Scottish Court of Session Decisions

The Premier Briquette Company, Limited, London, pursuers, brought an action against Henry John Gray, advocate, Aberdeen, defender, for payment of £225, being instalments due by him on 500 shares allotted to him in terms of letter of application addressed by him to the pursuers. The letter of application had been sent by the defender along with a sub-underwriting contract for 500 shares in the pursuers' company and a cheque for £25, being a deposit for 1s. per share to the Mining, Commercial, and General Trust, Limited, London, who had agreed to underwrite 100,000 shares in the pursuers' company. The sub-underwriting contract was docqueted with an acceptance for and on behalf of the Mining Trust and signed by W. W. Macalister, its managing director, but the acceptance was not expressly intimated to the defender.

The pursuers pleaded, inter alia—“1. The pursuers being entitled in terms of the defender's said letter of application to payment by him of instalments on the shares applied for by him, amounting to the principal sum sued for, are entitled to decree therefor as craved.”

The defenders pleaded, inter alia—“3. Defender's application for shares having been lodged with the pursuers by the said W. W. Macalister without defender's knowledge and without his consent and without any right or authority whatsoever, the allotment following thereon is invalid and the defender is entitled to absolvitor. 4. The defender's letter of application having been signed by defender solely in pursuance of and subject to his proposal to sub-underwrite the shares therein mentioned, and the proposal to sub-underwrite not having been accepted and no intimation of any acceptance thereof having been made to defender, and separatim having been withdrawn before allotment, the alleged allotment to the defender is inept and invalid and the defender is accordingly entitled to decree of absolvitor. 5. The defender's application for shares (subject to his underwriting proposal) having been put in the hands of the said W. W. Macalister to hold subject to the said sub-underwriting offer, the said W. W. Macalister had no right in the circumstances to deliver the said letter to the directors of the pursuer company, the allotment following thereon is invalid and the defender should be assoilzied.”

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On 18th December 1920 the Lord Ordinary ( Ashmore) allowed a proof before answer.

The facts of the case and the import of the evidence appear from the opinion of the Lord Ordinary, who on 5th July 1921 decerned against the defender in terms of the petitory conclusion of the summons.

Opinion.—“In this case the pursuers, the Premier Briquette Company, Limited (hereinafter referred to as the Premier Company), are suing the defender for payment of calls on shares said to have been applied for by him and to have been duly allotted to him.

The defence, stated generally, is to the following effect:—That the alleged application for shares was signed by the defender with reference to a sub-underwriting proposal made by him to the principal underwriters, the Mining, Commercial, and General Trust, Limited (hereinafter referred to as the Mining Company); that the Mining Company never intimated to the defender that they accepted the proposal; that, moreover, both the proposal to sub-underwrite and the relative application for shares were withdrawn before the date of the alleged allotment of the shares; that in these circumstances the Mining Company had no authority to deliver to the Premier Company the application for shares; that the allotment of the shares in favour of the defender is inept and invalid, and that in any view the sum sued for is excessive.

It was explained that this is really a test action intended to determine the liability to the Premier Company, not only of the defender, but also of other three persons to whom allotments of shares were made under similar circumstances.

Before I deal with the legal arguments it will be convenient to explain in detail the circumstances out of which the present proceedings have arisen.

On 12th September 1919 the pursuers were incorporated under the Companies Acts with a capital of £125,000 divided into 120, 000 preferred ordinary shares of £1 each and 100,000 ordinary shares of 1s. each.

On 23rd October 1919 the Premier Company entered into an agreement with the Mining Company whereby the Mining Company agreed to underwrite 100,000 preferred ordinary shares of £1 each. In the end of October Mr Boyce, who is the manager in London of a limited company, wrote Mr Crowe, the managing director in Aberdeen of the same limited company, asking Mr Crowe to assist in the sub-underwriting of the shares. Mr Boyce sent with his letter proof prints of the prospectus of the Premier Company, forms of a sub-underwriting letter, and forms of applications for shares.

Mr Crowe himself signed a sub-underwriting letter and an application for shares, and he got the defender and two other friends in Aberdeen also to sign sub-underwriting letters and relative applications for shares.

The sub-underwriting letter signed by the defender is dated 3rd November 1919. It is prefaced by a statement of particulars regarding the Premier Company, the name of the company, the date of its incorporation, the share capital, and the fact that the whole of the issue of 100,000 preferred ordinary shares had been underwritten. Then follows the sub-underwriting letter itself. It is addressed to the Mining Company, and it stipulates the following conditions:—(1) I agree to subscribe for 500 shares of £1, and I now hand you (the Mining Company) an application for the shares hereby underwritten by me together with a cheque for £25, being a deposit of 1s. per share payable on the shares. (2) If on or before the closing of the subscription list the whole of the issue of 100,000 shares has been applied for by the public, then no allotment is to be made to me (the defender), and the company is to return to me my cheque or the proceeds thereof. (3) If by the closing of the subscription list less than 100,000 shares have been applied for by the public, I am only to be allotted not more than my proportion of the deficiency between the amount subscribed by the public and the 100,000 shares. (4) You (the Mining Company) are to pay me a commission of 5 per cent. on the total shares hereby underwritten by me. And (5) this contract and my said application shall be irrevocable on my part, and this contract shall notwithstanding any withdrawal on my part, or any repudiation of my responsibility hereunder or under the application form, be sufficient to authorise and empower the directors to allot to me the above-mentioned shares, and enter my name on the register of the members in respect thereof. At the foot of the subunderwriting letter there is an acceptance which reads, and which is signed and dated as follows:—‘We accept the above underwriting on the terms mentioned to the extent of 500 shares. For and on behalf of the Mining, Commercial, and General Trust Limited.—W. W. Macalister, managing director. Dated November 7th, 1919.’ Along the margin of the sub-underwriting letter is an unsigned printed form reading as follows:—‘I/We desire an allotment of of the shares hereby underwritten by us. Signature,.’

The application for shares referred to in the sub-underwriting letter is addressed to the directors of the Premier Company, is signed by the defender, and is dated 3rd November 1919.

It bears, inter alia, that having paid to the company's bankers the sum of £25, being a deposit of 1s. per share on application for 500 shares of £1 each, the defender requests the directors to allot to him that number of shares, and then proceeds as follows:—‘I hereby agree to accept the same or any less number that you (the Premier Company) may allot to me.’

The defender's cheque for £25, referred to in the underwriting letter, is not produced, but according to the evidence it was in favour either of the Premier Company or its bankers.

The defender handed the sub-underwriting letter, the application for shares, and the cheque for £25 to Mr Crowe. Mr Crowe sent them on to Mr Boyce, and Mr Boyce in turn handed them over to Mr Macalister,

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the managing director of the Mining Company.

Besides being managing director of the Mining Company Mr Macalister was the vendor to the Premier Company. Mr Macalister deponed that on 7th November he, as managing director of the Mining Company, accepted the defender's offer to subunderwrite 500 shares by signing the acceptance form to that effect at the foot of the sub-underwriting letter.

The public subscription list opened on Monday, 10th November, and closed on Monday, 17th November.

The defender heard nothing regarding his offer to sub-underwrite or his application for Shares until he received from the secretary of the Premier Company a letter of allotment, dated 20th November 1919, intimating that ‘in response’ to his application for 500 shares the directors had allotted him 500 shares, and asking for a remittance of £100 as the balance of calls due ‘after crediting £25, the amount already paid by you’ (the defender).

On 2nd December 1919 the defender replied to the secretary of the Premier Company expressing surprise at the receipt of the allotment letter. The defender's letter then proceeds as follows:—‘The application I made was covered by a subunderwriting letter signed by me and dated 3rd ulto., under which I was only to be allotted not more than my proportion of the deficiency between the amount subscribed by the public and 100,000 shares.… I must, therefore, ask you to let me know how many shares were applied for by the public so that I may know the exact proportion which should have been allotted.’

It is noticeable, in view of the position taken up by the defender in this case, that in his letter acknowledging intimation of the allotment he takes exception only on the ground that the shares allotted exceeded the proportion of shares contemplated in his sub-underwriting letter.

On 4th December 1919 the secretary of the Premier Company wrote stating, inter alia, ( a) that he had found that a mistake had been made in allotting 500 shares to the defender, ( b) that bad those shares and others similarly applied for been excluded from the list of public subscriptions the liability of the defender and these other subscribers would have been only 92 per cent., and ( c) that the Mining Company (the principal underwriters) ‘are willing’ that the liability of the defender should be reduced by 50 shares to 450 shares, representing 9–10ths of the 500 shares in the defender's application. He accordingly enclosed a transfer for 50 shares in favour of the Mining Company for signature by the defender, and sent a cheque for £12, 10s., representing the proportion of the instalment effeiring to the 50 shares on the footing of the defender transferring the 50 shares and paying the balance of the instalments due on the 450 shares.

I think that I may omit the details of the further correspondence and merely summarise its purport as follows:—On 9th December 1919 the defender replied to the secretary of the Premier Company explaining that he would write later after hearing what Mr Boyce had to say, and meantime not acceding to the proposal contained in the secretary's letter of 4th December.

On 10th December the defender wrote further that Mr Crowe had reported that Mr Boyce had informed him that the subunderwriting proposals made by Mr Crowe's nominees (including the defender) had been withdrawn before the allotment was made.

On 12th December the secretary replied that the defender had been misinformed and that none of the underwriting proposals had been withdrawn.

On 22nd December the solicitors of the Premier Company wrote to the defender asking for a remittance on the footing either of his taking only 450 of the shares allotted to him and transferring 50 to the Mining Company or of his taking up the whole 500 shares.

On 29th January 1920 the solicitors of the Premier Company having received no reply from the defender wrote that they assumed that he was prepared to accept the whole 500 shares, and they asked a remittance of £225 on that footing.

[ His Lordship then dealt with the evidence as to the alleged withdrawal by the defender of his sub-underwriting offer and relative application for shares.]

In the second place I think that the evidence of what passed at the meeting of the directors of the Premier Company held on 20th November 1919 goes far to support Mr Macalister's testimony that there had been no intimation of withdrawal on the previous day.

The minute of the meeting bears, inter alia, that Mr Boyce was in the chair, that 10,000 shares had been applied for by the public, and that the applications for these 10,000 shares ‘as per allotment sheets produced’ were accepted.

The oral evidence as to what passed at the meeting is certainly conflicting. On the one hand Mr Boyce deponed that no applications for shares by any applicants, and in particular no applications by Mr Boyce himself, or by the defender, or by the other Aberdeen applicants, and no application sheets, were put before the meeting, and that the names of the applicants were not read over, and that the name of the defender was never mentioned.

On the other hand there is a body of testimony to the opposite effect. Mr Knapp, the secretary of the Premier Company, deponed that the original applications were produced by him to the meeting and also application sheets; that the whole of the names on these sheets (including those of the defender and his Aberdeen friends) were read over by Mr Macalister, and that Mr Boyce on hearing the name of one of the Aberdeen applicants remarked, ‘That is one of my Scotch friends.’

Mr Cairns, who is a director of the Premier Company, and who is by profession a barrister-at-law, corroborates generally MrKnapp's evidence, and in particular spoke to his having been led, when the applications were being read over, to examine the

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application sheets himself, doing so in consequence of a remark made by Mr Boyce on hearing the name of one of his Scotch friends.

Mr Macalister, now a director of the Premier Company, was present at the meeting of 20th November as the vendor to the company and also as representing the Mining Company. He deponed that at the meeting he read out the names in the application sheets and that Mr Boyce remarked on the name of one of the Aberdeen applicants being mentioned, that that was one of his Scotch friends.

I think that I have sufficiently indicated the state of the facts, and I proceed now to deal with the inferences which ought to be drawn and with the legal aspects of the case with special reference to the contentions urged for the defender.

I begin with the question of the alleged withdrawal of the defender's offer to sub-underwrite and his relative application for shares.

On the disputed question of fact as to whether before the allotments were made on 20th November Mr Boyce had intimated to Mr Macalister that the defender's offer and application were withdrawn, I am of opinion that the fact of such an intimation being made has not been established on the evidence adduced.

Assuming, however, contrary to the opinion which I have expressed, that intimation of the withdrawal before the allotment of shares on 20th November has been proved, I am further of opinion that in law such an intimation would be ineffectual, in view of the express stipulation in the subunderwriting letter signed and delivered by the defender to the effect that it and the relative application for shares should be irrevocable.

In other words, it seems to me that on the particular question of revocation now under consideration this case is governed by the principles given effect to in such cases as Pole's case, 1920, 2 Ch. 34, and Carmichael's case, 1896, 2 Ch. 643, and that it is to be distinguished from the case on which the defender's counsel specially founded, viz., Stark's case ( In re Consort Deep Level Gold Mines, Limited), 1887, 1 Ch. 575.

In Pole's case, for example, the subunderwriting letter was identical as regards its terms with the sub-underwriting letter in this case; but in Pole's case the applicant Mr Pole, contrary to the statement contained in the letter, had not signed and handed to the syndicate of underwriters, to whom the letter was addressed, any separate application for shares, although he did give to the syndicate, along with the sub-underwriting letter, a cheque for the application money. The syndicate having applied for an allotment of the proportion of shares to be taken by Mr Pole the company made the appropriate allotment.

Thereafter Mr Pole, before receiving intimation of the allotment, wrote the company withdrawing his application for shares, and on the company insisting on the validity of the allotment Mr Pole applied to have the register rectified by the removal of his name. It was held, however, that the authority which he had given to the syndicate to apply for shares was a continuing and irrevocable authority, coupled with an interest which he was not entitled to withdraw.

In the present case the conditions which constitute a continuing and irrevocable authority coupled with an interest are as conspicuous as in Pole's case. I refer to the fact that the defender's sub-underwriting letter bears to be granted for a valuable consideration, viz., the payment by the Mining Company to the defender of a commission of 5 per cent., and that the commission was to be paid in respect of the defender undertaking to relieve to the extent of 500 shares the Mining Company of their own underwriting obligation for the total issue of 100,000 shares.

With regard to Stark's case, it is really not in point on the question now under consideration. It is clearly distinguishable both from this case and from Pole's case by reason of the very different terms of the underwriting letter in Stark's case. The following are the outstanding differences:—( a) Mr Stark's offer to the Mines Company was to subscribe for 10,000 shares ‘or such less number as may be accepted by you’ (the Mines Company); ( b) Mr Stark's offer bore that it was only in the event of his failing to comply with the terms of his letter that he authorised the Mines Company themselves to apply for shares in his name or on his behalf. I may add that in addition to the differences in the terms of the underwriting letter the two cases differ materially in other respects, e.g., Mr Stark had not signed and handed to the Mines Company any separate application for shares or any cheque for the application money. The decision of the Court of Appeal was that the underwriting letter in Stark's case did not authorise the Mines Company to apply for shares in Mr Clark's name until ( a) he had been informed by the Mines Company of the number of shares for which they accepted his offer, and ( b) until he had failed himself to apply for that number. That decision proceeded on the special circumstances in Stark's case, and in my opinion has no bearing on the question now under consideration in this case.

For the reasons which I have given the argument for the defender so far as based on the alleged withdrawal of authority is unfounded alike in fact and in law.

Another ground of defence which calls for special notice was put as follows:—It was maintained for the defender that the defender's sub-underwriting letter was a mere offer, that to become binding contractually therefore it was necessary not only that it should be accepted, but that intimation of the acceptance should be duly intimated to the defender, that in point of fact no such intimation was given at any time, that in these circumstances the Mining Company had no authority and no right of any kind to apply for shares on behalf of the defender, and that the allotment in fact made on 20th November was in law inept and invalid.

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For the pursuers it was contended that in the circumstances of this case no intimation of acceptance was either expected or required, that the defender dealt with the Mining Company on the footing of leaving them simply to carry out the terms of the sub-underwriting letter without further communication, and that the actings of the defender himself both before and after the allotment on 20th November were inconsistent with the position now taken up by him as to the needfor any intimation of the acceptance of his offer to sub-underwrite. The pursuers' counsel emphasised the complete absence of any communication from the defender or from Mr Boyce indicative of expectation of any intimation of acceptance between the sending in of the sub-underwriting letter of 3rd November and the allotment on 20th November, and the terms of the defender's letter of 2nd December certainly show that the defender regarded the allotment as all right except only as regards the number or proportion of shares allotted.

On this aspect of the question the pursuers' counsel founded on the opinion of Mr Justice Chitty In re the Bulfontein Sun Diamond Mine Limited, 9th June 1896, 12 T.L.R. 461.

If this question of non-intimation of acceptance had arisen between the defender and the Mining Company and concerned them only, my impression is that the failure to give intimation might have raised a serious difficulty in the way of a contention by the Mining Company that notwithstanding non-intimation of acceptance the defender was bound on 20th November by the terms of his sub-underwriting letter.

The Mining Company, however, are not parties to this litigation, and in the view which I take no question between the defender and the Mining Company can be properly determined, and no such question need be considered, in this case between the Premier Company and the defender.

In my opinion the defence based on the non-intimation by the Mining Company of their acceptance of the defender's offer is not available to the defender as an answer to the claim made by the Premier Company in this case.

I base my opinion to that effect on the following considerations:—( a) The defender, by the terms of the underwriting letter, and in particular by signing and handing to the Mining Company his application for shares addressed to the Premier Company and the relative cheque for the application money, authorised, or at least must be held to have authorised, the Mining Company to apply as they did for an allotment of shares, and ( b) the defender having put the Mining Company in the ostensible position of acting for him in the applying for the shares, is barred as in a question with the Premier Company from disputing the authority of the Mining Company to make the application.

In Pole's case above cited, in which, as I pointed out, the underwriting letter was in the same terms as that under consideration in this case, but in which no separate application for shares had been signed and delivered, the Master of the Rolls (Lord Sterndale), referring to the handing by Mr Pole to the syndicate (the principal underwriters) of the sub-underwriting letter and the relative cheque, said that in effect that meant—‘Use these two documents—this sub-underwriting letter and this cheque—for the purpose of carrying out the terms of the letter and of the agreement which I have made with you.’ His Lordship also expressly adopted Mr Justice Lawrence's opinion to the effect that the authority conferred by Mr Pole on the syndicate ‘extended not only to the making of the application (for shares), but also to the maintenance of the application when made as an effectual application down to the date of its final acceptance by the company.’

The opinions which I have been quoting seem to me to be apposite in the present case, and to justify the view that as in a question with the Premier Company the Mining Company were either authorised or must be held to have been authorised by the defender to apply for shares by him. Even if in a question between the defender and the Mining Company the Mining Company had no authority, express or implied, to apply for shares for the defender, I think that the defender is not entitled to dispute the right of the Premier Company to act upon the authority which the defender had apparently entrusted to the Mining Company.

On the face of the documents the Premier Company at the date when the allotment was made found the appropriate indiciæ of the defender having authorised the Mining Company to submit the defender's application for shares for an allotment of 500 shares in the defender's favour. I say so because (1) the Mining Company produced the application for 500 shares signed by the defender and addressed to the Premier Company, and (2) the defender's cheque in favour of the Premier Company or their bankers for the application money in respect of 500 shares had been handed by the Mining Company to the secretary of the Premier Company, and had been paid into the Premier Company's bank account on or before 15th November.

In the circumstances I think that the well-known rule of Pickard v. Sears, 1837, 6 Adol. & Ellis, 469, 45 R.R. 538, as explained in Freeman v. Cooke, 1848, 2 Ex. 634, 76 R.R. 711, is applicable in this case, and that the defender is personally barred as in a question with the pursuers from disputing the authority which he had ostensibly given to the Mining Company.

The only other question to which I need refer is that relating to the number or proportion of shares allotted to the defender. The defender's counsel argued that the allotment of 500 shares was absolutely invalid. I think, however, that the argument is not well founded. It is necessary to keep in view the terms of the defender's application for shares. It requests the Premier Company to allot 500 shares and then proceeds, ‘and I hereby agree to accept the same or any less number that you (the Premier Company) may allot to me.’

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What happened was that the company, in good faith, allotted 500 shares in terms of the defender's application, whereas as in a question between the defender and the Mining Company the allotment applied for should have been only for 450 shares.

As appears from the correspondence, however, the secretary of the Premier Company wrote the defender explaining that the Mining Company were willing to relieve the defender of 50 of the shares allotted to him. The defender did not acquiesce in this proposal, and when later the Premier Company's solicitors put before the defender the choice of either holding the 500 shares or giving up 50 the defender still maintained a negative position. Then, although the pursuers in their pleadings in this case offer to give effect to the defender's rights against the Mining Company by reducing the amount concluded for, the defender has given no response on the subject.

I think that in the circumstances the pursuers are entitled to hold the defender to the allotment of 500 shares which was made in terms of his application. This will not prejudice any claims for relief or otherwise which may be competent to the defender against the Mining Company.

It follows that I must repel the defences and give decree for the sums of principal and interest as concluded for.”

The defender reclaimed, and argued—The pursuers sued on contract. They must therefore establish contract either ( a) by offer and acceptance, or ( b) by the doctrine of estoppel or personal bar. There were in the present case three distinct parties, viz., (1) the pursuers, (2) the Mining Trust, and (3) the defender. But to bind the defender in a question with the pursuers the defender must have dealt with the pursuers direct or through an authorised agent. On the evidence there was nothing to show that the defender came directly into contact with the pursuers, and therefore the letter of application and the cheque were the only means of establishing this relationship. These were put into the pursuers' hands by Macalister acting as intermediary, but he had no authority from the defender to do so as the latter's agent. There had been no intimated acceptance of the original sub-underwriting contract by Macalister to the defender, who was entitled to know where his obligation under that contract commenced. Until that acceptance had been intimated Macalister had no authority to act for the defender as his agent or to pass on the application for shares to the pursuers. The extent of the authority given in the sub-underwriting letter referred to a number of shares not ascertainable, and therefore that letter required acceptance. In re Hannan's Empress Gold Mining and Development Company, Carmichael's Case, [1896] 2 Ch 643, per Lindsay, L.J.; In re Bulfontein Sun Diamond Mine, Limited, 1896, 12 T.L.R. 461; In re Consort Deep Level Gold, Mines, Limited, Stark's Case, [1897] 1 Ch 575; In re Olympic Fire and General Reinsurance Company, Limited, [1920] 2 Ch. 341. There could be no case on negligence or personal bar till agency had been established. The onus on a person getting a contract through an agent was either to prove agency or bar by estoppel— Pole v. Leash, 1863, 33 L.J. (N.S.) Ch. 155, per Lord Cranworth at p. 161; Rankine on Personal Bar, p. 217. Intimated acceptance, however, of the sub-underwriting letter was necessary to constitute agency— Brogden v. Metropolitan Railway Company, 1877, 2 App. Cas. 666, and per Lord Blackburn at pp. 691, 692, and 697. Carlile v. Carbolic Smoke Ball Company, [1893] 1 QB 256, was a quite exceptional case. The cases of In re Bulfontein Sun Diamond Mine, Limited, 1896, 12 T.L.R. 461, and Ex parte Stark, [1897] 1 Ch 575, showed that the general law applied to sub-underwriting contracts. In In re Henry, Bentley, & Company and Yorkshire Breweries, Limited, ex parte Harrison, 1893, 69 L.T. 204, founded on by the pursuers, the point of non-acceptance was not taken, and the case was decided on holding out raising an objection of bar or estoppel against the defender. In that case the company saw the agent's authority and dealt with it on that footing. In the present case the pursuers saw no authority or application, and therefore they had no right to put the defender on their list. It was said, further, that esto that there was no acceptance, still the letter of application could be taken by itself and treated as an irrevocable mandate to apply for shares. This, however, was not possible, and was conclusively answered by Carmichael's Case, In re Hannan's Empress Gold Mining and Development Company, [1896] 2 Ch 643. Only direct contract between pursuers and defender could give the former authority to use the letter of application and the cheque as they did. Brocklesby v. Temperance Building Society, [1895] AC 173, and Fry v. Smellie, [1912] 3 KB 282, were not in point, as they dealt with the effect of limiting an agent's authority in dealing with third parties who were not aware of the limit. The argument against defender on this question proceeded solely on the doctrine of estoppel—a purely English rule involving artificial distinctions not known to the law of Scotland, and which could not be equiparated to personal bar in Scotland — Swinburne v. Western Bank of Scotland, 1856, 18 D. 1026. There was further no averment or plea to personal bar in the pleadings. Estoppel in any event was not a plea which would readily be given effect to— Baxendale v. Bennett, 1878, 3 QBD 525, per Bramwell, L.J., at p. 529; Dixon v. Muckleston, 1872, L.R., 8 Ch. App. 155, per Selborne, L.C., at p. 160. On the evidence there was neither holding out in the sense that an agent had been clothed with apparent authority, as illustrated in the case of Ex parte Harrison, nor was there either negligence on the part of the defender which could be said to be the proximate cause of the pursuers' action, nor any duty owed by the defender to the pursuers in the matter— Young v. Grote, 1827, 4 Bing. 253; Orr & Barber v. Union Bank of Scotland, 1854, 1 Macq. 513; Governor and Company of the Bank of Ireland v. Trustees of Evans' Charities in Ireland,

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1855, 5 H.L.C. 389; British Linen Company v. Caledonian Insurance Company, 1861, 4 Macq. 107, per Lord Cranworth at p. 114; Baxendale v. Bennett, 1878, 3 QBD 525; Wallace's Trustees v. Port-Glasgow Harbour Trustees, 1880, 7 R. 645, 17 S.L.R. 447; In re Cooper, 1882, 20 Ch D 611; Schofield v. Earl of Londes-borough, [1896] AC 514; London Joint Stock Bank, Limited v. Macmillan & Arthur, [1918] A.C. 777, 56 S.L.R. 367.

Argued for the pursuers and respondents—As between the pursuers and the defender there was a concluded contract constituted by the letter of application and the allotment. In making the allotment the pursuers' directors did not proceed on anything said or done by Macalister, and were not affected by any error made by him. The forgery cases had no application. By putting the Mining Trust in possession of the letter of application, which was complete on the face of it, the defender was precluded from averring that the former should not have passed on the application. There was a fundamental fallacy in the defender's argument as to the underwriting letter which really included two things, viz., an underwriting contract pure and simple, and a separate contract as to the shares constituted by delivery of the letter of application and cheque. As to the former this expectation was that the subscriber would not have to take up the shares. From this point of view no cheque was necessary till the liability was determined. In so far as the underwiting letter stood alone it might require acceptance. But the legal relation constituted by delivery of the application form and cheque to the underwriter made him agent for the particular purpose of the deposit which was to be used in paying the subscription to the pursuers for shares. This was independent of the subunderwriting letter and its acceptance. The circumstances here were precisely analogous to those in Ex parte Harrison and Brocklesby v. Temperance Building Society. The defender having entrusted to his agent the application form and cheque for the purpose of handing them to the pursuers, and the pursuers having received them, he was not entitled to plead that the authority given was limited by an agreement entered into between the underwriter and the sub-under—writer— Brocklesby v. Temperance Building Society; Fry v. Smellie; Story on Agency, p. 143; Bowstead on Agency, art. 82. The doctrine of the English cases, as summarised in Bell's Prim, 27 ( a), was good also for Scotland. A plea of bar was not necessary, and there were no facts that the pursuers could have averred. The agent here had apparent authority to apply for the shares Pole's Case; In re Olympic Fire and General Reinsurance Company, Limited, [1920] 1 Ch. 582, per Lawrence, J., at p. 591. Under article 5 of the sub-underwriting letter the application for shares was irrevocable. The present case was just one of the general types of agency known to the law of Scotland, and nothing short of an averment of forgery or fraud would disentitle the pursuers from relying on the application received. It was the custom for sub-underwriters to make firm applications for shares, and it was natural for the application to come through the underwriter, and the pursuers had no constructive knowledge of the sub-underwriting letter such as could prevent them dealing with the application— Muir's Executors v. Craig's Trustees, 1913 S.C. 349, per Lord President Dunedin at p. 355, 50 S.L.R. 284. Even if the application was to be read as subsidiary to the sub-underwriting letter, still the latter as far as acceptance was concerned did not require intimation. Even assuming that knowledge of acceptance required to reach the defender, still such knowledge did reach him perfectly well. Intimation might be made inferentially— Chapman v. Sulphite Pulp Company, Limited, 1892, 19 R. 837, 29 S.L.R. 755. There was no fixed time within which knowledge must reach him. The retention of the letter was sufficient to raise a presumption of acceptance— Ex parte Harrison; In re Bulfontein Sun Diamond Mine, Limited; Ex parte Stark per Lindley, L.J., at p. 591, referring to Carlile v. Carbolic Smoke Ball Company. If the defender repudiated the contract he should have taken prompt steps to have his name removed from the register— First National Reinsurance Company, Limited v. Greenfield, [1921] 2 K.B. 260. [On the necessity of a plea of bar the Lord Justice-Clerk referred to M'Gregor's Executors v. Anderson's Trustees, 1893, 21 R. 7, per Lord Kinnear at p. 12, 31 S.L.R. 4.J

At advising—