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(x.)

adoptive Acts"; and by sect. 12 of the same Act, parish Chap. XXV. councils are empowered, with the consent of the county council and the Local Government Board, to borrow money for the following purposes, viz.: "(a) for purchasing any land, or building any buildings, which the council are authorized to purchase or build; and (b) for any purpose for which the council are authorized to borrow under any of the adoptive Acts; and (c) for any permanent work or other thing which the council are authorized to execute or do, and the cost of which ought, in the opinion of the county council and the Local Government Board, to be spread over a term of years." The money is to be borrowed "in like manner and subject to the like conditions as a local authority may borrow for defraying expenses incurred in the execution of the Public Health Acts, and sects. 233, 234, and 236 to 239 of the Public Health Act, 1875 (z), shall apply accordingly, except that the money shall be borrowed on the security of the poor rate and of the whole or part of the revenues of the parish council, and except that as respects the limit of the sum to be borrowed, one half of the assessable value shall be substituted for the assessable value for two years." A charge for the purpose of any of the adoptive Acts is to be ultimately upon the rate applicable to the purposes of that Act.

xi.-Borrowing Powers of Education Authorities. - School boards, constituted by the Elementary Education Act, 1870 (a), were empowered by sect. 57 of that Act to borrow money for certain purposes. That section was repealed by sect. 10 of the Elementary Education Act, 1873 (b), which conferred upon school boards a similar but slightly varied power of borrowing for the particular purposes, and in the manner mentioned in the repealing section. This section was in turn repealed by the Education Act, 1902.

rent expenses.

A school board had no power to borrow money and to charge Temporary the ratepayers with interest which the board had paid under loan for curthe contract of loan, for purposes or in manner other than as prescribed by the Act of 1873, as, for instance, where a board contracted a temporary loan to meet current expenses, which the

(*) 38 & 39 Vict. c. 55. (a) 33 & 34 Vict. c. 75.

(b) 36 & 37 Vict. c. 86.

Chap. XXV. school fund was not sufficient to pay, until they could obtain money out of the rates (c).

(xi.)

Power to raise money

to build, &c. industrial schools.

Power to borrow for education of

children.

The provisions of sect. 10 of the Act of 1873 were, by the Elementary Education Act, 1876 (d), rendered applicable to the establishing, building and maintaining by school boards of certified day industrial schools thereby established, and certified industrial schools established by the Industrial Schools Act, 1866 (e), with the exception that "one of Her Majesty's Principal Secretaries of State" is to be substituted for "education department" throughout the section. It is also enacted that "such establishment and building shall be deemed to be a work for which a school board is authorized to borrow within the meaning of the first schedule to the Public Works Loan Act, 1875" (f).

Further powers of borrowing are conferred upon school boards by sect. 3 of the Elementary Education (Industrial Schools) Act, 1879 (g).

By sect. 5 of the Elementary Education (Blind and Deaf Children) Act, 1893 (), school boards and other "school authoblind and deaf ties," as defined by the Act, are invested with similar powers of borrowing to those conferred on school boards by the Elementary Education Acts (i), subject to a discretionary power in the Education Department to consent to the exercise thereof.

Education
Act, 1902.

The Education Act, 1902 (k), provides as follows:

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"Sect. 5. The local education authority shall throughout their area have the powers and duties of a school board and school attendance committee under the Elementary Education Acts, 1870 to 1900, and any other Acts including local Acts . and school boards and school attendance committees shall be abolished. "Sect. 19. (1.) A council may borrow for the purposes of the Elementary Education Acts, 1870 to 1900, or this Act in the case of a county council as for the purposes of the Local Government Act, 1888, and in the case of a council of a county borough, borough, or urban district as for the purposes of the Public Health Acts; but the money borrowed by a county borough, borough, or urban district council, shall be borrowed on the security of the fund or rate out of which the expenses of the council under this Act are payable.

(e) Reg. v. Reed, 5 Q. B. D. 483,
C. A.

(d) 39 & 40 Vict. c. 79, s. 15,
amended by 2 Edw. VII. c. 42.
(e) 29 & 30 Vict. c. 118.

(f) 38 & 39 Vict. c. 89.
(g) 42 & 43 Vict. c. 48.
(h) 56 & 57 Vict. c. 42.
(i) Vide sup.

(k) 2 Edw. VII. c. 42.

"(2.) Money borrowed under this Act shall not be reckoned as Chap. XXV. part of the total debt of a county for the purposes of sect. 69 of (xi.) the Local Government Act, 1888, or as part of the debt of a county borough, borough, or urban district for the purpose of the limitation or borrowing under sub-sects. 2 and 3 of sect. 234 of the Public Health Act, 1875."

The Education (London) Act, 1903, extends the borrowing powers given to county councils by the above section to the London County Council ().

(1) 3 Edw. VII. c. 24, Sch. 5.

Unincorporated societies

still governed by the Act of

1836.

Borrowing powers of an unincorpo

CHAPTER XXVI.

OF MORTGAGES BY BUILDING AND FRIENDLY SOCIETIES.

i.-As to Unincorporated Building Societies.-Benefit building societies were, prior to 1874, governed by the Benefit Building Societies Act, 1836 (a). Societies formed under that Act were not corporate bodies, but acted and held their property through the medium of directors and trustees. This Act was repealed by the Building Societies Act, 1874 (b), except as regards societies then subsisting until incorporated. Many societies, formed under the repealed Act, still exist; and some of these, not having obtained certificates of incorporation under the later Act, are still regulated by the provisions of the repealed Act.

The Act of 1836 contained no provisions authorizing the directors of building societies to borrow money; and accordingly rated society. the power of an unincorporated society to borrow depends on its rules (c).

Loans from strangers.

Provision that loan shall be a first charge.

Members not personally liable for money borrowed.

Unless the rules otherwise provide, the directors may borrow from persons who are not members of the society; such persons are creditors entitled, on the winding up of the society, to be paid in priority to the members of all classes, including those who have previously given notice of withdrawal (d).

Where the rule under which a loan is contracted provides that the money borrowed shall be a first charge on the funds and property of the society generally, the lenders will not be allowed to take special securities on particular property (e).

Directors borrowing money for a society cannot pledge the individual credit of members; any rule purporting to empower them so to do would be so far ultra vires, as being inconsistent with the nature of a building society under the Act (ƒ).

(a) 6 & 7 Will. IV. c. 32. See post,

p. 565.

(b) 37 & 38 Vict. c. 42, s. 7. See post, p. 566.

(c) Wurtzburg (4th ed), 99.

(d) Murray v. Scott, 9 App. Ca. 519;

Re Mutual Aid Permanent Building
Soc., 30 Ch. D. 434.

(e) Murray v. Scott, sup. See Small V. Smith, 10 App. Ca. 119.

(f) Murray v. Scott, 9 App. Ca. at p. 533. See Re Mutual Aid Permanent Building Soc., sup.

The rules of an unincorporated building society may authorize the directors to borrow money for the purposes of the society without imposing any limit as to the amount to be so borrowed; and loans contracted under such rules are valid (g).

Chap.

XXVI. (i.) Where rules give unlimited power to

If the rules give to the directors of an unincorporated society borrow. a power to borrow, limited as to amount, the society will not be Where rules give limited liable for any loan in excess of the prescribed limit (h). So, power to also, if the rules authorize the directors to raise money for certain borrow. specified purposes only, a loan for other purposes will create no liability against the society (i). A person lending money to the society is affected with notice of the limitation of borrowing powers imposed by the rules (k).

An unincorporated society has no power to borrow money Where rules unless authorized by its rules, either expressly or by necessary to borrow. give no power implication, by reason of such borrowing being properly incident to the course and conduct of the business for its proper purposes, as indicated by the rules (1).

It must be borne in mind that from the 2nd November, 1874, to the 22nd April, 1875, unincorporated societies certified under the repealed Act, 6 & 7 Will. IV. c. 32, were deemed to be societies under the Act of 1874 (m), and accordingly had power to borrow within the limits prescribed by the later Act, though no express borrowing powers were given by the rules.

powers ac

Where a society has no power to borrow at the time of the Borrowing loan, any security given for the money borrowed after borrowing quired after powers have been obtained will be void (»).

date of loan.

Where officers of a society borrow without authority, they Subrogation. may be entitled to the benefit of the equitable doctrine of subrogation, that is to say, that if they make payments for purposes of the society out of the borrowed moneys, they may stand in the place of the persons to whom the payments were made, and to claim against the society for the amounts so paid (0).

(g) Murray v. Scott, 9 App. Ca. 519. (h) Chapleo v. Brunswick Building Soc., 6 Q. B. D. 696, C. A.

(i) Davis' Case, L. R. 12 Eq. 516; Moye v. Sparrow, 22 L. T. 154.

(k) Per Baggallay, L. J., in Chapleo v. Brunswick Building Soc., 6 Q. B. D. at p. 712. See also Portsea Island Building Soc. v. Barclay, (1894) 2 Ch. 298, C. A.

(1) Cunliffe, Brooks & Co. v. Blackburn Benefit Building Soc., 9 App. Ca. 857, 865. See Richardson v. William

son, L. R. 6 Q. B. 276; Re National
Permanent Benefit Building Soc., Exp.
Williamson, L. R. 5 Ch. 309; Chapleo
v. Brunswick Building Soc., 6 Q. B. D.
696, C. A.; Exp. Watson, Re Sheffield
Permanent Building Soc., 21 Q. B. D.
301.

(m) See 37 & 38 Vict. c. 42, s. 8,
repealed by the Building Societies Act,
1875 (38 Vict. c. 9), s. 2.

(n) Exp. Watson, 21 Q. B. D. 301. See Re Bottom Gate Industrial Soc., 40 W. R. 139.

(0) Owen v. Roberts, 57 L. T. 81.

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