ONTARIO, COUNTY OF YORK, TO WIT: IN THE COMMON PLEAS. VICTORIA, by the Grace of God, of the United To James Austin, of the City of Toronto, in the County of York, greeting: Whereas George S. Page, Edward H. Kiddes and Isaac D. Fletcher lately, on the twenty-eighth day of July, in the year of our Lord one thousand eight hundred and seventy-four, in our Court of Common Pleas at Toronto, by the judgment of the same Court against "The Ontario Wood Pavement Company of Toronto," incorporated under and by virtue of the Statute of the late Province of Canada, made and passed in the twenty-seventh and twenty-eighth years of our reign, chaptered 23, for the sum of fifteen hundred and ninety-seven dollars and ninety-one cents, which in our said Court was adjudged to the said George S. Page, Edward H. Kiddes and Isaac D. Fletcher for the damages they had sustained, as well on the occasion of the not performing of certain promises before then made to them by the said "The Ontario Wood Pavement Company, of Toronto," as for their costs of suit in that behalf expended—whereof the said "The Ontario Wood Pavement Company, of Toronto," are convicted, as appears to us of record. And whereas, according to the provisions of the said Act, every shareholder in said company or corporation is, until the whole amount of his stock has been paid, individually liable to the creditors of the company or corporation to an amount equal to that not paid up thereon, but shall not be liable to an action therefor by any creditor before an execution against the company has been returned unsatisfied in whole or in part, and the amount due on such execution shall be the amount recovered with costs against such shareholder. And whereas you, James Austin, are a stockholder in the said "The Ontario Wood Pavement Company, of Toronto," to the extent of one hundred and eleven shares of the capital stock of the said company of one hundred dollars each. And whereas there is still due and unpaid by you, the said James Austin, on the capital stock of the said company, the sum of eight thousand eight hundred and eighty dollars or thereabout: And whereas a writ of fieri facias at the suit of the said George S. Page, Edward H. Kiddes, and Isaac D. Fletcher, against the goods and chattels of the said company, was issued out of our said Court of Common Pleas on the said judgment to recover the amount thereof, directed to the Sheriff of the County of York, in which said county the said company carried on its said business, which said writ of fieri facias has been returned “nulla bona" by the said Sheriff, and so that the said George S. Page, Edward H. Kiddes, and Isaac D. Fletcher have not yet been satisfied the damages and costs aforesaid. Wherefore the said George S. Page, Edward H. Kiddes, and Isaac D. Fletcher have humbly sought us to provide therein a proper remedy in their behalf; and we being willing that what is just and right in this behalf should be done : We command you, the said James Austin, that within ten days after the service of this writ upon you, inclusive of the day of such service, you appear in our Court of Common Pleas to show cause why the said George S. Page, Edward H. Kiddes, and Isaac D. Fletcher should not have execution against you for the damages and costs aforesaid, with interest thereon at the rate of six per cent. per annum from the said twenty-eighth day of July, in the year of our Lord one thousand eight hundred and seventy-four, on which day the judgment aforesaid was entered up, according to the force, form, and effect of the said recovery, if it shall seem expedient for you so to do. And take notice that in default of your so doing, the said George S. Page, Edward H. Kiddes, and Isaac D. Fletcher may proceed to execution. Witness, &c. And that the said James Austin has appeared to the said writ. And the said George S. Page, Edward H. Kiddes, and Isaac D. Fletcher pray that execution may be adjudged to them against the said James Austin of the said judgment, according to the force, form and effect of the said recovery and of the statute in that behalf, to the extent of the moneys remaining to be paid on and in respect of the said James Austin's shares in the said company towards the capital of the said company. On the 28th of March, 1876, the defendant pleaded six several pleas to the declaration which, together with the principal points of the evidence taken in the cause, are clearly stated in the report of the case in the Common Pleas, and in Scales v. Irwin, 34 U. C. R. 545, a suit arising out of the dealings of the same company. The cause came on to be argued before the Court* on the 10th day of March and 10th day of June, 1880, and again for further argument on the 13th day of June, 1881. C. Robinson, Q. C., and J. Maclennan, Q. C., for the appellant. Bethune, Q. C., for the respondents. The grounds upon which it was insisted the appeal should be allowed were, in substance, that the stock was shewn by the books of the company to have been fully paid up, and the certificate delivered to the appellant by the company was to that effect: that the onus was thus cast on the respondents of proving that it was not paid up, and they had failed to do so: that under the Act stock is *Present-BURTON, PATTERSON, MORRISON, JJ. A., and CAMERON, J. not required to be paid up in any particular manner; it is matter of agreement between the company and the shareholder, and it is for the company to say what equivalent they will accept for stock, whether money or money's worth, property, services, &c.; and it was not proved that in some way or other the stock in question was not paid and satisfied to the company; and that if as between the shareholder and the company the stock is paid up or satisfied, there is no principle on which it can be questioned by a creditor; and even if questionable for want of bona fides as between the company and a shareholder, it is not so as against a transferee for value in good faith without notice. Here the defendant had no notice that the shares were not fully paid up. The result of his inquiries and the authoritative information of the books were the other way, and he was confirmed in this opinion by the scrip issued to him by the company; and it is sufficiently shewn that the stock was held by the defendant as security only, and he is therefore protected by section 29 of the Act, 27-28 Vic. ch. 23. That the judgment in the Court below was erroneous, as it proceeds on the assumption that the Act required the fact of the stock being held as security to be in writing and to be entered in the company's books; but there is no such express requirement in the statute, nor does the law require it; all the statute requires is the fact, not that the fact should be evidenced in any particular way, and if the Legislature had so intended, it would have said so expressly in section 19. It is evident that the intention of the Legislature was to make beneficial ownership the test of liability to creditors, and is expressed in section 29 in the most general terms. This is a natural, intelligible principle, easily applied and easily understood; and if the views of the Court below were to be enforced they would be productive of inconvenience and injustice, and would interfere with that freedom in the use of property which is required for the facilitating of commercial transactions. In support of the judgment it was insisted that Arthurs, mentioned in the evidence, was the holder of the shares in respect of which the action was brought-part of such shares standing in his own name and part in the name of one William J. Atwell-but nothing beyond the first 10 per cent. thereon had been paid, and these same shares were transferred to the appellant, who accepted the transfer thereof. It was also contended that the appellant was not a purchaser of the shares for value without notice, and could not protect himself against liability for the amount due in respect of them; and it was evident that the appellant did not rely upon any entries in the books of the company so as to entitle him to set these up as evidence in his favour; but even if he had relied on such entries it was clear that, apart from the entries in the books, the stock was not paid for, and that the appellant knew it. The cases cited are mentioned in the report of the case in the Court below and in the judgments: March 24th, 1882. BURTON, J. A.-The defendant is sued in this proceeding by a judgment creditor of the Ontario Wood Pavement Company, whose execution was returned unsatisfied. It was claimed that the shares which had been transferred to the defendant by a transfer, absolute in form, but which was intended to be as security only, were issued as paid up stock to some of the contractors. It was not made very apparent upon the first argument how this was; but after the argument Mr. Justice Cameron sent for the transfer book, from which it clearly appears that the stock held by the defendant consists wholly of new stock under the by-law of the 6th February, 1871, which recited that the whole of the original capital stock, amounting to $130,000, had been allotted and paid in, and that the company had determined to increase the capital stock to $250,000, and enacted that it should be increased accordingly. Of the original stock of $130,000, $70,000 was first subscribed, and $7,000, or 10 per cent., paid. The subscription was subsequently made up to the full amount, of which the patentee took 920 shares, and in consideration of the other shareholders paying an additional 10 per cent. they agreed to pay up the balance of their shares. This was carried out in the manner described in Scales v. Irwin, reported in 34 U. C. R. 545. In point of fact then the recital was untrue. The original stock was not fully paid up, and the right to pass the by-law increasing the capital stock never arose. The question is, how far the present defendant, who pleads that he never was a stockholder, is in a position to raise that defence. The power of the directors to increase the capital stock is derived from sub-secs. 16, 17 and 18, of sec. 5 of the Act 27th and 28th Victoria, ch. 23, and arises only after the whole capital stock has been allotted and paid in, but not sooner, so that the by-law itself was in excess of the power of the directors; and it would seem by the 18th sub.-sec. that the by-law, even when passed, is not to have any force or effect whatever until after it has been sanctioned by a two-thirds vote of the shareholders at a meeting duly called, nor until a copy has been filed with the Provincial Secretary and notice under his signature inserted in the Gazette, and from that time the new stock becomes subject to all the provisions of law in like manner as though the same had formed part of the stock of the company originally subscribed. The directors had no power to issue these shares, and there is no proof of the steps preliminary to the by-law becoming operative having been taken; and no shares having been legally issued, it is impossible to say that the defendant was a shareholder unless on the ground of estoppel. It was said, however, that the defendant having accepted the transfer was estopped from questioning the legality of the issue. A party is only estopped from shewing the truth where |