Counsel's Opinion.

The principle of law applicable to this case is clear. The difficulty is in applying it to the facts. The principle is that an agent, who in the course of his agency, and in the matter of his agency, acquires a profit, must account for it to his principal, unless his principal knew of and assented to his acquiring the profit.

In the present case the agency of the Director in the matter of the allotment of shares was clearly not concluded until the allotment was made. This being so, the way the case strikes me is this—As a consequence of the issue of the prospectus the Company and its Directors either were not or were as between the Company and the applicants bound to allot the total number of shares offered, if they received a page 5 sufficient number of applications from responsible persons. If they were not so bound, then to the extent to which the Director rejected applications, he was bound to give the Company any benefit he might derive from the rejection. If, on the other hand, they were so bound, then to the extent to which the Director substitutes his own name for that of an outside applicant as an allottee, he is using his agency with exactly the same result as if he bought those shares or the inchoate right to those shares from the applicant at par and subsequently sold the shares at a premium.

The difficulty is in drawing the line, for there is no doubt that the Director is to some extent entitled to allot shares to himself. A principle may I think be found in this (taking this particular case) that, as regards the 1,000 for which Sir Julius applied, he stood at risk and stood towards the Company in a position in which the Company had rights against him, for if the Company allotted to him he was bound; but as regards the excess he never stood at risk, but acquired the shares, so to speak, despite the Company, and at a time when by reason of the large number of applications the shares had gone to a premium. As matter of logical result, perhaps one ought to say that the Director ought not to receive upon his application more than his proper rateable proportion, having regard to the total number of applications from responsible persons; but I think this is too fine.

To the extent of the 1,000 shares no objection can, I think, be taken, but I am of opinion that as to the excess Sir Julius is liable.