Sweeny v. Bank of Montreal

of a-Action

JJ, money was originally sent out from England, to J. R. at Montreal, to be in invested in Canada for her. J. R. subscribed for a certain amount of stock in the Montreal Rolling Mills Com. pany, as follows:

1 J. Rose in trust," without naming for whom, and paid for it with S.'s money. He subsequently sent over the certificates of stock to S., and paid her the dividends he received on the stock. Becoming indebted to the Bank of Montreal, R. transferred to the manager of the bank as security for his indebtedness some 350 shares of the Montreal Rolling Mills Company, and the transfer showed on its face that he held these shares "in trust." The Bank of Montreal then received the dividends on these shares, credited them to J. R., who paid them to S. J. R. subsequently became insolvent, and S., not receiving her dividends as usual, sued the bank for an account. Held, reversing the judgment of the court below, Strong J. dissenting, that there was sufficient to show that J. R. was acting as the mandatary or agent of S., and the Bank of Montreal, not having shown that J. R. had authority to sell or pledge the said stock, S. was entitled to get an account from the bank. APPEAL from a judgment of the Court of Queen's Bench for Lower Canda, rendered on the 25th September, 1884, confirming a judgment of the Superior Court rendered at. Montreal on the 24th December, 1881, dismissing the present appellant's action, so far as the present respondent was concerned, with costs.

The action in the court of original jurisdiction was brought by the present appellant against Wentworth J. Buchanan, bank manager, the Bank of Montreal the present respondent, James Rose, merchant, and the Montreal Rolling Mills Company, a body politic and corporate, defendants.

The following are the material facts of the case as proved at the trial by documentary and oral evidence: On the 18th March, 1871, Messrs. Crawford and Lockhart, of Belfast, in Ireland, remitted to the Bank of Montreal (the respondent) as directed by the Sweeny family, to the credit of James Rose, the sum of £2,040 11s. Id.;. and the following entry was made in the booke of Morland, Watson & Co., in which firm M, Rose was a partner, in the following words:

1871. March 31. James Rose ex deposit

Crawford & L. '0 March..............£2,040

11s. Id. $9,930.71 On the 25th March, 1871, Messrs. Crawford and Lockhart remitted to the respondent, at Montreal, the balance due to the Sweenys to Mr. Rose's credit, noti fying him thereof by letter of that date.

This amount was also carried into the books of Morland, Watson & Co., to the credit of Mr. Rose under date of April 14th, 1871.

Against this amount Mr. Rose drew on the 4th April $4,000, which amount on that day he expended on four shares of stock of the Montreal Rolling Mills Company, of the value of $1,000 per share, as appears by the account of James Rose (in trust) in the books of that company.

On the 11th April, 1871, Mr. Rose obtained from the Montreal Rolling Mills Company a certificate numbered 1008, by which, under the hands of its president and secretary, it was certified that on that day James Rose, in trust, was the holder of three shares in its capital stock, whereof the full value of $1,000 per share had been paid.

This certificate was subsequently sent to the present appellant by Mr. Rose, and he paid her the amounts of the dividends declared previous to the 1st January, On the 3rd June, 1876, Mr. Rose in trust, transferred to the defendant W. J. Buchanan in trust 250 shares, each of $100 fully paid up, in the capital stock of the Montreal Rolling Mills Company-(the value of the shares having been before that time chonged from $1,000 to $100 per share.

This stock was given pparently a cpllater.1 gecurity for advances made 4t the time or to be made thereafter by the respondent, on the notes of one James Howley indorsed by Mr. Rose to Mr. Rose personally.

There was another transfer of shares in the Montreal Rolling Mills Company's stock made on the 13th March, 1879, making in all 310 shares paid up in full transferred to Mr. Buchanan in trust for the respondent. From the establishment of the Rolling Mills Company, up to March, 1873, Mr. Rose had twenty-five shares of $1,000 each fully paid up, which, in the last mentioned month were changed as already mentioned into two hundred and fifty shares of $100 each fully paid up, and he never sold or transferred any of the said shares until he transferred them as already mentioned on the 3rd of June, 1878, to Mr. Buchanan in trust for the respondent--the said 250 shares being the only fully paid up shares he possessed at the time of the said transfer.

The appellant was unaware of the transfer to Mr. Buchanan until the beginning of the year 1880. On the 27th January, 1881, protests were served on the respondent and the Montreal Rolling Mills Company, and in May of that year the action in the court below was instituted.

The conclusions of the declaration, which set out the facts hereinbefore recited, prayed that the appellant might be declared the owner and proprietor of thirty shares of the said stock of the Montreal Rolling Mills Company. That W. J. Buchanan and the respondent be ordered to transfer the same to the said appellant and the Montreal Rolling Mills Co. to accept such transfer and make such entries and in default defendants be adjudged, to pay to appellants the sum of $3,900 value of said shares with costs.

To this action the respondent pleaded alone, setting up:lo. That Rose being indebted to it in a sum exceeding $3),000 transferred to the bank as security therefor, 250 shares of the capital stock of the. Montreal Rolling Mills Company of the par value of $25,000, which shares are now legally held for the said bank as collateral security for such debt which still remains wholly unpaid.

That the defendants now pleading are ignorant whether, and consequently deny that the shares referred to in the plaintiffs' declaration formed part of the said two hundred and fifty shares, as to all of which no trust whatever was disclosed to the said bank, the said James Rose dealing with the same as his own. property."

Then followed a denial of plaintiffs' allegations not specially admitted.

To this plea the plaintiff answered generally.

The Superior Court dismissed the plaintiff's action on the ground that Rose could always dispose of those shares as he has done for there was no cestui que trust disclosed and no acceptance of any trust, the oral testimony of Rose himself being inadmissible to prove acceptance.

The Court of Queen's Bench for Lower Canada affirmed the judgment of the Superior Court.

W. I

Sir W. J. RITcHIE C.J.-It cannot be disputed, I think, that a sum of money belonging to the plaintiff came to the hands of James Rose; that he on the 11th of April, 1871, invested such money in shares in the stock of the Montreal Rolling Mills Company in and for the benefit of, and in trust for, the said plainitiff, and the same was [VOL. Xf[. entered in the books of the said company in the name of the said "James Rose in trust," and the certificate issued by the said company certified that " James Rose trust" was " the holder " of the said shares, which cj. certificate Rose handed to plaintiff as showing her stock in the said company for whom plaintiff swears he bought it. That Rose paid plaintiff the dividends on this stock up to or near the 6th of January, 1880, and his answer to the question: " By whom were the dividends received ?" Was: "It was received by me from the bank " Q -" You received it from the bank of Montreal A.-" Yes."

Q -" That is you received the dividends on the whole stock ?" A.--" Yes, on the whole stock." Q.-" You transferred this stock to the bank of Montreal?"

A.-" Yes."

Buchanan endorsed the dividend cheques over to Rose ; and Rose says:--" They were paid to me up to that time and I paid them to her as I got them."

On the 3rd of June, 1876, Rose transferred the stock to W. J Buchanan "in trust " at the company's office. The transfer was signed " James Rose, in trust;" and on the 13th of March, 1879, in same manner other shares, as security for the benefit of the Bank of Montreal for a private indebtedness of Rose to the bank, as collateral security for advances made by the bank to him. Though standing in the books of the Rolling Mills Company " in trust," and though the transfer was signed by " James Rose in trust," and transferred by that transfer to Buchanan in trust, no enquiries appear to have been made as to who was interested in the stock or on what trust it was held, or whether Rose owned the stock or had a right to transfer it for an indebtedness of his own. Mr. Buchanan is asked, Q.- "Did he give you to understand that this stock was "stock belonging to himself, or did he deal with it as "someoune else's ? Was there Any questio:n of #o belong- " ing to any one else, or of any one else having any " interest in it

And he answers: " He offered this "stock to us as security."

The question was not put to him, " Do you own this stock ?" The learned Chief Justice of the court below seems to assume that it was not proved that Rose was ever requested to invest plaintiff's money in Montreal Rolling Mills stock, nor that she ever accepted or ratified the pretended trust;

but to my mind the evidence is clear on both these points.

She had the money in Rose's hands to invest for her; he does do so, in this stock in his own name in trust for her; he transmits her the certificate of ownership of the stock, showing it is held in trust by him, and she receives through him from time to time the half yearly dividends.

I cannot conceive stronger evidence of the acceptance, adoption and ratification of

Rose's acts on her behalf than this conduct of plaintiff.

The plaintiff adopted and enjoyed the benefit of the investment. If there ever was a case where the maxim,

Omnis ratihabitio retrd trahilur et mandato priori avquiparatur, is applicable, I think this is that case.

There can be no doubt the transfer of this stock by

Rose for securing his private indebtedness was a flagrant breach of trust, and the simple question is which of two innocent parties must bear the loss caused by the gross fraud of Rose.

There can be no doubt that the bank had full actual notice of the existence of a trust of some description, a trust for some one not disclosed. They could not obtain a transfer at the company's office without seeing there, if they chose to look, that the stock was registered in the name of Rose in trust, but without that, the very transfer on which they took the stock showed that

Rose was dealing with trust property and transferring property he held in trust and which the assignee well knew, for Mr, Buchanaoi himself tAs expresses it;

[VOL. Xll. " He transferred the stock to me in trust. There was a transfer of two hundred and fifty shares of Montreal V Rolling Mills stock; the transfer was signed by James Rose in trust, and he transfers it by that transfer to me I am quite prepared to adopt the language of the court in Shaw v. Spencer " that where one known to be a trustee is found pledging that which is known to be trust property to secure a debt of his own, the act is one primd facie unauthorized and unlawful, and it is the duty of him who takes such security to ascertain whether the trustee has the right to give it." It would and should then hardly be disputed, as was suggested in this same case, if the words had been in trust for Emily Sweeney, the duty of enquiry would be cast the creditor, but the effect of the words " in trust " as there suggested is the same. They must mean in trust for some one whose name is not disclosed, and there is no greater reason for assuming that a trustee is authorized to pledge for his own debt the property of an unnamed cesini que trust than the property of one whose name is known.

As pledging trust property is primd facie unlawful, where is the hardship of imposing on the person taking the security the duty of inquiry and the burden ascertaining the actual position of the property instead of remaining in ignorance without even, as Mr. Buchanan says, putting the question to him:

"Do you own the stock ? The assignee having the notice that this stock was held by Rose in trust, when he sought to deal with it for his own private benefit, in my opinion the duty of inquiring as to the nature, character and limitations of the trust was imposed on the person taking it as security for such an indebtedness.

When there is actual notice that a trust exists and the use to be made of the trust property is primd facie a misappropriation, to refrain from asking any question of Rose as Buchanan says, or making any inquiry what- A o ever, is to my mind not only a want of ordinary prudnce but gross negligence.

I cannot understand how in any system of jurisprudence a creditor can receive from a trustee by way pledge for securing a private debt due by the trustee trust property knowing the same to be property held in trust and hold such property against the ceslui que trust the beneficial owner thereof by force of a transaction on its face so dishonest and fraudulent.

Buchanan does not pretend he did not know it was held in trust. After answering as before, he is then asked- In the case of Mangles v. Dixon (1) it was held that the assignee of any security, (that is, when the assignee has only an equitable right, as an assignee a bond,) stands in the same position as the essignor as to the equities arising upon it. How different the idea of Mr. Buchanan from that of Lord St. Leonards, who in that suit, at p. 732, as to right of parties when they have actual notice of equities, as when parties have notice that property is held in trust, says:

If the bank, knowing in this case, as they must have done, that Rose was borrowing money for his own private use on a pledge of property belonging to another, which he held in trust, and that he was thus dealing swEEr with it for his own benefit and as his own property, ~chose to advance money on such property under such circumstances and ask no question, they cannot, C.j.1n my opinion, be said to have taken it in good faith, and cannot be in a better position in reference to it than Rose himself, and as he had no beneficial interest in the property they can claim none, but must be held to have taken the property charged with the trust, and so are bound to account for it to the plaintiff as the cestui que trust entitled to the beneficiary interest therein.

I do not think Rose, in this case, could claim under any law to be entitled to pledge for advances for his own personal benefit property held in trust for and belonging to another, any more than Barrow in the case of the City Bank vs. Barrow to which my brother Taschereau has called my attention, could pledge the property in his hands belonging to another, and that, consequently, the bankers in this case, as the bankers in that, cannot set up any title to the stock as derived from him against the real owners.

I am, therefore, of opinion that the appeal should be allowed.

SraoNG J.-For the reasons given by the learned Chief Justice of the Court of Queen's Bench, and also for some additional reasons, I am of opinion that the judgments of the courts below ought to be affirmed. Before proceeding to consider the various points of law which have been raised in argument, it may be well to remark that the decision in this case must depend entirely upon the law of the Province of Quebec, as embodied in the Civil Code, and that the English law of trusts, and analogies derived from that law, are entirely inapplicable, and cannot be resorted to for the purpose of determining the rights of the parties. Further, it is to be borne in mind that (excepting perhaps the law relating to substitutions) there is nothing in the legal system established by the Quebec Code in any way resembling the doctrine of a double owner- So ship in the case of trusts which prevail in the English courts, by which property held in trust is regarded as the legal property of one owner,--the trustee,-and the beneficial property of another owner-the cestui que By the la w of the Province of Quebec, as well as by the ancient and modern law of France on which it is founded, no distinction is made between the legal and the beneficial ownership, and the rights of a person who has ceded or caused to be ceded his property to a mandatary, by a transfer absolute in form, are in no sense rights in rem, but mere personal rights, entitling the party making the cession to a personal remedy against the mandatary for any breach by the latter of his obligations, and to nothing more. I am, of course, referring to a case in which the property is transferred to the mandatary, and not to the case of a deposit, when the property remains in the depositor and the possession only is parted with.

Having made this preliminary observation as to a general principle of law, which must be kept constantly in view in considering this case, and as to which I shall have to say more, and refer to some authorities hereafter, I now propose to inquire what were the legal rights of the appellant as against Rose; first, in respect of the money deposited with him by Messrs. Crawford & Lockhart, and next in respect of the shares now in question, in which, as Rose now alleges, he invested the money.

As regards the money remitted by Messrs. Crawford & Lockhart to Rose, the proof appears to be sufficient to establish that Rose was a depositary of it. The entry in the books of Morland, Watson & Co., the firm RBA in which Rose was a partner, appears to me to constitute a commencement of proof, sufficient to let in oral trang proof according to art. 1233 C.C. (P.Q.), which seems to restrict the definition of a commencement of proof, according to the ancient law, in a less degree than art. 1347 of the French Code, which requires that a writing, to constitute a commencement of proof, should emanate from the party against whom it is sought to be used, or from one of his " auteurs," the latter a condition not required by the terms of art. 1233 of the Quebec Code, and, as it appears from the authorities, not required by the ancient law of France (1).

This entry shows that the moneys remitted by Messrs Crawford & Lockhart reached Rose's hands, and were by him deposited with the firm of Morland, Watson & Co., of which he was a member, and would have been sufficient according to Bonnier under the stricter French law. This entry is a writing emanating from the firm of Morland, Watson & Co., of which Rose was a member; there is nothing to show, and no reason can be suggested, why a writing emanating from others, jointly with the party sought to be charged with it, should not be a sufficient commencement of proof; then this writing does emanate from Rose in conjunction with his partners-at least it was an entry made by one who represented the firm, the clerk or book-keeper, in whose handwriting it is, and who was a person representing the several members of the firm, including Rose, which is sufficient. Bonnier (2) says :

Particle Stre

4tre

This contract of deposit, however, only involved a personal obligation on the part of Rose to pay over the money when called upon, and there having been, up to the date of the purchase of the shares, no mandate to invest, this was nothing more than an ordinary debt, and did not involve any obligation to transfer the shares, the equitable doctrine of following moneys held upon deposit, as trust funds, into a wrongful investment, having no place, as far as I have been able to ascertain, in French law.

It is said, however, that there was a mandate to invest, and it therefore becomes a question whether any such agency is proved.

I fail to find in the record any proof of such a mandate anterior to the purchase the shares.

It is clear law that a mandate may be either express or tacit, but whether express or tacit, as in the case of every contract, the assent of both parties, of the principal as well as of the agent, must be established by legal proof.

As regards direct proof, mere verbal evidence is of course inadmissible, under the French law of evidence, to establish the mandate.

A tacit mandate may however, be established by the acts and conduct of the parties, and from such acts and conduct the assent of the mandator as well as of the mandatary may be inferred. There is however nothing in the evidence warranting the inference that the appellant assented in any way to an investment of her money in these shares, prior to the date at which they were acquired, or -:,e contrary, it appears they were bought by Rose without her knowledge or assent.

The question arises however, whether there was not Strong j. such a tacit ratification by the appellant, of the purchase of the shares by Rose, as was equivalent, in law, to a prior authority. The general principle of law that the ratification of the acts of one who assumes to act as agent, is to be deemed equivalent to a prior authority, is expressly provided for by the Quebec Code, and the article 1720, (identical with 1998 of the French Code) in which this principle of law is embodied, also expressly delares that such ratification may be either express or tacit. Then the acceptance of the benefit of the act of the assumed agent, by the person for whose benefit he has ostensibly acted, with knowledge of all the circumstances, is considered as implying adoption, and amounts to tacit ratification (see Troplong Mandat Nos. 610 and 611.)

This principle, by which subsequent adoption or ratification is considered equivalent to prior authority, is however, like all legal fictions, subject to the qualification that the rights of third parties, intervening before the ratification, are not to be affected post facto.

Turning then to the evidence I proceed to enquire if there is place for the application of this principle to the facts of the present case.

Was there then such an assent by the appellant, to Rose's investment of her money in Montreal Rolling Mills shares, as amounted to a tacit ratification sufficient, under article 1720, to make Rose her agent by relation in the acquisition of the shares ?

As before stated any acts of recognition or assent on the part of the appellant to have this effect must have been prior in point of time to the transfer by Rose to Mr. Buchanan. The proof on this head consists entirely of statements contained in the deposition of Rose.

It is to be remembered that the two transfers to Mr. Buchanan were s completed respectively on the 3rd June, 1876, and the 14th March, 1879.

In order then to give the appellant a title in priority to the bank, it must be shown that st g . there was an adoption by her of the investment, at a date anterior to the last transfer to the respondents. Any silent acquiescence by Miss Sweeney in what is stated in Rose's letter is therefore manifestly too late for this purpose, as that letter is of the 6th June, 1880, a date long subsequent to the last transfer to the respondents.

The statements material to this question contained in Rose's deposition are as follows - Q. Iave you any doubts as to whom the stock referred to in the certificate, plaintiffis exhibit number ], belongs?

(The defendant's counsel objects to this as involving a question of law. Objection reserved by the court.)

A. The certificate was handed to Miss Sweeney, the plaintiffin this case.

Q. And for whom did you buy it?

.A. For her.

Q. Did you ever pay anything to her coming from this stock ? (The defendant's counsel again repeats his first objection above set forth, and the objection is again reserved by the court.)

A. Yes I paid her the dividends up to the time the bank stopped me from drawing them.

Q. When was that?

A. I paid her dividends up to or near the date of this letter, plaintiffs exhibit " A. namely the sixth of January, 1880, and I expected the dividends to be paid again, shortly after that time, as usual. They were paid to me up to that time and I paid them to her. I expected to receive them as usual soon after, but they were stopped.

It was the first time they were stopped. The dividends fel due on the first of February following the date of that letter, and I thought they would be paidl then as they had been before. They were always paid to me previously and I had paid them over to Miss Sweeney as I got them.

Q. The dividends of the Montreal Rolling Mills Company are payable in August and in February of each year, are they not?

?

J. From this it appears that at some unascertained time, whether before or after the dates of the transfers to the bank is left uncertain, the certificate for the shares was handed to Miss Sweeney, and that the proceeds of dividends accruing up to January, 1880, were received by Rose, and by him paid over to the appellant.

This is the only evidence which tends to prove ratification to be found in the case.

The onus of proving a mandate by ratification or otherwise was, of course, upon the plaintiff in the action, but can it be said that either of these facts, taken separately or together, establish that Miss Sweeney, with the knowledge that her money bad been invested in Rolling Mills shares, accepted the certificate and took the profits of the shares prior to the transfers to the respondents. Time was material, and it was incumbent on the plaintiff to establish the date, but the handing over of the certificate, for all that appears, may have been after the last transfer to the respondents, for no date is assigned to it by Rose, and in a case like the present, whenthe anxiety of Rose to throw the loss occasioned by his fraud and misconduct on the bank rather than on the appellant is manifest, I think we ought jealously to scrutinize his evidence, and that we are not entitled to supply defects in the proof by making presumptions and drawing inferences to establish material facts which the plaintiff ought to have proved directly. Again, the mere fact that, Rose Vo received the dividends and handed the proceeds to the appellant proves nothing towards making out a case of stong J. ratification, unless it is also shown that Miss Sweeney was informed by him, or in some way knew, that the money was in fact the proceeds of an investment in these shares, but of this most material fact there is not a word of proof to 1be found in Rose's deposition or elsewhere in the record. It is quite consistent with

Rose's statements, that whilst he handed the money to

Miss Sweeney, he also told her that the money was the produce of other investments, or that it was interest on money remaining in his hands or in those of his firm, or that it was the profit of some investment not specified, in any of which cases there would have been no ratification of his act in investing in these particular shares, for it was incumbent on the plaintiff to prove that she knew of the purchase of these particular shares and assented to it prior to the transfer to the respondents. In this I think the appellant has failed, and consequently it is not proved that Rose held the shares as her agent when the respondent. acquired them.

I, therefore, come to the same conclusion as the

Court of Queen's Bench, that the appellant failed to prove her case, of which the establishment of a mandate was the indispensable foundation, and that, therefore, she must fail in her action.

There are, however, in my opinion, other reasons for holding that this appeal cannot succeed, reasons which are consistent with the hypothesis that the evidence is sufficient to establish the agency, and that the conclusion before stated on that head is erroneous.

Then assuming, that either by reason of some prior authority, proof of which has been overlooked, or by reason of ratification prior to the transfer to the X o respondents, it matters not which, a mandate is sufficiently established, I proceed to inquire what would j. have been, in law, the consequence and effect of such proof as regards Rose's powers of disposition upon the shares in question.

Mourlon, who, though an institutional writer, is regarded as a sound authority on French law, states, with clearness and conciseness, the legal consequences of a purchase by an agent of tangible, corporeal property, property susceptible of being transferred by tradition. He says (1) if corporeal property, such as a house, is purchased by an agent in the name of his principal, the agent is a mere " porte-voix," and the property passes at once to the principal ; but if the agent purchases in his own name, the law operating on the contract of sale transfers the property to the agent in the first instance, who becomes bound by a legal obligation to transfer it at once to his principal, which latter obligation the law also by force of art. C.N. 711 (C.C.P.Q. art. 583) implements by transferring the property to the principal, who thus acquires the property by force of these two mutations.

The law thus applicable to the case of a corporeal, movable or immovable, cannot be applicable to the property in these shares now in question, for the legislature has expressly enacted that the property in them shall be passed in one way, and in one way only, namely, by a transfer on the books of the company. This brings the enquiry to the question:

What are the legal powers of disposition of an agent or mandatary to whom property is either transferred by the mandator or principal, or who, with the knowledge and assent of the principal, obtains from a third party a transfer of property such as this for the benefit and behoof of the principal.

. In the French law such an agent is designated a o mandataire prdle-non and according to the highest authorities he is entitled to exercise unlimited powers J. of disposition over the property so vested in him, and third persons acquiring rights in or title to the property from him, are not considered to be in bad faith, in any way affected by knowledge or notice that the agent is dealing with the property in contravention of the agreement between him and his principal, the sole remedy of a principal in such a case being a personal action against the mandatary who is considered, as regards third persons, to have been invested with unlimited powers of disposition, as much so as if he was himself the veritable and absolute proprietor.

As showing that such is a correct definition of the powers of the person known in French law as mnandataire prdte-nom, I refer to Laurent, who says

The author then gives, as an illustration, the case a transfer of property transferred by the owner to one who, as agreed by a contre lettre or secret convention, is to hold it as a mandatary for the benefit of the party making the transfer. From this, however, it is not to be inferred that this particular species of agency is confined to the case of a transfer by the principal himself and does not include the case of a transfer by a third person to a mandatary for the beneficial use of the principal, for such a distinction would, of course, be purely arbitrary, and moreover is shown by the arrit of the Court of Cessation, hereafter to be cited, to have no existence,

Laurent, in the passage referred to, next proceeds to Sww v consider what are the powers of disposition which such a prdle-nom mandataire has over the property with which he is invested, and he shows that these rights srog J. are those of an absolute proprietor. Thus he says:- Done, a 1'6gard des tiers, le mandat est cens6 ne pas exister: partant, celui qui, en r&lit6, n'est qu'un mandataire aura les droits que lui donne son titre apparent. Si c'est une cession, il sera consid6rb comme propri~taire A Fegard des tiers, et il pourra valablement faire tous. actes de disposition, quand mime par ces actes il dbpasserait les bornes du mandat qu'il a recu sous forme de cession. Next he considers the case of the third party having notice that the person with whom he deals is only a mandataire, and, after citing a decision of the Court of Cassation, proceeds as follows:

Cela implique qui celui qui constitue un mandat sous forme de pr~tenom a Pintention que les rapports entre le pr~te-nom et les tiers soient rgl6s par 'acte apparent, et qu'il n'y ait do mandat qu'entre lui et le pr~te-nom: de sorte quo le mandat, m6me connu des tiers, soit cens6 no pas exister A leur 6gard. Mais, comme le cessionnaire apparent est, en realit6, mandataire, nait la question de savoir en quelle qualit6 les tiers entendent traiter avec lui, alors. qu'ils savent que le pr4tendu cessionnaire n'est qu' un mandataire ? Est-ce Facte apparent qui pr~vaudra, quoique les tiers sachent que ce n'est qu'un acte apparent?

On suppose que le cessionnaire a trait6 en cette qualit6, et que les tiers ont accept6 cette qualit6 apparente. Dans ce cas, il faut dire, avec la cour de cassation, que F'acte apparent r6gle les rapports du pr~tenom avec les tiers, malgr6 la connaissance qu'ils ont de la r~alit des choses.

Having thus shown that knowledge of the fact that the mandate does not affect the third party who may purchase from the " prdte nom," Laurent next proceeds to consider a question, which is also the vital question in the present case, and his decision of which applies a fortiori here, namely, whether the knowledge of a third party acquiring title from the mandatary, not merely of the existence of the mandate, but also of its terms, and that the act of the mandatary in ceding his apparent rights is in contravention of the convention existing between him and his principal binds the purchaser. He says on this head:

Il y a cependant un motif de douter: si le pr4&te-nom fait ce qu'il n'avait pas le droit de faire comme mandataire, Pacte sera-t-il valable?

Ne peut-on pas dire que les tiers sont de mauvaise foi? Dans la doctrine consacr6e par la cour de cassation, on bcarte la question de bonne foi.

y a, en effet, une difference entre la contre lettre de Particle

1321 et le mandat donn6 sous forme de pr6te-nom.

La contre-lettre a pour objet de tromper les tiers, elle 6veille du moins Pidbe et le souppon de fraude: tandis que colui qui donne un mandat i un pr~te-nom ne vent pas tromper, it consent A ce que le mandataire agisse & P'gard des tiers, non comme mandataire, mais comme cessionnaire: c'est lui qui pourra Ctre tromp6 si le mandataire d6passe les bornes de son maldat; il accepte d'avance cette cons6quence de 'acte apparent qu'il passe, il renonce & se pr~valoir contre les tiers du mandat que ceuxci ignorent ou sont cens6s ignorer. Il suit de 1& qu'il n'y a pas, dans Fespce, mauvaise foi de la part des tiers, ils font ce que le mandant les autorise & faire.

I have given this somewhat long extract from Laurent as it shows the law very clearly and is very apposite to the questions which are presented for our decision in this appeal.

The arret of the Court of Cassation, already referred to, and upon which Laurent founds his text, is reported in Dalloz, 1864, Vol. 1, p. 282 (the case of Richaud C. Lcurieux) and it fully bears out his conclusions. The court says in effect that the mandat prdte-nom is a contract sui generis not governed by the general principles of the law applicable to the contract of mandate, and that the question of the good or bad faith of those dealing with the mandatary cannot arise. It is further of importance, as showing that the principle applies as well to the case of a cession made to the mandatary by a third party for the benefit of the principal, as to that when the cession is by the principal himself, directly to the prdle-nom for in that case the fact was, the property and the rights in question had been ceded to the prdle-nom by a third person.

In this arre t the court says

6tre ait These authorities might be largely added to, but I will only refer further to Troplong, Mandat which is in entire: accord with the law before stated from Laurent and the Court of Cassation.

It cannot be objected that these authorities are not applicable in the Province of Quebec, for the law of agency as embodied in the Quebec Civil Code agrees in every respect material to the present question with that of the French Code.

And it is to be observed that the doctrine of the Court of Cassation is not founded on any particular article or text of the Code, but on a presumption of law (presumptio juris et de jure) as to the intention of a principal who transfers or authorizes a transfer of property to his agent or mandatary to be held by the latter ostensibly as absolute owner, but in reality for the beneficial use of the principal, and the reasons which have induced the French courts and jurists to make such a presumption are equally applicable in the Province of Quebec.

Then applying the before stated principles of law to the facts in proof in the present case and, assuming for the present purpose that the fact of agency by ratification is sufficiently established, we find that the relations between appellant and Rose were exactly such as according to the authorities cited constituted the latter No.

682-, a mandataire prdte-nom, according to the definition before given.

swav The absolute property in these shares was vested in him, though for the benefit of his principal; for, if the appellant was entitled, even as between herself and Strong J. Rose, to claim any interest in the shares, it could only be on the ground that she had recognized and adopted his acts in taking the transfer in his own name, and as such ratification was in all respects equivalent to a prior authority, we are by a sort of legal fiction to regard Rose as having acquired the shares originally as the mandatary of the appellant with her authority and assent, thus exactly fulfilling the conditions pointed out by Laurent and the Court of Cassation as requisite to constitute the peculiar species of the contract of mandate now in question.

Next arises the enquiry, were the powers of disposition incidental to an agency of this nature legally exercised ?

It is to be observed that both the Court of Cassation and the text writers above mentioned lay it down that a degree of knowledge which, in an ordinary case, would constitute a purchaser in bad faith, would have no effect upon the validity of the acquisition by a person to whom a prdte-nowt mandataire might sell pledge the property entrusted to him, and that even though such a purchaser or pledgee should have notice not merely of the fact, that the person from whom he was buying or taking security was an agent holding the property for the benefit of another, but also of the additional fact that the disposition of the property proposed to be made would actually contravene the convention between the agent and his principal, such notice would still not invalidate a transfer made to the third party having such knowledge.

This goes far beyond anything which is requisite in the present casefor at the most the words " in trust," entered in the share register and added to Rose's name in the transfer V. ~to Mr. Buchanan (if indeed they had any signification at all), would only have signified that Rose, having the Strong J. absolute property in the shares, held that absolute property as the mandatary for some undisclosed principal, in which case, as already shown, the law clearly justified Mr. Buchanan in assumingr, as he did, that Rose had the power to do what he actually did, namely, to pledge the shares for advances to be made. or already made to him by the bank.

That this is the very utmost effect which can be attributed to this appearance of these words " in trust " in the share register and transfer is apparent when we consider the general principle of the law that good faith is always to be presumed, and that it lies on those who allege bad faith to prove it. Whilst I say this, I by no means concede that it would in law have made any difference if Rose had disclosed to Mr. Buchanan facts, which there is no pretence for saying he did communicate, viz., the entire history of these shares and of the purchase of them by Rose with the funds of the appellant, just as fully in every respect as Rose states those alleged facts in his deposition, for it appears to me that the question of good or bad faith is entirely immaterial in dealing with an agent, such as Rose undoubtedly was. It is out of the question to say in face of the law, which says that bad faith must be proved and not presumed, that even if bad faith or notice of all the facts had been material, there was any obligation on Mr. Buchanan to make enquiry, as the declaration charges there was.

To say there was such a duty cast upon the respondents would be to apply the doctrine of constructive notice, which prevails in English courts of equity, and which being entirely founded on presumption is expressly excluded in French law by the principle already mentioned that no presumption of bad faith shall be made. Whilst I have made these observations swEN on the evidence, as showing that nothing was done by o the bank or the manager knowingly to prejudice the rights of Miss Sweeney, I must repeat that, in my judg- st J. ment, it would have made no legal difference if Mr. Buchanan had received the fullest information as to Miss Sweeney's connection with the shares in question. I have carefully refrained from making any observations on the English law applicable to the case, either for the purpose of drawing analogies or pointing out distinctions. I have endeavoured to consider the case on what I consider to be the principles of the French law prevailing in the Province of Quebec, by which alone it falls to be decided. I may, however, be permitted to add that I should doubt whether even upon the highly artificial principles as to constructive notice which prevails in courts administering English equity there would have been sufficient in the words " in trust," (for it is the appearance of these words in the share register and in the transfers, which alone can be referred to as establishing notice,) to have put Mr. Buchanan on enquiry.

The argument doubtless would be that Mr. Buchanan was put upon enquiry by seeing these words added to Rose's name as indicating that he was acting in the quality of a trustee or agent.

But in the first place I should doubt if the words "in trust" are not too general and vague for any such purpose, and in the next place it would have appeared to me to be out of the question to suppose that an enquiry from Rose, who was dealing with the shares as his own, would have led to any communication of the appellants rights, and an enquiry of the officers of the Rolling Mills Company would certainly have been fruitless as all they could have said would have been that they added the words "in trust" because Rose instructed them to do : and consequently' there would have been no ground for applying the doctrine of construetive notice which proceeds on the inference that knowledge would have been obtained if enquiry had been made.

I need not however speculate on what the result of the evidence would have been in an English Equity Court for it is sufficient to say that this case is to be decided by the law of Quebec, and that adjudged by that law the result is that, first; no presumption of any notice or knowledge not actually found to have been brought home by the respondent's manager can be imputed to them; and secondly, that even if Rose had stated to Mr. Buchanan every fact and circumstance contained in his deposition in this cause, Mr. Buchanan would have been in law fully justified in accepting the transfer and the notice would not have impaired or in any way affected the title of the bank to hold the shares as security for the advances for which they were pledged.

That the view of the law, before stated, is that acted on in practice in dealing with shares in the Province of Quebec, is proved on the part of the respondent and not contradicted.

Mr. Buchanan, in his deposition, states that it is not unusual to find these words " in trust " added in the certificate, but that such addition is not considered as incapacitating the holder from disposing of the shares freely as his own property, and that it is not the usage to make any inquiries into the nature of the title in such cases.

That a trust may be created in the shares of this company, which it would be imperative on the courts of the Province of Quebec to enforce, according to the principles prevailing in English courts of equity, I do not for a moment question. In the case, which may be supposed, of shares being put into trust by a settlement made between parties domiciled in England, VOL. XIn.]

SUPREME COURT OF CANADA.

and which, according to the intention of the parties, is to be construed and executed according to the law of that country, there can be no doubt that on the ordinary principles of private international law the rights of the parties would be considered by the Quebec Stng courts as governed by the rIles relating to trusts which.prevail in English law, provided, of course, that proper proof of that law was adduced.

But in the present case all the parties to the contract being domiciled in Qaebec, which was also the locus of the contract, and where it was to be carried into execution, I maintain that their rights under it must be ruled exclusively by the law of Quebec.

I am of opinion that the appeal must be dismissed with costs.

FOURNIER J.-La poursuite de 1'appelante, Demanderesse en Cour Sup6rieure, a pour but le recouvrement de trois actions dans le fonds de la " Montreal Rolling

Mills Company,"

originairement de mille dollars chacune, rgulibrement convertie plus tard en actions de cent piastres chacune,-d6tenues pour elle en fiddicommis, (in trust) par James Rose 'un des d6fendeurs, qui les a ill6galement transportes A la Banque de

Montreal, intim~e, comme sfitet6 collat~rale d'une dette qui lui 6tait personnelle.

L'Appelante allague que lors de ce transport par le dit James Rose (in trust) fiddicommis .il 6tait A la connaissance des d6fendeurs et de chacun d'eux que les dites actions n'6taient point la proprift6 du dit James

Rose, mais celle d'autres personnes et qu'il 6tait en cons6quence du devoir des d6fendeurs de s'enqu6rir de ce fait avant d'en consentir on accepter un transport.

L'Intimbe seule a plaid6 A cette demande, all~guant que les dites actions lui ont 6 transport~es conjointement avec au-deld de deux cents autres pour la garantie

: d'une cr6ance qu'elle avait contre le dit James Rose pour un montant exc~dant trente mille dollars; allCguant en outre qu'aucun fiddicommis ne lui a 6t6 dnonc6 et que le dit James Rose disposait de ces actions Fournier J. cOmme de sa chose propre.

D'aprbs la preuve 6crite et testimoniale, il est tabli que la famille Sweeny dont 1'appelante est un des membres, fit le 18 mars 1871, remise A James Rose par l'interm~diaire de MM. Crawford et Lockhart de Belfast, en Irlande, d'une somme de X2040.11.1.

On ne trouve dans la lettre d'envoi de cette somme aucnne instruction particulibre sur la manibre de la placer ou employer,-mais elle contient les passages suivants faisant voir qu'une partie de ces fonds appartenait A 1'appelante et qu'ils restaient sa proprift6.

at remitted friends party with it . Cette somme fut reque par Rose vers le 31 du mome mois et par lui d6pos6e entre les mains de la soci6t Morland, Watson et Cie., dont il faisait partie.

Ce fait est constat6 par l'entr~e suivante que l'on trouve dans les livres de cette socit., "1871, March. James Rose ex Deposit Crawford & L., 20 March, £2040.11.1 "-6gale A $9,930.71.

II fat cr~dit6 pour cette somme dans les livres de la socift .

Plus tard la balance de ce qui revenait A la famille Sweeny fut 6galement remise 4 James Rose, par MM. Crawford et Lockhart, comme cela est prouv6 par la production de leur correspondance.

V . dance.BANK

Le 14 avril, m~me ann6e Rose tira sur ce d6p6t une somme de $4,000 qu'il employa le mime jour a Fournier J. acheter quatre actions en fid6icommis (in trust) de la '-Montreal Rolling Mills Company" de la valeur do

$1,000, chacune.

Ce fait est prouv6 par les liVres de cette compagnie.

Le 11 avril il se fit remettre par la dite compagnie un certificat No. 1008 sous le seing du pr6sident et secr6taire, constatant que lui le dit James Rose tait le d6tenteur en fid6icommis (in trust) de trois actions dans le capital de la dite compagnie, dont le plein montant de mille dollars par part avait t6 acquitt&.

Ce certificat fut transmis par Rose A l'appelante A laquelle il a aussi fait parvenir les dividendes de ces actions jusqu'au ler janvier 1884.

Le 3 janvier 1876, Rose tonjours avec la qualit6 de fiddicommissaire transporta a l'un des d6fendeurs W.

J. Buchanan agissant (in trust) comme fiddicommissaire pour 1'intimbe, deux cent cinquante actions, du montant de $100 chaque,pay6, dans le fonds social de la comgagnie.

Quoique 1'appelante n'en ait pas fait un grief dans sa d6claration, ce transport parait d'aprbs la preuve avoir t6 fait comme silret6 collat6rale d'escompte fait dans le mime moment et A tre fait par aprbs, sur les billets de

James Hawley, endoss6 par Rose.

Ce fait forme un des consid6rants duijugement de la Cour Sup6rieure,

6nonc6 comme suit:dit n's

Le 13 mars 1879, un autre transport d'actions dans la m6me compagnie fut fait de la mAme manidre, ce qui faisait en tout 310 actions pay6es en plein, transportbes A l'intim6e par Rose.

SWEEY

Depuis 1'6tablissement de la "Montreal

Rolling Mills Company " James Rose a 6t6 1'un des actionnaires jusqu'A la date des transports ci-dessus mentionn6s, et Fournier j. y a toujours eu ces actions inscrites en fiddicommis (in L'appelante, confiante dans le certificat qui lui avait 6t6 transmis, recevant r6gulibrement ses dividendes, croyait ses fonds en parfaite siret6 lorsqu'elle apprit an commencement de Janvier 1880, que ses actions avaient t6 transport6es A l'intim6e A laquelle elle en fit plus tard la demande par un prot&t qui fut suivi de laction en cette cause.

L'appelante a retrac6 la disposition de ces fonds d'une manibre certaine depuis le moment de leur envoi jusqu'd celui de leur emploi en actions dont les certificats lui furent remis presqu'aussitat et dont elle est toujours demeur6e en possesion. Malgr6 cela la Cour Sup6rieure a renvoy6 sa demande, se fondant principalement sur les consid6rants suivants:lo. Consid6rant que par le d6p6t de la dite somme de trois mille piastres fait entre les mains du dit James Rose, ce dernier est devenu propriftaire de la dite somme en autant que ce ddp6t est irrigulier. 2o. Consid6rant que la preuve du dpt en matibre civile ne peut se faire vis-A-vis de tiers que par derit.

3o. Consid6rant que le fait, que le dit James Rose, a appos6 son nom comme souscripteur des dites parts n'a pas eu Peffet vis-A-vis des tiers de rendre la demanderesse propri6taire des dites parts, que s'il en 6tait autrement on ne saurait A. qui attribuer la propri6t6 de ces parts dans les cas oa elles serait r~clambes par plusieurs d6posants; que le dit James Rose ne pouvait pas vis-i-vis des tiers soustraire ses biens A l'action de ces cr~anciers par le soul fait d'ajouter & Eon nom le mot in trust, et tant que le fiddicommis (trust) n'est pas d6clar6 comme 6tant la propri~t6 d'une personne nommie, lea tiers out droit d'agir avec la d6positaire dans telles circonstances comme si ces choses 6taient siennes.

Ce jugement a 6 confirm6 par la Cour du Bane de la Reine, et c'est ce dernier jugement confirmant le premier qui est actuellement soumis ; la r6vision de cette cour.

Le premier consid6rant du jugement de la Cour Sup6rieure est fond& sur une proposition 6videmment o inadmissible, savoir, que Rose est devenu propri6taire de la somme de trois mille piastres en autant que le Founier d6p6t qui en a t fait est irr6gulier.

L'omission de quelques-unes des conditions 16gales d'un d6p6t pent bien changer la nature des obligations du d6positaire, mais elle n'a certainnement pas 1'effet de le rendre propri6taire de la chose d6pos6e

Le contrat pent alors suivaut les circonstances se transformer en un mandat obligeant le d6positaire 6 remettre ou A rendre compte de la somme reque. Ce consid6rant est en outre contraire

A la preuve qui constate que du moment que Rose a touch6 cette somme, loin de s'en consid6rer le propri6taire il en a fait au contaire une entree dans les livres de compte constatant que la somme qui lui avait 6t remis par MM. Crawford et Lockhart provenait de la succession Sweeny.

La lettre d'envoi ne lui conf6.

rait ni droit de propriW6 ni de jouissance dans cette somme.

L'entr6e qu'il en a faite prouve bien qu'il l'a compris ainsi.

De plus l'employant presqu'aussit6t & I'acquisition, comme il a d6jA 6t6 dit, d'actions souscrites, il est vrai par lui-m6me, mais en fiddicommis (in trust), ne conservait-il pas encore A cette somme, le caractbre d'un d6p6t on du moins d'une somme d'argent A raison de laquelle il reconnaissait n'avoir aucun droit de propri6t6, et dont il ne pouvait disposer qu'au b6n6fice d'autres personnes.

Son mandat A cet 6gard n'est pas bien formel, mais la lettre d'envoi en contient assez pour faire comprendre que ces fonds ne lui 6taient transmis que pour 6tre plac6s au profit des h6ritiers.

Il n'y a certainement pas d'autre conclusion A tirer de cette lettre, surtout par rapport A l'appelante. En effet, si ces deniers n'avaient pas 6t6 envoy6s pour 6tre plac6s, pourquoi MA1,

Crawford et Lockhart auraient-ils pris la precaution de recommander A Rose de se procurer de suite les preuves de 1'tat civil de 1ile Sweeny.

Non seulement ces deniers 6taient sa proprit6, mais ils devaient Atre Fourner j.plac6s pour elle

Il est bien vrai comme le dit l'hon. Juge Rainville que le d6p6t qui en a 6t6 fait est irr6gu- Her parce que l'obligation de garder les deniers et de les restituer en nature n'a pas impos6e A Rose. quelle peut 6tre la cons6quence de cette omission, serait-ce de rendre Rose propri6taiye. Il est certain que non d'apr~s ce qui a 6t6 dit plus haut.

Et d'ailleurs le but que se proposait 6videmment 1'appelante n'6tait pas de confier la garde de ses deniers, mais bien de les faire placer ainsi que je l'ai dbjh dit. Pour bien appr6cier la convention des parties, il ne faut pas perdre de vue le but qu'elles avaient. En faisant application aux faits de cette cause de l'autorit6 suivante de Duranton on est forc6 de conclure que ce n'est pas un d6p6t qui. a t6 fait, mais un mandat qui a t6 confi6 & Rose. Au vol. 18, no 12, aprbs avoir d6fini le d6p6t, il dit:- Et but A titre, et but espce fait; dit but s'attacher: unius jusque initium est; n'attribue A

Suivant cette autorit6, il faut conclure que le d0p6t irr6gulier dans le cas actuel s'est transform6 en un contrat de mandat, et ce qui serait encore plus conforme (1) pp.

Kandatif aux faits, c'est qu'il n'y a eu d~s l'origine qu'un contrat de mandat et non pas un contrat de d6p6t, et que Rose 6tait un mandataire et non un d6positaire et que tout ce qu'il a fait pour 1'appelante l'a 6t6 en la premibre qualit6. Dans le cas mme oii Rose ne serait pas con- Fournier J. sid6r6 comme ayant eu un mandat r6gulier, il est impossible de ne pas le consid~rer au moins comme le negotiorum gestor de l'appelante.

S'il n'a pas eu d6s l'origine instruction sp6ciale de faire des deniers qui lui ont 6t6 remis, 1'emploi qu'il en a fait, il est du moins constant qu'il les a re9us, qu'ils appartiepnent

A l'appelante; qu'il en a fait le placement pour elle, quoique pas nomm6ment; qu'aussit6t aprbs l'achat des actions il en a transmis le certificat A l'appelante et qu'il lui a fait remise des dividendes. Son ing6rence, en supposant qu'elle ne fut pas autoris6e, le place dans la position au moins d'un negotiorum gestor responsable de ses actes envers 1'appelante. Mais par la ratification de ses actes 1ing6rence de Rose est devenue sujette A toutes les obligations d'un mandataire r6gulier envers son mandant.

Cette ratification est prouv6e bien positivement par 1'acceptation par 1'appelante du certificat.

que Rose lui avait transmis pour constater 1'achat des actions et par la reception des dividendes pendant plusieurs ann6es.

Ces faits constituent certainement une ratification formelle de l'emploi des deniers qui a fait naitre entre 1'appelante et Rose les m~mes obligations que s'il y avait eu un contrat de mandat r6gulier das l'origine. En cons6quence de ce qui pr~chde, je reconnais qu'il n'y a pas eu de d6p6t r6gulier,-mais que la lettre de MM. Crawford et Lockhart est suffisante pour 6tablir la preuve d'un mandat de g6rer pour

1'appelante, et que dans tous les cas 1'ing6rence de

Rose, son emploi des deniers, la transmission du certificat des actions--la r6ception par 1'appelante du certifi.

cat et des dividendes out 6tabli entre eux les obligations de mandant et de mandataire.

On a fait objection A la r6ception de la preuve testimoniale sur le principe que ni le contrat de d6p6t ni le contrat de mandat ne peuvent 6tre prouv6 par t6moins. Fournier J. Ce principe est certain, mais ne s'applique pas A la gestion d'affaires.

La preuve testimoniale 6tait done admissible pour prouver tons les faits d'ing6rence de Rose. En outre, lorsqu'il y a un commencement de preuve par 6crit, la preuve testimoniale peut 6tre reque pour compl6ter la preuve du contrat du mandat

Dans les deux cours cette preuve a t6 consid6r6e comme ill6gale et c'est principalement pour ce consid6rant que la Cour du Banc de la Reine a confirm6 le jugement de la Cour Sup6rieure.

Je regrette d'avoir A dire que je ne pus accepter cette conclusion.

Non seulement je crois qu'il y a un commencement de preuve par 6crit suffisant, mais je trouve qu'il y a une preuve complte du fait que les actions en question n'appartiennent ni A Rose ni A 1'intim6e. Celle-ci en les acceptant et Rose en les remettant (in trust) en fiddicommis out tous deux admis que ces actions n'appartenaient ni A l'un ni A 1'autre. Cette d6claration formelle faite par 6crit doit avoir son effet, et si elle n'indique pas l'appelante comme propri6taire, elle ne laisse plus au moins A 6tablir que la question d'identit6 de la personne du propri6taire.

Ce fait mat6riel de 1'identit6 pouvait sans doute 6tre prouv6 par t6moin, apris 1'admission des deux parties qu'elles n'6taient pas les propriftaires. II ne restait done qu'A faire disparaitre l'incertitude cr66e A cet 6gard par 1'insertion des mots in trust. Cette incertitude est-elle, comme 1'a dit l'hon. Juge de la Cour Sup6rieure, une raison suffisante pour faire attribuer A Rose la propri6t6 de ces actions ? La r6ponseest dans l'6crit mime, oi' Rose dit qu'il ne les d6tient pas pour lui. S'il s'agissait d'un meuble ordinaire r6clam6 par diff6rentes parties, regarderait-on comme suffisante pour en priver le v6ri- 69A table propri6taire, et 1'attribuer A ceux qui le r6pudie.

raient, la raison qu'on ne peut distinguer auquel des r6clamants ils appartient.

On essaierait sans doute avant cela d'en chercher par la preuve testimoniale, le v6ritable propri6taire.

Cette d6eclaration in trust qui Fournier J. suit les actions depuis leur premi6re origine jusqu'aux transports fait A l'intim6e, constitue un commencement de preuve par 6crit suffisant non seulement contre Rose, mais aussi contre l'intim6e qui a fait la meme d6claration par l'interm6diaire de son agent Buchanan; ainsi il 6mane des deux parties, et il n'y a pas lieu dediscuter la question de savoir si n'6manant que de Rose il pouvait aussi servir contre la banque.

Les autorit6s cit6es dans le factum de 1'appelante 6tablissent clairement cette proposition d6velopp6e dans le vol 5 p. 88, No. 7 de Lacombibre, des Obligations.

A

Au surplus cette objection ne pouvait Atre oppose par l'intim6, m~me s'il n'y en avait contre elle, comme contre Rose, le mAme commencement de preuve par 6crit, pour la raison que l'appelante n'6tait pas partie aux transactions entre Rose et l'intim6e, et qu'il lui a 6t6 impossible de se procurer une preuve

6crite d'un acte qui se faisait en fraude de ses droits.

L'art. 1233, par. 5, 0.0, est positif sur ce point.

La preuve testimoniale pouvait done 6tre admise:lo Parce que les faits du negotiorum gestor qui par la ratification se transforment en mandat, peuvent 4tre prouv6s par t6moins.

2o. Parce que 1'appelante n'6tant pas partie aux transactions faites A son d6triment il ne lui 6tait pas tenue de se procurer une preuve 6crite.

So. Parce qu'il y a dans l'insertion des mots in trust un commencement de preuve par 6crit 6manant de

Rose et de l'intim6e, suffisant pour faire admettre la preuve testimoniale.

Les actions dont ii s'agit sont sans doute d'aprbs 'art. 387, considir6es comme meble, mais elles ne sont pas dans tous les cas sujettes A l'effet de l'art. 2268, d6clarant Fournier J.que la possession d'un meuble corporel, A titre de propri6taire fait pr6sumer le juste titre. Quoique Particle ne semble viser que les meubles corporels, je ne contesterai pas la proposition avanc6e par I'intim~e que les actions aux porteurs doivent, pour leur transmission, en certains cas, tre assimiles, A la transmission des meubles corporels.

IVIais les auteurs, quelques-uns mimes de ceux cit6s par ie savant conseil de la Banque intim6e, reconnaissent qu'il y a des exceptions auxquelles ce mode de transmission ne peut s'appliquer. IMarcad

(1) en fait ainsi la distinction dans le no 12. art. et A i A et n'est

Apr6s avoir fait voir que 1'art. 2279 s'aplique aux actions au porteur, et aux billets de banque, il conclut ainsi qu'il suit:

A valeur; A A

Pour le transport des actions dont il s'agit il y avait des formalit6s A remplir.

Ces actions ne sont pas au porteur; elles ne peuvent tre transport~es que par un 6crit fait dans les livres de la compagnie et sign6 par les parties.

Elles ne sont done pas susceptibles d'tre transmises de la main A la main. 696i

L'intim6 ne pent en cons6quence opposer Part. 2268. Mme d'aprbs cet article l'appelante aurait droit de SWENY prouver sa propri6t6, et de prouver les vices de la possession et les vices du titre de la banque.

C'est ce qu'elle a amplement fait en prouvant sa propri6th des Fournier J. actions, et l'acceptation du transport par 1'intim6e en face de la declaration qu'elle achetait on prenait en gage la propri6t6 d'autrui. Cette transaction si on la considbre comme vente, est encore nulle d'aprbs l'art. 1487, comme 6tant la vente de la chose d'autrui.

Le conseil de 1'intimbe a fait une trbs savante dissertation pour Atablir la l6galit6 du transport de ces actions fait A la banque comme Sriret6 collat6rale.

C'est-A-dire que meme si elles appartenaient A 1'appelante, Rose pouvait valablement les mettre en gage.

Cette proposition exigerait un examen s~rieux et approfondi pour stre combattue.

Mais heureusement que ce travail est tout fait et que la question est r6gl6e par la plus haute autorit6 judiciaire de 1'empire, celle de la chambre des Lords si~geant comme cour d'appel.

Ce haut tribunal n'est pas, il est vrai, notre cour de dernier ressort comme le Conseil Priv6, mais dans la d6cision que j'invoque City Baik v. Barrow il s'agissait de d6cider d'aprbs le code civil, B.C. Ainsi la discussion si compl~te qu'on y trouve et la d6cision rendue dans cette cause de la doivent avoir sur ce point toute la force d'une autorit6. Le cas 6tait beaucoup plus favorable que le cas actuel, car celui qui avait mis les articles en gage avait le pouvoir de les vendre, tandis que Rose n'avait ni le pouvoir de vendre ni celui de mettre en gage. Comme il serait trop long de faire une analyse de ce rapport. Je ne donuerai qu'un extrait du pr6ambule rapport et un court extrait des motifs de lord Selborne :

title, Held, that under the circunstances of the case, Bonnell could not, Barrow, entitled to pledge Barrow's goods, and that, consequently, the bankers could not set up any title to the goods, as derived from him, against the real owner.

Fournier J.

A la page 669, lord Selborne dit:

If there are two things, in fact and in law, which it is easy to distinguish from each other, I should have said that those two things were, sale and pledge

Not only in the nature of the case are there these differences, but there is no system of jurisprudence which does not recognize them. In this very Canadian Code there is a whole chapter on the subject of sale.

It begins by thus defining a sale, " Sale is a contract by which one party gives a thing to the other for a price in money which the latter obliges himself to pay." And there is another chapter on the subject of pledge which begins :_ " Pledge is a contract by which a thing is placed in the hands of a creditor, or, being already in his possession, is retained by him, with the owner's consent, in security for his debts."

Each of those subjects is pursued in details, in a series of clauses carefully and throughout distinguished from each other. Not only is it so in this Canadian Code, but it is generally so in others, certainly in the French Code and in the text writers upon the French law, which deal with these two things very much in the way in which they are dealt with in Canada. Therefore, to say that when there is power given by law to sell, when a purchaser has by law a good title under circumstances particularly defined, that power extends by implication to a pledge, and the pledgee will have a good title also, is an assumption for which neither reason nor authority has been, nor I think can be, alleged."

Si, comme on le voit d'aprs cette autorit6, celui qui a 16galement le pouvoir de vendre n'a pas celui de mettre en gage, A plus forte raison celui qui, comme Rose n'avait aucun autre pouvoir que celui d'un mandataire, ne pouvait-il mettre en gage la chose de son mandant.

En r6sum6 je suis d'avis cue les actions en question sont la propri6t6 de 1'appelante et que l'intimse les ayant ill6galement acquises, elle est tenue d'en consentir une r6trocession tel que demand6.

En cons&quence l'appel devrait 6tre maintenu avec d6pens. HENRY J.-I think it is clear from the evidence that Rose had in his possession, and it is unimportant in this case how he came by it, certain money belonging to the appellant, and that he invested it in the stock of the Montreal Rolling Mills Company in his own name, o j. but " in trust," and that for two or three years he collected dividends and paid them over to the appellant Miss Sweeny.

Whether he was instructed by her to invest the money is immaterial, because, after it was invested, she ratified the act, and became virtually the principal, and not only entitled to be considered as such, but liable to all the incidents attending that position ; and if the company had failed, it is clear she would have become a contributory for unpaid stock, and obliged to contribute to the payment of what is due to creditors; under such circumstances Rose held that stock as her trustee.

The bank claims it was transferred to them absolutely by Rose, but in order to sustain that defence it would be necessary for them to prove that he was not only a trustee to hold, but also that he had authority to sell.

There is no pretence that he had authority from the plaintiff to convey or sell that stock. But even if he had the power of dealing with or selling it at all, that would not authorize him to transfer it to another party in payment of a debt which he owed.

She, therefore, is Entitled, to all intents and purposes, to claim the value.

But we are told it was held by him " in trust " and that the cestui que hust for whom he held was not named. That, I think, is immaterial, the stock was shown to have been held by him " in trust " for somebody. and the bank knew that fact and they, under such circumstances, mut be held to have known that they were taking from him, in payment of his debt, what belonged to another. I consider it amounted to a fraudulent transaction for the bank to take the stock from Rose, knowing that he did not own it. I would consider such conduct discreditable on the part of any moneyed Eenry j. institution. Independently of that, they have shown no right to hold the stock by the transfer from him. If the principal can show that he was entitled to the property he can always take advantage of the illegal act of transfer of property by his agent, and if Rose took the stock improperly in his own name without any qualification, having used the money of the appellant to purchase it, she would be entitled to come into court and make him transfer it to her. I think the appeal should be allowed with costs and the appellant declared entitled to rank for the amount she claims.

J.-I am also of opinion that this appeal should be allowed.

The remittance of the money by Sweeny's agent to Rose did not, as held by the Superior Court, create a contract of depdt irrigulier

If Rose's act in investing this money in these shares had not been ratified by Sweeny, he would have been, supposing there was no proof of a mandate, a negotiorum gestor, acting under a quasi contract. In that case, no commencement of proof in writing would have been necessary. Article 1233 C. C.

It is evident, however, that this money was sent to him to be invested for and in Sweeny's name. This seems to me an irresistible inference of fact in the case. Demolombe For what else was this money sent ? Then, there was subsequently a complete ratification by Sweeny of this investment, first, by her accepting the certificate of these shares in lieu of her money, and, secondly, by her receiving, during over eight years, the dividends thereon. Rose was then a mandatary, and a commencement of proof in writing was, perhaps, necessary to prove the mandate, though both the mandator and the mandatary admit it. Did the plaintiff adduce such a raschereau commencement of proof ? She has produced and holds . the only certificate in writing issued for these shares:

" in trust " added to Rose's name in the register of the Montreal Rolling Mills, which all prove that these shares did not belong to Rose personally; Rose's evidence was then perfectly legal. It was argued for the bank that Rose being Sweeny's mandatary his evidence was objectionable on that ground. But it must be remarked that when he gave his evidence he had long before ceased to be such mandatary.

Article 1288 C.0.

Laurent (1) ; Bedarride, Dol and Fraude (2).

Then it is not necessary that such a writing should emanate from the adverse party. Pothier, it is true, was of a contrary opinion, but the courts in France, in cases before the Code Napoleon, were all against him on this point.

Bonnier (1); Table Gen. Dev. V. Preuve, commencement de (2); Marcad6 under article 1347; Dalloz. Vo. Obligations (3) ; Bedarride (4.; Sebire and Carteret, Ency. De Droit (5).

Tashereau

The fact that our Code leaves out the qualification of * a commencement of proof given by the Code Napoleon demonstrates, it seems to me, that the codifiers must have been of opinion that the last one was new law, but that they deemed it better to adhere to the old law. Moreover, even if we were to hold that the commencement of proof in writing required is the same for. us as the one required by the Code Napoleon, the bank's contention on this point could not prevail because their very title to these shares and the only one on which they can rely to retain them is signed by Rose " in trust," that is to say, " for a third party." This constitutes, according to all the authorities, a writing emanating from them. Laurent (6); Dalloz V. Obligations (7).

As to the appellant's contention that the bank may be here taken as the ayant cause of Rose, and that a writing by Rose is, on that ground, a writing by the bank, I would have some doubts, though it is not unsupported by authority. Demolombe, (8) ; Marcad6, (9); Laurent, (10); Bedarride (11).

But there is another aspect of this part of the case. What were the real relations between the bank and Rose?

No other, it seems to me, than that of a mandator and mandatary as regards the dividends, and pledgor and pledgee as regards the capital. Rose authorized the bank to receive the dividends on these In shares for him and transferred to them the capital as a pledge or security.

The bank consequently never S became the owner of these shares.

This appears by ' their own plea. Now, according to all the authorities under the Code Napoleon, in fact under the very terms -aschereau of Art. 13 thereof, the writing necessary to constitute

. a commencement of proof may emanate from the person represented by the party against whom the proof is brought.

Here the bank is the mandatary and pledgee of Rose, and not only represents him, but they are, in law, as to this, one person.

The admissions in writing by Rose that this money belonged to a third person are then sufficient commencement of proof against the bank and in fact are to be held admissions by the bank itself. Dalloz Vo. Obligations (1) ; Aubry et Rau, (2); Nimes lst February, 1870, Dalloz Rec. Per.

1872, 1st part, (3); Rolland de Villargue (4).

The respondent has referred us to the authorities on prdle-noms. But there was no prdle-nom here.

Sweeny never authorized Rose to sell these shares either in his name or in her name; and Rose did not buy these shares, or transfer them to the bank, in his own name, but only as agent.

He did not disclose the name of his principal, but he informed the bank, by signing

" in trust " that it was as agent or mandatary, and for a third party, that he was acting.

They were put on their guard and were bound to ascertain who the third party was, and what was the extent of Rose's powers as such mandatary.

Not having done so, they have only themselves to blame if they suffer par from having dealt with an unauthorized agent (1). Article 1703 C. C. specially enacts that for all acts of alienation and hypothecation the mandate must be express.

There was no such mandate here from Sweeny to Rose. The original mandate was to invest her moneys. Having done so, his powers as to the capital had lapsed.

He was funclus officio, art 1755 C. and he had no right thereafter to dispose of or deal in any way with this investment without a new authorization or mandate.

The law as to factors and brokers, relied upon by the respondent, has no application to this case. Rose was not a factor or broker, neither was he a trader dealing in such securities.

It is precisely because the rule is plus juris in alium transferre polest quam ipse habet that the factor's Acts and article 1735 et seq. of our Code were necessary, in the interests of commerce, to legalize sales made by factors and brokers in certain cases. See Per Lord Blackburn, in City Bank v. Barrow (2); Clarke v. Lomar (3); Johnston v. Lomar (4).

If Rose had taken these shares in his own name, or had transferred them to the bank as owner, even then the plaintiff's contention would probably prevail. The sale of a thing which does not belong to the seller is null, says Art. 1487 0.0. That such, as a general rule, is the law in regard to the pledge of a third person's property is unquestionable. Before the code, though the sale of another person's property was not null, it was not doubted that a pledge of anything of which the pledgor was not the owner conferred no right as against the owner to the pledg6e. Cassills and Crawford If a debtor, says Pothier Nantissement gives as a pledge what does not belong to him, the owner may revendicate it, though the pledgee XI.]

SUPREME COUUT OF CANADA.

is not paid. I refer also to Troplong du Nantissement (1) and Mass6 (2); Moor v. Lambe, t

The authorities of Troplong Nantissement (4) and other commentators who are of opinion that now, in France, in virtue of art. 2279 of the Code Napoleon, the sale or pledge of a thing aschereau belonging to a third party is valid when the vendee or pledgee could reasonably and without any doubt believe that the vendor or pledgor was really the owner, cannot apply here. In the first place our corresponding art. 2268, different in this from the French Code, applies expressly to corporeal movables only; secondly, it applies only to purchasers in good faith:

Troplong,

Prescription (5) and authorities cited in the Belgian edition. And thirdly, under our article, possession of a movable is not (per se) a title, but only a presumption of title.

The owner of a movable is, within three years from the loss of his possession, always admitted to rvelaim it by proving the def -cts of the possession

(f any one who detains it. The article and the coditiers expressly say so. Supplementary Report

Upon these last three grounds also must fall the contention raised by the bank, at the argument, that the appellant cannot recover the said shares without reimbursing the advances they made upon them.

There are, however, two additional, and'to my mind decisive, reasons which militate against the bank on this point

The first one is that there is no plea on the record raising the issue, the second is that the bank's plea is not that they made advances on these shares, but only, and as against them this is conclusive, that these shares were transferred to them as collateral security for advances previously made.

The case of the City Bank v. Bar-row (7) is, it seems