contracts which are material to the interests of the company and 'Chap. XI. material to be made known to the shareholder came within the provisions of the 38th section. Brett, L.J., adhered to the opinion he had expressed in Gover's case (r), and concurred in the judgment of Cockburn, C.J. Bramwell, L.J., was of opinion that the defendants were not liable, as only those contracts are meant which affect the company and which put an obligation upon it, whether with or without some benefit attached, and that the section does not extend to every contract which would assist a person in determining whether he would become a shareholder. Kelly, C.B., also held that the defendants were not liable, for substantially the same reasons as those stated by Bramwell, L.J. In Sullivan v. Mitcalfe (t) the question as to the construction of this enactment came before the Court of Appeal (u) on a demurrer to a statement of claim. A. and B. being possessed of a patent, agreed to sell it to a company for £56,000, but by a series of contracts it was arranged that only £2,000 out of that sum should be retained by them for their own use, and that £54,000 should be divided between the promoters and the company. The prospectus, issued on behalf of the company, did not mention the contracts relating to the disposal of the purchase money of the patent. The defendants were promoters and directors of the company. The plaintiff subscribed for shares, and afterwards sued the defendants to recover the price of the shares subscribed for by him. It was held on demurrer, by Baggallay and Thesiger, L.JJ. (Bramwell, L.J., dissenting), that the contracts as to the disposal of the purchase money of the patent ought to have been specified in the prospectus pursuant to the Companies Act, 1867, s. 38, and that the defendants were liable to the plaintiff for the price of his shares. In the course of his judgment Thesiger, L.J., observes (x): “As a mere matter of interpretation unaffected by any rule of construction, the section appears to me capable of being read in such a manner as to bear either the wider or the narrower interpretation which has been put upon it, and the arguments in favour of the one and the other interpretation appear to me almost equally (r) 1 Ch. D. at p. 200. (t) 5 C. P. D. 455 (C. A.); 49 L. J. C. P. 315. (u) Bramwell, Baggallay, and Thesiger, Chap. XI. balanced. Under such circumstances, even if there were no rule of construction guiding me to the same result, I should feel myself compelled by the preponderating weight of judicial authority which, putting aside Gover's case (y), which is claimed by the advocates of both interpretations, is to be found in favour of the wider interpretation in Cornell v. Hay (z), in Charlton v. Hay (a), and in Twycross v. Grant" (b). Bramwell, L.J., adhered to the opinion he had expressed in Twycross v. Grant (b), and entered into an elaborate criticism of the section and the decisions that had been pronounced upon it, and his lordship concluded his judgment with the observation that "Care should be taken not to put a construction on the statute, unreasonable and impossible from its wideness, which on the failure of a perfectly honest company may work the grossest injustice on persons entirely honest and faithful to their duties." S. 38 only applicable to shareholders. S. 38 does not give remedy against the company, but only against persons omitting to disclose contracts. Meaning of words "know ingly issuing," in s. 38. Measure of damages. It will be seen from the above review of judicial opinion on this point, that the preponderating weight of judicial authority is in favour of the wider rather than the narrower interpretation of the statute. The 38th section of the Companies Act, 1867, is applicable only for the protection of shareholders in the company, and creates no statutory duty towards the bondholders of the company or others, for breach of which an action on the statute will lie (c). Where the omission to specify any agreement is fraudulent under the statute, the shareholder has his remedy against the person making the omission, but cannot have his name removed from the list of shareholders (d). The words "knowingly issuing" in s. 38, mean intentionally issuing a prospectus without inserting the contracts which are required by that section to be specified, although they are omitted under the bona fide belief that it is unnecessary to specify them (dd). If the real damage occasioned to the plaintiff by the defendant's fraud is the price he paid for the shares, he is entitled to recover that amount, and where the shares taken by the plaintiff proved to be worthless, he was held entitled to recover the whole (y) 1 Ch. D. 182. (2) L. R. 8 C. P. 328. (a) 31 L. T. N. S. 437. (b) 2 C. P. D. 469 (C. A.) (c) Cornell v. Hay, L. R. 8 C. P. 328; 42 L. J. C. P. 136. (d) Gover's Case, 1 Ch. D. 182; 45 L. J. Ch. 83 (C. A.). So held by majority of the Court, Brett, L.J. dis. (dd) Twycross v. Grant, 2 C. P. D. 469; 46 L. J. C. P. 636 (C.A.). amount (e). Where the plaintiff retained his shares after he Chap. XI. had knowledge of the misrepresentation, and the shares having depreciated in value; it was held that he was entitled to recover damages, and that since the concern, which was bought as a going concern, would not have fetched more than one half if it had been sold as a wrecked concern, the measure of damages was one half the purchase money (ƒ). (e) Twycross v. Grant, L. R. 2 C. P. D. 469; 46 L. J. C. P. 626, Kelly, C.B. (f) Arkwright v. Newbold, 49 L. J. Ch. 689. dis. Chap. XII. Property in unpublished works. Not dependent on statute. Copyright only exists by sta tute. CHAPTER XII. COPYRIGHT. "EVERY new and innocent product of mental labour," observes a learned writer on the law of copyright (a), "which has been embodied in writing or some other material form, becomes the exclusive property of the author, and without his express permission the law will not allow any other person to publish it." The nature of the right of an author in his works is analogous to the rights of ownership in other personal property, and is far more extensive than the control of copying after publication in print, which is the limited meaning of copyright in its common acceptation. Thus, if after composition the author chooses to keep his writings private, he has the remedies for wrongful abstraction of copies analogous to those of the owner of personalty in the like case. He may prevent publication; he may require back the copies wrongfully made; he may sue for damages if they are sustained (b). The property of an author in his unpublished works is independent of statute, and depends entirely upon the common law right of property (c). This right the Courts will protect, and will accordingly prevent any one making use of or publishing the manuscript of an author (d), or the unpublished lectures of a lecturer (e), or the etchings of an engraver (ƒ), without their permission. After publication the copyright in works of literature and art (a) Shortt's Law of Copyright, 2nd ed. p. 5. (b) Per Erle, C.J., Jefferys v. Boosey, 4 H. L. Cas. 815; 24 L. J. Ex. 81. (c) See Prince Albert v. Strange, 2 De G. & Sm. 695; on appeal, 1 Mac. & Gordon, 25; 18 L. J. Ch. 126; per Yates, B., in Millar v. Taylor, 4 Burr. at p. 2378. (d) Webb v. Rose, cited 2 Bro. P. C. 138. (e) Abernethy v. Hutchinson, 1 H. & Tw. 40; 3 L. J. Ch. 209; Nicols v. Pit man, 26 Ch. D. 374. Publication of lectures without consent is forbidden in certain cases by 5 & 6 Wm. 4, c. 65. (f) Prince Albert v. Strange, supra. exists only by statute (g), and there is no co-existing common law Chap. XII. protection during the statutable period (h). The first Act defining the rights of authors of published works was the 8 Anne c. 19, which was repealed by the Copyright Amendment Act, 1842, 5 & 6 Vict. c. 45, which is the statute Copyright Act, now in force in respect to the copyright in books, &c. (i). That 1842. statute by s. 2 enacts that in the construction of the Act the Definition of word "book" shall be construed to mean and include every volume, words, s. 2. part or division of a volume (k), pamphlet, sheet of letter press (1), sheet of music, map, chart, or plan separately published; that the words "dramatic piece" shall be construed to mean and include every tragedy, comedy, play, opera, farce, or other scenic, musical, or dramatical entertainment (m); and that the word "copyright" shall be construed to mean the sole and exclusive liberty of printing and otherwise multiplying copies (n) of any subject to which the said word is herein applied. S. 3 enacts that the copyright in every book which shall after Duration of the passing of the Act be published in the lifetime of its author copyright. shall endure for the natural life of such author, and for the further term of seven years, commencing at the time of his death, and shall be the property of such author and his assigns provided always that if the said term of seven years shall expire before the end of forty-two years from the first publication of such book, the copyright shall in that case endure for such period of forty-two years, and that the copyright of every book which shall be published after the death of its author shall endure for the term of forty-two years from the first publication thereof, and shall be the property of the proprietor of the author's manuscript from which such book shall be first published and his assigns. (g) Jefferys v. Boosey, 4 H. L. Cas. 815; 24 L. J. Ex. 81; Donaldson v. Beckett, 4 Burr. 2408. (h) Reade v. Conquest, 9 C. B. N. S. 755; 30 L. J. C. P. 269. (i) This statute must prima facie be construed as referring to British authors only, "But I do not doubt," observes Lord Cranworth, L.C., "that a foreigner resident here, and composing and publishing a book here, is an author within the meaning of the statute. He is within the words and spirit. I go further; I think that if a foreigner, having composed, but not having published, a work abroad, were to come to this country, (k) University of Cambridge v. Bryce, (1) Clementi v. Golding, 2 Camp. 25; (m) Russell v. Smith, 12 Q. B. 217. |