Farrell v. Manchester and Portland Rolling Mills Co.

Farrell v. Manchester and Portland Rolling Mills Co.

Appeal allowed: plaintiff entitled to rescission and repayment by the company because repudiation was promptly and persistently asserted, defendants' conduct and lack of response justified reasonable delay before suing and no prejudice to third parties was shown; however directors were not personally liable because evidence did not show they authorized, adopted or knew of the broker's fraudulent prospectus or were otherwise culpable.

Citation
(1908) 40 SCR 339
Parties
Appellant/plaintiff: Michael Farrell; Respondent/company: The Portland Rolling Mills, Limited; Respondent/director: James Manchester; Respondent/director: R. C. Elkin
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
16 June 1908
Procedural Posture
Equity Appeal / On Appeal to the Supreme Court of Canada From the Supreme Court of New Brunswick (appeal From Decree Dismissing Bill)
Outcome
Appeal allowed in part: judgment against company reversed in favour of appellant; decree of courts below dismissing bill set aside as to company; directors (Manchester and Elkin) held not personally liable and succeed on that issue.
Legal Topics
Misrepresentation, Rescission, Laches/delay, Director Liability, Prospectus, Paid Up Shares, Restitutio in Integrum
Source Language
English
Commercial Law Company Law Equity Tort (deceit) Agency Law Misrepresentation Rescission Laches/delay +4 more

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Parties

Michael Farrell

Appellant/plaintiff

The Portland Rolling Mills, Limited

Respondent/company

James Manchester

Respondent/director

R. C. Elkin

Respondent/director

Procedural Posture

Equity Appeal / On Appeal to the Supreme Court of Canada From the Supreme Court of New Brunswick (appeal From Decree Dismissing Bill)

Legal Issues

  1. 1 Whether delay between repudiation and commencement of suit barred equitable rescission (laches)
  2. 2 Whether company was liable for misrepresentations in prospectus prepared and circulated by broker
  3. 3 Whether individual directors who authorized sale by broker were personally liable for broker's misrepresentations

Ratio Decidendi

Appeal allowed: plaintiff entitled to rescission and repayment by the company because repudiation was promptly and persistently asserted, defendants' conduct and lack of response justified reasonable delay before suing and no prejudice to third parties was shown; however directors were not personally liable because evidence did not show they authorized, adopted or knew of the broker's fraudulent prospectus or were otherwise culpable.

Court Disposition

Appeal allowed in part: judgment against company reversed in favour of appellant; decree of courts below dismissing bill set aside as to company; directors (Manchester and Elkin) held not personally liable and succeed on that issue.

Orders

  • Rescission of purchase as against Portland Rolling Mills, Limited and repayment of $3,000 with interest to appellant
  • Appeal against the defendant company allowed with costs