1) Law Rep., 3 H. L., 222. (*) 31 Beav., 365; 31 L. J. (Ch.), 861. 1871 Phosphate of Lime Co. v. Green. notice or such a knowledge of the facts as amounts to notice. It is sufficient to show that facts were made known to the shareholders, into the effect of which they might and ought to have inquired, and to which they ought to have objected at the time, unless they intended to adopt the transaction. I think there was such evidence here. On the 5th or 6th of March, 1867, a meeting of the shareholders in the Phosphate of Lime Company was held for the purpose of considering the expediency of the absorption or transfer of that company to the Sombrero Company, with a diminished capital; and at that meeting a report was read in which it was stated, amongst other things, that that diminution of capital had been effected "partly by shares cancelled owing to the abandonment of the Lagrosan purchase, and partly by shares forfeited for non-payment of calls." In order to effect a diminution of the capital, the shares under both those heads must have been cancelled. Mere forfeiture without cancellation would not have had that effect. The validity of the transfer or absorption adopted or authorized at that meeting has never been called in question. At that same meeting a copy of the accounts was put in and submitted to all the shareholders. That fact distinctly appears upon my notes. It was not like the case of the mere production of a ledger into which the shareholders could have no opportunity of looking at the time. Unless the shareholders intended to adopt the transaction, they should have inquired into the circumstances under which the cancellation took place. If they had done so, they would have been told that it was the result of a compromise. The transfer having been made to the new company, dividends have been paid upon the smaller amount of capital, and consequently at an increased rate; and, things having con64] tinued in this *state for two or three years, the company now seeks to recover from the defendants the sum advanced to them in 1866, and from which the directors had absolved them in consideration of the cancellation of the 400 shares; and this without giving them back the shares or paying them the dividends which would have accrued thereon. Taking all these facts into consideration, it seems to me that there was abundant evidence to justify the jury in saying that the company (that is, the shareholders), with knowledge of all the circum |