Edgington v. Fitzmauric

29 Ch. 459 (1885)

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Nature of the Case

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Facts

P advanced 1500 pounds for debentures of a society of which Ds were the directors and officers. To raise the funds, Ds circulated a prospectus that announced that they had acquired a valuable property subject to a half-yearly payment of 500 pounds in redemption of a mortgage of 21,500 pounds. They also stated that they would use money to complete alterations and additions to the buildings and purchase their own horses and vans and to further develop an exist for the direct supply of cheap fish. Those statements were impeached as the prospectus was framed to lead a person to believe that the debentures would be a charge on the property of the company; it failed to mention a second mortgage on the property, it failed to state that the entire 21,500-pound mortgage was due in full on April of 1884, and that the real object of the debentures was to pay off present company liabilities and that the company could not complete its planned purchases of equipment as advertised. The verdict went to P and Ds appealed.