Law and Cases

paginate 1 exclusively ER repprints/1914-15 All ER rep /Hickman v Kent or Romney marshland Sheep Breeders Association and an different 1914-15 All ER repp 900 Hickman v Kent or Romney Marsh Sheep Breeders Association and another 1914-15 All ER Rep 900 Also reported 1915 1 Ch 881 84 LJ Ch 688 113 LT 159 59 Sol Jo 478 CHANCERY DIVISION ASTBURY J 4, 25 MARCH 1915 31 MARCH 1915 arbitrament Submission Article of comp twain Application for partship of comp exclusively and acceptance Rule for alone dissensions among fellowship and members to be hitred.Comp either Articles Effect Contr make believe mingled with members and confederation and amongst members overwhelm se. In 1905 the complainant was select a member of the suspect necktie, and he so agreed to conform to its rules and regulations. By guile 49 of the contrivanceistic creationicles of familiarity differences amidst the necktie and whatever of its members relating to whatever of the affairs of the connective mustinessiness be referred to the decision of an arbitrator.In 1914 the complainant issued a writ against the association and its secretary claiming injunctions and declarations in repute of matters which mentiond to the affairs of the association and for certain other relief, which in substance was to do his ripe(p)s beneath the denominations. On an application by the defendants for a stay of the action pursuant to s 4 of the arbitrement impress, 1889, and to refer the matters in dispute to arbitration in accordance with the footing of art 49,Held (i) art 49 must be tough as a statutory stipulation between the members and the association as well as between themselves immerse se, and it patch upd a introduction to arbitration inwardly the Arbitration bet, 1889 (ii) the application for membership by the plaintiff and its acceptance by the association pull ind a shrink between the plaintiff and the association by which the plaintiff agreed in pe nning to conform to the regulations of the association, unmatchable of which regulations was that all ifferences between the association and a member should be submitted to arbitration, and that read also constituted a meekness to arbitration thitherfore, on some(prenominal) those grounds a stay of the action would be granted. Notes Applied Anglo-New groundland come outgrowth Co v R, 1920 2 KB 214. Considered Agricultural Wholesale Society v Biddulph and District Agricultural Society, 1925 Ch 769 Beattie v Beattie, Ltd, 1938 3 All ER 214. Applied Kanssen v Rialto (West End) Ltd, 1944 Ch 154. Considered Rayfield v Hands, 1958 2 All ER 194.Referred to London authorize and Bag Co v Dixon and Lugton, Ltd, 1943 2 All ER 763. As to the effect of memoranda and names of association, keep in line 6 HALSBURYS LAWS (3rd Edn) 127-130, and for causal agencys see 9 DIGEST (Repl) 85-88. As to patiences to arbitration and stay of proceedings, see 2 summon 2 HALSBURYS LAWS (3rd Edn) 3 e t seq, and for fictional characters see 2 DIGEST (Repl) 421 et sec. For Companies Act, 1948 see 3 HALSBURYS STATUTES (2nd Edn) 452, and for Arbitration Act, 1950, see ibid, vol 29, p 89. Cases referred to 1) Willesford v Watson (1873) 8 Ch App 473 42 LJ Ch 447 28 LT 428 37 JP 548 21 WR 350, LC & LJJ 2 affirm (Repl) 452, 190a. (2) Re Tavar atomic number 53 mine Co, Pritchards Case (1873) 8 Ch App 956 42 LJ Ch 768 29 LT 368 21 WR 829, LJJ 9 Digest (Repl) 85, 362. (3) Melhado v Porto Alegre Rail Co (1874) LR 9 CP 503 43 LJCP 253 31 LT 57 23 WR 57 9 Digest (Repl) 53, 152. (4) Eley v autocratic Government auspices Life effrontery Co (1875) 1 ExD 20 45 LJQB 50 33 LT 743 24 WR 252 affirmed (1876) 1 ExD 88 45 LJQB 451 34 LT 190 24 WR 338, CA 9 Digest (Repl) 87, 372. 1914-15 All ER Rep 900 at 901 (5) smiler v La Trinidad (1887) 37 Ch D 1 57 LJ Ch 292 58 LT 137 36 WR 289 4 TLR 14, CA 9 Digest (Repl) 87, 374. (6) Kelner v Baxter (1866) LR 2 CP 174 36 LJCP 94 15 LT 213 15 WR 278 sub nom Kelmer v, Baxter, 12 Jur NS 1016 9 Digest (Repl) 682, 4498. (7) Re Famatina Development Coops, Ltd, 1914 2 Ch 271 84 LJ Ch 48 30 TLR 696, CA 10 Digest (Repl) 978, 6731. (8) MacDougall v Gardiner (1875) 1 Ch D 13 45 LJ Ch 27 33 LT 521 24 WR 118, CA 9 Digest (Repl) 619, 4130. (9) Pender v Lushington (1877) 6 Ch D 70 46 LJ Ch 317 9 Digest (Repl) 609, 4039. 10) Imperial Hydropathic Hotel Co, Blackpool v Hampson (1882) 23 Ch D 1 49 LT 150 31 WR 330, CA 9 Digest (Repl) 553, 3655. (11) Johnson v Byttles Iron place (1877) 5 Ch D 687 46 LJ Ch 786 36 LT 528 25 WR 548, CA 9 Digest (Repl) 350, 2243. (12) Bradford Banking Co, Ltd v Briggs & Co, Ltd (1886) 12 App Cas 29 56 LJ Ch 364 56 LT 62 35 WR 521 3 TLR, 170, HL 9 Digest (Repl) 85, 363. (13) denomination v Odessa Waterworks Co (1889) 42 Ch D 636 58 LJ Ch 628 37 WR 733 5 TLR 596 1 billion 265 9 Digest (Repl) 86, 364. (14) Salmon v Quin and Axtens, Ltd, 1909 1 Ch 311 78 LJ Ch 367 ampere-second LT 161 25 TLR 164 53 Sol Jo scallywag 3 150, CA affirmed sub nom Quin and Axtens, Ltd v Salmon, 1909 AC 442 78 LJ Ch 506 100 LT 820 25 TLR 590 53 Sol Jo 575 16 Mans 230, HL 9 Digest (Repl) 498, 3283. (15) Welton v Saffery, 1897 AC 299 66 LJ Ch 362 76 LT 505 45 WR 508 13 TLR 340 41 Sol Jo 437 4 Mans 269, HL 9 Digest (Repl) 203, 1293. (16) Bisgood v Hendersons Transvaal Estates, Ltd, 1908 1 Ch 743 77 LJ Ch 486 98 LT 809 24 TLR 510 52 Sol Jo 412 15 Mans 163, CA 9 Digest (Repl) 201, 1288. (17) Re Lewis, Ex parte Munro (1876) 1 QBD 724 45 LJQB 816 35 LT 857 sub nom R v Munro, Re Lewis, 24 WR 1017, DC 42 Digest 126, 1211. 18) Caerleon Tinplate Co v Hughes (1891) 60 LJQB 640 66 LT 118 7 TLR 619 2 Digest (Repl) 423, 27. (19) Baker v Yorkshire Fire and Life boldness Co, 1892 1 QB 144 61 LJQB 838 66 LT 161 2 Digest (Repl) 423, 28. Also referred to in strain Morgan v W Harrison, Ltd, 1907 2 Ch 137 76 LJ Ch 548 97 LT 445, CA 2 Digest (Repl) 445, 170. Borlands Trustee v Steel Bros & Co, Ltd, 1901 1 Ch 279 70 LJ Ch 51 47 WR 120 17 TLR 45 9 Digest (Repl) 99, 446. Re Wheat Buller Consols (1888) 38 Ch D 42 sub nom Re Wheal Buller Consols Ltd, Ex parte Jobling, 57 LJ Ch 333 58 LT 823 36 WR 723 4 TLR 282, CA 9 Digest (Repl) 469, 3071.Adjourned Summons by which the defendants applied for a stay of the action beneath s 1 of the Arbitration Act, 1889 see now s 4 of the Arbitration Act, 1950. The defendants, the Kent or Romney Marsh Sheep Breeders Association and their secretary, W W Chapman, applied for an order staying all proceedings in the action pursuant to s 4 of the Arbitration Act, 1889, and referring the matters in dispute in the action to arbitration under art 49 of the articles of association of the association.The Kent or Romney Marsh Sheep Breeders Association was incorporated under the Companies Acts in the year 1895 as an association not for profit, the defendant 1914-15 All ER Rep 900 at 902 W W Chapman having been the secretary since the incorporation of the association. On 8 November 1905, the plaintiff, Alf red John Hickman, wrote to Chapman as such(prenominal) secretary stating he wished to centralize a member of the association, and in react on 10 November 1905, Chapman wrote to the plaintiff inclosing a form of application for membership.This form, completed and write by the plaintiff, was accepted by Chapman on or about 12 November 1905, and was as follows rogue 4 Kent or Romney Marsh Sheep Breeders Association (Incorporated). Application form for membership. I, Alfred J Hickman, of Court Lodge, Egerton, in the county of Kent, am desirous of becoming a member of the Kent or Romney Marsh Sheep Breeders Association (Incorporated) as a flock owner, and I engage when elected to pay the entrance fees, yearly subscriptions, nd such fees for entry of ewe flocks and individual sheep as whitethorn then be in force or subsequently adopted, together with all such costs for superintendence and tattooing as may be sanctioned by the council for the time being, and to conform to the r ules and regulations of the association until I by notice in authorship to the secretary cease to be a member of the association. Signature, ALFRED J HICKMAN. go out Nov 11, 1905. The plaintiff was elected a member of the association on 12 celestial latitude 1905, and he was intercommunicate of such election by letter on 14 December 1905.By art 49 of the articles of association of the defendant attach to Whe neer some(prenominal) difference arises between the association and any of the members touching the authoritative flavor or construction or the incidents or consequences of these presents or of the statutes, or touching anything then or thenceforth done, executed, omitted, or suffered in pursuance of these present, or of the statutes, or touching any br separately or say br distri only whenively of these presents, or any claim on account of any such breach or alleged breach, or otherwise relating to the premises or to these presents, or to any statute affecting the a ssociation, or to any of the affairs of the association, every such difference shall be referred to the decision of an arbitrator to be ordained by the parties in difference or if they ordurenot agree upon a single arbitrator, to the decision of two arbitrators, of whom one shall be appointed by each of the parties in difference, or an umpire to be appointed by the two arbitrators. On 18 December 1914, the plaintiff issued the writ in the present action claiming, inter alia, an injunction to restrain the defendants from taking any steps to expel him from the association or doing any act or acts in derogation of his rights as a member of the association, and damages for refusing to register his sheep, and a declaration that he was empower to wee his sheep registered. A summons for directions was issued, solely before it was heard or any move on step taken is the action, the defendant association and Chapman issued this summons fara itinerary the hearing of an application by the m that all further proceedings be stayed, pursuant to s 4 of the Arbitration Act, 1889, and that the matters in principal in the action should be referred to arbitration in accordance with art 49 of the articles of the association.By s 4 of the Arbitration Act, 1889 see now Arbitration Act, 1950, s 4 If any party to a entryway, or any person claiming through or under him, commences any legal proceedings in any court against any other party to the patience, or any person claiming through or under him, in respect of any matter agreed to be referred, any party to such legal proceedings may at any time after appearance, and before delivering any pleadings or taking any other steps in the proceedings, apply to that court to stay the proceedings, and that court, or a judge at that placeof, if satisfied that in that respect is no sufficient causal agent why the matter should not be referred is accordance with the submission, and that the appli guttert was, at the time when the proce edings were commenced, 1914-15 All ER Rep 900 at 903 and still remains, ready and go outing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings. By s 27 see s 32 of Act of 1950 Submission means a pen discernment to submit present or future differences to arbitration, whether an arbitrator is named thitherin or not. By s 14(1) of the Companies (Consolidation) Act, 1908 see now s 20 of Companies Act, 1948 The document and articles shall, when registered, harbour the ships club and the members thereof to the equivalent extent as if they respectively had been signed and sealed by each member, and holded bargains on the part of each member, his heirs, executors, and administrators, to observe all the provision of the roll and of the articles, subject to the provisions of this Act. Page 5 Micklem, KC, and F Hinde for the defendants. Frank Russell, KC, and HS Simmons for the plaintiff in the action. Cur adv vult, 31 M ar 1915 ASTBURY J (read the following appraisal) This is a summons by the defendants to stay proceedings in the action under s 4 of the Arbitration Act, 1889 see now s 4 of Arbitration Act, 1950.The plaintiff, by his writ in the action, which is brought against the defendant association and their secretary, claims injunctions, a declaration, and certain other relief in respect of matters which arise out of and relate solely to the affairs of the association, which relief is, in substance, to oblige the plaintiffs rights under the articles of association of the defendant company. It is admitted by the plaintiff that the action is against, the association and the second defendant as its officer, and no point is made by the plaintiff of there being two defendants. The association is a limited company registered under the Companies Acts, and by its schedule of association it is provided (inter alia) that the objects of the association ar the encouragement of the breeding of Kent or Romney Marsh sheep at home and foreign and the maintenance of the purity of the breed Further The establishment and publication of a flock book of appreciate and pure-bred sires which have been used, or ewes which have been bred from, and of such other flock books (if any) which the council may conceive of fit and the annual registration of the pedigrees of such sheep as argon proved to the satisfaction of the council to be eligible for entry. The undertaking of the arbitration upon and settlement of disputes and interrogative sentences relating to or connected with Kent or Romney Marsh sheep and the breeding thereof, and for other subsidiary purposes. By art 49 disputes between the association and any of its members ar to be referred to arbitration.This is a common form of article in private companies, and, the objects of the association being what they are, it and its members magnate he seriously prejudiced by a public trial of their disputes. If this summons fails, as the plaintiff contends that it should, these arbitration clauses in articles are of very little, if any, value. The plaintiff became a member of the association in 1905. It is clear on the authorities that if there is a submission to arbitration within the convey of the Arbitration Act there is a prima facie duty set upon the court to act upon such an agreement per LORD SELBORNE in Willesford v Watson (1) 8 Ch App at p 480.In the present case the defendants contend, first, that art 49, dealing as it does with the members of the company in their energy of members only, constitutes a submission within the meaning of the Arbitration Act, or, alternatively, that the rent contained in the plaintiffs application for membership and the companys 1914-15 All ER Rep 900 at 904 acceptance of it amounts to such a submission. The plaintiff contests both these propositions. Independently Page 6 of the peculiar(a) dispute in this case, the arguments, especially upon the first of these arguments , have raised questions of far-reaching importance and of great obstruction. I will deal with the question as to the effect of art 49 first. Section 14(1) of the Companies (Consolidation) Act, 1908 see new s 20(1) of Companies Act, 1948, says The memorandum and articles shall, when registered, bind the company and members thereof to the same extent as if they respectively had been signed and sealed by each member, and contained covenants on the part of each member, his heirs, executors, and administrators, to observe, all the provisions of the memorandum and of the articles, subject to the provisions of this Act It is laid down in text-books of the highest authority that the articles are not a agitate between the members and the company, just now a slim with the other members. The articles are a nonplus only as between the members inter se in respect of their rights as stockholders.The exact nature of this covenant that is, the covenant referred to in s 14 has stagen rise t o considerable discourseion and is even now very difficult to designate but it is now settled that it is not equivalent to a submit between the company, on the one part, and the members, on the other, on which either a member fag sue the company or the company post sue a member. The principal authorities in support of these propositions are Re Tavarone digging Co, Pritchards Case (2) Melhado v Porto Alegre Rail Co (3) Eley v Positive Government shelter Life Assurance Co (4) and Browne v La Trinidad (5) In Pritchards Case (2) by the articles of association of a exploit company it was provided that the company should immediately after incorporation enter into an agreement with the vendor of the mine for the get of the mine, and the price was fixed.The articles were signed by the vendor and six other persons, and the directors allotted shares to the vendor, but no further agreement was made with him. It was held, affirming the decision of WICKENS, V-C, that the articles of asso ciation did not constitute a contract in piece of writing between the vendor and the company within s 27 of the Companion Act, 1867, and that certain shares should not, thence, be considered as fully paid up. MELLISH, LJ, in giving judgment, state (8 Ch App, at p 960) But I am of credence that the articles of association crappernot be considered as a contract in writing between De Thierry and the company for the sale of the mine to them.It may no doubt be the case if no other contract was entered into, and if De Thierry signed these articles and they were acted upon, that a court of equity would hold that as between him and the company from their acting upon it there was a binding contract but in themselves the articles of association are simply a contract as between the shareholders inter as in respect of their rights as shareholders. They are the deed of alliance by which the shareholders agree inter se. In Melhado v Porto Alegre Rail Co (3) the articles of association of a union stock company provided that the company should defray such expenses incurred in its establishment as the directors should consider might be deemed and treated as preliminary expenses to an amount not exceeding a sum named. The plaintiffs, who were promoters of the company, had incurred preliminary expenses in its establishment, and it was held that no action would lie at the suit of the plaintiffs against the company under the articles. LORD COLERIDGE, CJ, state (LR 9 CP at p 505) The action is brought on a clause in the articles of association, by which the directors are authorised to pay certain expenses if they should consider them 1914-15 All ER Rep 900 at 905 to be correctly deemed preliminary expenses. The declaration avers that all conditions were. performed, necessary to entitle the plaintiffs to be paid, their expenses and therefore I think we must take it that, they, were expenses which, if the directors had thought proper to pay then the articles would have jus tified them in paying. The question therefore is whether an action will lie for the payment of these expenses, in pursuance of the articles of association, to which the plaintiffs were not parties.I have come to the cultivation that no such action will lie I must say mostwhat reluctantly, because though I wish to press no opinion on the merits of this particular case, having no materials for forming such Page 7 an opinion, it does seem just, in general, if a company takes the benefit of the work and expenditure by which its humankind has been rendered possible, and voluntarily comes into existence on the terms that it shall be liable to pay for such work and expenditure, that a cause of action should be given. I can find, however, no legal principle upon which such an potion can be maintained. It appears to me that there is no contract between the plaintiffs and the defendants.The doctrine of ratification is inapplicable, for the reasons given in the judgments in Kelner v Baxter (6). MELLOR, J, said (ibid at p 506) The plaintiffs were not in any carriage parties to the articles of association, and there was not, therefore, any express contract to pay them. BRETT, J, said (ibid at p 507) there is no contract, in my judgment, of any sort upon which they can sue, and unless there be a contract of some sort between them and the company I do not see that they can have any cause of action. No contract made with them before the existence of the company can be ratified by the company for the reasons pointed out in the case of Kelner v Baxter (6) with which I fully agree. In Eley v Positive Government Security Life Assurance Co (4) the articles of association contained a clause in which it was utter that the plaintiff, a headcounter, should be the solicitor to the company and transact its legal business. The article were registered and the company incorporated. The plaintiff was not appointed solicitor by any resolution of the directors, nor by any instrument bearing the seal of the company, that he acted as such for a time. Subsequently the company ceased to employ him, and he brought an action for breach of contract against the company for not employing him as its solicitor. The first count of the declaration stated that it was agreed by and between the plaintiff and the defendants that the plaintiff should be employed by the defendants as, and appointed by them to the office of, solicitor of the company.During the argument it was contended that the contract declared for was not the contract purported to be contained in the articles. AMPHLETT, B, in his judgment, said (1 ExD at pp 26, 28) The articles, taken by themselves, are simply a contract between the shareholders inter se, and cannot, in my opinion, give a right of action to a person like the plaintiff, not a pasty to the articles, although named therein. If authority were wanted for this proposition, the cases cited in the argument, Pritchards Case (2) and Melhado v Porto Alegr e Rail Co (3) are, in my opinion, kind of conclusive on the subject. For these reasons, I think that there was no contract at all between the plaintiff and the company to the effect stated in the declaration. CLEASBY, B, confined his judgment to the experience points raised in the case and said (ibid at p 30) I am of opinion that cl 118 of the articles cannot by itself be taken to operate as a contract between the solicitor and the company. 1914-15 All ER Rep 900 at 906 KELLY, CB, said (ibid at pp 31, 32) I forbear to pronounce any opinion as to whether these articles, with the fact of the subsequent employment, constitute a contract on the terms contained in them, because, were I to so hold, there would be a difficult question behind, whether it was not ultra vires for the directors to attempt to bind the company to employ a solicitor to transact, for all his life, all the legal business of the company.Passing by this, I come to consider the objection raised under s 4 of the St atute of Frauds. I do not see how anyone can doubt that this agreement was not to be performed within a year. It was for the life of the plaintiff, subject to a defeasance on the possibility of his being chargeable of some misconduct. But, assuming, as I think we must, that this was not to be performed in a year, the question arises whether there is any memorandum or timbre in writing of it signed by the defendants. The signatures affixed to the articles were she intuitu and it can hardly be suggested that the directors had any idea that in signing the articles they were signing a line of products of this contract. Page 8This case went to the Court of Appeal, and LORD CAIRNS, LC, said (1 ExD at pp 89, 90) I wish to say, in the first place, that in my opinion a contract of the kind suggested to exist in this case ought not to receive any particular favour from the court. The statement is that Baylis was endeavouring to form a joint stock insurance company upon a new principle, an d applied to the plaintiff to make advances to meet the expenses of getting up the company, and it was arranged between them that in the event of the company being formed the plaintiff should be appointed permanent solicitor to the company. That is to say, a bargain is made between a professional man and Baylis, which, so far as the case is concerned, does ot appear to have been communicated to those who were invited to join the company, that if the former will advance money for the formation of the company he shall be appointed permanent solicitor, and the company shall be obliged to employ him as their professional adviser. When the articles are prepared, they are so by the plaintiff, and in them he inserts a clause which no doubt informs those who signed the articles of the arrangement, but does not appear to have been brought to the notice of those who joined from receiving circulars. This, I repeat is not a proceeding which the court would encourage in any way. I also wish to r eserve my judgment as to whether a clause of this kind is obnoxious to the principles by which the courts are governed in deciding on questions of public policy. This case was first rested on the 118th article.Articles of association, as is well known, follow the memorandum, which states the object of the company, date the articles state the arrangement between the members. They are an agreement inter socios, and in that sop up, if the introductory words are applied to art 118, it passs a covenant between the parties to it that they will employ the plaintiff. Now, so far as that is concerned, it is res inter alios acts, the plaintiff is no party to it. No doubt he thought that by inserting it he was making his employment safe as against the company, but his relying on that view of the legal philosophy does not alter the legal effect of the articles. This article is either a stipulation which would bind the members or else a mandate to the directors.In either case it is a matter between the directors and shareholders, and not between them and the plaintiff. In Browne v La Trinidad (5) before the formation of the company an agreement was entered into between B. and a person as trustee for the intended company by which it was stipulated (inter alia) that B should be a director and should not be removable till after 1888. The sixth clause of the articles provided that the directors should adopt and carry into effect the agreement with or without modification, and that subject to such modification (if any) the provisions of the agreement 1914-15 All ER Rep 900 at 907 should be construed as part of the articles.The agreement was acted upon, but no contract adopting it was entered into between the plaintiff and the company. Held, that treating the agreement as embodied in the articles, still there was no contract between B and the company that he should not be removed from being a director, the articles being only a contract between the members inter as, and no t between the company and B COTTON, LJ, towards the end of his judgment, said (37 Ch D at pp 13, 14) presume that an unlimited power is given to the confluence by art 91, ought we, having study to the contract entered into by the memorandum of Nov 24, 1884, and art 6, to interfere by injunction to restrain the company in general confluence from acting under that power?I do not give any opinion upon the question how far the court would have interfered by injunction in order specifically to give an agreement between the company and the plaintiff that he should be an irremovable director. That point raises questions upon which I should not like to give any opinion without having them fully discussed. In my opinion we ought not to interfere in the present case, because there is no such contract between the plaintiff and the company. The memorandum of agreement of Nov 24, 1884, is in no way a contract between the plaintiff and the company. It is said that it was adopted and incorporat ed into the articles, but I cannot accord to that. The company by its directors acted upon the agreement, but that does not make it binding on the company.Then is it incorporated into the articles in such a way as to entitle the plaintiff to say, I have such a contract between me and the company as can be implement by a court of law, and as I might enforce in equity by way of specific performance? That point is understandably settled, I think, by Eley v Positive Government Security Life Assurance Co (4). There two of the members of the court of first instance held, and the other member did not express dissent, that the articles are save a contract between the shareholders inter se, and that though a person in whose favour a stipulation is made in the articles may afterwards have shares allotted to him, he does not by that means become in the same position as if he had entered into a contract with the company. LINDLEY, LJ, said Having regard to the construction put upon s 16 of t he Companies Act of 1862 in the case of Eley v.Positive Government Security Life Assurance Co (4) and subsequent cases, it must be taken as settled that the contract upon which he relies is not a contract upon which he can maintain any action, either on the common law side or the equity side. There might have been some difficulty in arriving at that conclusion if it had not been for the authorities, because it happens that this gentleman has had shares allotted to him, and is therefore a member of the company. Having regard to the terms of s 16, there would be some force, or, at all events, some plausibility, in the argument that, being a Page 9 member, the contract which is referred to in the articles has become binding between the company and him.Of course, that argument is open to this difficulty, that there could be no contract between him and the company until the shares were allotted to him, and it would be remarkable that upon the shares being allotted to him a contract betwe en him and the company, as to a matter not connected with the holding of shares, should arise. In these four cases the article relied upon purported to give specific contractual rights to persons in some capacity other than that of shareholder, and in none of them were members seeking to enforce or protect rights given to them as members in common with the other corporators. The actual decisions amount to this, that an outsider to whom rights purport to be given by the articles in his capacity as such outsider, whether he subsequently becomes a member or not, 1914-15 All ER Rep 900 at 908 cannot sue on such articles treating them as contracts between himself and the company to enforce such rights.Such rights are not part of the general regulations of the company applicable alike to all shareholders and can only exist by virtue of some contract between such non-member and the company, and the subsequent parceling of shares to an outsider in whose favour such an article is inserted does not enable him to sue the company on such an article to enforce rights which are res inter alios acta and not part of the general rights of the corporators as such. The language of some of the judgments appears, however, to go further, as recognised, for instance, by SARGANT, J, in Re Famatina Development Corpn (7) (1914 2 Ch at p 279). The wording of s 14(1) of the Companies (Consolidation) Act, 1908, which is in the same terms as s 16 of the Act of 1862 see now s 20(1) of Companies Act, 1948, is difficult to construe or understand. The company cannot in the ordinary course be bound otherwise than by statute or contract, and it is in this sermon section that its agreement must be found, so far as the members are concerned.The section does not say with whom they are to be deemed to have covenanted, but the section cannot mean that the company is not to be bound when it says it is to be bound, as if, , nor can the section mean that the members are to be under no obligation to the company under the articles in which their rights and duties as corporators are to be found. Much of the difficulty is removed if the company be regarded, as the framers of the section may very well have so regarded it, as being treated in law as a party to its own articles. It seems clear from other authorities that a company is entitled as against its members to enforce and restrain breaches of its regulations see, for example, MacDougall v Gardiner (8) Pender v Lushington (9) and Imperial Hydropathic Hotel Co, Blackpool v Hampson (10). In the last case BOWEN, LJ, said (23 Ch D at p 13) The articles by s 16 are to bind the company and all the shareholders as much as if they had all put their seals to them. It is also clear from some(prenominal) authorities that shareholders as against their company can enforce and restrain breaches of its regulations, and in many of these cases judicial expressions of opinion appear which, in my judgment, it is impossible to disregard. In John son v Lyttles Iron Agency (11) in an action by a shareholder against the company, JAMES, LJ, said (5 Ch D at p 693) The notice did not comply rigorously with the provisions of the contract between the company and the shareholders which is contained in the regulation of Table A In Bradford Banking Co, Ltd v Briggs & Co, Ltd (12) the articles gave the company a quick temper on its members shares, and, in an action by the company to enforce such lien, LORD BLACKBURN said (12 App Cas at p 33) Page 10 The only one of the articles of association which I think it material to notice is the 103rd article, which is as follows The company shall have a first and permanent lien and charge, available at law and in equity, upon every share of every person who is the holder or one of several joint owners thereof for all debts due from him, either alone or collectively with any other person, whether a shareholder or not in the company. John Faint Easby, a coal merchant, became a proprietor of a n umber of shares in the respondent company, and obtained certificates for them. This property in the shares was, by virtue of s 16 of the Companies Act, 1862, already quoted, I think, bound to the company as much as if he had (at the time he became holder of these shares) executed a covenant to the company in the same terms as art 103, but I do not think it was bound any further. 1914-15 All ER Rep 900 at 909In Wood v Odessa Waterworks Co (13) which was an action by the plaintiff on behalf of himself and all other shareholders against the company, STIRLING, J, said (42 Ch D at p 642) The articles of association constitute a contract not merely between the shareholders and the company, but between each individual shareholder and every other. In Salmon v Quin and Axtens, Ltd (14) FARWELL, LJ, referring to this last statement, said (1909 1 Ch at p 318) I think that that is accurate subject to this observation, that it may well be that the court would not enforce the covenant as betwee n individual shareholders in most cases. In Welton v Saffery (15) LORD HERSCHELL, who dissented on the main question from the rest of the House, made the following general observation (1897 AC at p 315) Section 16 of the Act of 1862 provides that the articles of association, when registered, shall bind the company and the members hereof to the same extent as if each member had signed his name and affixed his seal thereto, and there were in such articles contained a covenant on the part of himself, his heirs, executors, and administrators, to conform to all the regulations contained in such articles, subject to the provisions of this Act. The articles thus become in effect a contract under seal by each member of the company, and gravel his rights. They cannot, of course, diminish or affect any liability created by the express terms of the statute but, as I have said, the statute does not purport to settle the rights of the members inter se it leaves these to be opinionated by the articles (or the articles and memorandum together) which are the social contract regulating those rights. I think it was intended to allow for perfect freedom in this respect.It is quite true that the articles constitute a contract between each member and the company, and that there is no contract in turns between the individual members of the company but the articles do not any the less, in my opinion, regulate their rights inter se. Such rights can only be obligate by or against a member through the company, or through the liquidator representing the company but I think that no member has, as between himself and another member, any right beyond that which the contract with the company gives. In all these last-mentioned cases the respective articles sought to be enforced related to the rights and obligations of the members primarily as such, and not to rights of the character dealt with in the four authorities first above referred to.It is difficult to pay these two classes of decisions and the judicial opinions therein expressed, but I think this much is clear first, that no article can constitute a contract between the company and a third person secondly, that no right merely purported to be given by an article to a person, whether a member or not, in a capacity other than that of a member, as, for instance, as solicitor, promoter, or director, can be enforced against the company and, thirdly, articles regulating the rights and obligations of the members generally as such do create rights and obligations between them and the company respectively. Page 11 In Bisgood v Hendersons Transvaal Estates, Ltd (16) BUCKLEY, LJ, said (1908 1 Ch at p 759) The purpose of the memorandum and articles is to set the position of the shareholder as shareholder, not to bind him in his capacity as individual. By s 27 of the Arbitration Act, 1889 see now s 32 of Arbitration Act, 1950 Submission means a written agreement to submit present or future differences to arbitrat ion, whether an arbitrator is named therein or not. 1914-15 All ER Rep 900 at 910The defendants first contention is that art 49 is, on the authorities, a written agreement within the meaning of this section. In Re Lewis, Ex parte Munro (17) which was an action on the Attorneys and Solicitors Act, 1870, it was held that A document containing the terms of an agreement as to the amount of costs payable by a client to his solicitor, assented to by the client, but signed by the solicitor only, is not an agreement in writing within the Attorneys and Solicitors Act, 1870. LORD COLERIDGE, CJ, said It is quite clear that there was no agreement in writing within s 4 of the Act. An agreement in writing within s 4 must be an agreement by both parties, and both parties must sign their names upon the agreement. In Caerleon Tinplate Co v Hughes (18) in an action for the price of goods sold, the bought note signed by the defendants contained a provision for arbitration in case of dispute, while the sold note signed by the plaintiff contained no such provision. It was held that there was no submission within the meaning of the Act, for an agreement to submit to arbitration must be in writing and signed by both parties. Re Lewis (17) was referred to, and DENMAN, J, referring to s 27 of the Arbitration Act, 1889, said (60 LJQB at p 641) In my judgment, there can be no written agreement unless in writing signed by the parties as their agreement, and that written agreement means one in which the terms on both sides are reduced into writing.It is useless to discuss the doctrines here, for the bought and sold notes differ in the essential particular that the former contains a provision which is wholly move out in the latter. WILLS, J, said (ibid) Supposing there were a contract and the parties were ad idem which in fact they were not in this case yet there was no submission under the Act unless there was an agreement in writing by both parties. Re Lewis, Ex parte Munro (17) is conclusive on this point. In the present case the agreement is to be in writing under s 27, and we must hold that both parties must sign their names to it otherwise there might be a conflict of evidence, and a discussion as to what was understood by either party. In Baker v Yorkshire Fire and Life Assurance Co (19) an action was brought on a fire policy which was executed in the usual way by the company, but not by the assured, and it was held that the policy, though not signed by the plaintiff, amounted to a submission to arbitration within the meaning of the Act LORD COLERIDGE, CJ, who had been a party to Re Lewis (17) said (1892 1 QB at pp 145, 146) Page 12 The plaintiff sues on the policy, and by so suing affirms it to be his contract he cannot disaffirm a part of the very contract on which he is suing. He contends that in order to acquire into operation the arbitration clause contained in the policy, the policy must be signed by both parties but the Act of Parliament says noth ing of the kind, and the only apparent justification for the contention is to be found in Caerleon Tinplate Co v Hughes (18). That decision must be interpreted, however, with regard to the particular facts of that case.There was there no complete contract the two documents constituting the contract differed materially in their terms, and the court said it was plain that the parties were never ad idem. A L SMITH, LJ, said (ibid at pp 146, 147) It is said, however, that by the interpretation clause a submission must be a written agreement to refer disputes to arbitration. This, however, is not a 1914-15 All ER Rep 900 at 911 higher interpretation than was necessarily put on the language of the old Act, under which it was the universal practice to refer these cases, and does not mean that in all cases the written agreement to refer must be signed by both parties. It is quite unnecessary to say more as to the decision in Caerleon Tinplate Co v Hughes (18) than that it turned entirely u pon the peculiar facts of the case. The result of these decisions is, I think, that if the submission is in writing and is binding on both parties as their agreement, or as the equivalent in law to an agreement between them, the statute is satisfied. In the present case the plaintiffs action is, in substance, to enforce rights as a member under the articles against the company. The 49th article is a general article applying to all the members as such, and, apart from technicalities, it would seem reasonable that the plaintiff ought not to be allowed, in the absence of any evidence filed by him, to proceed with an action to enforce his rights under the articles which in itself is a breach of his obligation contained therein to submit his disputes with the company to arbitration, and, if the case falls within the Act, I see no reason for exercising my discretion under s 4 in his favour.In my judgment, art 49, for the reasons above referred to, creates rights and obligations enforceabl e as between the plaintiff and the company respectively, and such rights and obligations are contained in a written document, but whether such document is a contract or agreement between the plaintiff and the defendants within s 27 of the Arbitration Act, 1889, depends upon whether the decision in Eley v Positive Government Security Life Assurance Co (4) and the other cases of a similar character above referred to ought to be regarded as only dealing with and applying to articles purporting, first, to contain an agreement with the company and a third person, or, secondly, to define the rights of a shareholder in some capacity other than that of a member of the company.To reconcile the decisions and expressions of judicial opinion above mentioned, some such view should, I think, be adopted, and general articles dealing with the rights of members as such treated as a statutory agreement between them and the company as well as between themselves inter se, and in my judgment, art 49 in the present case does constitute a submission to arbitration within the true meaning and intent of the Arbitration Act. Having regard, however, to the conclusion to which I have come on the second contention raised by the defendants, it is not necessary for me to base my decision upon this ground alone and upon the opinion I have so expressed.The defendants second contention is that the contract contained in the plaintiffs application for membership, and the defendants acceptance of it, amounts to a submission within the Act. On 8 November 1905, the plaintiff wrote to the company, through its secretary I wish to become a member of the Kent Sheep Breeders Association. Will you kindly take the necessary steps? That was answered by a letter from the secretary, in which he said If you will fill in the inclosed form I shall have great sport in submitting it to the next council meeting. Page 13 The form inclosed was signed by the plaintiff. It stated that the plaintiff wished to becom e a member of the association and agreed to pay an entrance fee, subscriptions, and fees for entry of sheep, and to conform to the rules and regulations of the association.At a meeting of the council of the association held on December 12 the plaintiffs project was accepted and he was elected a member of the defendant company. Notice of such acceptance was given to the plaintiff in a letter of December 14 by the secretary, which informed him he was elected a member of the association at the council meeting held on the 12th. In consideration of being elected a member and of his offer to join the association being accepted, the plaintiff contracted in writing with the association to conform to its rules and regulations. One of such regulations was a general submission to arbitration of all differences between the 1914-15 All ER Rep 900 at 912 ssociation and any of its members as such, amply wide enough to cover the matters in dispute in this action. The association at the date of the contract was already bound to each and all its corporators to act in conformity with such regulations, and was at the date of the writ in this action, and has been since, ready, and willing to so act It is submitted on behalf of the plaintiff that at the date of this contract he may have known nothing about art 49, and that as the council of the association have power under its articles to make further by-laws and regulations as to certain matters therein referred to, the plaintiffs offer may have referred to these.The plaintiff has, however, filed no evidence in support of this, and the articles not only constitute the rules and regulations of the company, but refer to the rules and regulations of the association as, contained in them, and I am unable to accept this contention. In my judgment, the contract so made between the plaintiff and the association is also a submission in writing within the true meaning and intent of the Arbitration Act, and I make an order to stay under s 4 and direct that the matters in dispute in this action be referred to arbitration accordingly. Solicitors Walters & Co Ernest Simmons & Co. Reported by GP LANGWORTHY, ESQ, Barrister-at-Law.