With a view to concealing the financial difficulties of a mining company and securing control its property, the manager entered into a secret arrangement with the respondent whereby the latter was to acquire the liabilities, obtain judgment thereon, bring the property to sale under execution and purchase it a new company to organized in which the respondent was to have a large interest. The manager, who was a creditor of the company, was to have his debt secured and to receive an allotment of shares, in the new company proportionate to those held by him in the old company and he agreed that he would not reveal this understanding to the other shareholders.
Held, affirming the judgment appealed from B.C. Rep. Sedgewick J. dissenting, that the agreement could not be enforced as the consideration was illegal and a breach trust which the other shareholders were defrauded.
APPEAL from the judgment of the Supreme Court of British Columbia(1) reversing the judgment of Martin J. and dismissing the plaintiff's action with costs.
Girouard,
Davies, Idington and Maclennan JJ.
(1) Rep.