Royal British Bank v Turquand: CEC 1856

The plaintiff sought payment from the defendants, a joint stock Company, on a bond, signed by two directors, under the seal of the Company whereby the Company acknowledged themselves to be bound to the plaintiff in pounds 2,000. The company said that there had been no resolution authorising the making of the bond, and that it was given without the authority of the shareholders.
Held: The plaintiff was entitled to judgement, the obligee having, on the facts alleged, a right to presume that there had been a resolution at a general meeting, authorising the borrowing the money on bond. Outsiders dealing with a company in good faith can assume that acts within the company’s constitution and powers have been properly and duly performed and are not bound to enquire whether acts of internal management have been regular.
Jervis CJ said: ‘We may now take for granted that the dealings with these companies are not like dealings with other partnerships, and that the parties dealing with them are bound to read the statute and the deed of settlement. But they are not bound to do more. And the party here, on reading the deed of settlement, would find, not a prohibition from borrowing, but a permission to do so on certain conditions. Finding that the authority might be made complete by a resolution, he would have a right to infer the fact of a resolution authorizing that which on the face of the document appeared to be legitimately done.’
Jervis CJ
(1856) 6 E and B 327, [1856] EngR 470, (1856) 6 El and Bl 327, (1856) 119 ER 886
England and Wales
Appeal fromThe Royal British Bank v Turquand 2-Jun-1855
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Cited by:
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ExplainedMorris v Kanssen HL 1946
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Lists of cited by and citing cases may be incomplete.
Updated: 08 October 2021; Ref: scu.251748