Odger's English Common Law

558 FRAUDULENT MISREPRESENTATION.
The term " promoter " as used in connection with a company has ho very
definite meaning ; it involves " the idea of exertion for the purpose of
getting up and starting the company (or what is called ' floating ' it), and
also the idea of some duty towards the company imposed by or arising
from the position which the so-called promoter assumes towards it." 1
Thus the vendor of property, for which the public are asked to subscribe,
may or may not be a promoter. But the term " promoter " within the Act
does not include any person by reason of his acting in a professional
capacity for persons engaged in procuring the formation of the company. 2
In addition to his remedy against the directors or other
persons, who have induced him to take shares by fraudulent
mis-statements contained in the prospectus of a new company
a shareholder may be entitled also to bring an action to
compel the company, if it is not in liquidation, to take back
the shares and repay him the money, which he paid for them,
as money obtained by the company through the fraud of its
agents.
"Where a company has obtained a benefit through the
fraud of an agent, the person defrauded may recover back his
money from the company " on proof that " he paid his money
in consideration of certain statements and acts of the secretary,
directors and managers of the company; that the circum-
stances under which they got the money were fraudulent;
that the transaction was not bond fide but a fraudulent trans-
action to get his money without any consideration ; and that
the money found, its way into the coffers of the company." 3
The company has derived a material benefit from the fraud of
its agent. In such a case the principle is that he, who profits
by the fraud of his agent, adopts the fraudulent act and
becomes responsible to the party for any damage which he
has sustained in consequence of the fraud
;
4 and this is so
although the specific fraud was committed without any
authority from him at the time.
It will be a great advantage to the shareholder if he can
succeed in obtaining this relief, as his name will then be
1 Per cur. in Emma Silver Mining Co. v. Lewis (1879), 4 0. P. D. at p. 407.
2 S. 84 (5). " Expert " includes any person whose profession gives authority
to a statement matte by him. The Act also provides for indemnifying any person
whose name has been improperly inserted as a director (s. 84 (3)), and for contribution
from co-directors (s. 84 (4) ).
8 Per Grove, J., in Blake v. Albion Life Assurance Co. (1878), 4 C. P. D. at
pp. 99, 100. See also Swire v. Francis (1877), 3 App. Cas. 106.
' See per Cockburn, C. J., in Weir v. Bell (1878), 3 Ex. D. at p. 249.