Corporation Agencies Ltd. v. Home Bank of Canada

Majority

that the appeal lacked substance and that the only appel- IMPmI, lant who had any status did not intend to prosecute it, dismissed the appeal; but, under all the circumstances, without costs.

Appeals dismissed. CORPORATION AGENCIES LIMITED

(TAWILF)

*Nov

(PLAINTIFF)

........................

HOME BANK OF CANADA (DEFEND- ANT) ....................................

APPEAL PER SALTUM FROM THE SUPERIOR THE PROVINCE QUEBEC (a)

The appellant corporation was engaged in business as registrar and transfer agent the capital stock of joint stock companies and as trustee for the collection of mortgages, insurance and other company purposes. Its president was one C. H. Cahan, Sr., and amongst its directors were one C. H. Cahan, Jr., son of the former, and one B. F. Bowler, the latter acting also as secretary-treasurer. The appellant kept its bank account at the Merchants Bank of Canada in Montreal; C. H. Cahan, Sr., had bank accounts at the Bank of Montreal at Montreal, with the agency of that bank in New York, and with the Guarantee Trust Company in New York. C. H. Cahan, Jr., had a personal account with the respondent, the Home Bank, and another with the Empire Trust Company in New York; he was also, without the knowledge of his father, dealing in stock speculations and the promotion of companies, and had bank accounts at the Montreal branch of the Sterling Bank of Canada and with La Banque Provinciale at Montreal and several other banks. As C. H. Cahan, Sr., being extensively engaged in special work during the war, was frequently absent from Montreal for prolonged periods, he gave his son, from time to time temporary powers of attorney to transact his banking business andi finally gave him a general power of attorney to draw and sign cheques upon any chartered bank with which he had an account.

One of the by-laws of the appellant corporation provided that "*

* * * may be made, drawn * * * by the secretary-treasurer, acting C.J.C. and Duff, Mignault, New combe and Rinfret JJ.

(a) Appeal to the Privy Council.

jointly with the manager, or with any director of the company * * *." Bowler, placing himself in the hands of C. H. Cahan, Jr., signed whatever cheques the latter directed him to sign. During the absence of his father, C.

Amongst others, HOME ninety-four cheques were thus drawn on the appellant's bank account in the Merchants Bank, which were presented for payment by or under the direction of Cahan, Jr., not at the office of the Merchants Bank, but at the office of the respondent bank, which credited the proceeds of the cheques to the private account of Cahan, Jr., or, in some cases, paid them to 'him in cash. These cheques were presented to the Merchants Bank by the respondent bank which received from the former the proceeds amounting in the aggregate to $205,960.37. The money which was requisite and available in the Merchants Bank of Canada for the payment of the cheques consisted, in addition to the appellant's small balance in its bank account, of money provided by deposits by Cahan, Jr., of cheques drawn on his father's bank accounts, and on the different other banks. When Cahan, Jr., disappeared from Montreal, and his father became aware of the condition of the appellant company's affairs, the present action was instituted for the recovery of the sum of $205,960.37.

company alleged that the Home Bank received the proceeds of the ninety-four cheques wrongfully, fraudulently and in breach of trust; that these cheques on their face showed that Cahan, Jr., was using them for his own purposes; that the bank to which they were delivered took them with notice and knowledge of his defective title, or wilfully abstained from making any inquiry as to the nature and extent of the power and authority of Cahan, Jr., and Bowler, and in bad faith participated in their wrongful acts, thereby enabling C. H. Cahan, Jr., to appropriate to his personal use and benefit the funds out of which these cheques were met and paid by the Merchants Bank of Canada and which always were the property of the Corporation Agencies, Limited. The bank joined issue with the appellant and, in addition, filed a special defence to the effect that it received the cheques for value and in due course, that it became the owner and proprietor of the cheques; and further pleaded that during the whole of the period when these cheques were being issued irregularly, as alleged, Corporation Agencies, Ltd., had not assets to represent, in whole or in part, the sum which it pretends to have lost by reason of the facts set up in its declaration.

Held, Duff and Newcombe JJ. (dissenting)

, that the appellant company was not entitled to recover from the respondent bank the amount claimed by its action; that as the funds with which -the cheques were met were neither the property nor in the legal possession of the appellant company, the latter had failed to show such an interest as is requisite to entitle it to bring an action at law (Art. 77 C.C.P.); that although at the time the money so withdrawn apparently stood to the credit of the appellant company in the Merchants Bank of Canada, it cannot be considered to have been in its possession, since, according to the doctrine of the Civil Law, possession in the legal sense cannot be acquired without the volition (volont6) of the possessor; and as volition cannot exist without consent or knowledge, there never was possession by the appellant company of the funds in question. There was not the intention to possess, nor possession animo domini. Held further, Duff and Newcombe JJ. dissenting, that the appellant cannot maintain a claim for accounting for the fund which stood in its name at the Merchants Bank of Canada, as no contractual relation AN s existed between appellant and respondent nor any obligation on the latter's part to maintain such fund; an essential condition of the action condictio ob injustam causam, ownership of the moneys with which the cheques were paid, is wanting; if considered as an action for damages, the only damages recoverable would be the amount of the loss of the appellant and there was no loss in fact; neither could appellant succeed, even were possession admitted, under the principle of possession vaut titre, since that doctrine does not apply in the case of criances, and moreover it affords essentially a plea which can be invoked only by the possessor while in possession and to repel an attack upon his possession; neither can the appellant's action be maintained as an action en ripitition de l'indu; nor can it be based on a possible future claim against it by Cahan, Sr., or the other corporations whose accounts were used in the kiting operations; and, finally, the assertion by the appellant of a right to the moneys deposited by Cahan, Jr., involves its ratification of the entire fraudulent scheme of the latter.

Per Duff and Newcombe JJ., dissenting.-The respondent received, the proceeds of the cheques in question from the appellant's bank account out of moneys which were in the appellant's possession and without the appellant's authority, having notice, of which the cheques themselves were prima facie evidence, that Cahan, Jr., the respondent's endorser, was not entitled to the cheques or to appropriate their proceeds, and in these circumstances the appellant was entitled to recover from the respondent bank the amount so received by it as money had and received by the appellant to the respondent's use, or as money of the appellant received by the respondent which was not due to the latter, (Art. 1047 C.C.); while it may be less likely that two directors would lend themselves to the fraudulent purpose of appropriating the company's money for the private uses of one of them than that the latter alone should do so, it is nevertheless, even where two directors join, prima facie evidence of fraud that one of them is making use of the company's funds for his own individual purposes; Cahan, Jr., and Bowler had, by the appellant company's by-laws, explicit authority to endorse cheques payable to the company's order and the proceeds of such cheques so endorsed and deposited by them in the appellant's bank account came into the appellant's possession as credits belonging to the appellant and under its control, because these proceeds were so deposited by the appellant's appointed agents in its account upon which it could have operated; if the appellant's officers, other than Cahan, Jr., and Bowler, did not know that the money had been deposited before the respondent drew it out, they had means of knowledge by the exercise of which, with ordinary diligence, they would have become aware of it, and the appellant therefore could not escape liability to the owners of the money deposited upon the ground that it was ignorant of the deposits; it was unnecessary to consider the effect of the kiting of the cheques, because independently of any cheques which represented kiting transactions there was actual money in the case to an amount in excess of that which the appellant claimed; the appellant was entitled by reason of its right and title of possessor to maintain this action as against the respondent, which was a wrongdoer, and had wrongfully deprived the appellant of its possession.

APPEAL per saltum from the judgment of the Superior Court, Duclos J., province of Quebec, dismissing the appellant's action.

The material facts of the case are fully stated in the above head-note and in the judgments now reported. E. Lafleur K.C., G. Barclay and W. R. Henry for the appellant.-The moment that it appeared to the respondent bank that these cheques had been drawn by C. H. Cahan, Jr., as agent, to be disposed of by such agent for his own purposes, either to pay the agent's personal indebtedness to the respondent bank, or to be credited in the agent's personal account with the respondent bank, such credits being drawn upon by the agent for his own private business and speculations, that moment the respondent bank ceased to act in good faith, and in so taking and applying the cheques participated knowingly in the wrongful acts of such agent.

There was no valid delivery of these cheques to the respondent, inasmuch as the respondent never became a holder in due course.

The authority of C. H. Cahan, Jr., to draw cheques was limited; it did not include any authority to draw cheques for his own benefit; nor did it include authority to dispose, for his own benefit, of the cheques when drawn.

The respondent was not in good faith; and even if acting in good faith, had notice of defect in the title of Cahan, Jr., to the ninety-four cheques.

Although the credits which the appellant had, from time to time, in its account with the Merchants Bank, upon which these cheques were drawn, represented, in a considerable part, funds of other persons and companies, which had been deposited to the credit of the appellant's account, nevertheless the appellant had title to the credits in its account and legal title to its cheques, or, in any event, appellant had an interest in its cheques and in the proceeds thereof, which entitled it to maintain the present action. The respondent bank cannot, by virtue of the provisions of Art. 1031 of the Civil Code, exercise, in the present action, the rights and actions of Cahan, Jr., against the appellant, if any exist, as a defence to appellant's demand herein.

Aimg Geoffrion K.C., and W. K. McKeown K.C. for the respondent.-The respondent bank was a holder in due course, and in particular had no notice of the alleged defects in the title of Cahan, Jr.

There was no defect in the title of Cahan, Jr., to the cheques sued on.

The appellant sustained no loss whatever as a consequence of the cheques sued on.

J.-Corporation Agencies, Limited, brought suit and prayed that the Home Bank of Canada be condemned to pay to it the sum of $209,028.12.

The ground of the action was that, under the circumstances stated in the declaration, the Home Bank received the proceeds of ninety-six cheques wrongfully and fraudulently and in breach of their trust drawn in the name of the Corporation Agencies, Ltd., upon the Merchants Bank of Canada by C. H. Cahan, Jr., purporting to act as director of the Corporation Agencies, Ltd., and one B. F. Bowler, purporting to act as secretary-treasurer; that these cheques on their face showed that Cahan, Jr., was using them for his own purposes; that the bank to which they were delivered took them with notice and knowledge of the defective title, or wilfully abstained from making any inquiry as to the nature and extent of the power and authority of Cahan, Jr. and Bowler, and in bad faith wilfully participated in the wrongful acts of the latter; thereby enabling C. H. Cahan, Jr. to appropriate to his personal use and benefit the funds out of which these cheques were met and paid by the Merchants Bank of Canada and which always were and now are the property of the Corporation Agencies, Limited.

The Home Bank joined issue with the Corporation Agencies, Ltd.; and, in addition, filed a special defence to the effect that it received the cheques for value and in due course, that it became the owner and proprietor of the cheques; and further pleaded that during the whole of the period when these cheques were being issued irregularly, as alleged, the Corporation Agencies, Ltd., had not assets to represent, in whole or in part, the sum which it pretends to have lost by reason of the facts set up in its declaration.

Mr. Justice Maclennan, before whom the action was first tried, considered that the form of the cheques on their face was notice of the fact that C. H. Cahan, Jr., was appropriating to his own use the monies of the Corporation Agencies, Ltd. Thus the Home Bank was put upon inquiry as to his authority and right to issue and use the cheques; and, by refraining from making any inquiry, it J. participated in the wrongful act of C. H. Cahan, Jr.; it did not act in good faith and was not the holder in due course of the cheques. On the plea that the Corporation Agencies, Ltd., never had assets to represent, in whole or in part, the total aggregate sum of the cheques, he was of the opinion that the sources from which the Corporation Agencies, Ltd., received the monies out of which its bank paid them were irelevant in an issue between the Corporation Agencies, Ltd., and the Home Bank. He therefore condemned the Home Bank to pay to the Corporation Agencies, Ltd., the sum of $205,960.37.

This sum is slightly under the amount of the original claim because evidence was lacking to show that two of the cheques were cleared by the Home Bank.

The Court of King's Bench (appeal side) however reversed the rulings of the trial judge which rejected evidence offered tending to show that the Corporation Agencies, Ltd., loss was less than the amount claimed, and it accordingly ordered that the record be remitted to the Superior Court and the enqubte reopened, so that the parties might be afforded an opportunity of examining further witnesses and of adducing evidence in support of this issue.

The reasons of each of the judges sitting in appeal are worth referring to.

Chief Justice Lamothe said:- Mr. Justice Martin said:- While express no opinion on the legal effect of any proof that may be made or whether or not appellant can successfully urge that the amount of its liability, if any, towards respondent should be reduced by amounts which Cahan, Jr., paid into the Merchants Bank to respondents' credit whether from moneys by him misappropriated from others or otherwise, I am of opinion that the appellant should have been allowed to amend its plea in so far as it amplifies the allegations of par. 46, and that it Rinfret J. should have been granted an opportunity to examine the witness Bowler, respondents' secretary-treasurer, who signed the cheques with Cahan, Jr., and who must have had an intimate knowledge of all the transactions in question.

The rights and obligations of the parties must and can only be determined after full opportunity is afforded all parties in, interest to allege and urge their respective pretentions and support same if they can by legal proof.

The learned trial judge held that the sources from which the respondent received the moneys out of which its bankers paid these cheques is irrelevant. In a restricted sense this is true, but as a practical business proposition, I should say it is wrong in principle. If Cahan, Jr., one day fraudulently obtained from respondent $10,000 of its moneys and the next day brought back and deposited to its credit $5,000, manifestly Cahan, Jr., could urge that and anyone else legally bound with him by reason of knowledge of or complicity in the fraud could also do so.

Mr. Justice Greenshields said:- I am of opinion that the appellant, the Home Bank, should not be denied the right to endeavour to prove that the whole, or some part, of the money withdrawn upon the cheques signed by Cahan, Jr., subsequently reached the credit and control of the company respondent by being deposited to its credit, with its banker, the Merchants Bank of Canada. I freely admit that the respondent should not lose by reason of the illegal acts of Cahan, Jr., if they were illegally participated in by the appellant (if participation took place); but I am yet to be convinced that the respondent should be enabled to make a profit by these illegal acts. Without expressing an opinion on the merits, but solely for the purpose of my judgment on these rulings at enquite by the trial judge I do not believe the respondent could maintain an action for a greater amount against the Home Bank of Canada (appellant) than it could against Cahan, Jr., by reason of the dealings with these cheques.

Mr. Justice Allard said:- L'appelante, la Home Bank, a le droit de prouver que l'intimbe n's rien perdu par suite des op6rations de banque du fils de M. Cahan, et que l'argent, tir6 du compte de l'intimbe A la banque des Marchands, a Rt remis au cr6dit de son compte, A la dite banque. Quand cette preuve sera faite, la cour aura A d6cider si, en droit, la pr6tention de l'appelante est bien fond6e.

The case was accordingly retried by Mr. Justice Duclos, who heard all the new evidence. He considered that the Home Bank obtained the cheques in question for value, in good faith and without knowledge or notice, express or constructive, of the alleged defect in the title of Cahan, Jr., that the circumstances existing at the time these cheques were paid by the bank were of a nature to allay and lull to sleep any suspicion that might have arisen in the bank manager's mind, that the Corporation Agencies,

Ltd., suffered no loss by reason of the withdrawal of funds by means of these cheques, and, that the money with which they were paid was not the money of the Corpora- Junfet J. tion Agencies, Ltd., but was stolen -money to which it could acquire no title; and he therefore dismissed the action with costs.

An appeal is now brought directly to this court from the judgment of Mr. Justice Duclos by consent of the parties.

It is evident that the Court of King's Bench thought it material to ascertain whether the Corporation Agencies,

Ltd., loss was less than the amount claimed by it, or whether it had met any loss at all. It would be unreasonable to assume that otherwise it would have remitted the record to the Superior Court for the purpose of this inquiry.

Being of opinion that the Corporation Agencies, Ltd., cannot succeed against the Home Bank, at all events unless it has shown itself to have been either the owner or the legal possessor of the monies withdrawn, and that

Corporation Agencies, Ltd., never was the owner or never had possession of the kind or in the quality which might entitle it to revendicate, it is apparent that it will not be necessary to decide whether the defendant bank was a.

holder in due course, which would involve a difficult choice between the holdings of fact of the two trial judges on that point. To put it perhaps more precisely: if the funds with which the cheques were met were neither the property nor in the legal possession of Corporation

Agencies, Ltd., it has failed to show such an interest as is requisite to entitle it to bring an action at law (C.C.P.

Art. 77).

The first cheque upon which the Corporation Agencies,

Ltd., now seeks to recover is dated the 29th March, 1919, and the last the 20th December, 1919.

At the date of the issue of the first cheque, the balance standing to the credit of the Corporation Agencies, Ltd., in the Merchants

Bank of Canada was only $61.74. For the whole period with which we are concerned, the Corporation Agencies,

Ltd., was practically dormant. It had no business of any consequence during the years 1918 and 1919 and merely acted as registrar or transfer agent for certain other companies and as trustee for one company.

The statement of the Merchants Bank of Canada, as well as a number of other statements emanating from Cor- J. poration Agencies, Ltd., and prepared by its president himself, or at his request, were filed at the second trial. A firm of chartered accountants made an examination of them; in adition, the exhibits were placed before them. In connection with their investigation, they prepared certain schedules and made a report based entirely on the Corporation Agencies, Ltd., own figures and statements. These showed that, as a result of the transactions of C. H. Cahan, Jr., during the period of time for which the cheques in question were drawn, i.e., between 29th March and 31st December, 1919, the minimum gain in Corporation Agencies, Ltd., account was $2,887.42, and the maximum gain was $8,350.89, according as certain items are or are not charged to C. H. Cahan, Jr., or the sundry corporations which he used for the purposes of his operations. This report takes into account the regular and legitimate business of the Corporation Agencies, Ltd., as distinguished from the irregular transactions, as they were qualified by the president of the Corporation Agencies, Ltd., Mr. Cahan, Sr., himself.

The accountants showed that, for the period covered by the ninety-six cheques, the deposits made in Corporation Agencies' account in the Merchants Bank by Cahan, Jr., were in excess of the withdrawals. During this same period, all that Corporation Agencies, Ltd., received from its clients and paid into its bank account was a sum of $5,890.34, while the amount which it paid out n the course of its legitimate business was $8,402.35, or a surplus of $2,512.01, which came out of the funds irregularly deposited by Cahan, Jr.

It was the conclusion of the chartered accountantsand this was fully borne out by the statements filed-that no money of the Corporation Agencies, Ltd., was used to meet the ninety-six cheques irregularly issued by Cahan, Jr., and Bowler.

These cheques were only items in a kiting system, or an exchange of cheques carried on by Cahan, Jr., and each of them was fully met by money provided from sources other than Corporation Agencies, Ltd. Kiting has been described by the witnesses as a scheme "for obtaining credit for a short period by running three or four accounts " or " getting credit for the time it takes to clear cheques from one bank to another."

The evidence is overwhelming, and in fact it is not disputed, that the operations of Cahan, Jr., in connection with the cheques sued upon were nothing but kiting. To give some idea of their extent, Cahan, Jr., for that purpose, used as many as twelve bank accounts, there being, in addition to the account of Corporation Agencies, Ltd., in the Merchants Bank of Canada, the accounts of his father in the Bank of Montreal at Montreal, the Bank of Montreal at New York, the Guarantee Trust Company in New York; his own personal accounts in the Home Bank of Canada and in the Empire Trust Company, in New York; and also the accounts of several companies, such as Canadian Records Press, Ltd., Dominion Operating Company, Hotel Company of St. John, Ltd., International Exploration Company, Ltd.; and also private accounts under the name of George V. Greene and Olive Trevor. Outside of the Merchants Bank of Canada, the Home Bank of Canada and the Bank of Montreal and the New York institutions already mentioned, several other banks were used: the Standard Bank of Canada, La Banque d'Hochelaga, La Banque Provinciale, the Sterling Bank, the Montreal City and District Savings Bank and the Bank of Toronto.

Two items will suffice to show at once the volume and the nature of the transactions.

A recapitulation of the deposits from March 29th, 1919, to the end of the year, shows that they amounted to $2,108,452.01, of which only $5,890.34 had to do with the regular business of Corporation Agencies, Ltd. A study of the Corporation Agencies, Ltd., account in the Merchants Bank discloses that it had no assets to represent, in whole or in part, the amount of the ninety-six cheques, and that they were fully met by money from other sources. The cheques that came in and went out always offset each other. It was not, as in Canadian Pacific Railway Co. v. La Banque d'Hochelaga (1), a case of repayment of the money withdrawn by means of cheques; but a deposit was made in the account before each cheque was presented for the purpose of meeting it. As a matter of fact, although the Corporation Agencies, Ltd., had practically no funds and notwithstanding the large amounts irregularly withdrawn, at no time was its bank account overdrawn.

Rinfret J.

It may be true that an examination of the total operations since 1915 would show a loss by Corporation Agencies, Ltd., although that could never exceed a sum slightly over $30,000, half of which was represented by the unauthorized sale of Victory Bonds payable to bearer and has nothing to do with the case here.

As observed by Duclos J. in the course of the enqu~te, But this money had already been lost for some time when the first of the cheques here sued on was presented by Cahan, Jr. It should not be forgotten that the present action is not brought for the recovery of the amount which Corporation Agencies, Ltd., has lost at the hands of Cahan, Jr. That would entail an accounting between the Corporation Agencies, Ltd., and the latter since 1915, and with that accounting the Home Bank of Canada is not concerned.

This action is limited to ninety-six specified cheques. The charge is that by means of these cheques the funds of the Corporation Agencies, Ltd., have been irregularly withdrawn.

The onus is upon the Corporation Agencies, Ltd., to show that these cheques were met by its funds; and from that inquiry must be excluded funds antecedently withdrawn.

The trial judge to whom the case was remitted for the purpose of making such inquiry, found as a fact that none of these cheques were paid out of the funds of the Corporation Agencies, Ltd. They were paid out of funds provided by Cahan, Jr.

Upon the evidence, these findings are correct.

It follows that Corporation Agencies, Ltd., failed to establish what it alleged as the basis of its declaration, to wit: that the proceeds of the ninety-six cheques

The appellant had to establish the foundation of its action. It is erroneous to say that the bank cannot raise such a question because it would be tantamount to putting forward a defence which belongs only to Cahan, Jr.

Before the bank is required to enter upon its defence, the Corporation Agencies, Ltd., must prove its interest in the case and establish its right of action. It is significant that, at the outset, the Corporation Agencies, Ltd., relied on the ground that the monies with which the cheques were paid were its property and that this contention, after two trials, appeared so devoid of foundation that before this court it felt obliged to put its case on an entirely different footing.

It is now claimed that, even if the Corporation Agencies,

Ltd., was not the owner of the funds, it is nevertheless entitled to recover them because, at the time they were withdrawn, they stood to its credit in the Merchants Bank of Canada, and should be considered to have been in its possession. It was contended that the possession of the monies which it thus had, without ownership thereof, suffices to enable it to maintain this action against the defendant bank because of their wrongful withdrawal by means of the fraudulent cheques made by C. H. Cahan,

Jr., and of which the bank obtained payment as holder.

The monies were put into the Corporation Agencies,

Ltd., account at the Merchants Bank mostly in the form of cheques, but, for the present purposes, cheques are not different from money, and the statement of Lord Halsbury in The Great Western Ry. Co. v. The London and

County Banking Co. Ltd. (1), can be made with equal force in a Quebec case.

Now .the deposit by Cahan, Jr., of monies or cheques which did not belong to the Corporation Agencies, Ltd., was wholly unauthorized. He was no more authorized to make the irregular deposits, than he was to make the irregular withdrawals.

Even if the by-laws of the Corporation Agencies, Ltd., empowered its directors or its officers to make deposits on its behalf, clearly this must be understood of regular and legitimate deposits only.

For it cannot be conceived that these by-laws anticipated the possibility of there being paid into the Corporation

Agencies, Ltd.,. bank. account monies which were illegally procured or stolen. The Corporation Agencies, Ltd., could not be bound by the consequences of the irregular deposits until they had come to its knowledge and it had ratified aCIFs them expressly or tacitly (Art. 1727 C.C.).

Here both trial judges have found that the Corporation Agencies, Houor Ltd., was absolutely without notice of the fraudulent cAA.

transactions of Cahan, Jr., and that the monies were deposited without its consent or knowledge.

Nor can the knowledge of Cahan, Jr., of the deposits which he made in fraud of Corporation Agencies, Ltd., be attributed to it for the purpose of supplying the element of volition necessary to convert its mere temporary detention of the monies so deposited into legal possession. There are no special circumstances in this case which would take it out of the general rule that notice of a fraud committed by an agent upon or against his principal and of the facts and circumstances connected with it is not imputed to the latter.

Such is the well-established doctrine in English Law (Bowstead, Agency, 7th Ed., p. 336; The Commercial Bank of Windsor v. Morrison (1), and I know of no reason why it should not prevail in Quebec. See 8 Revue L6gale, n.s. 297. Moreover, by paragraph 6 of its answer to the amended plea, the Corporation Agencies, Ltd., sets up as a ground why knowledge of the acts of Cahan, Jr., and Bowler should not be imputed to it, that these acts were done in fraud and were kept hidden from any officer or employee of the company.

The doctrine of imputation of knowledge to the principal because of knowledge by the agent is for the benefit of third parties; to find the principal invoking it on his own behalf savours of novelty. Finally, the volition (volontd) requisite to legal possession implies something more than merely constructive notice or knowledge by imputation.

Quite independently of the particular character of bank deposits, which will have to be examined later, it is strictly according to the doctrine of the civil law that possession in the legal sense cannot be acquired without the volition (volont6) of the possessor; and as volition cannot exist without consent or knowledge, there never was here possession by the Corporation Agencies, Ltd., of the funds so deposited.

There must be the intention to possess and the possession must be animo domini. This accords with the jurisprudence in Quebec (Lafortune v. Vzina (1); Langelier, Cours de Droit Civil, vol. VI, p. 445), and with coRRATIon the doctrine of the French authors which is conveniently collected in Fuzier-Herman, R6pertoire du Droit Frangais, verbo Possession; nos. 3, 4, 26, 28 and 38:

* *

* II importe donc, pour mieux pr6ciser la notion de possession, de la distinguer soigneusement de deux autres institutions avec lesquelles un examen superficiel pourrait amener h la confondre: la pro- Rinfret J. pri6t6 et la detention. D'une part, en effet, la possession ne dioit pas 6tre confondiue avec le droit (de propri6t6) lui-mime dont elle n'est que la manifestation extkrieure; comme le disent les textes romains, nihil commune habet proprietas cum possessione (fgt. par. 1, D. de acq. vel amitt. poss. XLI, 2): c'est pr6cis6ment dans cette distinction entre le droit de propri6t6 et la possession que r6side tout 1'int6rit pratique de la thdorie juridique de la possession.

D'autre part, il peut se faire qu'une personne tienne de fait une chose sous sa puissance, sans avoir l'intention de la soumettre i 1'exercice d'un droit riel; ce fait prend alors plus particulirement le nom de d~tention.

4. La d6tention constitue done une situation juridique parfaitement d6finie et qui est tout A fait distincte de la possession v6ritable; elle en diff0re par I'absence de l'animus. * * *

26. Selon une doctrine traditionnelle qui vient du dtoit romain, la possession se compose de deux 616ments: I'un mat&riel, appel6 le corpus, I'autre intentionnel, appel6 l'animus. Sur ce point, et notamment en ce qui concerne l'animus domini, les r&dacteurs du code civil s'en sont tenus aux ides traditionnelles de Pothier, de Domat et de Dunod, et par cons6quent il n'y a point lieu, dans une 4tude des textes du code civil, de se prioccuper de la question, aujourd'hui tr~s-controvers6e, de savoir si, au point de vue des textes du droit romain, la possession supposait n6cessairement l'animus domini. On ne peut en effet, interpr6ter notre code & I'aide de th6ories nouvelles qui constituent non un d~veloppement doctrinal ou jurisprudentiel, mais une critique de notre 16gislation.

28. L'animus constitue l'61ment immat6riel de la possession. Suivant la doctrine traditionnelle, enseign6e par Savigny, I'animus est I'intention chez celui qui posside de se comporter vis-h-vis de la chose comme un v6ritable propri~taire, c'est l'animus domini. Suivant une doctrine plus r6cente, expos~e par Ihering, I'animus serait seulement I'intention de poss6der, animus rem sibi habere. On peut d6finir l'animus sous une forme plus large, en disant que c'est I'intention ches celui qui posside d'agir pour son propre cornpte.

39. L'animus 6tant l'intention de se comporter it titre de propriftaire d'une chose ou de titulaire d'un droit, il ne peut y avoir d'acquisition de possession sans la volont6 de poss&der h un titre quelconque.

II suit de IA que celui qui achite une chose et suquel on en livre une autre.qu'il prend par erreur, n'acquiert la possession ni de l'une ni de l'autre; car il ne posside pas celle qu'il a achet6e, puisqu'elle ne lui a pas 6t6 livr6e, ni celle qui lui a 6t6 livrbe, puisqu'il n'a pas eu l'intention de la poss6der. De mime, la volont6 de poss6der 4tant de l'essence de la possession, il s'ensuit que ceux qui sont incapables de volont6, tels que les impubbres et les fous, ne peuvent acqu6rir la possession; mais ils le peuvent par le tuteur qui les repr6sente.

Une femme peut acqu6rir la possession sans I'autorisation de son mari, car la possession est une chose de fait; mais (1) [19161 Q.R. 25 K.B. 544.

elle ne pourrait, sans en 6tre autoris~e, exercer les droits qui r6sultent de cette

"",RAO'

Pothier, De la possession:

40. Il est &vident qu'on ne peut acquirir la possession d'une chose, sans avoir la volont6 de la poss6der.

- Par exemple, on me fait entrer dans le cabinet d'une personne A qui je vais rendre une visite: en l'attendant je prends un livre que je trouve sur son bureau, pour voir ce que c'est; il est 6vident que, quoique je l'aie Rinfret J. entre mes mains, je n'en acquiers pas la possession; car je n'ai pas la volont6 de le poss6der.

Pareillement h I'6gard des h6ritages: si, dans un voyage, je vais coucher au chateau de mon ami en son absence; quoique je sois seul dans ce chateau, je n'en acquiers pas la possession; car je n'ai pas la volont6 de l'acquirir: Qui jure familiaritatis amici fundum ingressus est, non videtur possidere, quia non eo animo ingressus est ut possideat, licat corpore in fundo sit; L. 41, if. de Acq. poss.

De ce principe, " que pour acquirir Ia possession d'une chose, il faut avoir Ia volont6 de la poss6der," il s'ensuit que, si j'ai schet6 de vous une chose, et que vous m'en livriez une autre, que je prends par erreur pour celle que j'ai achethe et dont j'ai intention d'acqu6rir la possession, je n'acquiers la possession ni de celle que j'ai acquise par erreur, parce que ce n'est pas celle dont j'ai la volont6 d'acqu6rir la possession, ni de celle que j'ai la volont6 d'acqu6rir, parce que je ne l'ai pas reque: Si me in vacuam possessionem fundi Corneliani miseris, ego putarem me in fundum Sempronianum missum, et in Cornelianum iero, non acquiram possessionem, nisi forta in nomine tantftm erraverimus, in corpore consentiamus; L. 34 ff. eod. tit.

The above doctrine is also expounded in Aubry & Rau. tome 2, paragraphs 177 and 179; Baudry-Lacantinerie & Tissier, nos. 195, 197, 203, 216; Planiol, 6th ed. tome 1, no. 2269; Laurent, 5 ed. vol. 32, pp. 273 and 276; Colin & Capitant, vol. 1, pp. 873 and seq.

The same doctrine will also be found in Dalloz, R~pertoire Pratique, verbo Possession, nos. 7, 8, 21, 23, 25, 26, 51, etc.

Both Laurent (vol. 32, p. 270) and Fuzier-Herman (R6pertoire, verbo Possession, no. 5) allude to Troplong's opinion that dans la doctrine du code, les ditenteurs pr6caires sont aussi des possesseurs, de sorte que toute d6tention serait une possession (and state that he has) vainement essay6 de soutenir que Particle 2228 C.C. s'applique aux simples d6tenteurs; que ceux-ci sont des possesseurs dans le sens g6n6ral du mot et que leur possession produit certains effets de droit. They both show that he alone, of all the French authors, entertains such an opinion.

Such being the doctrine and the French law of possession, Corporation Agencies, Ltd., never had the possession because it lacked the animus possidendi or intention to possess, or what Saleilles calls " la volont6 possessoire." Planiol, vol. 1, p. 701, points out: " Sans volont6, point de rapport possessoire; par exemple, il n'y a pas de possession si quis dormienti aliquid in manu ponat (Paul, au Digeste XLI, fr. 1, par. 3)."

Not only Corporation Agencies, Ltd., had not the will to possess, but it had absolutely no knowledge or notice of what was going on; and, indeed, this has been its attitude throughout this case.

It had no more possession of the monies put by Cahan, Jr., into its account in the Merchants Bank than it would have had if Cahan, Jr., had simply placed them, without its knowledge, in the vault in its office and, subsequently, had taken them out and remitted them direct to the Home Bank. In neither case could it be said that, in the course of these operations, Corporation Agencies, Ltd., had, at any moment, acquired possession of the monies.

There is this difference however between the supposed deposit in a vault and the deposit in a bank, that in the case of banking, there is no " d6p6t r6gulier."

A banker is not a depositary " bound to restore the identical thing which he has received in deposit " (Art. 1904 C.C.). customer parts with the title to his money and loans it to the banker, the result being to make the bank the debtor of the customer with the sole obligation of honouring the customer's drafts or cheques.

This conception of banking is generally accepted, as well in the other provinces of Canada and in England as it is in France and in the province of Quebec.

Falconbridge, Banking and Bills of Exchange, 3rd ed. p. 311; Foley v. Hill (1); Robarts v. Tucker (2); In re Derbyshire. Webb v. Derbyshire (3); Marine Bank v. Fulton Bank (4); Baudry-Lacantinerie, 3rd ed. Du d6p6t et du s6questre, no. 1097; Dalloz, R6pertoire, verbo Banque, nos. 3 and 4; Fuzier-Herman, Repertoire du Droit Frangais, verbo Banque, nos. 70-71-72 and 73; Vanier v. Kent (5).

In contradistinction to the depositary under the civil code (art. 1803), the banker is authorized to use the money deposited, and his only obligation is to remit an equal sum of money.

Notwithstanding this difference, however, the customer may in the normal case be regarded as in possession of the credit which results from his deposit with his banker. But there the volition essential to legal possession is present, whereas what we have in the case at bar is at the utmost a mere detention.

We may now consider the nature of the remedy which the Corporation Agencies, Ltd., is seeking.

In its factum, the appellant states that, under English law, it might sustain its right to recover under various forms of action, such as an action in trover to recover the cheques, or an action for conversion, or an action for money had and received, or an action for the restoration of property. It however encounters a difficulty in finding under the law of Quebec a principle upon which to base a right of action. That difficulty really is that, in the circumstances of this case, it has no right of action whatever. Perhaps it is appropriate to point out here that none of the cases decided in England to which our attention has been drawn has any real application.

In the case of North & South Wales Bank v. Irvine (1), which most nearly resembles it, the cheque was signed by Irvine and " paid out of Irvine's money at his own bankers," which had been deposited by himself. Under such circumstances, the inquiry as to " where he got that money was irrelevant " and the defendants were held not But here the cheques were not paid out of monies belonging to the Corporation Agencies, Ltd.; and that renders the Irvine Case inapplicable.

This action cannot be maintained, as suggested by Mr. Lafleur, as one for the restoration of the fund which stood in the name of the appellant at the Merchants Bank of' Canada. The obligation to account for that fund was not upon the Home Bank, but only upon the Merchants Bank, which alone had accepted the position of a borrower. There was not and there never existed any contractual relation between the Corporation Agencies, Ltd., and the Home Bank of Canada. Assuming that the appellant's action could be considered as a condictio ob injustam causam, the essential condition of that action, the ownership of the monies with which the cheques were paid, is wanting here (Aubry & Rau, 5th ed. vol. 6, p. 325, par.

442 bis). If the action can be regarded as an action for damages resulting from the abstraction of the funds by means of the fraudulent operations in which the Home

Bank is alleged to have participated, then the measure of such damages must be the amount of the loss of Corporation Agencies, Ltd. There was in fact no such loss; the trial judge held that there has been none; and, in our view, that finding is fully justified.

Even were possession admitted, it would not avail to enable the appellant to institute proceedings. In France, the law is (Art. 2279 C.N.): " En fait de meubles, la possession vaut titre." Nevertheless, all the commentators agree that this article applies only to corporeal moveables and not to " cr6ances," that it merely creates a presumption of title which may be rebutted, and that the maxim it embodies only affords a defence to a person in actual possession for the purpose of repelling a revendication.

Fuzier-Herman, verbo Possession, nos. 290, 300, 338 and

339; Dalloz, Repertoire pratique, verbo Possession, nos.

45, 90, 91; Baudry-Lacantinerie, 3rd ed. De la prescription, no. 480; Laurent, 5th ed. vol. 32, nos. 562 and seq.

Guillouard, tome 2, no. 847.

Dalloz, R6pertoire Pratique, verbo Possession, no. 95, says:- It is looked upon as being essentially a plea which can be invoked only by the possessor while in possession and to repel an attack upon his possession.

If that be true in France, with the law as it is expressed in Art. 2279 of the Code Napoleon, with how much greater force must this doctrine be held to apply here, in view of the corresponding article of the Quebec code, of which the first paragraph is:may be added moreover that, under the law of Quebec, mere possession can seldom be made the basis of an This article is limited to the possessor of an immoveable property or a real right.

In respect of moveable property, the corresponding procedure is the attachment in revendication.

But article 946 of the Code of Civil Procedure gives this remedy to the owner, to the pledgee, the depositary, the usufructuary, the institute in substitution and the substitute. As will be perceived, this enumeration does not include a mere possessor as such. The fact that the article enumerates certain classes of possessors is indicative of the intention to exclude the others. Moreover, the procedure for attachment in revendication applies to moveable property only so far as it can be identified. The appellant here does not meet the conditions required.

In the view which we take of the case, neither can this action be maintained as " Faction en r6p6tition de l'indfi " (Art. 1047 C.C.), for if Corporation Agencies, Ltd., is in a.position to disregard and repudiate the cheques entirely and if the money paid out by the Merchants Bank of Canada to meet them did not belong to Corporation Agencies, Ltd., and was so paid without its knowledge and participation, it follows that the appellant has never paid anything and is therefore not entitled to be reimbursed. It has been suggested however that the present action might be entertained as being in anticipation of a possible future claim on behalf of Cahan, Sr., or the. other corporations whose accounts have been used in the kiting operations.

It is urged that this would constitute the required interest in the appellant to enable it to assert its right of action. It will be sufficient to consider the suggestion with regard to C. H. Cahan, Sr., there being no difference in that respect between his case and those of the other corporations.

We are not now called upon to decide whether the appellant company is liable to C. H. Cahan, Sr., or whether the fraudulent withdrawals by C. H. Cahan, Jr., from its bank account without its knowledge or assent would afford the appellant an answer to a claim by C. H. Caban, Sr. That is not the ground upon which the action was taken and fought out in the court below.

The appellant distinctly put its claim on the ground that it was and always had been the owner of the monies with which the cheques were paid by the Merchants Bank of Canada. In fact, the Corporation Agencies, Ltd., appears to have been careful to avoid any admission of liability towards C. H. Cahan, Sr. In view of articles 1048, 1049, 1050, 1051 and 1143 of the Civil Code, the Corporation Agencies, Ltd., being in good faith, it would seem likely that its absolute lack of knowledge of the operations of C. H. Cahan, Jr., of the irregular deposits made by him and of the subsequent withdrawals of the same amounts would protect it against any liability towards C.

There are besides other circumstances which make it highly improbable that a claim of that kind will ever be lodged against the Corporation Agencies, Ltd., by its own president.

As for the other sundry corporations or subsidiary companies, where accounts were opened and used for kiting purely and simply, the withdrawals and deposits therein tally to a cent; they never lost anything and they had really nothing to lose.

But suffice it to say that in our view this ground is not open here; for Corporation Agencies, Ltd., has not placed itself in a position where it could base its right of action on such an hypothetical interest. Its very allegation that it was the owner of the funds precludes the idea that it was accountable therefor to somebody else.

And, moreover, if its intention was to claim the monies on the ground that it may have to return them to their respective owners, since it is admittedly impossible to reach any final decision on that point without the proper parties being in the case, as the action stands, we are not in a position to decide whether these other parties can claim from the Corporation Agencies, Ltd. If the appellant intended that to be a ground of action, it should have alleged it and should have brought all the required parties into the case so that such an issue might properly be passed upon. Whether, if the appellant be liable to C. H. Cahan, Sr., that liability would give it a right of action against the Home Bank before C. H. Cahan, Sr., asserts and establishes his right of recovery against it is, at first sight, a question admitting of the gravest doubt and which personally we would be inclined to answer in the negative (Pothier, vol. II, no. 498); but it is unnecessary to decide it until it comes up in a proper case. Finally it would appear that the appellant cannot assert its right to the monies deposited by Cahan, Jr., without committing itself to a ratification of the fraudulent scheme of the latter, in partial execution whereof such deposits were made, and is thus precluded from repudiating the completion of the scheme by the withdrawal of such monies from its bank account. The whole course of dealing by Cahan, Jr., with the Corporation Agencies, Ltd., bank account, whether in drawing on it or in depositing funds to meet the withdrawals, was unauthorized and the principal cannot repudiate the withdrawals and take the benefit of the deposits. The logical position must be that the whole course of dealing should either be entirely repudiated or wholly accepted. The monies which went into Corporation Agencies, Ltd., account, in the course of the kiting operations, went in for the sole purpose of meeting the incoming cheques as they were issued. They were put in with no other object in view than to cover these cheques, which would not, and could not otherwise have been paid; and all this in a kiting game, where, in most instances, no real deposit was made. There was nothing more than a mere playing with paper. It would appear entirely fallacious to add up the successive deposits and permit the appellant to retain them as against the respondent, while charging to the latter the withdrawals by means of the ninety-six cheques which it was the sole purpose of the deposits to meet when they should be presented to the Merchants Bank. It seems unquestionable, notwithstanding the large aggregate amount of deposits and withdrawals, that, in the course of the kiting operations, a very much smaller amount was actually in turn deposited and withdrawn, with the net result that in the end the real balance of the appellant was in no wise impaired. The following passage from the well-known case of Atlantic Cotton Mills v. Indian Orchard Mills (1), seems to be absolutely in point and may be adopted, at least as ratio scripta, as correctly expressing the situation:

See also Demolombe, t. 31, no. 202; Dalloz, Rep. Prat., vo. Quasi-contrat, no. 53. In other words, the appellant cannot be allowed to approbate and reprobate at the same time and in the same action. The purpose of C. H. Cahan, Jr., in making the deposits was exclusively to meet the cheques which he had drawn against them. Ratification of that purpose by the appellant involves approval of the monies being used in pursuance of the object for which they were deposited.

In the result, if the appellant's contention were sound, it would receive an amount of $205,960.37 on the assumption that it may have to account for it to corporations practically brought into being for mere kiting purposes and whose bank accounts balance to the cent, or to Cahan, Sr., on the ground that part of those monies were stolen from him by Cahan, Jr., and were afterwards by the latter deposited in the Merchants Bank of Canada in the name of the Corporation Agencies, Ltd., although they were immediately withdrawn in the same manner, and although the Corporation Agencies, Ltd., had not the slightest suspicion that anything of the kind was going on.

Either the Corporation Agencies, Ltd., might never be called upon or it would be held liable to account. In the former case it would have got and would keep money to which it never was entitled; in the latter, through the instrumentality of the Corporation Agencies, Ltd., Cahan, Sr., would, to the prejudice of the creditors of the Home Bank, recover the money stolen from him by Cahan, Jr., although most of that money had already been lost befdre the first of the cheques here in question was cashed by the Home Bank. It is satisfactory that we are not constrained to a conclusion fraught with such consequences.

For these reasons, the action fails and was properly dismissed.

The formal judgment should, however, be modified by striking from it the direction that costs to be allowed defendant shall include

These expenses do not form part of the costs of litigation such as are allowed to a successful party on taxation. They are not covered by defendant's conclusion praying costs. While they might be recoverable as damages, as such they are not claimed.

The award of these expenses would, therefore, seem to be ultra petita. Moreover, the very special circumstances requisite to justify such a recovery are not presented on the record before us.

As a rule, this court will refuse to interfere with the discretion of the provincial courts in disposing of costs. But this is a case where we think an exception ought to be made. The appeal is per saltum and the extraordinary disposition as to costs made by the Superior Court has not therefore received the approval of the Court of King's Bench. These seem to us to be reasons which justify our dealing with the costs as we believe the Court of King's Bench would probably have done, had it been afforded the opportunity. A well-established rule is that, though the appeal involve costs only, the Court of King's Bench will rectify the decision of the court below when the latter appears to have proceeded upon an erroneous principle. Prowse v. Nicholson (1); Atlantic Ry. Co. v. Trudeau (2); Dgch~ne v. Dussault (3).

This view was affirmed by this court in Archibald v. Delisle (4).

Now, in Quebec, costs are fixed by a tariff having the force of law, after it has received the approval of the Lieutenant-Governor in Council.

The reports and statements of the accountants in this case were not the result of an investigation ordered or of a reference made by the presiding judge (Arts. 391, 410 C.C.P.), but were prepared at the ex-parte request and in the interest of the defendant. As such, they cannot form part of the costs prayed for by the conclusions of the defence (Laurent v. City of Montreal (1); Hickey v. City of Montreal (2); Robert v.

Denault (3); Layton v. City of Montreal (4).

At best, they must be made the subject of a special demand (Patenaude v. Edwards (5), and authorities therein referred to).

J.--The plaintiff company (appellant) seeks to recover from the defendant bank (respondent)

amount of 94 cheques, in the aggregate $205,960.37, which were drawn upon and paid by the Merchants Bank of

Canada at Montreal, together with interest from the respective dates of payment. There is no material difference between the parties as to the facts of the case; these may be stated briefly. The plaintiff is a body corporate under the laws of Canada, having its chief place of business at

Montreal, and it was engaged in business as registrar and transfer-agent of the capital stock of joint stock companies and as trustee for the collection of mortgages, insurance, and other company purposes. Prior to the war the plaintiff's business appears to have been active and prosperous, but after the war broke out it became impossible to finance further undertakings; several members of the staff undertook war service, and the business of the company was reduced to the concluding of that which it had in hand, and to the execution of its agency for some companies whose affairs were being wound up. It was in this connection, and owing to losses sustained, that the capital of the company, which was previously authorized to the extent of

$500,000, was, on 25th February, 1918, reduced to $50,000.

Some changes were at the same time made in the directorate, and, while C. H. Cahan, Sr., who had been serving as president of the company since 1910, continued to hold that office, his son, C. H. Cahan, Jr., and B. F. Bowler became directors, the latter also being charged with the duties of secretary-treasurer. C. H. Cahan, Sr., was a successful lawyer of considerable means. He kept a bank account at the

Bank of Montreal at Montreal, another with the agency of that bank in the city of New York, and still another with the Guaranty Trust Company, also in New York, and in each of these accounts there was a large credit balance. While the permanent residence of Mr. Cahan was at Montreal, he was, during the war, very extensively engaged in special work, or professional or other duties connected with the war, and, for this and other reasons which are stated in the evidence, he was frequently absent from home for prolonged periods. Mr. Cahan therefore from time to time, on such occasions, gave his son temporary powers of attorney to transact his banking business; three such powers had been given and had expired when, on 21st September, 1916, Mr. Cahan gave to Cahan, Jr., his power of attorney authorizing the latter

On 30th October, 1916, Mr. Cahan gave to his son a similar power of attorney to make, sign and draw cheques on his account with the agents of the Bank of Montreal in the city of New York. On 25th August, 1917, he also gave to his son his power of attorney, until 25th August, 1918, Finally, on 11th May, 1918, Mr. Cahan gave to his son his power of attorney to draw and sign cheques upon any chartered bank in Canada with which he (Cahan, Sr.) might have an account, including cheques creating an overdraft, but without limiting the time for execution of these powers. Cahan, Jr., was thus equipped with authority from his father to withdraw, on account of the latter, the funds which were standing to his credit in the various accounts mentioned.

It appears that the young man, unknown to his father, had, since early in 1915, been engaged in stock speculations, and that he had been carrying on a personal account with the defendant bank at Montreal, and another with the Empire Trust Company in New York.

It appears moreover that Cahan, Jr., also without the knowledge of his father, was engaged, with one Geo. V. Green, B. F.

Bowler, Morton and Trevor, otherwise known as Carter, and others, in the promotion of a number of companies, among others, Canadian Records Press, Ltd., Dominion

Operating Company, Ltd., and Hotel Company of St. John,

Ltd., the two first mentioned companies having bank accounts at the Montreal branch of the Sterling Bank of Canada, and the latter having an account with La Banque

Provinciale at Montreal.

Cahan, Jr., was an advocate of the province of Quebec and was engaged in his father's office at Montreal, which was situated in the Transportation Building, where the offices of the plaintiff company and of the defendant bank also were; and, in addition to such practice or professional business as he may have had on his own behalf, he attended to minor duties for his father, receiving therefor, from the latter, salary at the rate of $225 per month.

There is in evidence by-law no. 54 of the plaintiff company, which provides that:

Previously to 29th March, 1919, the date of the first cheque upon which the plaintiff declares, Caban, Jr., under his father's power of attorney, had, during the years 1916,

1917 and 1918, already fraudulently withdrawn, for his own purposes, from the agency of the Bank of Montreal in New York and from the Guaranty Trust Company there, substantially the whole of the deposits standing to his father's credit in these accounts; he had also, after becoming a director of the plaintiff company in 1918, turned his attention to the account of the latter as a base of operations against his father's bank account at Montreal, and involved in this fraudulent project were the accounts of the several corporations which Cahan, Jr., appears to have had under his control. At the time of the election of Cahan,

Jr., as director of the plaintiff company, and subsequently, its account in the Merchants Bank was, as has already been explained, not very active. The first fraudulent draft upon that account seems to have been made on 1st March, 1918. At that time the balance to the credit of the account was $4,591.71; the transactions in the account which are described as regular, during the period from March, 1918, to December, 1919, inclusive, amount in deposits to $81,947.60, and in withdrawals to $79,635.20.

In the interval there was also a series of fraudulent withdrawals and deposits by Cahan, Jr., which were not in fact known to the plaintiff company, nor to any of its officers, except Cahan, Jr., and Bowler, and which were not discovered until after 26th December, 1919.

The first draft upon which the plaintiff seeks to recover is dated 29th March, 1919. There were 94 of these cheques drawn from time to time during the period from the last mentioned date up to and inclusive of 26th December, 1919.

The earlier fraudulent transactions did not come to light until after the commencement of the action. It would appear that Bowler, who was nominally secretary-treasurer of the plaintiff company, placed himself entirely under the direction of Cahan, Jr., who was acting as the company's manager, and signed such cheques as the latter directed him to sign. cheques upon which the plaintiff claims were drawn on its bank account in the Merchants Bank, signed by Cahan, Jr., as director of the plaintiff company, and by Bowler as its secretary-treasurer; they were presented for payment by or under the direction of Cahan, Jr., not at the office of the Merchants Bank, but at the office of the defendant bank, which credited the proceeds of the cheques to the private account of Cahan, Jr., or, in some cases, paid them to Cahan, Jr., in cash. A number of these cheques, not less than 27, including the cheque of 29th March, 1919, first drawn, served to liquidate the personal indebtedness of Cahan, Jr., to the defendant bank by covering the debit balances against him in his private account.

Of the 94 cheques, 67, amounting to $146,429.87, were drawn payable to the order of C. H. Cahan, Jr., six others, amounting to $16,530.50, were drawn payable to the order of the defendant bank, the first of the cheques so drawn bearing date 14th May, 1919. The remaining cheques, 21 in number, amounting to $43,000, were drawn payable to the order of C. H. Cahan, Jr., or, in several cases, to the order of an agent, his office boy, or Geo. V. Green, or Trevor, each of whom was acting under the direction of Cahan, Jr., or to bearer. The cheques were endorsed by Cahan, Jr., and were presented to the Merchants Bank by the defendant bank, which received from the former the proceeds amounting in the aggregate to $205,960.37, the principal amount sought to be recovered by the plaintiff in the action. The money which was requisite and available in the Merchants Bank of Canada for the payment of these and other cheques consisted, in addition to the plaintiff's legitimate balance in its bank account, of money diverted by Cahan, Jr., through the fraudulent use of his father's powers of attorney, from the latter's bank accounts; deposits of some trust funds which were in the plaintiff's custody, and to which Cahan, Jr., had access; deposits made by Cahan, Jr., out of his private account, or, under Cahan, Jr's., direction, from the accounts in other banks of Geo. V. Green, who was an accomplice of Cahan, Jr., by means of cheques in plaintiff's favour drawn against Green's accounts in the Standard Bank of Canada, and in the Banque d'Hochelaga; cheques of the Hotel Company of St. John, drawn on La Banque Provinciale in plaintiff's favour; cheques of the Dominion Operating Company, drawn on the Sterling Bank; cheques to a comparatively small amount on the Montreal City and Savings Bank; a cheque of the International Exploration Company, Limited, drawn on the Bank of Toronto, and some small miscellaneous deposits of cheques and cash, the sources of which have not been definitely ascertained.

These deposits amount in total to a sum much in excess of the amount of the drafts now in suit, and the total ascertained defalcations of Cahan, Jr., likewise greatly exceed the latter amount; but the net total amount admittedly drawn by Cahan, Jr., from his father's bank accounts by means of the fraudulent cheques, which he drew in his father's name in favour of the plaintiff, and which were paid into the plaintiff's account in the Merchants Bank is ascertained at the sum of $132,828.45. These facts appear not to be in dispute. The deposits made by Cahan, Jr., in the plaintiff's bank account may also include, so far as disclosed by the evidence, amounts in the sum of $97,184.21, not traced to any source other than Cahan, Jr., and which may have belonged to him. The withdrawals which Cahan, Jr., made under his powers of attorney against his father's bank accounts extended over a considerable period previous to 1919, and continued during the whole of that year down to 26th December, when Cahan, Jr., disappeared; also, during that period, large deposits were made by Cahan, Jr., to the account of his father in the Bank of Montreal. These deposits were of course made to assist or to promote and maintain the fraudulent project in which Cahan, Jr., was engaged of converting to his own use the funds belonging to his father and to the plaintiff, the immediate source of the diversion being the plaintiff's bank account in the Merchants Bank. There seems to be no doubt that in the course of this fraudulent business there was considerable kiting of cheques, a process which is thus described by the expert accountant who testified for the defendant:

Bowler, who was a party to the transactions which he describes, and who was examined as a witness for the defendant, upon commission, says that kiting is a means of getting credit for the time it takes to clear a cheque from one bank to another bank; that cheques are passed from one bank account to another and

It is in this sense apparently that the word is used in the case; but, whatever may have been the nature and effect of the kiting operations, it is apparent, as I shall show, that there was, outside of these, real money involved in the deposits which went to the credit of the plaintiff's account, in addition to the credits which were the result of its ordinary legitimate transactions, to an amount greater than that of the fraudulent cheques upon which this action is brought.

On the night of 26th December, 1919, C. H. Cahan, Jr., who had up to that time been living at Montreal, disappeared.

He has not since been seen by anybody concerned in the case, and none of these knows where he is to be found.

On the following morning his father learned that he had been meddling with the accounts and misappropriating money; enquiries were made, and the case was put into the hands of accountants for investigation. Soon afterwards the action was brought, the plaintiff's declaration being delivered on 7th April, 1920; the plaintiff declared upon 96 cheques, but the claim as to two of them was subsequently abandoned because it was found that these two cheques had not been cleared at the defendant bank. The ground of the action was that Cahan, Jr., fraudulently, in breach of his trust and duty as a director of the plaintiff company, drew these cheques against the plaintiff's account at the Merchants Bank; that the defendant bank to which the cheques were presented for payment cashed them upon the endorsement and at the request of Cahan, Jr., placing the proceeds to the credit of the latter's private account, often in discharge of Cahan, Jr's., overdrafts, or paying the proceeds of them to him directly in cash at the wicket, and that, inasmuch as these cheques were, with few exceptions, made payable to Cahan, Jr., personally, who, in all cases, to the knowledge of the defendant bank, also personally had the benefit of the proceeds, the latter acquired and became the holder of the cheques and received the proceeds from the Merchants Bank with knowledge or notice that Cahan, Jr., was, fraudulently and in breach of trust, acting in excess of his authority in so procuring and disposing of the proceeds of the plaintiff's cheques for his own individual use and benefit.

The defendant bank pleaded a general denial, and subsequently, by amendment, raised the defences that the cheques were authorized by the plaintiff; that the defendant took the cheques in the ordinary course of its banking business in good faith, and without notice or knowledge of any defects in the title of Cahan, Jr.; that the cheques were not taken by the defendant for collection or as- an agent, but in due course and for value, and that the defendant bank, upon receiving the cheques, became the holder and owner of them in due course. Moreover the defendant pleaded that, for the whole of the period during which the cheques were drawn and paid, the plaintiff had not assets to represent the amount of the cheques, and that the plaintiff did not lose the whole or any part of the sum claimed in the action by reason of the cheques, the full amount thereof having been directly or indirectly accounted for, returned or paid to the plaintiff by Cahan, Jr., and that, by reason of such accounting, return and repayment, the plaintiff's claim was not maintainable, even as against the latter.

The action was tried before Maclennan J., of the Superior Court, who found that the defendant did not act in good faith, and did not not become the holder of the cheques in due course; that the defendant had notice of the defective title under which Cahan, Jr., held the cheques; that the sources from which the plaintiff received the money which was standing to its credit in its bank account in the Merchants Bank, and out of which the cheques were paid, were irrelevant to the issues between the parties; that the plaintiff had established its allegations; that the defendant had failed to establish a defence, and therefore that the plaintiff was entitled to recover the amount claimed with interest.

Upon appeal to the Court of King's Bench, this judgment was set aside; the rulings at enqu~te which rejected evidence offered tending to show that the plaintiff's loss was less than the amount claimed were reversed, and it was ordered that the record should be remitted to the Superior Court; that the defendant should have leave to amend; that the enquite should be re-opened, and that the parties should be accorded an opportunity to examine such further witnesses, including Bowler, as they might call in support of the issues as amended.

During the first trial the defendant had endeavoured to introduce evidence to show that, upon an accounting as between the plaintiff, Cahan, Sr., Cahan, Jr., and the other individuals and corporations concerned, the plaintiff had not, in the period covered by the cheques which are the subject of the action, funds of its own available in its bank account for the payment of those cheques; that the proceeds received by the defendant were not moneys of the plaintiff, and that the plaintiff had therefore suffered no loss. This evidence was rejected as inadmissible, the court holding that the accounts could not be taken in the absence of the parties to them, who were not joined in the action, but intimating that it would receive any evidence of the repayment to the plaintiff of the sum claimed. After the conclusion of the evidence and while the case was under consideration, the defendant presented a petition for leave to amend the defence and to re-open the enquite. The antepenultimate paragraph of the defence, as pleaded, was in these words:

The amendment desired was by way of supplement to this paragraph, with the object of setting out with more particularity that the moneys deposited in the Merchants Bank, out of which the cheques in question were paid, had been so deposited, or entered to plaintiff's credit, as a result of the cheques fraudulently drawn upon the account of Cahan, Sr., or deposited in the Merchants Bank by Cahan, Jr., for kiting purposes, and that the amounts paid out of the account by the Merchants Bank in discharge of the cheques upon which the plaintiff claims had been compensated or made good by the deposit of other cheques by Cahan, Jr. The defendant also desired leave to examine Bowler who had left the country, and whose place of abode was unknown at the time of taking the former evidence; also permission to examine further witnesses, and, to reexamine C. H. Cahan, Sr. This application was refused by the learned trial judge; but upon appeal it was granted by the Court of King's Bench. It is clear I think that the judgment of the latter court, when interpreted in the light of the reasons given, was intended only to vacate the judgment of Maclennan J. in order that the defendant might plead the paragraphs supplementary to paragraph 46 of the defence, which set forth with further particulars the defence generally indicated by that paragraph, and to re-open the enquiry for the admission of Bowler's testimony, and such other material evidence as might be tendered. Nothing whatever was determined as to the merits of the case, or the effect of the additional evidence which the defendant desired to produce. The court seems to have been of the opinion that this evidence was of a character of which the relevancy could not be determined without hearing the testimony, and perhaps this was due to some misapprehension of the learned trial judge's reason for rejecting the evidence which is expressed in his statement the learned judge did however subsequently intimate that if the defence had any evidence of repayment of the amount claimed he would receive it. It would appear moreover that the Court of King's Bench considered that the case was not ready for final determination upon the record submitted, and that the defendant should be allowed generally to enlarge its evidence, in addition to the introduction of the testimony which had been excluded at the trial. At the second trial the case was heard before Duclos J. The plaintiff renewed its objection to an accounting with those who were not parties to the action, and to evidence of deposits which were not appropriated to reduce or satisfy the plaintiff's claim. The objection was over-ruled by the learned judge, as governed by the judgment of the Court of King's Bench, and a large volume of additional evidence was taken, including the testimony of Bowler, who had been examined in England upon commission, and the evidence of expert accountants, who had been engaged in the case on defendant's behalf, and who produced a number of statements or exhibits which they had compiled to illustrate or establish their conclusions, covering 84 pages of the third volume of evidence.

In the result Duclos J. found that the defendant had received the cheques in question for value in good faith, and without knowledge or notice of the defect in title of Cahan, Jr., which the plaintiff alleged; that the circumstances existing at the times when the cheques were received by the defendant were of a nature to quiet or lull to sleep any suspicion which the defendant bank might otherwise have entertained; that the plaintiff had suffered no loss by reason of the withdrawal of the funds represented by the cheques, and that the money with which these cheques were met was not the money of the plaintiff, but was Stolen money, to which the plaintiff could acquire no title.

The plaintiff appealed from the judgment of Duclos J.., directly to this court.

Upon the merits of the case I find myself in substantial agreement with the judgment pronounced by Maclennan

J. upon the first trial, and I do not think that the evidence given later changes the aspect of the case. I have come to the conclusion that the defendant received the proceeds of the cheques in question from the plaintiff's bank account out of moneys which were in the plaintiff's possession, and without the plaintiff's authority, having notice, of which the cheques themselves were prima facie evidence, that Cahan, Jr., the defendanit's endorser, was not entitled to the cheques, or to appropriate their proceeds, and that in these circumstances the plaintiff is entitled to recover from the defendant the amount so received by it as money had and received by the defendant to the plaintiff's use, or as money of the plaintiff received by the defendant which was not due to the latter. Art.

1047 C.C., Sinclair v. Brougham (1); John v. Dodwell (2).

There can be no doubt that Cahan, Jr., as a director of the plaintiff company, and Bowler as director and secretary-treasurer, could not lawfully exercise the authority which they had to draw cheques upon;the company's bank account for the business of the company in a manner to appropriate the amounts standing to the plaintiff's credit to their own purposes, or to the purposes of either of them individually. The rule is universally recognized and founded upon abundant authority that an agent, whether of a company or person, cannot be permitted so to execute his mandate as to bring his own interest into conflict or BANK competition with that of his principal.

In Parker v. NewcombeJ McKenna (1), the Lord Chancellor (Cairns) says:- Now the rule of this court, as I understand it, as to agents, is not a technical or arbitrary rule, it is a rule founded upon the highest and truest principles of morality. No man can in this court, acting as an agent, be allowed to put himself into a position in which his interest and his duty will be in conflict.

In North West Transportation Company v. Beatty (2), Sir Richard Baggallay, pronouncing the judgment of the Judicial Committee of the Privy Council in a Canadian case, says:- A director of a company is precluded from dealing, on behalf of the company, with himself, and from entering into engagements in which he has a personal interest conflicting, or which possibly may conflict, with the interests of those whom he is bound by fiduciary duty to protect; and this rule is as applicable to the case of one of the several directors as to the managing or sole director.

In the application of this rule the principle has been enunciated, and it is established by conclusive authority, that when an agent gives to his individual creditor, or for his personal benefit, the paper of his principal, and thus uses the latter's credit for his private purposes, without authority of his principal, not only is he guilty of fraud, but the person who accepts the paper has, from the very nature of the transaction, prima facie notice that the agent is mis-applying the security or credit of his principal, and therefore acting without due authority.

In re Riches Ex Parte Darlington District Joint Stock- Bank Company (3), Lord Westbury said:- I may also adopt a passage which I find in a book of considerable merit, the late Mr. Smith's Compendium of Mercantile Law,-a passage which was cited with great approbation by judges of the Court of Common Pleas in the recent case of Leverson v. Lane (4), and which is as follows:- "It would seem that the unexplained fact that a partnership security has been received from one of the partners in discharge of a separate claim against himself, is a badge of fraud, or of such palpable negligence as amounts to fraud, which it is incumbent on the party who so took the (1) [18741 L.R. 10 Ch. App. 96,

(3) [18651 4 De G. J. & S. 581, at p. 118.

at p. 586.

(2) [1887] A.C. 589, at p. 593.

(4) [18621 13 C.B. N.S. 278, at pp. 282, 285.

security to remove by showing either that the partner from whom he received it acted under the authority of the rest, or at least that he himself had reason to believe so."

It is immaterial whether the partnership security is applied in discharge of an existing debt or whether it is used by the individual partner for the purpose of obtaining money from his own bankers to be applied for his own personal purposes.

BANK OF In John v. Dodwell & Company, Ltd. (1), Lord Haldane spoke as follows:- NewcombeJ However, it is none the less clear that, innocent of fraud as the appellants were found to be, they, by the action of their clerks, took an unmistakable and grave risk in the transactions in question. On the face of these Williams was, without showing authority to do so, drawing cheques for his own purposes on the respondents' funds at their bankers. If it turned out that the respondents had not allowed him to do so, and would not ratify his action, the notice which the appellants had got through the agency of their clerks of what was prima facie a breach of duty on his part would deprive them of all title to hold the cheques as against the respondents, if the latter should challenge the transaction.

There is a very apt statement in Stainer v. Tysen (2), where the defendant executed a broad power of attorney authorizing the attorney to draw and endorse notes for and in the name of the defendant, and in the exercise of this power the attorney made and delivered a promissory note to satisfy an indebtedness to the plaintiff of a firm of which the attorney was a member, but in which the defendant had no concern.

The note was made in the defendant's name, payable to the firm, and by the firm endorsed to the plaintiff.

The court, dismissing the plaintiff's action upon this note, said:- There is no doubt that a power drawn up nakedly to do acts for and in the name of the principal negatives all idea of interest in the agent, or authority to act for the benefit of any one beside the principal. This limitation therefore, the plaintiff was bound to notice. * * * When a person sees the note of a stranger made endorsed by one of the payees to discharge their own debt, and takes such an endorsement, he has seen enough, in connection with the power, to raise a strong suspicion, not to say conviction, that the whole is a fraud upon that stranger. It is too much to allow that he may shut his eyes and say, he supposed there were some special circumstances on which the attorney had a right thus to act. The transaction is, on its face, out of the ordinary course of business.

There is also a lucid exposition of the law to be found in the judgment of the Circuit Court of the United States for the southern division of New York in Anderson v. Kissam et al (3), a passage which was not questioned, although the (1) [19181 A.C. 563, at pp. 568- (2) [1842] 3 Hill (N.Y.), 279. (3) [18881 35 Fed. Rep. 699, at p. 703.

judgment was reviewed by the Supreme Court upon another point. The senior circuit judge said:

Therefore, if there is any significance in the fact that a bank president or cashier offers negotiable paper of his corporation, made by him in his official character, in payment of his personal debt, or to raise money for his personal use, it matters not that bankers generally do not appreciate it. If they regard the transaction as equivalent to one in which the individual comes with money in hand, they ignore its real character, NewcombeJ because in that case he comes with what purports to be his own, having the possession which implies title and ownership, and the right to use it as he sees fit. When he comes with money obligation of a corporation, which is the contract of a corporation only because he has made it, and which is not its contract if he has made it without authority, the transaction is a very different one.

Every person who takes such an obligation must ascertain at his peril that the agent who has made it was authorised to do so; and the moment that it appears that the contract has been made for the agent's own use and benefit, that moment his authority is impugned and impeached. No principle of the law of agency is better settled than that no person can act as the agent for another in making a contract for himself. Therefore it is that a bank president or cashier has no implied authority to bind his corporation to negotiable paper made for his own use; and if it appears upon the face of the paper that it is payable to the individual who has made it in an official capacity, the obligation is nugatory, and no purchaser can enforce it.

These American decisions serve to illustrate a rule which is in conformity with the judgments of final authority in England, and, as said by Cockburn C.J., in Scaramanga v. Stamp (1) :

The sound and enlightened views of American lawyers in the administration and development of the law-a law, except so far as altered by statutory enactment, derived from a common source with our ownentitle their decisions to the utmost respect and confidence on our part. The principle under consideration underlies the provisions of the Civil Code respecting mandate.

By article 1704 it is provided that the mandatory can do nothing beyond the authority given or implied by the mandate.

By article 1706, an agent employed to buy or sell a thing cannot be buyer or seller of it on his own account.

The commentaries of the French authors are practically in accord. Delange, Des Soci6t6s Commerciales, 1843-1-255; Dalloz, Jur. G6n., Rep. 40; Soci6t6, no. 927, p. 561; R4p. 30, Mandat-no. 386, p. 741; J. B6darride, Droit Commercial, Des Soci6tes, 1857, Liv. 1, Tit. III, pp. 159 and 185. It would be easy to multiply the references. The principle was affirmed in this court in Creighton v. The Halifax (1) 118801 5 C.P.). 295, at p. 303.

Banking Company (1), where two firms were carrying on different businesses, Esson & Company, which was largely coRonTIoN indebted to the respondent bank, and of which William Esson was a member, and Creighton & Company, of which the appellant Samuel Creighton and William Esson were also members, Creighton having no interest in the firm of Esson & Company.

William Esson drew a promissory NewcombeJ note in the name of Creighton & Company, payable to Esson & Company, without the authority of Creighton, and endorsed it in the name of Esson & Company to the respondent bank on account of the indebtedness of Esson & Company to the bank. Sir William Ritchie C.J., gave the following reasons for judgment in agreement with the other members of the court:

We do not think it necessary to hear further argument in this case. I think the evidence and findings of the jury afford sufficient material to establish that Esson signed the note in question in the name of the firm of Creighton & Co. without the authority of his co-partners, that he endorsed it in the name of Esson & Co-whether with or without authority is not material-and that he took it to the bank and had it discounted, and I am of opinion that the bank had a fair intimation that Esson was using the name of the firm of which Creighton was a partner, for his own private purposes, which was an illegal transaction; therefore, I think it should have put the bank on enquiry as to Esson's authority, and the facts shown threw on the plaintiffs the burthen of showing that the transaction was a right and proper one. Had they made the enquiries they should have made they would have seen that Essen was using the name of Creighton & Co. without authority, and that they should not have discounted the note.

Not having made such inquiries, the loss should not fall upon Creighton, the partner whose name was unlawfully used, but upon the bank.

There seems to be no material difference between Creighton's Case and this one, although in the former the fraud was committed by means of a promissory note, while in the latter the money was withdrawn directly from the plaintiff's bank account by means of cheques made payable to the fraudulent director or agent.

The incapacity of an agent in such circumstances to use the credit of his principal for his own benefit seems thus to have been so well established that upon first impression it seems wonderful that a bank would pay these cheques without any inquiry or explanation to ascertain or to show that they were issued by the plaintiff's authority. A bank cashier of ordinary experience and care should have been (1) [1890] 18 Can. S.C.R. 140.

put on enquiry when these cheques were presented to him by a private customer, since, by the terms of the cheques AGENCES themselves, it was open to doubt whether the customer had a good title to them. Ross v. London County Westminster and Parr's Bank Ltd. (1).

Mr. Scott, the manager of the respondent bank, tells us, however, why it was that Newcombe J he took the cheques. It was because he relied upon the integrity of Cahan, Jr., and upon his ability to discharge the obligations involved in his endorsements of them and the receipt of their proceeds.

Mr. Scott explains that Cahan, Jr., had kept his account in the respondent bank from the latter part of 1913 or the beginning of 1914; that the account had been absolutely satisfactory, E.nd that prior to the disappearance of Cahan, Jr., in 1919, he had never heard anything against his character or integrity. Mr. Scott gave the following testimony:

Q. P.C.-85 is a cheque dated November 1, 1919, for $4,000; that cheque was brought to your personal notice and initialed by you?

Q. Did you know what the capital of the Corporation Agencies Limited was at that time?

A. No, sir.

Q. That cheque was not accepted by the Merchants Bank of Canada at the time you initialed it for payment?

A. No, sir.

Q. You did not know what the financial standing of the plaintiff, the Corporation Agencies Limited, was at that time?

Q. Then on what were you relying for protection of your bank at the time you initialed that cheque and authorized the payment of $4,000 in cash to C. H. Cahan, Jr.?

A. On C. H. Cahan, Jr's., endorsation.

Q. Did you at the time you initialed this cheque regard it as peculiar that C. H. Cahan, Jr., was drawing a cheque to his own order for so large a sum as $4,000?

A. No, sir, I did not.

And again, generally:

Q. Did it not sound a note of warning to you, Mr. Scott, when Mr. C. H. Cahan, Jr., was depositing cheques of a company of which he was director to his own personal credit?

A. Having the confidence in Mr. C. H. Cahan, Jr., that we had, it never entered our heads.

Q. And really you say you were relying upon the financial credit and stability of C. H. Cahan, Jr.?

A. Yes.

In these circumstances I see no reason for the contention of the respondent bank, founded upon the judgments in (1) [1919] 1 K.B. 678, at p. 686.

Morison v. London County and Westminster Bank (1), a case which is also distinguishable upon other grounds, that its officers paid these proceeds to Cahan, Jr., because s they were lulled to sleep by the fact that the payment of previous similar cheques by the bank in like manner had not at the time elicited any protest or objection from the plaintiff company. I should think that Mr. Scott, if he gave the matter the least consideration, must have realized that these cheques were prima facie irregular and imported absence of authority; but he appears to have had great confidence in Cahan, Jr.; he was always ready to initial the cheques and to pass them on for payment by the bank when, as sometimes happened, his attention was especially directed to them by his clerks, and evidently it was because he relied upon Cahan, Jr., and the latter's bank account, that he abstained from enquiry.

The defendant put in evidence by-law no. 22 of the plaintiff company which provides as follows:- And it is contended that inasmuch as the plaintiff company had thus allowed its directors to contract with it, and inasmuch as by-law 54, which has already been quoted, provides that contracts and engagements on behalf of the company may be made and cheques drawn or endorsed by the secretary-treasurer, acting jointly with any director, the defendant bank was entitled to assume without enquiry, upon presentation of the cheques for payment, that the director, Cahan, Jr., had received them from the company in discharge of contractual obligations to him which the company had undertaken; and moreover, that because the cheques were signed not only by the director, Cahan, Jr., who was the payee, but also by the secretary-treasurer of the plaintiff company, the authority for the issue of these cheques was sufficiently certified by the latter and that this fact in itself made further enquiry unnecessary.

It will be remembered, however, that the defendant paid these cheques without any enht quiry whatsoever, or any information, either from the plaintiff or from Cahan, Jr., as to the reason why, or the circumstances in which, he was entitled, or claimed to be entitled, to receive from the plaintiff any of the payments for which the cheques were drawn. If there were proof that Cahan, Jr., had represented to the manager of the defendant bank that he was a contractor with the plaintiff company, and that the cheques were issued to him in payment or on account of moneys payable to him under his contract, and if the company had been informed of by-law no. 22, or if Cahan, Jr., had directed attention to it, as showing that he was not disqualified to contract with the company, it may possibly be, I do not decide it, that such an explanation would be held reasonably sufficient to justify the bank in the payment of the cheques; but neither did Cahan, Jr., nor anybody on his behalf, or on behalf of the plaintiff company, inform the bank or pretend that any contract had been made in pursuance of the by-law, or that the payments were being made on that account.

Moreover, in the absence of any by-law upon the subject a director's disqualification to contract with his company is not absolute; he may, disclosing his interest, contract with the company's consent, and there is thus always a possibility that payments may be due by a company to one of its directors as a. contractor. That possibility I suppose existed in every one of the decided cases, but it was never suggested that it afforded any justification or excuse. A general by-law authorizing the making of such contracts may lead to the conjecture of this explanation, but it does not by any means exclude the suspicion of fraud nor rebut the prima facie evidence of fraud which the paper itself discloses; it does not in my opinion justify the banker to abstain from enquiry, especially when, as in the present case, it is not shown that the bank considered or was even aware of the by-law, and it is not pretended that the bank was in fact influenced thereby. On the contrary, as I have already shown, the bank took the cheques because of the endorsation of Cahan, Jr. Then, as to the excuse that the cheques payable to

Cahan, Jr., the defaulting director, were signed not only by him but also by Bowler, the secretary-treasurer of the plaintiff company, the answer is that two directors, no more than one, can authorize the misappropriation of the company's money, and that prima facie the payee of a cheque receives the proceeds for his own purposes, and when therefore a director, either solely or jointly with another, signs a cheque upon the company's bank account in his own favour the cheque on its face is evidence of absence of authority, or the exercise of his powers for a purpose which is incompetent to him. In Creighton v.

The Halifax Banking Company (1), to which I have already referred, Strong J. quotes the following passage from the judgment of Lord Westbury in Re Riches (2):- And he adds, upon the authority of Lord Justice Lindley, that such a transaction

Moreover it is stated in Lindley on Partnership, 5th ed., p. 171:- Therefore I conclude that, while it may be less likely that two directors would lend themselves to the fraudulent purpose of appropriating the company's money for the private use of one of them than that the latter alone should do so, it is nevertheless, even where two directors join, prima facie evidence of fraud that one of them is making use of the company's funds for his own individual purposes.

The irregular or fraudulent deposits to the credit of the plaintiff's account in the Merchants Bank were made by means of cheques payable to the plaintiff's order, and thus required the plaintiff's endorsement to authorize their deposit; these cheques could therefore have come to credit only by the endorsement of Cahan, Jr., or Bowler, who had the plaintiff's authority to endorse cheques payable to its order.

The officers who endorsed the cheques had, by the company's by-laws, explicit authority to endorse. Thus the money found its way into the plaintiff's possession as a credit belonging to the plaintiff and under its control, because it went into the plaintiff's bank account on which the plaintiff could have operated. If the plaintiff's officers, other than Cahan, Jr., and Bowler, did not in fact know that the money was credited before the defendant drew it out, it was because they blindly trusted Cahan, Jr., and Bowler.

Certainly they had means of knowledge by the exercise of which, with ordinary diligence, they would have become aware of what was taking place in the company's bank account; the plaintiff cannot, I should think, permit its bank account, for a year or more, to be made the repository of other people's money by its appointed and entrusted officers, to whom was in fact committed the management of its business, and escape liability upon the ground that it was ignorant of the deposits. Marsh v. Keating (1); Jacobs v. Morris (2), and upon appeal (3); In re Carew's Estate (4); Le Neve v. Le Neve (5); In re European Bank (6); Rolland v. Hart (7); Boursot v. Savage (8).

There can be no doubt as to the validity and binding effect of the deposits as between the plaintiff and the Merchants Bank; they were made in strict accordance with authority conferred. No question of ratification, express or implied, arises involving an assumption of responsibility by the plaintiff company for the fraudulent outgoings from its account. The plaintiff having received the money became liable for its proper application.

It promptly repudiated all authority for the persons concerned with the cheques by which the money was withdrawn. I have shown that the defendant bank had no title to them. It is a part of the defendant's case that it bought these cheques from Cahan, Jr., and collected their proceeds, not as his agent or mandatory, but as the owner of the cheques and for its own benefit. Thus the defendant wrongfully converted the cheques to its own use and received their proceeds.

The defendant bank, having acquired the cheques in suit upon the faith of the endorsement of Cahan, Jr., the payee, cannot justify its claim to them except by establishing the title of Cahan, Jr.; and if, as Lord Herschell said in The London Joint Stock Bank v. Simmons (1), then it must be taken that the defendant bank had knowledge, when paying the cheques, that they were unauthorized by the company, and therefore is not entitled to urge that the payment of these cheques served lawfully to entitle it to the money by which the plaintiff's balance was reduced.

The deposits in the plaintiff's bank account, out of which these cheques were paid, were not the less in the plaintiff's possession because its accountability for them, or for some portions of the blended fund, may depend upon the tracing of the money to its sources, or upon other considerations affecting its ultimate ownership. The accounting for the various amounts paid in, or the application of these sums, may be a matter of some difficulty. Questions of set off or compensation and of the imputation of the payments may arise, but these do not affect the defendant's present liability to restore the amount which it withdrew without authority. The plaintiff, accepting its responsibility to make proper application of the funds which came into its possession, is entitled to have these funds in hand.

It is useless to contend that there were no assets or money of the plaintiff involved. The deposits were treated as money by the Merchants Bank which gave credit for them to the plaintiff in its bank account, and subsequently paid them out to the defendant in response to the fraudulent drafts which it presented. It seems not to be questionable that the deposits in the Merchants Bank were money in the plaintiff's hands, or that when withdrawn they actually were money in the hands of the defendant. In Spratt et al v. Hobhouse et al (2), Best C.J. said:

And Park J., said:

The defendant bank has presented a number of accounts prepared by the accountants whom it retained for the purposes of the action, covering the period from the end of March, 1919, to 26th December following, during which the cheques in suit were made and issued, with the object, so far as I can perceive, of showing that, if the plaintiff's interest in this action is, as I understand the defendant to contend, limited to the amount by which the balance in its bank account at the beginning of the period exceeded the amount which stood to its credit at the end of the period, that excess is negligible. It is said that the plaintiff's balance in its account in the Merchants Bank on 27th December, 1919, after the last of the fraudulent cheques had been paid, was not less than it was nine months previously when Cahan, Jr., made the first of the cheques which are the subject of the action. But, even if this were so, it ought not to affect the plaintiff's right of recovery, because, nevertheless, in the interval, the defendant withdrew from the plaintiff's account, with which it had no authority to meddle, the total amount claimed in the action; and it cannot of course justify this trespass, and the conversion of the deposits, either upon the ground that the money which it appropriated came into the plaintiff's account and possession in the period during which Cahan, Jr., and the defendant were illegally operating upon the account, or because the balance to the credit of the account consisted for the greater part of deposits made by Cahan, Jr. Indeed this contention is but a restatement the argument that possession of property does not give title as against a wrongdoer who converts it, sud that argument, in whatever form it is stated, must, as I shall presently show, upon principle and authority be rejected.

The results of the accounts which the defendant submits are founded very usually upon facts which are not disputed; but in other respects they depend upon inferences which might or might not be found to coincide with the facts which would appear if the individuals or corporations concerned, and whose moneys are said to be represented in the deposits, were parties or represented in an accounting; and it is, I should think, obvious that the plaintiff's right to recover the possession of the money of which it was deprived by the defendant cannot be affected by a partial or ex parte accounting or by evidence of the character submitted. There can only be a conclusive accounting by agreement of the parties or by enquiry and judgment of the court in proceedings in which they are represented.

It is unnecessary to consider the effect of the kiting of the cheques, because it appears to be certain that, independently of any cheques which represent kiting transactions, there is actual money in the case to an amount in excess of that which the plaintiff claims.

One of the defendant's exhibit shows that there were -net defalcations of Cahan, Jr., in respect of securities and money which actually belonged to the plaintiff amounting to $38,961.92.

McDonald, the defendant's expert accountant, testifies in effect that during the time from 29th March to 31st December, 1919, there were deposited in the plaintiff's account in the Merchants Bank $142,345.60 from Cahan, Sr's., account, and that during the same period there were deposited $97,184.21 from Cahan, Jr's., account in the defendant bank; it has been found impossible to asoertain the source of the latter amount; it is thought to represent profits derived by Cahan, Jr., from his stock speculations; that perhaps is mere conjecture; but although, in the absence of strict accounting, the origin of the deposits cannot definitely be ascertained, it seems to be a perfectly legitimate and indeed necessary inference from the evidence that an amount considerably more than that which is claimed in the action came from sources which had nothing to do with the kiting of cheques. I have already shown that according to the findings of the trial judge, the money which paid the fraudulent cheques was stolen from Cahan, Sr.

The defendant bank contends that it is entitled in this action to any relief to which Cahan, Jr., would have been entitled, if the plaintiff company had proceeded directly against him, and the defendant relies upon art. the Civil Code, which provides that:- But, to mention only one of the answers to this contention, the defendant bank is not a creditor of Cahan, Jr., and its principal defence in the action depends upon the denial of facts out of which, in the transactions involved in the case, it could become a creditor. I am satisfied that the defendant derives no advantage for purposes of the present action from art. 1031 C.C.

In the view of the trial judge the case of " Mr. A.", Robinson v. Midland Bank, Ltd. (1), is decisive of this action, and he would reject the plaintiff's claim because the moneys to the credit of the plaintiff, in the Merchants Bank, witi which the cheques in question were paid, were, as he says, stolen by Cahan, Jr., from his father's funds in the Bank of Montreal (Montreal and New York branches) and the Guaranty Trust Company of New York, and he applies an observation of Lord Darling's judgment, who is reported to have said:- Upon the assumption that it was stolen money, deposited by the thief in the plaintiff's account in the Merchants Bank, that the defendant bank received in payment of the cheques, it may be observed that to this extent there is a similitude between this case and that of " Mr. A.," in that the plaintiff here seeks, as did the plaintiff in the case of "Mr. A.," to recover from a bank stolen money which had found its way into the bank.

But in the case of "Mr. A.," the plaintiff failed because the money had not been received by the bank for his account and he had no title and no right of possession, not because the money had been stolen, while in the present case the Merchants Bank held the money for the plaintiff, and the latter has at least the right and title of possessor which is sufficient to enable it to maintain this action as against the defendant which had wrongfully deprived the plaintiff of its possession.

In Gordon v. Chief Commissioner of Metropolitan Police (1), Buckley, L.J., said:- There is no ground of public policy upon which the defendant should keep that which under no circumstances is his. It may be that the plaintiff never ought to have acquired that property, but, having acquired it, his cause of action to recover it from the person who deprives him of it arises only from the fact of deprivation.

North & South Wales Bank v. Irvine (2); Kleinwort v. NewcombeJ. Comptoir National d'Escompte de Paris (3); The Wink- field (4); British America Elevator Co., Ltd. v. Bank of British North America (5).

In Eastern Construction Company, Ltd., v. National Trust Company, Ltd.. and Schmidt (6), Lord Atkinson, delivering the judgment of the Judicial Committee of the Privy Council in an appeal from the Province of Ontario, and referring to the statement of Lord Campbell in Jeffries v. Great Western Railway Company (7), that as " against a wrongdoer possession is title," said:- That is no new doctrine. It was decided in 1721 in Armory v. Delamirie (8), " that the finder of a jewell, though he does not by such finding acquire an absolute property or ownership, yet he has such a property as will enable him to keep it against all but the rightful owner, and consequently may maintain trover." That principle was affirmed as applicable to a bailee by the case of The Winkfleld (9).

But this case and the case of Jefferies v. Great Western Ry. Co. (10), were approved of by Lord Davey in giving the judgment of the Judicial Committee of the Privy Council in Glenwood Lumber Co. v. Phillips (11), and it must be now taken as conclusively established.

In Moffatt v. Burland (12), Dorion C.J. said:

In 1848, the Court of Queen's Bench decided, in the case of Mills v. Philbin et al (13), that although the plaintiff had admitted on faits et articles, that he had no interest in the note sued upon, that he only held it for the purpose of collection, and that the money when collected would go to one Malo, still he was entitled to recover judgment.

Similar decisions had already been given by the Court of Appeals, the first on the 20th of July, 1821, in the case of Armour v. Main, and the second on the 20th of January, 1838, in the case of Ferrie v. Thompson (14). These rulings were in accordance with the well known rule of law that he who has an apparent title can enforce such title in the courts of justice as against every one except the real owner of the thing claimed, or as Troplong puts it in his Trait6 du Mandat, no 43: Ce dernier, le pr6- (1) [19101 2 K.B. 1080, at p.

(8) [17951 1 Str. 505; 1 Sm. L.C. 166 and others.

(2) [1907] 24 TJL.R. 5, at p. 8;

(9) [1902] P.D. 42.

[1908] A.C. 137, at p. 141.

(10) 5 E. & B. 802, at p. 805. (3) [1894] 2 Q B.D., 157.

[1904] A.C. 405, at p. 410. (4) [1902] P.D. 42.

[18841 4 Dor. 57, at p. 73. (5) [19191 A.C. 658.

(1847] 3 Rev. de L6g. 255. (6) [1914] A.C. 197, at p. 210.

(14) [1838] 2 Rev. de L6g. 303. (7) [1856] 5 E. & B., 802, at p. 805.

A In Porteous v. Reynar (1), the Judicial Committee of the the Privy Council had no hesitation in adopting the reasoning and decision of Dorion C.J., in Moffatt v. Burland (2) ((as consistent with reason and law."

In Sinclair v. Brougham (3), Lord Dunedin, said: If I am right in the view that the defendant bank had actual notice of Cahan, Jr's., lack of title to the cheques, or to apply their proceeds for his individual benefit, or knowledge of facts which should have raised suspicion as to the validity of this title or right, and which should therefore have put it upon enquiry to ascertain or to satisfy itself that Cahan, Jr., was acting with the plaintiff's authority; and if the defendant, with this notice or knowledge, and without any inquiry or explanation, paid the cheques to Cahan, Jr., upon his endorsement, then it follows that the defendant acquired no right or title to the cheques, or to their proceeds, which the defendant received from the Merchants Bank out of the funds standing to the plaintiff's credit. Moreover it follows that, whatever may have been the legal position as between the plaintiff and Cahan, Sr., or others to whom it may have been accountable, its possession of the money as between itself and the defendant conferred a right or title, not in the nature of a limited interest, but absolute and complete. As against a wrongdoer possession is title which cannot be disturbed. The defendant bank was a wrongdoer; it had no vindicable title. I would therefore allow the appeal.

Appeal dismissed with Solicitors for the appellant: Lafleur, MacDougall, Macfarlane and Barclay.

Solicitor for the respondent: W. K. McKeown.

Right of - Ownership- ..................................

ADMIRALTY LAW - Damages-Collisionat sea-Insurance-Unexpired portion of premium.] In an action claiming damages for loss of a ship in a collision the owner cannot recover the amount of the unexpired portion of the premium paid for insurance against such loss.-Judgment of the New Brunswick Admiralty

Division (11924] Ex. C.R. 229) varied,

SIP PER- SHIP R. P. &

W. F. LTD.................

2 - Shipping - Seamen - Collision - Action in rem- Navigation.] A collision occurred between the C. owned by the appellant company and the K. on the St.

Lawrence, off shore near Graveyard

Point; the former coming down stream and the latter going up. The C. having the right-of-way under rule 25 exercised her right to elect for the north side of the channel and gave a two-blast signal to the K. in ample time to warn the K. of her election to proceed to port, which was not answered. When about 1,000 feet apart, the C., perceiving that the K.

did not answer nor comply with her signal and that the K. was on a course nearly at right angles to the C., sounded the danger signal, immediately followed by a two-blast signal, answered by the K.

with two-blast, putting her helm to starboard and reversing her engines at full speed astern, instead of putting her helm hard astarboard.

The C. starboarded and then ported her helm to avoid grounding and struck the K. amidship.-Held, that the C. coming down with the current had the right to elect which side she would take, under rule

25 of the rules for navigating the St.

Lawrence above Montreal and that the K.

was wholly responsible for the collision and the damages which ensued.-Held also that a defendant's negligence may cease to operate as the efficient cause of an accident which would not have happened in the absence of it, if notwithstanding the defendant's negligence the accident be directly and proximately brought about by some supervening negligent act or omission by the plaintiff but that principle does not apply in the circumstances of this case where the defendant's negligence operated beginning to end and step by step in natural and obvious sequence so as to render escape from its consequences

ADMIRALTY LAW-Concluded impossible or so hazardous as not to commend the attempt to reasonable judgment.-Judgment of the Exchequer Court of Canada

Quebec Admiralty District ([1924] Ex. C.R. 196) reversed. LINEs

LTD B. 1. . . . . ANNEXATION-Municipal

-Part of township annexed to city- School section-Moneys on hand at annexation-Public School Act [1920] c. 100, s. 27 (1).]

Sec. 27 (1) of the Public School Act, 1920, provides that "where part of a township

* annexed *

* an urban municipality part shall for all school purposes be deemed to be part of the urban municipality."-In Dec. 1921, the Ontario Ry. and Mun. Board made an order directing that a part of the township of Sandwich W., comprising the whole of school section no. 11, should be annexed to the city of Windsor. The order was to take effect on Jan. 1, 1922, but by arrangement the former trustees continued to manage the affairs of the school section until April 1. At the end of 1921 the school section had a balance on hand and received in March, 1922, $4,000 from the township council on account of taxes for 1921, and in February, 1922, $200, the statutory contribution to teachers' salaries for 1921.-Held, that as the school section became for all school purposes part of the urban municipality on January 1, 1922, and as the money in question was proceeds of or chargeable against the rates of 1921, the urban Board of Education was entitled to recover, the annexation operating to transfer the school to the city as a going concern.

TURNER.......................... APPEAL-Jurisdiction-Income War Tax -Penalty-Criminal matter-Income War Tax Act, (D.) 7-8 Geo. V, c. 28, s. 8, 9; 9-10 Geo. V, c. 55, s. 7; 10-11 Geo. V, c. 49, es. 11, 13; 11-12 Geo. V, c. 33, s. 4- Supreme Court Act, R.S.C. (1906), c. 139, a. 36, 41 (b)--Criminal Code, ss. 706 761, 1024 (a), 1029.]

Section 9 (1) of The Income War Tax Act enacts that for every default in complying with certain sections persons in default "shall be liable on summary conviction to a penalty of $25 for each day during which default continues."

The respondent, having pleaded guilty on an information laid for a breach of section 8 of the Act, was fined $3 per day, the magistrate APPEAL-Continued holding that he could, in his discretion, impose a lesser penalty; and the decision was affirmed by the Appellate Division.

The appellant moved for special leave to appeal to this court.-Held, that special leave to appeal to this court could not be granted.-Per Anglin C.J.C. and Mignault, Newcombe and Rinfret JJ. The proceeding in this case does not fall within the civil jurisdiction of this court under s. 41 (b) of the Supreme Court

Act, but is a "criminal cause" within the meaning of the exception in s. 36 of that

Act.-Per Duff J. The proceeding being in form a criminal proceeding and the judgment not being a mere order for the payment of money, the right of appeal to this court, if any, must be found in the rovisions of the Criminal Code.

TBE

GmV.

BELL.....................

- Bankruptcy -Leave to appeal-Delay-Enlargement-Filing of petition in the registrar's office-Sufficiency

-Bankruptcy Act (D) 9-10 Geo. V, c. 36, s. 63, 66, 74 and rule 72-Supreme Court

Act, R.S.C. (1906), c. 139, rule 108.]

A judge of the Supreme Court of Canada cannot, under rule 108 of that court, enlarge or abridge the statutory delay provided by rule 72 of the Bankruptcy

Act for making "an application for special leave to appeal" to this court, which rule

72 is not inconsistent with the provisions of the Act (s. 74).-The filing of a petition for leave to appeal in the registrar's office within the delay will not suffice to meet the requirements of rule 72. BoivIN v

& Picd ..........

3-Finaljudgment-Substantive matter- Pleading-Action on separation agreement-Defence-Breach of conditions - Reply-Excuse for breach-Scandalous charges-Custody of infant.] The Supreme

Court of Canada entertained an appeal from a judgment confirming an order by a judge in chambers to strike out as scandalous and irrelevant a paragraph of the plaintiff's reply to the defence pleaded.

-By a separation agreement the husband undertook to pay his wife an annual sum by monthly instalments and it was provided that the wife should be given the custody of their son but that his father should be allowed to see him with reasonale frequency and should be consulted as to, and satisfied with, his up-bringing.

To an action by the wife for overdue instalments of her annuity breach of the condition as to the son was pleaded.

In a paragraph of her reply the plaintiff set up facts which were scandalous and vexatious if not material and sought to justify such breach by alleging that she had become aware since the agreement was made I hat the character and conduct of the defendant was such that she would not be justified in taking his advice as to, or permitting him to associate with, their

APPEAL-Continued son on account of the bad influence that would likely result therefrom.

On application of the defendant a judge in chamers struck out this paragraph from the reply as scandalous and irrelevant and the court en banc confirmed his order affirming the judgment of the Supreme Court of Nova Scotia ([1925] D.L.R. 277). Idington J. dissenting, that such order was properly made; that the reply alleging the husband's bad character is no excuse for a breach of the conditions in the agreement; and that the only way in which she can avail herself of such a matter would be by producing a judgment or order of the court under the Custody of Infants Act giving her the custody of the son free from the father's right of access.-Held also, that she cannot in this action claim such judgment or order from the court. Order XIX, rule 16, of the court rules.

McLEN-NAN v. Mc- LENNAN......................... 4-Amount in controversy-Loss as the effect of judgment-Municipal Institutions Act, R.S.O. s. 406 Municipal by-law-Street declared residential-Distance from street line for buildings-Frontage-Landowner affected by building - Right of action.] amount in controversy necessary to give the Supreme Court of Canada jurisdiction to entertain an appeal may be determined by the pecuniary loss that would be suffered as a result of the judgment appealed from.-Sec. 406 (10) of The Municipal Institutions Act (R.S.O. [1914] c. 192) authorizes the council of a city or town to pass a by-law declaring any highway or part of a highway to be a residential street and prescribing the distance from the street line in front at which buildings can be erected.

No common law right of action is given to a person prejudicially affected by the erection of a building in contravention of such a by-law and sec. 501 provides that in case of contravention it may be restrained by action at the instance of the corporation.

of Toronto passed such a by-law in respect of lands fronting on the north side of Carlton street between Sherboume and Homewood Av. R. proposed to erect an apartment house on the corner of Carlton street and Homewood Av. at a less distance from the street line than that prescribed by the by-law and fronting on Homewood Av. and a landowner on the north side of Carlton street who would be prejudically affected by its erection and claimed that it would be a contravention of the by-law brought action for an injunction to restrain R. from building it.-Held, affirming the judgment of the Appellate Division (26 Ont. W.N. 401) that the action could not be maintained; it was no part of the scheme of the legislation to create, for the benefit of APPEAL-Continued individuals, rights enforceable by action;

remedies were provided by the Act but none under the general law; and the aggrieved landowner can only resort to those so provided.

5-Final judgment-Demurrers pleadings-Issues of fad-Verdict for plaintifs-Non-suit or new trial refused- Demurrers undisposed In an action on an insurance policy the defendant demurred to counts in the declaration and the plaintiff to some of the pleas.

Pursuant to an order in chambers the issues of fact were first tried. A general verdict for the plaintiff was rendered after nonsuit had been refused. On appeal to the court en banc a motion for nonsuit, for which leave was reserved at the trial, or for a new trial was refused and the defendant obtained special leave to appeal to the Supreme Court of Canada.

Before this appeal came on argument was heard on the demurrers but judgment was not rendered.-Held, that as long as the issues of law are undetermined the judgment on the issues of fact does not decide, in whole or in part, any substantive right of any of the parties and is not a final judgment.-Sec. 36 (b) of the Supreme

Court Act provides that an appeal shall lie from "a judgment upon a motion for a nonsuit."-Held, that the judgment of the court en banc refusing a nonsuit was right;

that there can be no judgment of nonsuit when the issues of law are not before the court.-Judgment a ppealed from ([19241

4 D.L.R. 259) stands.

6--Criminal law-Deafness of juror as ground for-Question of law or fact

"sufficient ground" within discretion court-"Substantial wrong or miscarriage of justice"-Grand jury-Error in written order summoning persons-Oral order judge valid-Presiding judge-Sectionsl0l3 and 1014 Criminal Code-Jury Act, B.C.,

1913, 34,

An appeal on the ground that a juror was. deaf and the jury, therefore, illegally constituted is not an appeal a question of law within clause (a) of section 1013 Cr. C., neither is the question one of fact alone or of mixed law and fact within clause but it falls within clause (c) of that section;

and therefore leave of the Court of Appeal was a condition precedent to the respondent's right of appeal to that court.- Although on the case being referred back to the Court of Appeal the respondent may obtain leave, his appeal on the ground of the disqualification of the petit juror would ultimately fail, because in the circumstances of this case, even though that disqualification should be established, it did not cause a miscarriage of justice (s. 1014 (1)

APPEAL-Concluded wrong or miscarriage of justice has actually occurred"

(s.

1014 (2).-An order made by the judge designated to preside at the assizes directing the sheriff to summon other persons to serve on the grand and petit juries in the places of those whom the sheriff had been unable to serve was drawn up, by inadvertence, to cover only the summoning of petit jurymen.-Held, that the order as pronounced by the judge may be regarded as the order made by him rather than the order in the mistaken form in which it was drawn up, and there had been no illegality in the constitution of the grand jury.-The judge designated to hold the assizes may in advance of the actual opening of the court, for the purposes of section 31 of the Jury Act (B.C. 1913, c. 34) be regarded as the "presiding judge." of the Court of Appeal 2 W.W.R. 40) reversed. BOAK.................... current appeals to the Supreme Court Canada and Privy Council-Stay of proceedings.] Where,

B. being co-defendants, A. has first inscribed an appeal for hearing in the Supreme Court of Canada and B. later on has inscribed an appeal to the Judicial Committee of the Privy Council, upon motion on behalf of B. the proceedings on the first appeal were stayed pending the decision of the Privy Council upon B's. appeal. SHAVER.............. 8reversed- Patent - Weight of evidence-Review and re-weighing.

AQUEDUCT-Contract-Payment advance-Agreement furnish water a farm in perpetuity-Sale of land-Right of buyer as the ayant-cause of the vendor- Arts. 494, 1030, 1499 C.C.]

One Guay in common with several other landowners entered into an agreement with an aqueduct company whereby the latter, in consideration of the payment of a lump sum by each of the landowners, undertook to furnish water to their farms in perpetuity.

Subsequently Guay sold his farm to Fortin without any express assignment of the right to the water of the aqueduct. The aqueduct company having demanded from Fortin payment of the amount fixed by its tariff for the supply of water:-Held, that this stipulation having been made by Guay for the use of his farm and having created a right accessory thereto Fortin, as ayant cause d titre particulier of Guay, could set up this agreement as a defence to the company's action.-Judgment of the Court' of King's Bench (Q.R. 38 K.B. 75) affirmed. LAc ST. JEAN v. FORTIN................... ARCHITECT-Contract-Annual salary

-Extra commission on new works-Death before full execution of works-Right as to part of commission for preparation of plans and specifications.] On 1st May, 1921,

T. agreed to act as architect for the exclusive benefit of the appellant in consideration of an annual salary of $3,000 which comprised all disbursements, commission or fees which the appellant would have paid otherwise for the same services.

On 18th May, 1923, the appellant passed a resolution granting to T. over his salary a commission of 1i per cent on the cost of all new constructions.

T. died on the

6th November, 1923, without having received any part of such commission.

The respondents are the executors of the estate of T. and claimed from the appellant the amount of salary due to T., the commission of 11 per cent for all works already done on the new buildings and a further commission of I per cent on the total cost of the buildings when completed as remuneration for the drawing of the plans and specifications according to the official tariff of architects' fees.- Held that the appellant was not bound to pay any amount over the salary earned and the commission of 1) per cent of the value of the work actually done on the new buildings at the time of the death of

T., such salary comprising any remuneration due him for the preparation of the plans and specifications for these works.

CITA

QuigBEc BILODEAU...........

ASSESSMENT AND TAXES-Taxation

-Income-Logging company-Profitof timber land-Evidence-Onus- Statute-Retroaction-Income and Personal

Property Taxation Act, (B.C.) 1921, 2nd

Sess., c. 48, s. 36.]

Where the powers of a company, incorporated to take over as a going concern a logging business, included the power to acquire timber lands with a view to dealing in them and turning them to account for the profit of the com pany, and it bought a tract of timber landand sold it at a profit the same is not a capital profit but one derived from the business of the company and as such assessable to income tax under section 36 of the Income and Personal Property

Taxation Act (B.C.) 1921, 2nd Sess., c.

48.-A party contesting the validity of an assessment upon income is bound to establish facts upon which it can be affirmatively asserted that the assessment was not authorized by the taxing statute;

and it is only when these facts bring the matter into a state of doubt that the onus falls upon the Crown to show that the profit was earned in an operation which was a part of the business carried on by the assessed party.-But the above

Taxation Act having no retrospective operation the assessment in this case in

ASSESSMENT AND TAXES-Continued respect of profits made before the date of the enactment of the statute is illegal and should be reduced accordingly.- Judgment of the Court of Appeal ([1924] 2 W.W.R. 926) varied.

Co. KING ............. Municipal corporation-Exemption from taxes-Granted to "successors or ayants cause"-Sale-Right of buyer.] Section 4559 of the Town Corporations Act, R.S.Q. (1888) provided that "the council may, by a resolution, exempt from the payment of municipal taxes * ** any person who carries on any industry, or trade, or enterprise

* * 1906, the town of Notre Dame des Neiges (annexed in 1910 to the city respondent) passed a resolution exempting one E. G. and his successors or "ayants cause" from payment of taxes for a period of fifteen years upon farms of a total area of 192 acres, inasmuch as E. G. undertook to subdivide the property into building lots and to build during the first year a certain number of houses. In 1908, E. G. sold his property to the Northimount Land Company to whom right to exemption was confirmed; and the latter sold in 1910 to the appellant part of the property, undivided.

The taxes for 1911, $1,000, were paid to the respondent; but the taxes for 1912 and 1913, $3,675, were unpaid. Proceedings were taken by the respondent for the sale of the property owned by the appellant.

The latter pleaded that, under the terms of the resolution, it was entitled to the benefit of the exemption granted to its predecessor in title, as its successor or "ayant cause." At the time of the action the property bought by the appellant was still vacant. that the appellant, not being presumed owing to its character and aims to have purchased the tract of land for the purposes of engaging in speculative building, was not an ayant-cause of its vendor and therefore was not entitled to claim the exemption from taxes granted to the latter.

CIT

MONTRPAL........... 3- Federal income tax-"Income"-Profits from illegal business-Income War Tax Act, 1917, s. 3 (1).) Profits made in an unlawful or prohibited business, in this case the illegal purchase and sale of liquor in Ontario, are not "income" as that term is defined in see. 3 (1) of the Income War Tax Act, 1917, and are not taxable under that Act.-Judgment of the Exchequer Court ([1944] Ex. C.R. 193) reversed. 4- Agreement for fixed valuation-Term of years-Computation-Mode of assessment.] In 1907 an agreement was entered into by the city of Ottawa with the Can. At). Ry. Co. which was undertaking to build a hotel in the city to cost not less ASSESSMENT AND TAXES-Continued than $1,000,000.

The agreement provided "that for and during the period of fifteen years next ensuing from and including the year 1909 the total assessed value of the said hotel and the land used in connection therewith and all buildings appurtenances is hereby fixed and agreed upon at the sum of five hundred thousand dollars and no more."

During this period the rates on such valuation were to be the same as those imposed on property owners generally. In 1907 and since the system of the city was-and is-to prepare, not later than September 30 of each year, an assessment roll to form the basis of taxation for the following year if the council of that year so decides.-Held, affirming the judgment of the Appellate

Division (56 Ont. L.R. 153) that the agreement for the fixed assessment value must be construed in connection with the system according to which the first assessment on the hotel property would be levied in 1910; the fifteen year period, therefore, included the year 1924.

CITY

....................

5- Exemption - Charitable institution- Construction of statute-Ejusdem generis- Railway building-Ontario Assessment Act

(R.S.O. [1914] c. 195, ss. 5 (9) and 47 (3) ).]

By see. 9, subsec. 5 of The Ontario

Assessment Act every industrial farm, house of industry, etc., "or other charitable institution conducted on philanthropie principles and not for the purpose of profit or gain" is exempt from taxation.

By see. 47, subsec. 3 "the structures on railway lands and used exclusively purposes or incidental thereto

* shall not be assessed."

A railway company erected, on its own land, a building with all facilities for lodging entertainment and recreation and handed it over to the

Y.M.C.A. which agreed to provide suitable lodgings for its own members and employees of the railway. The railway company did not, and the Y.M.C A.

could not, make any financial gain therefrom.-Held, affirming the judgment of the appellate Division (56 Ont. L.R. 62)

that the building was not exempt from taxation under sec. 9 (5); the words "or other charitable institution" in that subsection mean an institution ejusdem generis, as those previously mentioned;

moreover the lodging house in this case was not a charitable institution conducted on philanthropic principles inasmuch as the Y.M.C.A. received an adequate return for the services supplied.- Nor was it exempt under sec. 47 (3); by other provisions of that section the structure must be "in actual use and occupation by the company" and by subsec. 3 it must be "used exclusively for

ASSESSMENT AND TAXES-Concluded railway purposes or incidental thereto" while other persons than employees took advantage of it. TOWN ..................... BANK AND BANKING - Promissory note-Composition between creditor and debtor-Note endorsed by third party to guarantee payments-Transfer by debtor to creditor for general collateral security- Knowledge of creditor- Holder in due course.] H. being indebted to a bank for $74,327.49 proposed to T., representing the bank, to settle the indebtedness by paying one half of the debt by monthly payments of $1,000 each and to give security for the other half. The last ten monthly payments were to be guaranteed to the bank's satisfaction.

This proposal was accepted by the bank and a formal deed of composition was entered into. With the view of fulfilling his obligation, H. obtained the respondent's endorsements to five notes of $500 drawn in favour of the bank and payable on certain dates coinciding with five of the last tea monthly payments, but he was unable to obtain security for the balance of $10,000. When H. had made only three of the monthly payments, T., acting for the bank apparently not considering H. to be default, demanded obtained from H. the transfer of the respondent's notes with a letter hypothecating the notes "as a general and continuing collateral security for the due payment of all advances made or to be made to" H. by the bank. T., at the time of the transfer, knew that the purpose of the respondent's endorsements was to secure in part the last ten payments under the deed of composition and also knew that H. had failed to obtain security for the balance of the last ten monthly payments.-Held that, as T. knew that H. had no right to hypothecate generally the respondent's notes and to convert what was a specific security into a general security, which was a breach of faith towards the respondent, the bank had no right of recovery as not having taken the notes in good faith and therefore not being a holder in due course.

MONTREAL 2--Company-Power of attorney - "Kiting" - Deposits - Possession-Right to recovr-Fraud-Arts. 1031, 1047, 1048, 1049, 1050, 1051, 1143, 1704, 1706, 1727, 1803, 1904, 2268 C.C.- Arts. 77, 391, 410, 946, 1064 C.C.P.] The appellant corporation was engaged in business as registrar and transfer agent of the capital stock of joint stock companies and as trustee for the collection of mortgages, insurance and other company purposes. Its president was one C. H. Cahan, Sr., and amongst its directors BANK AND BANKING-Continued were one C. H. Caban, Jr., son of the former, and one B. F. Bowler, the latter acting also as secretary-treasurer.

appellant kept its bank account at the

Merchants Bank of Canada in Montreal;

C. H. Cahan, Sr., had bank accounts at the Bank of Montreal at Montreal, with the agency of that bank in New York, and with the Guarantee Trust Company in New York.

Empire Trust Company in New York;

he was also, without the knowledge of his father, dealing in stock speculations and the promotion of companies, and had bank accounts at the Montreal branch of the Sterling Bank of Canada and with

La Banque Provinciale at Monti eal and several other banks. As C. H. Cahan,

Sr., being extensively engaged in special work during the war, was frequently absent from Montreal for prolonged periods, he gave his son, from time to time temporary powers of attorney to transact his banking business and finally gave him a general power of attorney to draw and sign cheques upon any chartered bank with which he had an account.

One of the by-laws of the appellant corporation provided that *

* may be made, drawn

* by the secretary-treasurer, acting jointly with 1he manager, or with any director of the company

*." Bowler, placing himself in the bands of C. H. Cahan, Jr., signed whatever cheques the latter directed him to sign. During the absence of his father, C.

"kiting."

Amongst otheis, ninety-four cheques were thus drawn on the appellant's bank account in the Merchants

Bank, which were presented for payment by o under the direction of Cahan, Jr., not at the office of the Merchants Bank, but at the office of the respondent bank, credited the proceeds of the cheques to the private account of Cahan,

Jr., or, in some cases, paid them to him in cash.

These cheques were presented to the Merchants Bank by the respondent bank which received from the former the proceeds amounting in the aggregate to

$205,960.37.

money was requisite and available in the Merchants

Bank of Canada for the payment of the cheques consisted. in addition to the appellant's small balance in its bank account, of money provided by deposits by Cahan, Jr., of cheques drawn on his father's bank accounts, and on the different other banks.

When Cahan, Jr., disappeared from Montreal, and his father became aware of the condition of

BANK AND BANKING-Continued the appellant company's affairs, the present action was instituted for the recovery of the sum of $205,960.37. appellant company alleged that the Home Bank received the proceeds of the ninety-four cheques wrongfully, fraudulently and in breach of trust; that these cheques on their face showed that Cahan, Jr., was using them for his own purposes; that the bank to which they were delivered took them with notice and knowledge of his defective title, or wilfully abstained from making any inquiry as to the nature and extent of the power and authority of Cahan, Jr., and Bowler, and in bad faith participated in their wrongful acts, thereby enabling C. H. Cahan, Jr., to appropriate to his personal use and benefit the funds out of which these cheques were met and paid by the Merchants Bank of Canada and which always were the property of the Corporation Agencies, Limited.

The bank joined issue with the appellant and, in addition filed a special defence to the effect that it received the cheques for value and in due course, that it became the owner and proprietor of the cheques; and further pleaded that during the whole of the period when these cheques were being issued irregularly, as alleged, Corporation Agencies, Ltd., had not assets to represent, in whole or in part, the sum which it pretends to have lost by reason of the facts set up in its declaration.-Held, Duff and Newcombe JJ. dissenting, that the appellant company was not entitled to recover from the respondent bank the amount claimed by its action; that as the funds with which the cheques were met were neither the property nor in the legal possession of the appellant company, the latter had failed to show such an interest as is requisite to entitle it to bring an action at law (Art. 77 C.C.P.); that although at the time the money so withdrawn apparently stood to the credit of the appellant company in the Merchants Bank of Canada, it cannot be considered to have been in its possession, since, according to the doctrine of the Civil Law, possession in the legal sense cannot be acquired without the volition (volont6) of the possessor; and as volition cannot exist without consent or knowledge, there never was possession by the appellant company of the funds in question.

There was not the intention to possess, nor possession animo domini.- Held further, Duff and Newcombe JJ dissenting, that the appellant cannot maintain a claim for accounting for the fund which stood in its name at the Merchants Bank of Canada, as no contractual relation existed between appellant and respondent nor any obligation on the latter's part to maintain such fund; an essential condition of the action con- B.C.R. BANK AND BANKING-Concluded dictio ob injustam causam, ownership of the moneys with which the cheques were paid, is wanting; if considered as an action for damages, the only damages recoverable would be the amount of the loss of the appellant and there was no loss in fact; neither could appellant succeed, even were possession admitted, under the principle of possession vaut litre, since that doctrine does not apply in the case of crdances, and moreover it affords essentially a plea which can be invoked only by the possessor while in possession and to repel an attack upon his possession;

neither can the appellant's act ion be maintained as an action en rdpdtition de l'indu; nor can it be based on a possible future claim against it by Cahan, Sr., or the other corporations whose accounts were used in the kiting operations; and, finally, the assertion by the appellant of a right to the moneys deposited by

Cahan, Jr., involves its ratification of the entire fraudulent scheme of the latter.- Per Duff and Newcombe JJ., dissenting.

The respondent received the proceeds of the cheques in question from the appellant's bank account out of moneys which were in the appellant's possession and without the appellant's authority, having notice, of which the cheques themselves were prima facie evidence, that Cahan,

Jr., the respondent's endorser, was not entitled to the cheques or to appropriate their proceeds, and in these circumstances the appellant was entitled to recover from the respondent bank the amount so received by it as money had and received by the appellant to the respondent's use, or as money of the appellant received by the respondent which was not due to the latter, (Art. 1047 C.C.); while it may be less likely that two directors would lend themselves to the fraudulent purpose of appropriating the company's money for the private uses of one of them than that the latter alone should do so, it is nevertheless, even where two directors join, prima facie evidence of fraud that one of them is making use of the companys' funds for his own individual purposes;

Cahan, Jr., and Bowler had, by the appellant company's by-laws, explicit authority to endorse cheques payable to the company's order and the proceeds of such cheques so endorsed and deposited by them in the appellant's bank account came into the appellant's possession as credits belonging to the appellant and under its control, because these proceeds were so deposited by the appellant's appointed agents in its account upon which it could have operated; if the appellant's officers, other than Cahan,

Jr., and Bowler, did not know that the money had been deposited before the respondent drew it out, they had means of knowledge by the exercise of which,

BANK AND BANKING--Concluded with ordinary diligence, they would have become aware of it, and the appellant therefore could not escape liability to the owners of the money deposited upon the ground that it was ignorant of the deposits; it was unnecessary to consider the effect of the kiting of the cheques, because independently of any cheques represented kiting transactions there was actual money in the case to an amount in excess of that which the appellant claimed; the appellant was entitled by reason of its right and title of possessor to maintain this action as against the respondent, which was a wrongdoer, and had wrongfully deprived the appellant of its possession.

cIs LTD. BANKRUPTCY diction-Leave to appeal-Delay-Enargement-Filing of petition in the registrar's office-Sufficiency-Bankrupcy Act 9-10 Geo. V, c. 36, ss. 63, 66, 74 and rule 72-Supreme Court Act, R.S.C. (1906), c. 139, rule 108.]

A judge of the Supreme Court of Canada cannot, under rule 108 of that court, enlarge or abridge the statutory delay provided by rule 72 of the Bankruptcy Act for making "an application for special leave to appeal" to this court, which rule 72 not inconsistent with the provisions of the Act (s. 74).- The filing of a petition for leave to appeal in the registrar's office witbin the delay will not suffice to meet the requirements of rule 72. BolvIN v. LARuE ...... BILL OF LADING............... BOUNDARY RIVER - Bridge--Costs- Municipal corporation-Agreement-Bylaw .............................. CANADIAN NATIONAL RAILWAYS -Garnishment-Proceeding-Trial. . 384 CARRIER - Common carrier - Transport company--Goods delivered to carter wearing ordinary insignia of company's employees-Theft-Liability-Arts. 1053, 1054, 1674, 1675, 1730 C.C.]

The respondent claims from the appellant, a cartage company employed by the Canadian Pacific Railway Company, the sum of $3,629.27 value of certain parcels of merchandises alleged to have been confided to a carter in charge of a wagon marked "C.P.R." in large letters and belonging to the appellant.

The respondent I elephoned to the appellant company requesting it to send a carter for the merchandises for shipment to the railway company; and later on, a pretended carter arrived stating he had come for the "C.P.R.," asked for and received delivery CARRIER-Concluded of the parcels. This carter, a former employee of the appellant, had borrowed the cap and apron of one Jutras, then a carter employed by the appellant, and prevailed on Jutras to allow him to use the appellant's wagon, stating that he required it to cart some trunks. The goods thus obtained were stolen by the pretended carter and his confederates also former employees of the appellantappeflant cannot be held responsible for the loss of the respondent's goods. Under the circumstances of this case the appellant cannot be held liable as a common carrier under articles 1674 and 1675 C.C it cannot be held liable as having held out the guilty carter as having authority to call for goods in its name under article 1730 C.C.; and there is no delictual liability on the part of the appellant under article

C.C.

CO.

2- Bill of lading-Burden of proof- The bill of lading for carriage of goods by railway provided that the carrier should be liable for any loss or damage thereto except, inter alia, if the same was caused by act or default of the shipper. Also, that when at the shipper's request the goods were carried in open cars the carrier would only be liable for negligence and upon it would be the burden of proving freedom from such

Goods were shipped on open cars upon which it was the duty of the shipper to load them.-Held, that the carrier has not discharged the burden of proving freedom from negligence if the court or jury is left in a state of real doubt as to negligence or no negligence.- Held also, that the carrier is not obliged to show how the accident causing injury to the goods was brought about; he is only required reasonably to satisfy the judge or jury that all possible precautions were taken against risks to be reasonably anticipated.-In this case the evidence did not suffice for a decision either as to the negligence in whole or in part of the shipper in loading the cars or as to whether or not the accident was due to a defect in the car or railway or neglect in working the railway for which the carrier is answerable. Therefor a new trial is ordered.-Per

The appeal should be allowed and the judgment of the trial judge restored.- Judgment of the Appellate Division (54

Ont. L.R. 238) reversed.

v. PAcric

CASES-Anderson Logging Co. and Taxation Act, In re ([1924] 2W.W.R. 926)

CASES-Continued

Canada Steamship Lines Ltd. v. Steamer John B. Ketchum II ([1924] Ex.C.R. 196) Canadian Bank of Commerce v. Munro ([1925] 1 W.W.R. 1) rev .......... National Ry. Co. and City of Ottawa, Re (56 Ont. L.R. 153) aff .......... Westinghouse Co. v. Canadian Pacific Ry. Co. (54 Ont. L.R. 238) rev ...... Capreol, Town of, and Canadian National Ry. Co. (56 Ont. L.R. 62) aff ....... Chivers v. Chivers & Co. (17 Cut..P.C. 420) fol.......

. . . . . . . . . . . . . . . . .. . . . 141 Commissioner of Stamps v. Hope ([1891] A.C. 476) appl.................... See SuccESSION Dury. Compagnie d'Aqueduc du Lac St. Jean v. Fortin (Q.R. 38 K.B. 75) aff ........ Dipenta v. Webb (57 N.S. Rep. 262) var. .......... Dufresne v. Dixon (16 Can. S.C.R. 596) ............ Ferguson v. La Cit6 de Montrial (Q.R. 37 K.B. 399) aff..................... Gutachenritter v. Ball (18 Sask. L.R. 443) aff..............................

Hole v. Sittingbourne and Sheerness Ry. Co. (6 H. & N. 488) app] ........... Hurlbut Co. v. Hurlburt Shoe Co. ([19231 Ex.C.R. 136) aff.................. King, The, v. Eastern Terminal Elevator Co. ([1924] Ex. C.R. 176) aff ........ Knox v. Lingle (Q.R. 38 K.B. 325) aff..........................

Lord v. Scottish Union and National Ins. Co. of Edinburgh ([1924] 4 D.L.R. 259) aff .............

............

See 5.

Loublier v. Gagnon (Q.R. 37 K.B. 376) See OwNERsnP.

B.C.R. CASES-Continued

McEwen v. Mid-West Collieries Co. (20

Alta. L.R. 472) aff ..............

McLennan v. McLennan ([1925) 1 D.L.R.

277) aff.....

............

......

Nutson v. Hanrahan (53 Ont. L.R. 99)

Orpen v. Roberts (26 Ont. W.N. 401)

af...........................

Patenaude v. Hamel (Q.R. 35 K.B. 333)

rev......

.............

Permutit Co. v. Borrowman ([1924] Ex- C.R. 8) rev...................

See 8.

Pirodeau v. Hamill (Q.R. 34 K.B. 500)

var.............................

Portage la Prairie v. R.M. of Cartier

(34 Man. L.R. 405) aff ............

See 10.

Racine v. Columbia Gramophone Co.

(Q.R. 38 K.B. 17) aff .............

Rex v. Boak ([1925] 2 W.W.R. 40) rev.

... ...

See CRIMINAL 2.

Riou v. La Ville de Trois-Pistoles (Q.R.

36 K.B. 355) rev................

Robe and Clothing Co. v. City of Kitchener

(55 Ont. L.R. 1) aff...............

Samson v. The Davie Shipbuilding and

Repairing Co. (Q.R. 37 K.B. 451) rev. 202

Smith v. Attorney General of Canada

([1924] Ex. C.R. 193) rev....... .. 405 v. Nevins (51 N.B. Rep. 1) rev. 619

Starr Ltd, R. P. & W. F. v. The Ship

Perene Ex. C.R. 229) aff....

Stevenson v. Florant (Q.R. 38 K.B. 314)

aff..........................

Sutton v. Dundas (17 Ont. L.R. 556)

Toronto, City of, v. Lambert (54 Can. S.C.

R. 200) dist......................

CASES-Concluded

Vzina v. Lafortune (56 Can. S.C.R. 246) Welsh v. Popham (20 Alta. L.R. 449) aff.......

..............

Williamson Candy Co. v. W. J. Crothers Co. ([1924] Ex. C.R. 183) af. ........ CHATTEL

MORTGAGE-Failure renew-Goods sold by mortgagor-Existence of mortgage known by purchaser- Good faith-Bills of Sale Act, R.S.A. (1922) c. 151, The appellant was a mortgagee of goods but failed to file a renewal statement the time required. The respondent purchased the goods from the mortgagor, paying full value. He knew that the mortgage was unpaid but considered he was entitled as a matter of law to rely upon the mortgagee's failure to file renewal, which fact he had ascertained by having caused a search to be made at the registry office. No collusion on respondent's part to protect the mortgagor was found.- Held, reversing the judgment of the Appellate Division ([1925] 1 W.W.R. 1), Idington and Mignault JJ. dissenting, that the respondent was not a "purchaser *

* good faith"

meaning of s. 19 of the Bills of Sale Act.- Per Anglin C.J.C. and Duff, Newcombe and Rinfret JJ. A purchaser who knows that goods which he is buying belong to a third person and that his vendor has neither title to them nor right to sell them, but, on the contrary, is bound as between himself and such third person to protect the right and title thereto of the latter, and who also knows that any right or title he may acquire by his purchase must be in defeasance of that of such third person, cannot be said, either legally or morally, to be a purchaser "in good faith" and therefore cannot maintain his claim to the goods as against such third person.

BANK OF V. MUNRO............. 2--Company-Powers of directors - Managing director-Power to give chattel mortgage for past indebtednes-The Companies Act, R.S.A.

(1922) c. 156, art. 55 of table A.]

Even independently of the express provision of art. 55 of table A. of The Companies Ordinance, the directors of a company constitute its governing and managing body, and, except to the extent that their powers are expressly restricted by statute or the articles of association or the by-laws and regulations they possess authority to exercise all the powers of the company.- When a board of directors of a companr appoint one of them "managing director,' they may be taken to have ipso facto 7(63 CHATTEL MORTGAGE-Concluded delegated to him their powers as a board of directors, subject to such direction and control as it is their duty to exercise.-A board of directors can validly execute past due indebtedness without the sanction the shareholders and the company cannot use as a valid ground of dismissal the fact that a managing director, whose powers have not been restricted by the resolution appointing him, has executed such a mortgage without the express authority of the directors or shareholders.-Judgment of the

Appellate

Division (20 Alta. L.R. 472) affirmed.

MID-WEST McEWEN

CHEQUE.........................

CIVIL CODE-Art. 83 (Domicile).. 532

2- Art. 113 (Absentees)..........

3- Art. 120 (Marriage) ..........

4- Art. 165 (Marriage)........... 532

5-Arts. 243, 245 (Paternal authority)

.................................

6- Art. 290 (Tutorship) ..........

7- Arts. 412, 415, 416, 417, 418, 419

(Right of accession) ................

8- Art. 494 (Use and habitation).. 192

9- Arts. 776, 777 (Gifts) .........

Art. 992 (Error) .............

Art. 1030, (Contract) ....

12-Arts. 1047, 1048, 1049, 1050, 1051

(Quasi-contract)....................

13-Arts. 1053, 1054, 1056 (Offences and quasi-offences).............. 126, 202

14- Arts. 1074, 1075 (Inexecution of obligations).................... 202

Art. 1128 (Divisible and indivisible obligations) ....................

16--Ar. 1143 (Payment) ........ 706

17- Art. 1472 (Sale)............. 249

See Goons 2.

CIVIL CODE-Continued

Art. 1499 (Delivery) ......... 19-Arts. 1522,

1526,

1527, (W arranty)....................... 20-Arts. 1590, 1591 (Forced sales) 224 21-Art. 1663 (Lease or hire of things) .................................

22.- Arts. 1674, 1675 (Carriers) ... Arts. 1704, 1706 (Mandate) ... 24-Art. 1712 (Obligations of the mandatory)........ ...

............ See PARTNERSHIP 1.

25-Arts. 1722, 1727, 1730 (Obligations of the mandator) .....

126, 289, 493, 26-Art. 1732 (Advocates, attorneys and notaries).......................... 27-Art. 1803 (Obligations of the depositary).........................

28.-Arts. 1850, 1851, 1854, 1856, 1857, 1863, 1869 (Partnership) ........... 289 29- Art. 1904 (Life-rents) ........ 30-Arts. 1983,

1994,

2009, (Privileges)..................... 334 31-Arts. 2084, 2128 (Registration of real rights)...................334, 32-Art 2268 (Short prescriptions) 706 33-Arts. 2485, 2487, 2489 (Insurance) ............ CODE OF CIVIL PROCEDURE-Art. 77 (Actions)...................... 2-Arts. 211, 212 (Defences, Answers and Replies)...................... 3-Art.

(Incidental and cross demands)......................... 4-Arts. 391, 410 (Experts and arbitrators)........................... 5-Art.

699 (Seizure of immoveables) 224 6-Art. 781 (Sherif's sale).... 224, 593 CODE OF CIVIL PROCEDURE-Con.

7- Art 946 (Revendication) ......

8- Art. 1064 (Possessory actions).. 706

9- Art. 1114 (Haheas corpus)...... 532

See Aurnourry.

COLLISION-Shipping law........

2---S hipping law.................

COMMON CARRIER

Income - Logging company--Projt-Sale of timber land-Evidence-Onus- Statute - Retroaction-Income and Personal Property

Taxation Act, (B.C.) 1921, 2nd Sess., c. 48, s. 36.]

Where the powers of a company, incorporated to take over as a going concern a logging business, included the power to acquire timber lands with a view to dealing in them and turning them to account for the profit of the company and it bought a tract of timber land and sold it at a profit the same is not a capital profit but one derived from the business of the company and as such assessable to income tax under section 36 of the

Income and Personal Property Taxation

Act (B.C.) 1921, 2nd Sess c. 48.-A party contesting the validity of an assessment upon income is bound to establish facts upon which it can be affirmatively asserted that the assessment was not authorized by the taxing statute;

Taxation Act having no retrospective operation the assessment in this case in respect of profits made before the date of the enactment of the statute is illegal and should be reduced accordingly.- Judgment of the Court of Appeal (11924]

2 W.W.R. 926) varied.

Co. v. .............

2- Transport company-Goods delivered to carter wearing ordinary insignia of company's employees-Theft - Liability- Arts. 1053, 1054, 1674, 1675, 1730 C.C.]

The respondent claims from the appellant, a cartage company employed by the

Canadian Pacific Railway Company, the sum of $3,629.27, value of certain parcels of merchandises alleged to have been confided to a carter in charge of a wagon marked "C.P.R." in large letters and belonging to the appellant. The respondent telephoned to the appellant company requesting it to send a carter for the merchandises for shipment to the railway company; and later on, a pretended

COMPANY-Continued carter arrived stating he had come for the "C.P.R.," asked for and received delivery of the parcels.

This carter, a former employee of the appellant, had borrowed the cap and apron of one Jutras, then a carter employed by the appellant, and prevailed on Jutras to allow him to use the appellant's wagon, stating that he required it to cart some trunks. The goods thus obtained were stolen by the pretended carter and his confederates also former employees of the appellant.appellant cannot be held responsible for the loss of the respondent's goods. Under the circumstances of this case the appellant cannot be held liable as a common carrier under articles 1674 and 1675 C.C.; it cannot be held liable as having held out the guilty carter as having authority to call for goods in its name, under article 1730 C.C.; and there is no delictual liability on the part of the appellant under article 1054 C.C. Dom- SoNs & Co....................... 3 - Powers of directors - Managing director-Power to give chattel mortgage for past indebtedness-The Companies Act R.S.A. (1922) c. 156, art. 55 of table A.i Even independently of the express provision of art. 55 of table A. of The Companies Ordinance, the directors of a company constitute its governing and managing body, and, except to the extent that their powers are expressly restricted by statute or the articles of association or the by-laws and regulations they possess authority to exercise all the powers of the company.-When a board of directors of a company appoint one of them "managing director," they may be taken to have ipso facto delegated to him their powers as a board of directors, subject to such direction and control as it is their duty to exercise.-A board of directors can validly execute chattel mortgage securing a past due indebtedness without the sanction of the shareholders and the company cannot use as a valid ground of dismissal the fact that a managing director, whose powers have not been restricted by the resolution appointing him, has executed such a mortgage without the express authority of the directors or shareholders.-Judgment of the Appellate Division (20 Alta. L.R. 472) affirmed.

Co. v. McEWEN............. 4- Agueduct contract-Sale of land 192 5--Bonds - Transfer - General security -Insolvency

- 6-Bank and banking-Power of attorney -Cheques-"Kiting"-Deposits - Poses- COMPANY-Concluded sion-Right to recover - Arts,

1031, 1047, 1048, 1049, 1050, 1051, 1143.

1704, 1706, 1727, 1803, 1904, 2268 C.C.- Arts. 77, 391, 410, 946, 1064 C.C.P.. 706

Practice and procedure -Canadian National Railway8-Garnishment-Proceeding - Fiat- Special have of appeal-Provincial appellate courts - Discretion - Canadian National Railways Act (1919)

9-10 Geo. V c. 13, 15-Supreme Court

Act, 10-11 deo. V, c. 32, s. 41.]

The discretion conferred on the provincial courts of appeal by section 41 of the Supreme

Court Act under which special leave to appeal to this court may be granted is untrammelled and free from restriction save such as is implied in the term

"special leave."-A writ of garnishment attaching moneys owed by the Canadian

National to a

.udgment debtor in its employment is a

'proceeding" within the provisions of s. 15 of the Canadian National Railways

Act and may therefore issue "without a fiat"

dissenting).

RAIL- V. CROTEAU..................

2 - Control and regulation of a trade-Canada Grain Act,

2 Geo. V, c. 27-S.s. (7) added to s. 95,

9-10 Geo. V, c 40 . 3.]

Subsec. 7 added to sec. 95 of The Canada Grain Act, 1912, by 9-10 Geo. V, c. 40, sec. 3, is ultra vires of the Parliament of Canada. Anglin C.

J.C. diss.-Judgment of the Exchequer

Court Ex. C.R. 176) affirmed.- The Canada Grain Act was passed in 1912 to control and regulate, through the Board of Grain Commissioners, the trade in grain.

It provides that all owners and operators of elevators, warehouses and mills and certain traders in grain, shall be licensed; for supervision of the handling and storage of grain in and out of elevators, etc.; and prohibits persons operating or interested in a terminal elevator from buying or selling grain. It contains also, provisions for inspection and grading.

C.J.C. dissenting, that this subsection is only a part of the scheme of the Act to control and regulate the business, local and otherwise, of terminal elevators which it is not within the competence of

Parliament to enact.-Held, per Duff and

Rinfret JJ, that the legislation is not warranted by the fact that three-fourths

CONSTITUTIONAL LAW-Continued of the trade in grain is export out of If Parliament can provide for control of the local business under that condition it must have power to do so whatever may be the extent of the export trade.-Per Mignault J. Nor can the legislation be supported as relating to agriculture (B.N.A. Act, 1867, sec. 85). The subject matter is only a product of agriculture and an article of trade. It is trade legislation and not for the support or encouragement of agriculture. TE KING 3- Provincial line-Constructed by a coal company- Operated by a federal railway company- Applicability of the federal Railway Act- Power of federal parliament to pass of s. 6 of the Railway Act, (D) 1919- B.N.A. Act, 1867, s. 92, 8.8. 10, par. c.] The appellant is a colliery company and had been authorized by a statute (c. 78 of 1921) of the province of Alberta to construct a railway known as the Luscar Branch to connect with the railway of the Mountain Park

Coal Company, Limited, at or near Leyland station. In April, 1923, the appellant entered into an agreement with the Mountain Park Coal Company, the Grand

Trunk Pacific Lines Company and the Grand Trunk Pacific Company, the two latter companies now represented by the Canadian National Railways, for the construction and operation of this railway. It also submitted its railway to the operation of certain agreements between the three other companies concerning the construction and operation of the railway of the Mountain Park Coal Company. The effect of all these agreements is that these railways were built by the Grand Trunk Pacific Branch Lines Company at the expense of the two colliery companies, the cost of construction to be reimbursed to the latter by certain rebates allowed them on the shipment of all coal over these railways, it being agreed that whet, the companies are fully reimbursed the railways will become the property of the Grand Trunk Pacific Branch Lines Company. The Grand Trunk Pacific Company undertook to operate the railways and to furnish such rolling stock as would be necessary.

In the agreement made by it with the three other companies, the appellant consented to any necessary application of the Grand Trunk Pacific Lines Company (or the Canadian Nattonal Railways) to the Board of Railway Commissioners for Canada for approval of the location of the Luscar branch and the maintenance and operation thereof Lines Company. The respondent Mc- Donald was the owner of Tams coal lease, Mountain Park Branch, Canadian 766'

CONSTITUTIONAL LAW-Continued

National Railways, in the vicinity of the

Luscar branch, and desired to obtain from the Board of Railway Commissioners permission to use a "Y" on the

Luscar branch and also to construct from this "Y" a spur track to serve his coal lease approximately 1,000 feet in length.

This application was opposed by the appellant which denied the jurisdiction of the Board to grant it. At the time of the application, the legal title to the ownership of the Luscar Branch was still in the appellant company's name.- Board of Railway Commissioners had jurisdiction to entertain and grant the application made by the respondent N.S.

McDonald.-Per Anglin C.J.C. and Duff and Rinfret JJ. The Luscar Branch is a railway within the meaning of s. 185 of the

Railway Act and therefore comes within the operation of the Railway Act by force of s. 5 of this Act.-Per Newcombe J.

The Canadian National Railways, by the effect of the above agreements, acquired and exercised, subject to the terms specified, operating rights upon the Luscar

Branch and it thus comes within the description of par. (c) of s. 6 of the Railway

Act, as being a railway operated by a company which is wholly within the legislative authority of the Parliament of

Canada, and therefore a work declared to be for the general advantage of Canada.

-Per Anglin C.J.C. and Idington, Duff and Rinfret JJ. S.s. (c) of s. 6 of the

Railway Act, which provides in general terms to what railways the Act shall extend and apply and enacts that these railways shall be deemed and are thereby declared to be works for the general advantage of Canada, is not within the legislative powers of the Dominion and does not constitute an effective declaration under par. (c) of s.s. 10 of s. 92 of the B.N.A. Act. Mignault and Newcombe JJ. contra.

LTo. v. N.S. McDoNALD ...........

4 - Labour - Legislative jurisdiction - Treaty of Versailles-Labour Conference of

League of Nations-Draft Convention- Submission to members.] In 1919 the

International Labour Conference of the

League of Nations adopted a draft convention limiting the hours of labour in industrial undertakings. It was referred to a select standing committee of the

League with the result that an article in the Treaty of Versailles provided that

"each of the members (of the Labour

Conference)

undertakes that it will

* * * bring the recommendation or draft convention before the authority or authorities within whose competence the matter lies for the enactment of legislation or other action."

The Dominion of Canada is a member.-Held, that the only obligation of the Dominion of Canada

CONSTITUTIONAL LAW-Concluded is to bring the draft convention before the competent authority for action.- Held, also, that the matter of labour in industrial undertakings in Canada primarily competence provincial legislatures but Parliament can legislate as to labour in territories not yet organized into, or forming part of a province and as to labour of servants of the Dominion if these are within the scope of the draft convention. OvER HOURS CONTRACT - Aqueduct - Payment in advance-Agreement to furnish water to a farm in perpetuity-Sale of land- Right of buyer as the ayant-cause of the vendor-Arts. 494, 1030, 1499 C.C.] One Guay in common with several other landowners entered into an agreement with an aqueduct company whereby the latter, in consideration of the payment of a lump sum by each of the landowners undertook to furnish water to their farms in perpetuity.

Subsequently Guay sold his farm to Fortin without any express assignment of the right to the water of the aqueduct. The aqueduct company having demanded from Fortin payment of the amount fixed by its tariff for the supply of water:-Held, that this stipulation having been made by Guay for the use of his farm and having created a right accessory thereto Fortin, as ayant cause 4 titre particulier of Guay, could set up this agreement as a defence to the company's action.-Judgment of the Court of King's Bench (Q.R. 38 K.B. 75) affirmed. v. FORTIN................... - Sale of goods - Contract price - Increase or decrease--Repudiation-Damages-Price determined or determinable- Art. 1472 C.C.]

The respondent, a fur manufacturer in Montreal, bought in December, 1919, from the appellant, a manufacturer of silks in New York, ten pieces of brocade silk as specified to be delivered "as ready."

The agreement of sale contained the following clauses: "If at the time of making delivery raw silk has advanced or declined five per cent or more from for Double Extra B. grade, a percentage equal to one-half of this advance or decline shall be added to or deducted from the price. If at the time of making delivery pay-roll and other labour costs have increased or decreased five per cent or more, a percentage equal to one-half of this increase or decrease shall be added to or deducted from the price. This contract ceases to be binding on either party as to goods not shipped by December 31, 1920."

proceeded to manufacture goods ordered, shipped them and sent invoices for same, adding to the contract prices a percentage CONTRACT-Continued according to the increase at the date of delivery in the costs of raw silk and respondent declined accept such increase; but the appellant insisted upon its interpretation of the contract and continued to make more shipments.

On the 20th of March, 1920, the respondent sent written notice to the appellant refusing acceptance of the goods and remitting invoices for same.

The appellant discontinued producing, but shipped to the respondent the goods in course of being manufactured at that date.

On April returned the goods, which were sold at auction by the appellant on respondent's account, after due notice to him. The brought

Rinfret J. (dissenting)

, that the terms of the contract must be construed as meaning that it is the percentage of advance or decline in the price chargeable for the complete article which is governed by the advance or decline in the price of material or labour costs and not the percentage of the value of the silk used in manufacturing the quantity of the complete fabric.-Held also that, although repudiation by a party to a contract of sale entitles de facto the other party to recover damages thus incurred, the vendor has the right to insist on preserving the integrity of the contract and to tender the goods for delivery according to the terms of the sale, in which case his claim for damages will be more easily and readily assessed upon refusal to accept by the buyer.-Held further that the appellant had no right to claim damages in respect of loss of profit on the uncompleted part of the contract. Idington J contra.-Per Rinfret J. dissenting. The contract of sale is not binding upon the parties, as in order to validly stipulate a price based on certain conditions prevailing at the time of delivery the contract must fix the date of such delivery;

in other words, a price which can vary at the will of the vendor is not a price

"certain et d~termin6" (Art. 1472 C.C.)

which is an essential element of the contract of sale.

3 - Architect - Annual salary-Extra commission on new works-Death before full execution of works-Right as to part of commission for preparation of plans and specifications.] On 1st May

1921, T.

agreed to act as architect for the exclusive benefit of the appellant in consideration of an annual salary of $3,000 which comprised all disbursements, commission or fees which the appellant would have

CONTRACT-Continued paid otherwise for the same services. 18th May, 1923, the appellant passed a resolution granting to T. over his salary a commission of 1 per cent on the cost of all new constructions. T. died on the 6th November,

1923, without having received any part of such commission. The respondents are the executors of the estate of T. and claimed from the appellant the amount of salary due to T., the commission of 11 per cent for all works already done on the new buildings and a further commission of I per cent on the total cost of the buildings when completed as remuneration for the drawing of the plans and specifications according to the official tariff of architects' fees.- Held that the appellant was not bound to pay any amount over the salary earned and the commission of 1J per cent of the value of the work actually done on the new buildings at the time of the death of T., such salary comprising any remuneration due him for the preparation of the plans and specifications for these works. LE CIi DE Qut ..............

4 - Specific performance to sell land-Time limit-Vendee owning interest-Agreement to sell on failure to purchase whole-Sale pending purchase agreement-Amendments-Penalty.] and others, by contract in writing, agreed to sell certain land, within a stated time, for $30,000 to W. who, within such period, was to have the exclusive right to buy it. W. had an interest in the land which, if he failed to purchase, he agreed to sell for $1,000.

But, while the contract was in force, he sold this interest to R. for $4,000 of which he got paid 81,125 on account. W. did not purchase within the time stated and was tendered a deed with a cheque for $1,000 to convey his nterest as agreed to D. and others. This being refused, the latter brought action for specific performance of the contract and to have the deed to R. aside as being given without consideration and with a collusive and fraudulent intent. The trial judge dismissed the action holding the conveyance to R. to be bona fide and that performance could not be decreed.

The court en banc accepted his finding of bona fides but held the plaintiffs entitled to other relief than damages against W. for breach of contract, which the trial judge held was the only remedy they had. The relief granted by the court en banc was to award to the plaintiffs the balance of the purchase money due from R. to W. and give them the benefit of a lien or charge of W. on his interest in the land for payment of his purchase money therefor. that, under the Registry Ad of Nova Scotia then in force (R.S.N.S. IND

CONTRACT-Concluded

1900, c. 137, s. 15), R. has acquired a title clear of all legal and equitable claims;

but the option agreement was still in existence as against W. and also bound

R., after he had actual notice of it, to the extent to which it was then available;

and it should be given effect to on equitable principles as to the unpaid purchase money.-The question whether the right to the vendor's lien ever existed was not raised by the plaintiffs, nor evidence upon the subject taken at the trial.- Held that t he judgment appealed from

(57 N.S. Rep. 262), should be varied by striking out the direction that the plaintiffs should have the benefit of any lien in favour of W. as unpaid vendor.- Evidence was given at the trial showing that W. had obtained an advance from a bank, which was not a party to the action, on the security of the money payable to him by R.-Held, that R. is entitled to protection against the bank's claim and the case should be remitted to the court below to have the bank added as a party and its rights to R's purchase money ascertained.

That court has inherent power to correct the error in its judgment resulting from its failure to dispose of the bank's claim. R's failure to bring this matter to the at tention of the court on the settlement of the judgment would, according to the general rule of procedure, be a reason for depriving him of his costs but the court feels justified in making an exception in this case.-Idington J.

dissenting, would allow the appeal and restore the judgment of the trial judge.

DIPENTA.................

39) (D) 1921, c. 24.]

sued to recover penalties under s. 39 of the Copyright Act (R.S.C. 1906, c. 70)

for alleged infringements by the appellant of his copyright in a highway map of the province of Quebec. Under that section, four cases are penalized: (a) the copying of the entire map, and (b) the copying of a part thereof, in either case in its integrity

(sans aucune alteration), or, at least without change in the main design; (c)

the copying of the entire map, and (d)

the copying of a part of the map, again in either case, with an alteration in the main design.-Held that a plaintiff seeking to enforce this section in any of these four cases cannot succeed if the court is satisfied that in committing the act or the acts charged as an infringement of copyright the defendant did not act

"with intent to evade the law."

PARAns..

CRIMINAL LAW - Income War Tax - Penalty - Criminal matter-Income War Tax Act,

CRIMINAL LAW-Continued

(D.) 7-8 Geo. V, c. 28, as. 8, 9; 9-10 Geo. V, c. 55 a. 7; 10-11 Geo. V, c. 49, ss. 11, 13; 11-12 deo. ', c. 33, a. 4-Supreme Court Act, R.S.C. (1906), c. 139, s8. 36, 41 (b)- Criminal Code, ss. 706, 761, 1024 (a), 1029.]

Section 9 (1) of The Income War Tax Act enacts that for every default in co plying with certain sections persons in default "shall be liable on summary conviction to a penalty of $25 for each day during which default continues." The respondent, having pleaded guilty on an information laid for a breach of section 8 of the Act, was fined $3 per day, the magistrate holding that he could, in his discretion, impose a lesser penalty; and the decision was affirmed by the Appellate Division. The appellant moved for special leave to appeal to this court.- Held, that special leave to appeal to this court could not be granted.-Per Anglin C.J.C. and Mignault, Newcombe and Rinfret JJ. The proceeding in this case does not fall within the civil jurisdiction of this court under s. 41 (b) of the Supreme Court Act, but is a "criminal cause" within the meaning of the exception in 8. 36 of that Act.-Per Duff J. The proceeding being in form a criminal proceeding and the judgment not being a mere order for the payment of money, the right of appeal to this court if any, must, be found in the provisions of the Criminal Code.

v. BELL......... 2-Appeal-Deafness of juror as ground for-Question of law or fact or "sufficient ground" within discretion of court-"Substantial wrong or miscarriage of justice"- Grand jury-Error in written order summoning persona-Oral order by judge valid-Presiding judge-Sections 1013 and 1014 Criminal Code-Jury Act, B.C. 1913 c. 34, s. 31.]

An appeal on the ground that a juror was deaf and the jury, therefore, illegally constituted is not an appeal on a question of law within clause (a) of section 1013 Cr. C., neither is the question one of fact alone or of mixed law and fact within clause but it falls within clause (c) of that section and therefore leave of the Court ol Appeal was a condition precedent to the respondent's right of appeal to that court.-Although on the case being referred back to the Court of Appeal the respondent may obtain leave, his appeal on the ground of the disqualification of the petit juror would ultimately fail, because in the circumstances of this case even though that disqualification should be established, it did not cause a miscarriage of justice (s. 1014 (1) (e) Or. C.) or should be dismissed because "no substantial wrong or miscarriage of justice has actually occurred" (s. 1014 (2).-An order made by the judge designated to preside at the assizes directing the sheriff to summon other persons to serve on the CRIMINAL LAW-Continued grand and petit juries in the places of those whom the sheriff had been unable to serve was drawn up, by inadvertence, to cover only the summoning of petit jurymen.-Held that the order as pronounced by the judge may be regarded as the order made by him rather than the order in the mistaken form in which it was drawn up, and there had been no illegality in the constitution of the grand jury.-The judge designated to hold the assizes may in advance of the actual opening of the court, for the purposes of section 31 of the Jury Ad (B.C. 1913, c.

34) be regarded as the "presiding judge."

of the Court of Appeal

2 W.W.R. 40) reversed.

v. BOAK.....................

CROWN - Public work - Employment-Exchequer Court Ad s. 20

(c)-R.S.C. [1906] c. 140; 7-8 Geo. V, c.

23, s. 2-Statute-Construction.] By sec.

20 (c) of the Exchequer Court Act as amended in 1917 the Exchequer Court can hear and determine

Every claim against the Crown arising out of any death or injury to the person or the property resulting from the negligence of any officer or servant of the Crown while acting within the scope of his duties or employment upon any public work."- As this section now stands (since the amendment of 1917) it is no longer necessary, in order to create liability, that the person or property injured should be upon the public work at the time; the words "upon any public work" qualify the employment, not the physical presence of the negligent officer or servant thereon and the driver of a motor truck (employed by a government department) carrying government employees to a public work is so employed.

THE KING v. SCRO- CUSTOMS DUTY-ncrease in....

See AcT.

DEBENTURE LOAN-Special Object- Proceeds used for other purposes-Responsibility of municipal officers..........

DEDICATION....................

See Lanw 2.

DISCONTINUANCE..............

EMPLOYMENT-Abolition of-Merger of banks-Society-Pension fund-Members.........................

Will - Probate from probate judge-Burden of proof- Weight of evidence-"The Probate Courts

Ad,'

N.B.S., 5 Geo. V, c. 23, 8. 113.1

The general rule of legal procedure that the burden of proof is on the party who

EVIDENCE-Concluded asserts the affirmative of the issue applies in the case of a will offered for probate.- The judge of probate having refused to admit the will to probate on the ground that the execution of it had not been established by satisfactory evidence, his judgment was affirmed by the Appeal Division of the Supreme Court, who held affirmatively that the will was a forgery.- Held, reversing the Appeal Division, Duff J. dissenting, that the weight of evidence was in favour of the validity of the will, which should be admitted to probate.-Per Duff J.: The onus was upon the party propounding the will to establish its execution, and remained upon him throughout, and it was the duty of the trial judge to pronounce against the will if, after considering the whole of the admissible evidence adduced, he was not judicially satisfied that the will had been duly executed; and that there was no sufficient reason for reversing the concurrent findings of the trial judge and the Appeal Division that the testimony of the proponent and of the attesting witnesses was not credible.-A New Brunswick statute provides that "the Supreme Court (on appeal) shall decide questions of fact from the evidence sent up on appeal notwithstanding the finding of the judge in the court below."- Held, per Duff J., that this provision does not authorize the Supreme Court to deal with an appeal as if it were the court of original jurisdiction but it must proceed as on a re-hearing.-Judgment of the Appeal N.B. Rep. 1) reversed, Duff J. dissenting.

v. NEvINs 2---Onus..................... 3-Burden of proof-Partnership - Death of partner-Continuance of business -Distribution of profits............ 4--Burden of proof-Carrier-Bill of lading-Negligence................. EXPROPRIATION - Value of land - Expert witnesses-Evidence. KINo ARCHER.......................... 2--Sale of land.................. See or 2.

TRIAL JUDGMENT.........279, 391 See 3, 5.

GARNISHMENT - Canadian National Railways-Fiat.................... GRAIN ACT-Validity............ HABEAS CORPUS-Paternal authority -Tutorship-Minor child in care of tutor- Right of parent to regain possession- Habeas corpus-Proper remedy-Arts. 83, 8.C.R. IND

HABEUS CORPUS-Concluded

113, 120 165, 243, 245, 290 C.C.-Art.

1114 C.6.P.]

The rights of the tutor given by Art. 290 C.C. do not extinguish those of the parent under Arts. 113, 243 and 245 C.C.; and therefore the tutor, to whose care the mother previously had confided her child after the death of the father, cannot assert the right to refuse to surrender possession of her child to her, even though she had renounced to her legal right to tutorship.-The writ of habeas corpus is the proper remedy, as recognized by law and jurisprudence, of a mother who wishes to regain possession of her child illegally kept or detained from her.-In determining such right, consideration should be given to the interests of the child, without, however, confusing the interests with the wish or will of the child.-Judgment of the Court of King's

Bench (Q.R. 38 K.B. 314) affirmed.

HOURS OF LABOUR-Legislative juris- INCOME TAX-Assessment and taxes- Federal income tax-"Income"-Profuts from illegal business-Income War Tax

Act, 1917, s. 3 (1).]

Profits made in an unlawful or prohibited business, in this case the illegal purchase and sale of liquor in Ontario, are not "incone" as that term is defined in sec. 3 (1) of the

Income War Tax Act, 1917, and are not taxable under that Act.-Judgment of the Exchequer Court ([19241 Ex. C.R.

193) reversed.

2- 3-Income war tax-Appeal-Jurisdiction-Criminal matter..............

INFANT-Custody of-Separation agreem ent.............................

INSURANCE, ADMIRALTY LAW - Damages - Collision at sea - Unexpired portion of premium.] In an action claiming damages for loss of a ship in a collision the owner cannot recover the amount of the unexpired portion of the premium p aid for insurance against such loss.udgment of the New Brunswick Admiralty Division

([19241 Ex. C.R. 229)

varied,

Idington

J. dissenting. THE

R. P. & W.

INSURANCE, LIFE-Application-Statements insured- Non-disclosure - Materiality-Application attached to the policy

-Arts.

7027 and 7028, sa. 1, 2 R.S.Q.- Arts. 992, 2485, 2487, 2489 C.C.) The

INSURANCE, LIFE-Continued late Dr. Bourgeois, the appellant's husband, was insured with the respondent company for $20,460 upon two policies applied for on the 29th November, 1918. He was operated on for cancer of the throat in March, 1919, and died of it on the 22nd December, 1919.

His widow sued to enforce the policies.

The respondent contested her claim on grounds of concealment and misrepresentation by assured.

Dr. Bourgeois suffered from early

1918 from persistent laryngitis accompanied by hoarseness and, at times, extinction of voice. He visited three doctors who were his friends. He was given treatments with nitrate of silver by one of these doctors upon the advice of another of them. In question 2 of part B of the application for insurance, the insured was required to answer whether he had ever suffered from any of some 47 specified complaints, one of them being "d6bilitation de la voix," although no mention was made of laryngitis. To this question, he answered "No."

By question 8, the applicant was asked: Have you had any other complaint than that already mentioned and he also answered "No."

By question 4, he was asked to give the name and address of his regular (habituel) doctor and he answered "none."

By question 9, he was asked: Have you consulted or have you been attended by any other doctor than the one above mentioned. If yes, when and what for.

To this question, he replied with a dash.-Held that, in the circumstances of this case, the laryngitis, the extinction of voice and the hoarseness from which the insured was suffering, his visits to different doctors and his treatments with nitrate of silver were material facts which the insured was bound to disclose.

Mignault and Rinfret JJ. (dissenting)

.-Held, also, that, not only would disclosure of the facts so concealed have prevented the undertaking of the risk, but their suppression, however innocent, having regard to the questions propounded to the applicant, constituted misrepresentation which actually induced the insurer to enter into the contract. Mignault and Rinfret JJ. dissenting. A photographic copy of the application, which contained the answers made by the insured and which was declared to form part of the contract had been attached by glue or paste to one of the inside pages of each of the policies sued upon.-Held that such attachment is a substantial compliance with the statutory requirement contained in s.s. 1 of art. 7028 R.S.Q. which enacts that all the terms or conditions of a contract of insurance shall be set forth in full on the face or back of the policy. Mignault and Rinfret JJ. expressing no opinion. KIER- V. ManoPooTAN LIFE INs. Co. 600 INTERVENTION..............

Co-defendants - Concurrent appeals to the Supreme Court of Canada and Privy Council-Stay of proceedings

.................................

JUDGMENT FROM OTHER PRO- VIN CE...........................

Hours of -Legislative juris- LEASE-Sherif's sale-Effect-Transfer of the lease to the buyer-Right of the lessee to abandon premises. Art. 781 C.C.P.

Arts. 1663, 2128 C.C.]

Where, subsequently to the sheriff's sale of an immovable, the person on whom the property was sold transfers his rights in a lease to the buyer (adjudicataire) and the latter notifies the lessee that he can remain in possession of the immovable, the lessee as no right to abandon the premises and is not discharged from the obligations resulting from the lease.-Judgment of the Court of King's Bench (Q.R. 38

K.B. 17) affirmed.

Co. v. RACINE .............

2- Mortgage.................

LEAVE OF APPEAL-Provincial appellate courts-Jurisdiction-Discretion. 384

2- Bankruptcy..................

LIQUOR ACT-Intoxicating Liquor Act of NJB.-Sale by licensees-Amending

Act-Sale by Crown-Taking over licensees' stock-Time of valuation-Increase in customs duty-Sales tax-Interest-6 Geo.

V, c. 20; 9 Geo. V, c. 53 (N.B.)

By the

Intoxicating Liquor Act of New Brunswick, 1916, liquor was sold by licensed vendors; by an amendment in 1919 control of the business by the Crown through a board was authorized, such board being permitted to take over the stock of liquor held by the licensees of whom the

Canadian Drug Co. was one, who were required, on request, to furnish a statement of the stock in hand or in transit with the prices paid and other particulars, the value to be based on such statement or, if that could not be done, to be determined by a method agreed upon.

Upon payment therefor the liquor should become the property of the Crown.

The Amending Act came into force on

April 18, 1921, and the operating board was appointed on the same day; on May

10 the customs duty on liquor was increased; the parties agreed on the value of the liquor of the Canadian Drug Co.

except on the point as to whether or not

LIQUOR ACT-Concluded the increased duty should be added to the value and the amount of the sales tax or any interest should be allowed; the liquor was delivered to the board in June and July and paid for in October subject to the above mentioned rights as to value.-Held, that the value of the liquor should be determined as of the date at which delivery was made and the Drug Co. was entitled to the increased duty.-Held also, that the case must be treated as one of purchase and sale in which the vendor is entitled to be paid the amount of the sales tax on the price.- Held further, that the vendor was not entitled to interest either on the purchase price or the amount of the sales tax. THE Co. BOARD MERGER OF BANKS............ See SocIETy.

MORTGAGE-Chattel mortgage-Failure to renew--Goods sold mortgagor- Existence of mortgage known by purchaser- Good faith-Bills of Sale Act, R.S.A. (1922) c. 151, s. 19.]

The appellant was a mortgagee of goods but failed to file a renewal statement time required. The respondent purchased the goods from the mortgagor, paying full value.

He knew that the mortgage was unpaid but considered he was entitled as a matter of law to rely upon the mortgagee's failure to file renewal, which fact he had ascertained by having caused a search to be made at the registry office. No collusion on respondent's part to protect the mortgagor was found.-Held, reversing the judgment of the Appellate Division ([1925] 1 W.W.R. Idington and Mignault JJ. dissenting, that the respondent was not a "purchaser * * in good faith" within the meaning of s. 19 of the Bills of Sale Act.-Per Anglin C.J.C. and Duff, NEwcombe and Rinfret JJ. A purchaser who knows that goods which he is buying belong to a third person and that his vendor has neither title to them nor right to sell them, but, on the contrary, is bound as between himself and such third person to protect the right and title thereto of the latter, and who also knows that any right or title he may acquire by his purchase must be in defeasance of that of such third person, cannot be said, either legally or morally, to be a purchaser "in good faith" and therefore cannot maintain his claim to the goods as against such third person. MUNRO .......... 2-Sale-Real property-Transfer of mortgaged land-Absolute in form but as Esecurity only-Claim by mortgagee against transferee under implied covenant-Land Titles Act, R.S.A. (1922), c. 133, ss. 54, MORTGAGE-Concluded

55, 179.]

Where a transfer of mortgaged land was given by the mortgagor as security only, but was absolute in form and contained no declaration negativing or modifying the covenant by the transferee with the transferor and mortgagee for payment of the mortgage, declared by section 54 of The Land Titles Act to be implied in the transfer, and where in a memorandum of agreement it was stipulated that upon payment of the amount in which the mortgagor was indebted to him, the transferee should re-iransfer to the mortgagor a title to the land in fee simple subject to existing encumbrances or "other encumbrances of equal amount."

Appellate Division, (20 Alta. L.R. 449)

that section 54 did not render the transferee liable to the mortgagee for the amount of the mortgage.

By the interpretation of sections 54 and 55 of The

Land Titles Act in light of section 179 of the same Act, their ex facie meaning appears to be subject, at least, to this gratification, that they must not be construed or applied in such a way as to disable the courts from giving effect to the terms of any agreement constituting a "disposition" of the land within the meaning of section 179, entered into either contemporaneously with, or subsequently to, the execution of the transfer.

v.POPHAM........................

3-Statute of Limitations - Mortgaged lands-Possession by first mortgagee- Acknowledgment of title-Lease by party in possession-Joinder by second mortgagee- R.S.O. [1914] c. 75, ss. 20 and 24.]

Lands in Ontario were twice mortgaged and the first mortgagee entered into possession occupying the lands and receiving the rents and profits for sufficient time to acquire title under the Statute of Limitations. During this period leases were executed by the mortgagee in possession and by the second mortgagee as third party. The leases contained no express acknowledgment by the lessors of title in the second mortgagee but coni ained this clause: "The parties of the third part hereby consent and agree to the within lease."-Held, affirming the judgment of the Appellate Division (53 Ont. L.R. 99)

that this clause acknowledged the authority of the lessors to execute the lease but did not imply an acknowledgment by them of any title in the second mortgagee.

also that the second mortgagee had no status to maintain the action;

all her-rights under her mortgage and her interest in the lands having become extinguished at the expiration of the statutory period.

NUrson v.

4 - Chattel mortgage - Company managing director-Power to give for past indebtedness.......................

MUNICIPAL CORPORATION -Negligence - Defective sewers - Alteration - Negligence of contractors-Obstructing natural drainage.] When, during a heavy rainstorm, the city sewers are incapable of carrying all the water that falls, and contractors employed to relay the pavement, in course of their work, obstructed the natural flow of the surface water and caused it to back and flood premises on the street, the corporation which must be deemed to have notice of the obstruction, is guilty of negligence in not having it removed and also responsible for the negligence of the contractors. Hole v. Sittingbourne and Sheerness Ry. Co. (6 H. & N. 488) appl.-Judgment of the Appellate Division (55 Ont. L.R. 1) affirmed- The contractors covenanted to indemnify the city against the consequences of any injury to property in the course of the work.-Held, reversing the judgment of the Appellate Division (55 Ont. L.R. 1), that as it was shown that the act of the contractors was the sole effective cause of the injury to said premises they were liable under said covenant notwithstanding the defective drainage system, and the negligence of the corporation. City of Toronto v.Lambert (54 Can. S.C.R. 200) and Sutton v. Dundas (17 Ont. L.R. 556) 2-Assessment and taxes-Exemption from taxes-Granted to "successors or ayants cause"-Sale--Right of buyer.] Section 4559 of the Town Corporations Act, R.S.Q. (1888) provided that "the council may, by a resolution, exempt from the payment of municipal taxes * * * any person who carries on any industry, or trade, or enterprise

* 1906, the town of Notre Dame des Neiges (annexed in 1910 to the city respondent) passed a resolution exempting one E. G. and his successors or "ayants cause" from payment of taxes for a period of fifteen years upon farms of a total area of 192 acres, inasmuch as E. G. undertook to subdivide the property into building lots and to build during the first year a certain number of houses. In 1908, E. G. sold his property to the Northmount Land Company to whom right to exemption was confirmed; and the latter sold in 1910 to the appellant part of the property, undivided. taxes for 1911, $1,000, were paid to the respondent; but the taxes for 1912 and 1913, $3,675, were unpaid.

Proceedings were taken by the respondent for the sale of the property owned by the appellant.

The latter pleaded that, under the terms of the resolution, it was entitled to the benefit of the exemption granted to its predecessor in title, as its successor or "ayant cause."

At the time of the action the property bought by the appellant was still vacant.-Held that the appellant, not being presumed owing to its character and aims to have purchased the tract of land for the purposes of engaging in speculative building, was not an ayant-cause of its vendor and therefore was not entitled to claim the exemption from taxes granted to the latter. LA

Jsus

ClIT

3-Negligence-Municipal law-Pumping station-Electric wtires-Children playing on roof-Accident-Liability-Need of notice or fence.] The respondent in his quality as tutor to his minor son aged about eight years sued the appellant city for $20,000 damages for injuries sustained by his son. The city is situated on the river side, near Montreal; and in order to prevent flooding, a dyke with a roadway on the top was constructed and is maintained by the city.

A pumping house not abutting upon any street or highway was erected behind a part of the dyke in order to prevent sewage from backing up in times of heavy rain. This pumping station was worked by electric power conveyed through the delivery system of the city. At a corner of the pump house was a small building known as the valve house having a flat roof somewhat lower than the top of the dyke and situated at a distance of about three feet six inches from it. Children were in the habit of playing about thedyke and in the vicinity of the pump house; and it was possible for them, descending the dyke in disregard of a by-law of the appellant posted at different places, to mount the roof of the-valve house, jump on t he sloping roof of the pump house and climb on hands and knees to its top, whence they would slide down. The evidence shows that the children engaged in this sport only when the pump house was not occupied and when policemen were not in sight. It was not proved that the city appellant knew by its officials or otherwise, that children were in the habit of going upon the roof of either house, although it would appear that children were using the roof in the manner described upon favourable occasions. The respondent's son, on the day of the accident, had climbed to the top of the pump house roof and was sitting on the ridge awaiting his turn to slide, when he lost his balance, rolled down the slope opposite the side facing the valve house and the dyke and was arrested in his fall by one of the groups of electric wires at the eaves of the pumping station, whence he was rescued by a neighbour after sustaining the injuries in respect of which the action is brought. The jury found that the accident was "due to the common fault" of appellant and respondent; and that the fault of the appellant consisted "in not having danger notices about the neighbourhood of the pumping station and some fences to prevent boys getting on the roof."

Judgment by the trial judge for $10,000 was affirmed by the Court of King's Bench.-Held, that the case presented no evidence for the jury; that the boy was a trespasser upon the roof and that trespassers have no right to complain of the condition of the premises as they find them; that the electric wires which were the immediate cause of the boy's injury, although an incident of the case, were not an element in the cause of action, because they did not tempt or attract the boy, were not in the nature of a trap, and had not hing whatever to do with bringing the boy upon them, and that the case was therefore distinguishable from the Turntable Cases which have been considered both in Quebec and in England and the United States.-Held also that the law does not impose a duty upon proprietors to fence their buildings to exclude mischievous boys any more than it does with respect to natural objects such as growing trees which are no better known nor more familiar.-Per Idington

J. dissenting. The evidence adduced before the jury was such that the trial judge could not properly withdraw the case from the jury and therefore their verdict should stand.

CITY 4--Sale of land-Sherif's sale-Seizure super non domino-Encroachment-Public domain- Non-seizable-Expropriation - Dedication-Arts. 1590, 1591 C.C.-Art. 781 C.C.P.]

A sheriff's sale discharges an immovable from all rights of ownership, except when the owner is, at the time of the sale, in possession of the immovable seized super non domino, as the right to revendication then belongs to such owner and if, at the time of the seizure, the real owner is not in possession, he must, in order to retain his right of ownership, make an opposition to the sale in the usual way.-An encroachment however upon a real property constituting a mere holding de facto, and not a possession de jure, cannot invalidate a judicial seizure and sale made against the real owner, who in such a case must be reputed to be in possession animo domini. (Art. 699 C.C.P.;) Dufresne v. Dixon, 16 Can.S. C.R. 596, and Vzina v. Lafortune, 56 Can. S.C.R. 246 dist.-The principle of law that an immovable forming part of the public domain cannot be seized or alienat ed does not apply when that immovable has been so incorporated by unlawful process.-Except in cases of donation, or abandonment or sale by mutual consent, a municipal corporation to become owner of real property must previously and under pain of nullity perform all the formalities required for expropriation proceedings, and unless these have been B.C. rigorously executed, the owner of the property who has been dispossessed against his will, is not restricted to a claim for an indemnity, but he may revendicate his properly by way of action pititoire.-An immovable affected by an bypothec cannot be legally dedicated by the owner to the public; and, in such case, Arts. 1590 and 1591 C.C. do not apply.-Judgment of the Court of King's

Bench

(Q.R. 37 K.B. 399) affirmed.

5--Appeal-A mount in controversy- Loss as the of judgment-Municipal

Institutions Act, R.S.O. [1914] s.

- Municipal by-law - Street declared residential-Distance from street line for buildings-Frontage-Landowner affected building-Right of action.] The amount in controversy necessary to give the Supreme Court of Canada jurisdiction to entertain an appeal may be determined by the pecuniary loss that would be suffered as a result of the judgment appealed from.-See. 406 (10) of The

Municipal Institutions Act (R.S.O. [19141 c. 192) authorizes the council of a city or town to pass a by-law declaring any highway or part of a highway to be a residential street and prescribing the distance from the street line in front at which buildings can be erected.

The city of Toronto passed such a by-law in respect of lands fronting on the north side of Carlton street between Sherbourne and Homewood Av.

R. proposed to erect an apartment house on the corner of Carlton street and

Homewood Av. at a less distance from the street line than that prescribed by the by-law and fronting on Homewood

Av. and a landowner on the north side of

Carlton street who would be prejudicially affected by its erection and claimed that it would be a contravention of the by-law brought action for an injunction to restrain R.

building it.- Held, affirming the judgment of the Appellate

Division (26 Ont. W.N. 401) that the action could not be maintained; it was no part of the scheme of the legislation to create, for the benefit of individuals, rights enforceable by action; remedies were provided by the Act but none under the general law; and the aggrieved landowner can only resort to those so provided.

ROBERTS.........

6--Part of township annexed to city- School section-Moneys on hand at annexation-Public School Act 100, s.

27 (1).]

Sec. 27 (1) of the Public School

Act, 1920, provides that "where part of a township

* annexed *

* an urban municipality part shall for all school purposes be deemed to be part of the urban municipality."-In Dec. 1921, the Ontario Ry. and Mun. Board made an order directing that a part of the township of Sandwich W., comprising the whole of school section No. 11, should be annexed to the city of Windsor. The order was to take effect on Jan. 1, 1922, but by arrangement the former trustees continued to manage the affairs of the school section until April 1. At the end of 1921 the school section had a balance on hand and received in March, 1922, $4,000 from the township council on account of taxes for 1921, and in February, 1922, $200, the statutory contribution to teachers' salaries for 1921.-Held that as the school section became for all school purposes part of the urban municipality on January 1, 1922, and as the money in question was proceeds of or chargeable against the rates of 1921, the urban Board of Education was entitled to recover, the annexation operal ing to transfer the school to the city as a going concern.

CrY v. Promissory note - Signature unauthorized-Validity- Debenture loan-Special object-Proceeds used for other purposes-Responsibility municipal officers-Cities and Towns 8 Geo. V, 60, s. 5956 (t.)] The municipal council of the town of Trois- Pistoles passed a by-law on the 26th January, 1920, authorizing the borrowing, by way of debentures, of a sum of $22,500, for the purchase of an electric lighting plant for which the town held an option expiring

30th

April, resolution of its council the town decided to accept the option on the 6th of April, 1920. The mayor and the secretarytreasurer, as the executive officers of the municipal council, arranged with the bank for the advance of the purchase money pending the sale of the debentures and undertook that the proceeds of the sale would be deposited with the bank to be applied in re-payment of the advances. On the 30th of April, 1920, at the instance of the bank a promissory note for $12,441.89 and a so-called interim debenture for $22,500 were signed by the mayor and the secretary-treasurer and handed to the bank. Then the town issued debentures in series of $100, $250 and $500 res ectively in conformity with the by-law and deposited the proceeds to the credit of its general bank account.

Instead of reimbursing the advances made by the bank as agreed the town drew against these moneys for its general purposes. On the 30th of July, 1921, the mayor and secretary-treasurer, without any express authority, renewed the promissory note of $12,441.89 by giving another note for 89,005.31, the balance having been paid by the town.-Held, reversing the judgment of the Court of King's

Bench (Q.R. 36 K.B. 355), Malouin J.

dissenting, that the giving by the mayor and the secretary-treasurer of the promissory note for $12,441.89, of the renewal note for $9,005.31 and of the interim debenture being unauthorized and therefore void, the appellant in the first action was entitled as a ratepayer to ask the courts to pronounce their nullity.-Held also reversing the judgment of the Court of king's Bench (Q.R. 36 K.B. 78),

Anglin and Malouin JJ. (dissenting)

, that there had been a diversion of the proceeds of the debenture loan within the meaning of section 5956 (t.) of the Cities and Towns

Act, 8 Geo. V, c. 60, and the mayor and the secretary-treasurer were bound jointly and severally to pay to the town the sum of $9,005.31 in order to extinguish the balance owed by it to the bank on the purchase price of the electric plant.-Per

Anglin J. (dissenting)

As the note given by the municipal officers was void, the overdraft in the general bank account of the municipality, which had been created by the advances made under the arrangement of the 6th of April, continued; and, as the proceeds of the debenture loan were subsequently deposited in that account, were applicable to such overdraft and were sufficient to cover it, there was no effective diversion of such proceeds within the meaning of sec. 5956

(t) and personal liability of the municipal officers therefor did not arise. Riou

LA .........

8-Assessment and taxes-Agreement for fixed valuation-Term of years-Computation-Mode of assessment.] In 1907 an agreement was entered into by the city of

Ottawa with the Can. Atl. Ry. Co. which was undertaking to build a hotel in the city to cost not less than $1,000,000.

agreement provided "that for and during the period of fifteen years next ensuing from and including the year 1909 the total assessed value of the said hotel and the land used in connection therewith and all buildings

* and appurtenances

* is hereby fixed agreed upon at the sum of five hundred thousand dollars and no more."

During this period the rates on such valuation were to be the same as those imposed on property owners generally.

In 1907 and since the system of the city was-and isto prepare, not later than September 30 each year, an assessment roil to form the basis of taxation for the following year if the council of that year so decides.

Appellate Division (56 Ont. L.R. 153)

that the agreement for the fixed assessment value must be construed in connection with the system according to which the first assessment on the hotel property would be levied in 1910; the fifteen year period, ; therefore, included the year 1924.

RAILWAYS.... 9-Action in damages--Statutory notice before suit-Sufficiency-(Q.) 13 Geo. V, c. 65, s. 611.]

The appellant took an action to recover damages to his mill property caused by flooding alleged to be due to an obstruction of the natural flow of the waters of the River Becancourt by the piers of a bridge constructed by the respondent corporation.

Section 5684 of the Revised Statutes of Quebec (now 13 Geo. V, c 65, s. 611) prescribes that a person who would recover damages from a municipal corporation for injury caused to his property shall within 30 days from the date of the occurrence of such injury give notice in writing to the clerk of the municipality "containing the particulars of his claim."

The day after the flooding of which he complains, the appellant caused a letter to be written by his attorney to the secretary-treasurer of the respondent corporation informing it of his claim for damages exceeding $2,000 suffered by him "dans son moulin"- Held, that the notice given by the appellant was a sufficient compliance with the statute as to damages caused by the flooding to the mill property itself and to its appurtenances.

JoBIN THE CITY OF MINES................. Boundary river - Bridge - Costs -Agreement-By-law-The Municipal Act, R.S.M. 1913, c. 133, ss. 667 and 668.] order to give jurisdiction to the Municipal Commissioner, under sections 667 and 668 of the Municipal Act, to apportion the costs of building a bridge over a river or stream forming the boundary between two municipalities, the latter must previously have agreed to construct the bridge.-The power of a municipality to contract with another municipality to build by joint action such a bridge must be exercised by by-law.- Judgment of the Court of Appeal (34 Man. (L.R. 405) affirmed. CARTIER....................... 11-Assessment and Taxes-Charitable institutions-Exemption ............ NAVIGATION

Municipal corporation -Defective sewers-Alteration - Negligence of contractors-Obstructing natural drainage.] When, during a heavy rainstorm, the city sewers are incapable of carrying all the water that falls, and NEGLIGENCE-Continued contractors employed to relay the pavement, in course of their work, obstructed the natural flow of the surface water and caused it to back and flood premises on the street the corporation which must be deemed to have notice of the obstruction, is guilty of negligence in not having it removed and also responsible for the negligence of the contractors.

Hole v.

Sittingbourne and Sheerness Ry. Co. (6 H.

& N. 488) appl.-Judgment of the Appellate Division (55 Ont. L.R. 1) affirmed.- The contractors covenanted to indemnify the city against the consequences of any injury to property in the course of the work.-Held, reversing the judgment of the Appellate Division (55 Ont. L.R. 1), that as it was shown that the act of the contractors was the sole effective cause of the injury to said premises they were liable under said covenant notwithstanding the defective drainage system, and the negligence of the corporation. City of Toronto v. Lambert (54 Can. S.C.R. 200)

and Sutton v Dundas (17 Ont. L.R. 556)

dist. THE CITY KITCHENER ROBE

CLOTHING CO.................

2 - Municipal law - Pumping station

-Electric wires-Children playing on roof

-Accident-Liability-Need of notice or fence.] The respondent in his quality as tutor to his minor son aged about eight years sued the appellant city for $20,000 damages for injuries sustained by his son.

The city is situated on the river side, near

Montreal; and in order to prevent flooding, a dyke with a roadway on the top was constructed and is maintained by

It was not proved that the city appellant knew, by its officials or otherwise. that children were in the habit of going upon the roof of either house, although it would appear that children were using

NEGLIGENCE-Continued the roof in the manner described upon favourable occasions. The respondent's son, on the day of the accident, had climbed to the top of the pump house roof and was sitting on the ridge awaiting his turn to slide, when he lost his balance, rolled down the slope opposite the side facing the valve house and the dyke and was arrested in his fall by one of the groups of electric wires at the eaves of the pumping station, whence he was rescued by a neighbour after sustaining the injuries in respect of which the action is brought. The jury found that the accident was "due to the common fault" of appellant and respondent; and that the fault of the appellant consisted "in not having danger notices about the neighbourhood of the pumping station and some fences to prevent boys getting on the roof."

Judgment by the trial judge for $10,000 was affirmed by the Court of King's Bench.-Held, that the case presented no evidence for the jury; that the boy was a trespasser upon the roof and that trespassers have no right to complain of the condition of the premises as they find them; that the electric wires which were the immediate cause of the boy's injury, although an incident of the case, were not an element in the cause of action, because they did not tempt or attract the boy, were not in the nature of a trap, and had nothing whatever to do with bringing the boy upon them, and that the case was therefore distinguishable from the Turntable Cases which have been considered both in Quebec and in England and the United States.- Held also that the law does not impose a duty upon proprietors to fence their buildings to exclude mischevious boys any more than it does with respect to natural objects such as growing trees which are no better known nor more familiar. Per Idington J. dissenting. The evidence adduced before the jury was such that the trial judge could not properly withdraw the case from the jury and therefore their verdict should stand.

CIry 177 3 - Crown - Public work - Employment-Exchequer Court Act s. 20 (c)- R.S.C. c. 140; 7-8 Geo. V, c. 23, s. 2-Statute-Construction.] By sec. 20 (c) of the Exchequer Court Act as amended in 1917 the Exchequer Court can hear and determine " (c) Every claim against the Crown arising out of any death or injury to the person or the property resulting from the negligence of any officer or servant of the Crown while acting within the scope of his duties or employment upon any public work."- As this section now stands (since the amendment of 1917) it is no longer necessary, in order to create liability. that the person or property injured should be NEGLIGENCE-Concluded upon the public work at the time; the words "upon any public work" qualify the employment, not the physical presence of the negligent officer or servant thereon and the driver of a motor truck (employed by a government department) carrying government employees to a public work is so employed.

KINo v.

4---Carrier-Bill of lading-Burden of proof.] The bill of lading for carriage of goods by railway provided that the carrier should be liable for any loss or damage thereto except, inter alia, if the same was caused by act or default of the shipper

Also, that when at the shipper's request the goods were carried in open cars the carrier would only be liable for negligence and upon it would be the burden of proving freedom from such negligence.

Goods were shipped on open cars upon which it was the duty of the shipper to load them.-Held, that the carrier has not discharged the burden of proving freedom from negligence if the court or jury is left in a state of real doubt as to negligence or no negligence.-Held, also, that the carrier is not obliged to show how the accident causing injury to the goods was brought about; he is only required reasonably io satisfy the judge or jury thai all possible precautions were taken against risks to be reasonably anticipated.-In this case the evidence did not suffice for a decision either as to the negligence in whole or in part of the shipper in loading the cars or as to whether or not the accident was due to a defect in i he car or railway or neglect in working the railway for which the carrier is answerable.

Therefore a new trial is ordered.-Per Idington J. dissenting.

The appeal should be allowed and the judgment of the trial judge restored.of the Appellate

(54 Ont. L.R. 238) reversed.

5 -Latent defects - Second-hand dealer

-Accident-Liability...............

6 - Damages - Orchard - Fire - Quantum of damages-CANAIAN

NA- NOTARY-Partnership-Real or nom inal- Notaries-Loss by a client-Reim bursement-Liability of partners-Joint or joint and several-Arts. 1128, 1712, 1730,

1732, 1850 1851 1854, 1856, 1857, 1863,

1869 C.C.f The liability of a notary pract ising his profesEion in real or nominal partnership with another notary to reimburse money of a client entrusted to the firm and converted by the latter to his own use is under article 1854 C.C.

a joint liability imposing upon the former an obligation to contribute one-half of

NOTARY-Concluded the loss, and not a joint and several liability involving an obligation for the whole.-The effect and application of articles 1730 and 1869 C.C. considered.- Judgment of the Court of King's Bench (Q.R. 34 K.B. 500) varied.

NOTICE - Statutory - Before suit - Sufficiency-Municipal corporation - Action in damages................. See 9. OWNERSHIP - Right of accession - Possesor-I mprovements-Cood faith - Droit de retention-Right of Trouble of eviction-Registration-Arts. 412, 415, 416, 417, 418, 419, 776, 777 1983, 1994, 2009, 2015 2084 C.C.] E. L. having been declared bankrupt, his Eon, A.L., pretended that he had taken possession of a certain piece of land and had cultivated it by virtue of an authorization given by E. L., accompanied with a verbal undertaking by the latter to donate it to him. A.L. entered an action against the trustee of his father's bankrupt estate, declaring that he was abandoning the ownership of the piece of land in question but claiming from the estate the value of his improvements thereon and praying for a declaration that, until he had been paid for same, he was entitled to retain the land in his possession.-On the municipal valuation roll the father was entered as owner and the son as lessee of the land in quesi ion.

Not only had they never contested the entries thus made but ihe father had paid t he municipal and school taxes as owner; while Ihe son, having been sued for taxes due by him as lessee, had acquiesced and paid them. The insurance premiums were paid by the father, who, moreover, had always included the land as part of his assets in the financial statements which he handed over to his bankers.

father had granted a hypothee on the same land to one D.P.; and the land appeared in the father's name in the registry office.-In addition to that, on two successive occasions, the son had accepted hypothecary obligations from his father on the same land, thus acknowledging his fat her's ownership in deeds signed by him.-Held that, under the above circumstances, even if the conversation alleged to have been exchanged between the father and the son, when the latter took possession of the land, meant anything more than a vague promise or expectancy that ihe son would eventually become the owner of the said land (which the father and of the son was inconsistent with the idea that anything had taken place of a nature to vest in the son a "juste titre," sufficient to constitute him possessor in good faith within ihe meaning of art. 412 C.C.-At all events, verbal 8.C.R. OWNERSHIP-Concluded evidence of the alleged verbal gift should not be accepted to prevail in favour of the son as against the rights of the creditors of the father, and to give to his possession the character of good faith necessary to enable him to claim the benefit of the privilege granted by art. 417 C.C.-Held that a possessor, even in good faith, who has made any valuable improvements to a lot of land cannot, under art. 417 C.C.

bring a substantive act ion for the payment either of the value or of the cost of such improvements, nor to have his droit de retention determined; but he is entitled to raise such claims only when he is troubled in his possession and an attempt is made to evict him.-Held that the rights given to the possessor by art. 417

C.C. afford merely means of defence

"moyens d'exception" and may not be asserted until the real owner endeavours to revendicate the land ("fonds").- Held that the "title" which a possessor must hold in order to be considered "in good faith," under art. 412 C.C. is not necessarily a deed or even a writing, but connotes the cause

("cause")

forms the basis of his right of possession.

Moreover, it requires a title purporting to transfer ownership

("translatif de propri6t6"), which alone constitutes what is known as "juste tilre."-Held that a possessor in good faith is not obliged to cause his "droit de retention" to be registered in order to claim the benefit of art. 417 C.C. against the creditors of the owner.-Judgment of the Court of King's

Bench (Q.R. 37 K.B. 376) reversed,

PARTNERSHIP - Real or nominal - Notaries-Loss by a client-Reimbursement-Liability of partners-Joint or joint and several-Arts. 1128, 1712, 1730, 1732,

1850, 1851, 1854, 1856, 1857, 1863, 1869

The liability of a notary practising his professign in real or nominal partnership with another notary to reimburse money of a client entrusted to the firm and converted by the latter to his own use is under article 1854 C.C. a joint liability imposing upon the former an obligation to contribute one-half of the loss, and not a joint and several liability involving an obligation for the whole.- The effect and application of articles

1730 and 1869 C.C. considered.-Judgment of the Court of King's Bench (Q.R.

34 K.B.

varied.

2- Death of partner-Continuance of business-Distribution of profits-Burden of proof.] The respective testators of the parties hereto were partners in business and the respondents' testator also carried on a separate business.

The moneys received therefrom and from other sources outside the partnership affairs being

PARTNERSHIP-Concluded deposited in the partnership account. In 1910 a settlement between the parties took place and the appellant's testator was paid $2,000 by cheque drawn upon the firm account.

On appeal from a former report it had been held that, on the evidence then Lefore the court, this sum was paid to equalize the interest of the partners in the firm's assets and that the balance of moneys in the firm's bank account after such payment was made belonged to the partnership; but the matter was referred back to the Master to permit the present respondents to adduce further evidence to controvert these conclusions.- Held that it must be regarded as res judicata that the sum of $2,000 was paid to equelize the interests of the partners in the then subsisting assets and that the moneys in bank after the settlement were partnership assets unless the present respondents should prove on the reference back that any part of the moneys belonged to their testator.-Held also that the evidence on the reference back had not displaced the prima facie case on these points made by the appellant on the first hearing before the Master.-In the result the appeal was allowed to the extent of some $300 to which the appellant was entitled.-Per Idington

J. The appeal should be allowed in toto.

v. CAR- PATERNAL AUTHORITY-Tutorship -Minor child in care of tutor-Right of parent to regain possession- Habeas corpus -Proper remedy-Arts. 83, 113, 120, 165, 243, 245, 290 C.C.-Art. 1114 C.C.P.] The rights of the tutor given by Art. 290 C.C. do not extinguish those of the parent under Arts. 113, 243 and 245 C.C.; and therefore the tutor, to whose care the mother previously had confided her child after the death of the father, cannot assert the right to refuse to surrender possession of her child to her, even though she had renounced to her legal right to tutorship.-The writ of habeas corpus is the proper remedy, as recognized by law and jurisprudence, of a mother who wishes to regain possession of her child illegally kept or detained from her.- In determining such right, consideration should be given to the interests of the child, without, however, confusing the interests with the wish or will of the child.-Judgment of the Court of King's Bench (Q.R. 38 K.B. 314) affirmed. PENSION FUND................. POSSESSION-Bank and banking-Company - Power of attorney - " Kiting"-Deposits-Right to recover- PRACTICE AND PROCEDURE-Stay proceedings-Juriadiction--Security for only-Execution for debt and below.] The appellant company, having been held liable in the courts below for a sum approximately $7,000, appealed to this court giving security only for the sum of $500 for the costs of the appeal.

The appeal to this court was dismissed with costs. The appellant then applied for a stay of proceedings in the action pending a projected appeal to the Judicial

Committee of the Privy Council.-Held that the application as made could not be granted as, security for the debt and costs in the courts below not having been given, the control of the issue of execution for them rests wholly with the provincial courts; a judge of this court can only direct that further proceedings be stayed in this court until the appellant should have an opportunity of presenting a petit ion for leave to appeal to the Judicial

Committee

Privy

Council.

FIRE INS. CO.

v. McPHERSON....................

- Final judgment - Substantive matter - Pleading separation agreement-Defence-Breach of conditions-Reply-Excuse for breach- Scandalous charges-Custody of infant.]

The Supreme Court of Canada entertained an appeal from a judgment confirming an order by a judge in chambers to strike out as scandalous and irrelevant a paragraph of the plaintiff's reply to the defence pleaded.-By a separation agreement the husband undertook to pay his wife an annual sum by monthly instalments and it was provided that the wife should be given the custody of their son but that his father should be allowed to see him with reasonable frequency and should be consulted as to, and satisfied with, his up-bringing. To an action by the wife for overdue instalments of her annuity breach of the condition as to the son was pleaded. In a paragraph of her reply the plaintiff set up facts which were scandalous and vexatious if not material and sought to justify such breach by alleging that she had become aware since the agreement was made that the character and conduct of the defendant was such that she would not be justified in taking his advice as to, or permitting him to associate with, their son on account of the bad influence that would likely result therefrom.

On application of the defendant a judge in chambers struck out this paragraph from the reply as scandalous and irrelevant and the court en banc confirmed his order affirming the judgment of the Supreme Court of Nova

Scotia ([1925] D.L.R. 277).-Held Idington J. dissenting, that such order was properly made; that the reply alleging

PRACTICE AND PROCEDURE-Con. the husband's bad character is no excuse for a breach of the conditions in the agreement; and that the only way in which she can avail herself of such a matter would be by producing a judgment or order of the court under the Custody of Infants Act giving her the custody of the son free from the father's right of access.-Held also, that she cannot in this action claim such judgment or order from the court.

Order XIX, rule 16, of the court rules. McLEN- 3--Replevin-Recovery of goods-Subsequent dismissal of action-Return of goods not ordered. Action on bond-Right to order for return or damages. P. brought a replevin action to regain possession of goods seized under process of law. He succeeded at the trial and the goods were delivered to him. The judgment in his favour was reversed by the full court but return of the goods or damages for their detention was neither demanded nor adjudged. In an action on the replevin bond.-Held, that as the obligees could in the replevin action, have claimed and obtained an order for return of the goods or for damages they cannot claim it in this

4 - Canadian National Railways-Garnishment-Proceeding--Fiat-Special leave of appeal- Provincial appellate courts-Jurisdiction- Discretion-Canadian National Railways Act (1919) 9-10 Geo. V, c. 13, s. 15- Supreme Court Act, 10-11 Geo. V, c. 32, 8. 41.]

The discretion conferred on the provincial courts of appeal by section 41 of the Supreme Court Act under which special leave to appeal to this court may be granted is untrammelled and free from restriction save such as is implied in the term "special leave."-A writ of garnishment attaching moneys owed by the Canadian National Railway Corporation to a judgment debtor in its employment is a "proceeding" within the provisions of s. 15 of the Canadian National Railways Act and may therefore issue "without a fiat"

dissenting).

5--Appeal-Final judgment-Demurrers to pleadings-Issues of fact-Verdict for plaintiffs- Nonsuit or new trial refused - Demurrers undisposed of.] In an action on an insurance policy the defendant demurred to counts in the declaration and the plaintiff to some of the pleas. Pursuant to an order in chambers the issues of fact were first tried.

A general verdict for the plaintiff was rendered after nonsuit had been refused.

On appeal to the court en banc a motion for nonsuit, for which leave was reserved at the trial, or for a new trial was refused and t he defendant obtained special leave to appeal PRACTICE AND PROCEDURE-Con.

to the Supreme Court of Canada. Before this appeal came on argument was heard on the demurrers but judgment was not rendered.-Held, that as long as the issues of law are undetermined the judgment on the issues of fact does not decide, in whole or in part, any substantive right of any of the parties and is not a final judgment.-Sec. 36 (b) of the Supreme

Court Act provides that an appeal shall lie from "a judgment upon a motion for a nonsuit."-Held, that the judgment of the court en banc refusing a nonsuit was right; that there can be no judgment of nonsuit when the issues of law are not before the court.-Judgment appealed

([1924] 4 D.L.R. 259) stands.

ScoTTisa UNION & INS. Co.

.....................

6-Judgment from other province-Suit for declaratory judgment-Absence of plea- Cross-demand-Principal action and cross demand to be heard at same time-Arts.

211, 212, 217 C.C.P.]

A suit was instituted in the province of Quebec by the appellants for the purpose of having declared executory a judgment from

British

Columbia awarding them

$12,476.07 for timber sold and delivered under contract. The respondent did not deliver any plea (Arts. 211, 212 C.C.P.), but filed a cross-demand claiming

$38,788.52 for breach of the terms of the contract and asking that the amount of the judgment be compensated pro tanto.

The appellants inscribed the case ex parte for judgment on the principal demand and the trial judge gave judgment accordingly.-Held, affirming the judgment of the Court of King's Bench (Q.R. 38 K.B.

325) that, as the claim under the terms of the cross-demand arises "out of the same causes as the principal demand," article

217 C.C.P. prescribes the procedure to be followed and that adjudication must be made at the same time upon the original demand and the cross-demand.

KNox...................

7 - Status - Intervention - Discontinuance-Supreme Court Act as. 60, 69,

80.]

Where a judgment had been given against a corporation in favour of a holder of a debenture, the interest upon which was in default, and the company and its president personally (the latter not theretofore a party) gave security for an appeal to the Supreme Court of Canada without objection by the respondents.- Held that the president had no status to take part in the appeal as he had not intervened in the manner provided by

The Supreme Court Act, s. 80.-An informal statement in a letter from the solicitors of the appellants

(Imperial

Steel Corporation Ltd.) indicating an intention to abandon an appeal does not suffice to effect a discontinuance, the explicit provisions of the Supreme Court

PRACTICE AND PROCEDURE-Con. Rule 60 not having been complied with. IMPERIAL LTD. V. BITTER; IMPERIAL LTD. v. WATSON.................. PRINCIPAL AND AGENT- Broker's commission-Negotiation of mortgage loan A. W. McLAUGHLIN & CO. v. BIRKs...................... PROBATE....................... See WILL.

PROMISSORY NOTE-Bank and banking-Composition between creditor and debtor-Note endorsed by third party to guarantee payments-Transfer by debtor to creditor for general collateral security- Knowledge of creditor-Holder in due course.] H. being indebted to a bank for $74,327.49 proposed to T., representing the bank, to settle the indebtedness by paying one half of the debt by monthly payments of $1,000 each and to give security for the other half. The last ten monthly payments were to be guaranteed to the bank's satisfaction. This proposal was accepted by the bank and a formal deed of composition was entered into.

With the view of fulfilling his obligation, H. obtained the respondent's endorsements to five notes of $500 drawn in favour of the bank and payable on certain dates coinciding with five of the last ten monthly payments, but he was unable to obtain security for the balance of the $10,000.

When H. had made only three of the monthly payments, T., acting for the bank apparently not considering I. to be in default, demanded and obtained from H. the transfer of the respondent's notes with a letter hypothecating the notes "as a general and continuing collateral security for the due payment of all advances made or to be made to" H. by the bank. T at the time of the transfer, knew that the purpose of the respondent's endorsements was to secure in part the last ten payments under the deed of composition and also knew that H. had failed to obtain security for the balance of the last ten monthly payments.-Held that, as T. knew that H. had no right to hypothecate generally the respondent's notes and to convert what was a specific security into a general security, which was a breach of faith towards the respondent, the bank had no right of recovery as not having taken the notes in good faith and therefore not being a holder in due course. BANK MONTREAL 587 2 - Signature unauthorized - .. . .. . See MUNIcIPAL CoRuoRATIoN 7. PUBLIC UTILITIES-Commission of- Finality of proceedings............. Employment - Crown-Negligence.................

See CnowN.

RAILWAY-Statute-Construction-RailwayBoard-Jurisdiction-Agreement of railway company with province-i Edw. VII, c.

53 (D).]

By an agreement made in 1901 between the Canadian Northern Ry. Co.

and the Government of Manitoba the

Lieutenant

Governor in Council was authorized to fix the rates to be demanded by the company for the carriage of freight on its lines in the province. This agreement was confirmed by Acts of Parliament and the legislature respectively,

Dominion Act containing the following provisions: Sec. 3. "Nothing in this Act or in the indenture contained in the schedule shall

(a) divert limit, temporarily or otherwise, the rights or powers

* of any commission

* *

* respecting any matter or thing, obligation or duty; (c) authorize the

Canadian Northern Ry. Co.

* to charge or demand any discriminating rate for the carriage of freight or passengers, or to allow or make any secret or special tolls, etc. or any higher rates for the carriage of freight or passengers, than those heretofore or hereafter fixed

* *

* by any commission or other authority."-Held, that sec. 3 (a) clearly reserves the rights and powers of the

Board of Railway Commissioners which is a commission or authority within its terms; and that 3 (c) which deals with special matter of tolls does not except that subject from the generality of 3 (a)

on the principle generalia specialibus non derogant, inasmuch as the two subsections are concerned with different matters and do not overlap nor conflict.

THE Gov- THE NORTH- Ry. OTHERS ..........

2 - Subsidy- Railway tolls-Agreement by railway company-Board of Railway Commissioners- Powers-Revision of tolls-Effect on agreement-60-61 V., c. 5-Railway Act, 1903,

3 Edw., VII., c. 58.]

By an Act passed in

1897 Parliament, inter alia, granted a subsidy to the C.P.R. Co. for building the

Crow's Nest Line provided the company entered into an agreement for substantial reductions in the rates for carrying certain classes of freight over the railway between designated points and feeders and that no higher rates should thereafter be charged. The items of such reductions were set out in the Act and the company executed an agreement embodying these conditions. The reduced rates have since remained in force except as suspended by temporary measures during the war and after the war by power temporarily given to the Board of Railway Commissioners to revise railway tariffs notwithstanding any such statutes

RAILWAY-Continued or agreements. When this temporary power ceased to exist the question of the reduced rates came before the board which made an order disallowing tariffs filed under the Act and agreement of 1897 claiming the right to do so under the general authority over railway tariffs given it by the Railway Act.-Held, that the said statute and agreement made in 1897 are binding on the board which has, therefore, no power to change the rates thereby fixed.-Held also, Idington J. dissenting, that the rates so fixed apply only to carriage of freight between said points and feeders as they existed in 1897. Against such restricted application the anti-discrimination provisions of the Railway Act cannot be invoked.-The Act of 1897 is a "Special Act" as that expression is defined in the Railway Act.- If said Act authorizes the agreement and prescribes its terms the obligations under said agreement are statutory and not merely contractual, just as if the agreement were confirmed by, and made part of, the Act.

3- Provincial line-Constructed by a coal company-Operated by a federal railway company-Applicability of the federal Railway Act-Power of federal parliament to pass s.s. c. of s. 6 of the Railway Act, (D) 1919-B.N.A. Act, 1867, s. 92, s.s. 10, par.

The appellant is a colliery company and had been authorized by a statute (c. 78 of 1921) of the province of Alberta to construct a railway known as the Luscar Branch to connect with the railway of the Mountain Park Coal Company, Limited, at or near Leyland station. In April, 1923, the appellant entered into an agreement with the Mountain Park Coal Company, the Grand Trunk Pacific Branch Lines Company and the Grand Trunk Pacific Company, the two latter companies now represented by the Canadian National Railways, for the construction and operation of this railway. It also submitted its railway to the operation of certain agreements between three other companies concerning the construction and operation of the railway of the Mountain Park Coal The effect of all these agreements is that these railways were built Lines Company at the expense of the two colliery companies, the cost of construction to be reimbursed to the latter by certain rebates allowed them on the shipment of all coal over these railways, it being agreed that when the companies are fully reimbursed the railways will become the property of the Grand Trunk Pacific Branch Lines Company. Grand Trunk Pacific Company undertook RAILWAY-Concluded to operate the railways and to furnish such rolling stock as would be necessary.

In the agreement made by it with the three other companies, the appellant consented to any necessary application of the Grand Trunk Pacific Branch Lines

Company (or the Canadian National

Railways) to the Board of Railway

Commissioners for Canada for approval of the location of the Luscar branch and the maintenance and operation thereof

Lines respondent

McDonald was the owner of Tams coal lease, Mountain Park Branch, Canadian

National Railways, in the vicinity of the

Luscar branch, and desired to obtain from the Board of Railway Commissioners permission to use a "Y" on the

Luscar branch and also to construct from this "Y" a spur track to serve his coal lease approximately 1,000 feet in length.

This application was opposed by the appellant which denied the jurisdiction of the Board to grant it. At the time of the application, the legal title to, the ownership of the Luscar Branch was still in the appellant company's name.-Held,

Idington J. (dissenting)

, that the Board of

Railway Commissioners had jurisdiction to entertain and grant the application made by the respondent N. S. McDonald.

-Per Anglin C.J.C. and Duff and Rinfret

JJ. The Luscar Branch is a railway within the meaning of s. 185 of the Railway Act and therefore comes within the operation of the Railway Act by force of s. 5 of this Act.-Per Newcombe, J. The

Canadian National Railways, by the effect of the above agreements, acquired and exercised, subject to the terms specified, operating rights upon the

Luscar Branch and it thus comes within the description of par. (c) of s. 6 of the

Railway Act, as being a railway operated by a company which is wholly within the legislative authority of the Parliament of

Canada, and therefore a work declared to be for the general advantage of Canada.

-Per Anglin C.J.C. and Idington, Duff and Rinfret JJ. S.s. (c) of s. 6 of the

Mignault and

Newcombe JJ. contra. LuscAR

CoL- LTD. N. S. McDONALD....

4-Canadian National Railways-Garnishment -Fiat....................

See CosTrrvTmoNAL 1.

REGISTRATION - Droit de retention- Trouble of eviction.................

REPLEVIN-Recovery of goods-Subsequent dismissal of action-Return of goods not ordered-Action on bond-Right to order for return or damages.] P.brought a replevin action to regain possession of goods seized under process of law. He succeeded at the trial and the goods were delivered to him.

The judgment in his favour was reversed by the full court but return of the goods or damages for their detention was neither demanded nor adjudged. In an action on the replevin bond.-Held, that as the obligees could in the replevin action, have claimed and obtained an order for return of the goods or for damages they cannot claim it in this action.

V. RIDEOUT.... 347 RETENTION-Droit de-Right of action -Trouble of eviction................ SALE OF GOODS-Vendor and purchaser dealer-Latent defects- Accident-Liability-Presumed knowledge -Rebuttal-Contractual warranty-Damages-"Foreseen"-Arts. 1053, 1056, 1074, 1075, 1522, 1526, 1527, 1528 C.C.] These actions arise out of the death of an employee of D. caused by an explosion of gun cotton in an iron "second-hand" pipe in the course of its being heated for use for the purpose for which it had been bought by D. from S.

The order given was for "used pipes in good working condition."

D. submitted to a judgment in favour of the representatives of its employee under the Workmen's Compensation Act for $2,560.

D. sued to recover this sum from S.; in a second action S. claimed the same sum by way of warranty from his vendor Z., and in a third action Z. sought to recover by way of sub-warranty from his vendor B.- Held, that since no care which could reasonably be expected from the vendors would have disclosed the presence of the gun cotton, there was no delictual liability under Art. 1053 C.C.]-Held, that a merchant-vendor, not the manufacturer, is legally presumed to know latent defects in the thing sold only where his calling imports a profession of skill or kn6wledge in regard thereto on which the purchaser might reasonably rely.-Held that a second-hand dealer is therefore not subject to the legal presumption of knowledge contained in par. 2 of Art. 1527 C.C.

He is liable only to the extent indicated in Art. 1528 C.C., unless he had actual knowledge of the latent defect from which injury has arisen, or had some reason to suspect its existence, non-disclosure of which might amount to dol.-Held that the presumption of knowledge under par. 2 of Art. 1527 C.C. is rebuttable only by proof that the nature of the defect was such that its existence could not have been suspected by the vendor and that he could not have discovered it by any precaution he might SALE OF GOODS-Continued reasonably be expected to take.-Held also that the damages claimed by D. from

S. are not recoverable as resulting from a conventional or contractual warranty, as these damages could not "have been foreseen" by the vendor within the meaning of Art. 1074 C.C.-Judgment from the Court of King's Bench (Q.R. 37 K.B.

reversed, Idington J. (dissenting)

451) .

& FILION

2-Contract price-Increase or decrease- Repudiation-Damages-Price determined or determinable-Art. 1472 C.C.]

respondent, a fur manufacturer in Montreal, bought in December, 1919, from the appellant, a manufacturer of silks in

New York, ten pieces of brocade silk as specified to be delivered "as ready.'

December

31,

1920."

proceeded to manufacture goods ordered, shipped them and sent invoices for same, adding to the contract prices a percentage according to the increase at the date of delivery in the costs of raw silk and declined accept such increase; but the appellant insisted upon its interpretation of the contract and continued to make more shipments. On the 20th of March, 1920, the respondent sent written notice to the appellant refusing acceptance of the goods and remitting invoices for same.

The appellant discontinued producing, but shipped to the respondent the goods in course of being manufactured at that date. On

April returned the goods, which were sold at auction by the appellant on respondent's account, after due notice to him.

brought

$3,956.99, being $345.86 for goods retained by respondent, $1,184.85 for difference of price for the returned goods sold at auction and $2,426.28 for damages on the unexecuted part of the contract.- Held, Rinfret J. dissenting, that the terms of the contract must be construed as meaning that it is the percentage of advance or decline in the price chargeable for the complete article which is governed by the advance or decline in the price of material or labour costs and not the

SALE OF GOODS-Concluded percentage of the value of the silk used in manufacturing the quantity of the complete fabric.-Held also that, although repudiation by a party to a contract of sale entitles de facto the other party to recover damages thus incurred, vendor has the right to insist on preserving the integrity of the contract and to tender the goods for delivery according to the terms of the sale, in which case his claim for damages will be more easily and readily assessed upon refusal to accept by the buyer.-Held further that the appellant had no right to claim damages in respect of loss of profit on the uncompleted part of the contract.

contra.-Per Rinfret J. dissenting. The contract of sale is not binding upon the parties, as in order to validly stipulate a price based on certain conditions prevailing at the time of delivery the contract must fix the date of such delivery; in other words, a price which can vary at the will of the vendor is not a price "certain et d6termin6" (Art. 1472 C.C.) which is an essential element of the contract of sale.

Co. v. KAuFMAN............. .249 SALE OF LAND - Vendor and purchaser -Reservations in original grant from Crown-Disclosure by vendor-Land Titles Act, R.S. Sask. (1920) c. 67, s. 60.] In an action for specific performance of an agreement for the sale of land, dated in April, 1920, two defences were set up, the second of which was the alleged inability of the vendors to make title owing to the existence of reservations in certain original Crown grants dated in 1906 and 1907. The agreement for sale contained a covenant by the vendors "to convey the lands to the purchaser by good and sufficient deed or transfer" but contained no words of exception or limitation such as "subject to the conditions and reservations contained in the original grants from the Crown."

The agreement also contained a covenant by the purchaser accepting the title of the vendor.-Held, affirming the judgment of the Court of Appeal (18 Sask. L.R. 443), Idington J. dissenting, that, in the circumstances of this case and in view of the provisions of section 60 of the Land Titles Act, the vendor was under no obligation to caution the purchaser about the reservations in the original grant to which his title was normally subject and that the purchaser ought to have inquired himself about the nature of the title the vendor could give. 2---Sheriff sale-Sei re super non domino-Encroachment-Public domain- Non-seizable - Expropriation - Dedication-Arts. 1590, 1591 C.C.-Art. 781 C.C.P.]

A sheriff's sale discharges an immovable from all rights of ownership, SALE OF LAND-Continued except when the owner is, at the time of the sale, in possession of the immovable seized super non domino, as the right to revendication belongs to owner; and if, at the time of the seizure, the real owner is not in possession, he must, in order to retain his right of ownership, make an opposition to the sale in the usual way.-An encroachment however upon a real property constituting a mere holding de facto, and not a possession de jure, cannot invalidate a judicial seizure and sale made against the real owner, who in such a case must be reputed to be in possession animo domini (Art. 699

C.C.P.); Dufresne v. Dixon, 16 Can.

S.C.R. 596, and Vdzina v. Lafortune, 56

Can. S.C.R. 246 dist.-The principle of law that an immovable forming part of the public domain cannot be seized or alienated does not apply when that immoveable has been so incorporated by unlawful process.-Except in cases of donation, or abandonment or sale by mutual consent, a municipal corporation.

to become owner of real property must previously and under pain of nullity perform all the formalities required for expropriation proceedings, and unless these have been rigourously executed the owner of the property, who has been dispossessed against his will, is not restricted to a claim for an indemnity, but he may revendicate his property by way of action pititoire.] An immovable affected by a hypothec cannot be legally dedicated by the owner to the public;

and, in such case, Arts. 1590 and 1591

C.C. do not apply.-Judgment of the

Court of King's Bench (Q.R. 37 K.B. 399)

affirmed.

THE CITY V.

FERGUSON....................

3 - Interest-Specific performance.] On the 20th

July, 1922, K. agreed to purchase from

J. an immovable for $85,000, payable

$6,000 on the execution of the agreement and $79,000 as follows: $6,000, on the

20th July, 1923, 1924, 1925 and 1926,

$25,000 on the 20th July, 1927, and the balance on the 20th July, 1928, with interest at 7 per cent, "the amount of the aforesaid deferred payments respectively to be applied first in payment of the interest upon the said purchase money to the date of the respective payments then towards the said purchase money.';

K. paid the first instalment due on the date of the agreement and became entitled to possession of the premises.

On the 8th of February, 1923, K. agreed to sell to P. the same property for $823,000 payable as follows: $7,000 on the execution of the agreement, $79,000 by assuming the payment of the above balance of purchase money due by K. to J., $28,000 on the 15th of March, 1923, and $1,000 on the 15th of each month, April to

SALE OF LAND-Continued

December, 1923, with interest at 7 per cent. This last agreement also provided that "all adjustments, including rents (were) to be made as of the 15th day of March, 1923,

* * *." Of the first deferred payment of $6,000 payable 20th July

1923, a sum of $3,605.70 was attributable to interest up to the 15th of March, 1923, upon the purchase money, according to the first agreement of sale. P. withheld the interest earned up to 15th March, 1923, amounting to the aforesaid sum of $3,605.70, claiming that he was entitled to that allowance upon the instalment of $6,000 due 20th July, K. refused to credit the interest, claiming that P. was not entitled to any deduction. P. sued for specific performance.-Held that, upon the true interprel ation of the agreement of sale, P. was not liable for the interest accrued previously to 15th March, 1923, the adjustment date.

Where a transfer of mortgagea land was given by the mortgagor as security only, but was absolute in form and contained no declaration negativing or modifying the covenant by the transferee with the transferor and mortgagee for payment of the mortgage, declared by section 54 of The Land Titles Act to be implied in the transfer, and where in a memorandum of agreement it was stipulated that upon payment of the amount in which the mortgagor was indebted to him, the transferee should re-transfer to the mortgagor a title to the land in fee simple subject to existing encumbrances or "other encumbrances of equal amount." Appellate Division, (20 Alta. L.R. 449), that section 54 did not render the transferee liable to the mortgagee for the amount of the mortgage.

By the interpretation of sections 54 and 55 of The Land Titles Act in light of section 179 of the same Act, their ex facie meaning appears to be subject, at least, to the gratification, that they must not be construed or applied in such a way as to disable the courts from giving effect to the terms of any agreement constituting a "disposition" of the land within the meaning of section 179, entered into either contemporaneously with or subsequently to, the execution of the transfer. WELn v. ................

5---Contract-Specific performance - Agreement to sell land-Time limit- Vendee owning interest-Agreement to sell on failure to purchase whole-Sale pending purchase agreement-Amendments-Penally.] D. and others, by contract in SALE OF LAND-Continued writing, agreed to sell certain land, within a stated time, for $30,000 to W.

who, within such period, was to have the exclusive right to buy it. W. had an interest in the land which, if he failed to purchase, he agreed to sell for $1,000.

But, while the contract was in force, he sold this interest to R. for $4,000 of which he got paid $1,125 on account.

W. did not purchase within the time stated and was tendered a deed with a cheque for $1,000 to convey his interest as agreed to D. and others. This being refused, the latter brought action for specific performance of the contract and to have the deed to R. set aside as being given without consideration and with a collusive and fraudulent intent. The trial judge dismissed the action holding the conveyance to R. to be bona fide and that performance could not be decreed.

The court en banc accepted his finding of bona fides but held the plaintiffs entitled to other relief than damages against W.

for breach of contract, which the trial judge held was the only remedy Ihey had.

The relief granted by the court en banc was to award to the plaintiffs the balance of the purchase money due from

R. to W. and give them the benefit of a lien or charge of W. on his interest in the land for payment of his purchase money therefor.-Held that, under the Registry

Act of Nova Scotia then in force (R.S.N.S.

1900, c. 137, s. 15) R. has acquired a title clear of all legal and equitable claims;

but the option agreement was still in existence as against W. and also bound

R., after he had actual notice of it, to the extent to which it was then available;

(57 N.S. Rep. 262) should be varied by striking out the direction that the plaintiffs should have the benefit of any lien in favour of W. as unpaid vendor--Evidence was given at the trial showing that W had obtained an advance from a bank, which was not a party to the action, the security of the money payable to him by

R.-Held, that R. is entitled to protection against the bank's claim and the case should be remitted to the court below to have the bank added as a party and its rights to R's purchase money ascertained.

That court has inherent power to correct the error in its judgment resulting from its failure to dispose of the bank's claim.

R's failure to bring this matter to the attention of the court on the settlement of the judgment would, according to the general rule of procedure, be a reason for depriving him of his costs but the court

SALE OF LAND-Concluded feels justified in making an exception in this case.-Idington J. dissenting, would allow the appeal and restore the judgment of the trial judge.

6 - Joint purchase - Speculation purposes-Title in the name of one-Failure to transfer title to other-Right to repudiate -Return moneys.1 The appellant acquired an interest in land purchased by H. for purposes of speculation. H. agreed to transfer to the appellant, free from encumbrances, an undivided quarter interest, and he professed to make this transfer by an instrument subsequently executed, in which, moreover, H. agreed, upon demand, to execute such further transfers, assignments and other documents as should protect the interest of the. appellant.-Held that the latter instrument left nothing outstanding between the parties except the undertaking for further assurance, which is an independent covenant, and that delay in the performance of it was not a cause for rescission of the executed conveyance and recovery of the purchase money. Bow- ....... 7- Right of buyer................ 8--Company-Aqueduct-Contract.. 192 Immovable - Mandate - Commission-Profit-Arts. 1233, 1722 C. Representation by vendor-"Good arable land"-Weight of evidence. Asson. Co. OF SALES TAX-Interest............. DEALER - Latent defects-Accident-Liability ......... SEPARATION AGREEMENT-Breach of conditions - Excuse - Scandalous charges......................... 279 SHERIFF'S SALE - Lease - Effect - Transfer of the lease to the buyer-Right of the lessee to abandon premises. Art. 781 C.C.P.

Arts. 1663, 2128 C.C.] Where, subsequently to the sheriff's sale of an immovable, the person on whom the properly was sold transfers his rights in a lease to the buyer (adjudicataire) and the latter notifies the lessee that he can remain in possession of the immovable, the lessee has no right to abandon the premises and is not discharged from the obligations resulting from the lease.- Judgment of the Court of King's Bench (Q.R. 38 K.B. 17) affirmed.

Co. v. RACINE....... .593 SHERRIFF'S SALE-Concluded

2---Sale of land .................

SHIPPING LAW

SOCIETY - Pension fund-Members- Abolition of employment-Merger of banks.]

Under the provisions of the Pension Fund

Societies Act, (R.S.C. 1906, c. 123), the employees of La Banque Nationale established a pension fund society including nearly all of them so long as they would remain in the employ of the bank.

Article 16 of its by-laws enacted that an employee, obliged to discontinue his services to the bank by reason of abolition of his position (pour cause de suppression d'emploi) after 25 years of service to the bank and of participation in the society, should be entitled to claim the amount of the pension provided in the by-laws.

But it was also provided by article 44 that, in the event of La Banque Nationale ceasing to exist, the society would be liquidated and the proceeds distributed to the members in accordance with the by-laws; and that those having no vested rights at that time would receive only their contributions with interest at four per cent. La Banque Nationale was merged with La Banque d'Hochelaga on the 30th April, 1924, in accordance with the provisions of the Bank Act.]-Held that the merger of La Banque Nationale with the other bank, although it necessarily terminated the employment of the members of the society as employees of that bank, did not effect an abolition of positions (suppression d'emploi) within the meaning of article 16 of the by-laws of the pension fund society; but that the rights of the members were governed by the terms of article 44.

LEMOINE.........................

STATUS.

....................

Board railway company with province-1 Edw.

VII, c. 53 (D).]

By an agreement made in 1901 between the Canadian Northern

Ry. Co. and the Government of Manitoba the Lieutenant Governor in Council was authorized to fix the rates to be demanded by the company for the carriage of freight on its lines in the province. This agreement was confirmed by Acts of Parliament and the legislature respectively, the

Dominion Act containing the following provisions: Sec. 3.

"Nothing in this Act or in the indenture contained in the schedule shall

* *

(a) divert or limit, temporarily or otherwise, the rights of powers

* of any commission

* respecting any matter or thing, obligation or duty; (c) authorize the

Canadian Northern Ry. Co. charge or demand any discriminating rate for the carriage of freight or passengers, or to allow or make any secret or special tolls, etc., or any higher rates for the carriage of freight or passengers, than those heretofore or hereafter fixed * * by any commission or other authority."- Held, that see. 3 (a) clearly reserves the rights and powers of the Board of Railway Commissioners which is a commission or authority within its terms; and that 3 (c) which deals with special matter of tolls does not except that subject from the generality of 3 (a) on the principle generalia specialibus non derogant, inasmuch as the two subsections are concerned with different matters and do not overlap nor conflict.

PROVINCE

RY. OTHERS.............. 2-Intoxicating Liquor Act of N.B.- Sale by licensees-Amending Act-Sale by Crown-Taking over licensees' stock-Time of valuation-Increase in Customs duty- Sales tax-Interest-6 Geo. V, c. 20; 9 Geo. V, c. 53 (N.B.)]

By the Intoxicating Liquor Act of New Brunswick, 1916, liquor was sold by licensed vendors; by an amendment in 1919 control of the business by the Crown through a board was authorized, such board being permitted to take over the stock of liquor held by the licensees of whom the Canadian Drug Co. was one, who were required, on request, to furnish a statement of the stock in hand or in transit with the prices paid and other particulars, the value to e based on such statement or, if that could not be done, to be determined by a method agreed upon. Upon payment therefor the liquor should become the property of the Crown. The Amending Act came into force on April 18, 1921, and the operating board was appointed on the same day; on May 10 the Customs duty on liquor was increased; the parties agreed on the value of the liquor of the Canadian Drug Co. except on the point as to whether or not the increased duty should be added to the value and the amount of the sales tax or any interest should be allowed; the liquor was delivered to the board in June and July and paid for in October subject to the above mentioned rights as to value.-Held, that the value of the liquor should be determined as of the date at which delivery was made and the Drug Co. was entitled to the increased duty.-Held also, that the case must be treated as one of purchase and sale in which the vendor is entitled to be paid the amount of the sales tax on the price.- Held further, that the vendor was not entitled to interest either on the purchase price or the amount of the sales tax. THE Co. 7g7 CoUNcm...........................

- Subsidy tolls-Agreement by railway company- Board of Railway Commissioners-Powers

-Revision of tolls-Effect on agreement- 60-61 V., c. 5-Railway Act, 1903, 3 Edw.,

VII, c. 58.]

By an Act passed in 1897

Parliament inter alia, granted a subsidy to the C.P.R. Co. for building the Crow's

Nest Line provided the company entered into an agreement for substantial reductions in the rates for carrying certain classes of freight over the railway between designated points and feeders and that no higher rates should thereafter be charged. The items of such reductions were set out in the Act and the company executed an agreement embodying these conditions. The reduced rates have since remained in force except as suspended by temporary measures during the war and after the war by power temporarily given to the Board of Railway Commissioners to revise railway tariffs notwithstanding any such statutes or agreements. When this temporary power ceased to exist the question of the reduced rates came before the board which made an order disallowing tariffs filed under the Act and agreement of

1897 claiming the right to do so under the general authority over railway tariffs given it by the Railway Act.-Held, that the said statute and agreement made in

1897 are binding on the board which has, therefore, no power to change the rates thereby fixed.-Held also, Idington J.

dissenting, that the rates so fixed apply only to carriage of freight between said points and feeders as they existed in

Against such restricted application the anti-discrimination provisions of the

Railway Act cannot be invoked.-The

Act of 1897 is a "Special Act" as that expression is defined in the Railway

Act.-If said Act authorizes the agreement and prescribes its terms the obligations under said agreement are statutory and not merely contractual just as if the agreement were confirmed by, and made part of, the Act. GovERNMENTs

MANI- PAcic Ry. Co.. 155

4 - Control and regulation of a trade-Canada

Grain Act, 2 Geo. V, c. 27-S.s. (7) added to a. 95, 9-10 Geo. V, c. 40 s. 3.]

Subsec. 7 added to sec. 95 of Te Canada Grain

Act, 1912, by 9-10 Geo. V, c. 40, sec. 3, is ultra vires of the Parliament of Canada

Anglin C.J.C. diss.-Judgment of the

Exchequer Court ([1924] Ex. C.R. 176)

affirmed.-The Canada Grain Act was passed in 1912 to control and regulate, through the Board of Grain Commissioners, the trade in grain.

It contains, also, provisions for inspection and grading.

It was amended in 1919 by adding to sec. 95 subsec. 7 which provides that if at the end of any crop year in any terminal elevator "the total surplus of grain is found in excess of one-quarter of one per cent of the gross amount of the grain received in the elevator during the crop year" such surplus shall be sold for the benefit of the Board.-Held, Anglin C.J.C. dissenting, that this subsection is only a part of the scheme of the Act to control and regulate the business, local and otherwise, terminal elevators which it is not within the competence of Parliament to enact.- Held, per Duff and Rinfret JJ., that the legislation is not warranted by the fact that tbree-fourths of the trade in grain is export out of Canada.

If Parliament can provide for control of the local business under that condition it must have power to do so whatever may be the extent of the export trade.-Per Mignault J. Nor can the legislation be supported as relating to agriculture (B.N.A. Act, 1867, sec. 85.

The subject matter is only a product of agriculture and an article of trade.

It is trade legislation and not for the support or encouragement of agriculture.

KING v. EAsTERN TER- 5 - Assessment and taxes - Exemption - Charitable institution statute-Ejuedem generis-Railway buslding--Ontario Assessment Act (R.S.O.[1914] c. 195, ss. 5 (9) and 47 (3)

By see. 9, subsec. 5 of The Ontario Assessment Act every industrial farm, house of industry, etc.,

"or other charitable institution conducted on philanthropic principles and not for the purpose of profit or gain" is exempt from taxation.

By sec. 47, subsec.

3, structures * * railway lands and used exclusively for railway purposes or incidental thereto *

* shall not be assessed." railway company erected, on its own land, a building with all facilities for lodging entertainment and recreation and handed it over to the Y.M.C.A. which agreed to provide suitable lodgings for its own members and employees of the railway. The railway company did not, and the Y.M.C.A. could not, make any financial gain therefrom.- Held, affirming the judgment of the appellate Division (56 Ont. L.R. 62) that the building was not exempt from taxation under sec. 9 (5); the words "or other charitable institution" in that subsection meant an institution ejuadem generia, as those previously mentioned; moreover the lodging house in this case was not a charitable institution conducted on philanthropic principles inasmuch as the Y.M.C.A. received an adequate return for the services supplied.-Nor was it exempt under sec. 47 (3); by other provisions of that section the structure must be "in actual use and occupation by the company"

and by subsec. 3 it must be "used exclusively for railway purposes or incidental thereto" while other persons than railway employees took advantage of it.

TOWN

CAPREOL.........................

6 - Application - Retroaction-Order of court-Commission of Public Utilities- Finality of proceedings-10 eo. V, c. 53;

14 Geo. V, c. 74 (N.B.)]

In 1920 by 10

Geo. V, c. 53, the Board of Commissioners of Public Utilities, under another name, was created in New Brunswick authorized to make a contract with any municipality for supplying electrical energy therein.

In 1924 by an amending

Act it was given power, when a corporation had constructed, or desired to construct, works for distributing electricity on a highway on which were similar works of another corporation, to make an order approving of the location and of construction of the works of the new works which shall then be deemed lawful and may be operated by such corporation incurring liability to any other; nothing done by the Board in this respect is open to judicial review and no court shall be injunction or otherwise restrain the construction or operation of works so approved. By sec. 61, subsection 2, the

Act of 1924 does not apply to pending litigation "unless otherwise ordered by the court before which such litigation may be pending."

In 1923 litigation started between the N.B. Power Co. and the city of St. John. The city, under statutory authority and a contract with the Board, was constructing works for supplying electricity within its limits and the Power Co., which had carried on the same business for some years applied for an injunction and damages alleging a wrongful interference with its property and operation of its system. The action came on for trial in 1924 when the Act of that year above referred to was in force and the trial judge, under the provisions of sec. 61 (2) ordered that it should apply to such litigation on condition that the city should promptly apply to the Board for approval of its works.

The Appeal Division set aside this order holding that the judge had no power to make it and granted the injunction and damages.-Held, that the legislature had delegated to the court the legislative authority to declare the Act applicable and that the trial judge had properly

STATUTE-Concluded exercised the power so delegated.-Held also, that the Power Co. was entitled to damages for injury incurred prior to the Board's approval of the enterprise of the city.-Qu. Was the order of the trial judge open to review?

CrrY Jonn 7- LIMITATIONS - Mortgaged lands-Possession by first mortgagee-Acknowledgment of title-Lease by party in possession-Joinder by second mortgagee-R.S.O. [1914] c. 75, ss. 20 and Lands in Ontario were twice mortgaged and the first mortgagee entered into possession occupying the lands and receiving the rents and profits for sufficient time to acquire title under the Statute of

Limitations. During this period leases were executed by the mortgagee in possession and by the second mortgagee as third party. The leases contained no express acknowledgment by the lessors of title in the second mortgagee but contained this clause: "The parties of the third part hereby consent and agree to the within lease."-Held, affirming the judgment of the Appellate

(53 Ont. L.R. 99) that this clause acknowledged the authority of the lessors to execute the lease but did not imply an acknowledgment by them of any title in the second mortgagee.-Held also that the second mortgagee had no status to maintain the action; all her rights under her mortgage and her interest in the lands having become extinguished at the expiration of the statutory period. NUr- HANRAHAN................. STATUTES-(mp.) B. N.A. Act, 1867, s. 85............................. 2-(Imp.) B.N.A. Act, 1867, s. 92, ss. 10 (c)............................ 3-R.S.C. [1906] c. 70, s. 39 (Copyright Act).........................

4- R.S.C. [1906] c. 71, s. 42 (Trade- Mark and Designs Act) ............. 5-R.S.C. [1906] c. 123 (Pension Fund Societies Act)..................... 6-R.S.C. [1906] c. 139, ss. 36, 41 (b) (Supreme Court Act)............... 7-R.S.C. [1906] c. 139, ss. 60, 69, 80 (Supreme Court Act) ...............

8-R.S.C. [1906]

c. 139, rule 108 (Supreme Court Act) ..........

... STATUTES-Continued

9-R.S.C. [1906] c. 140, s. 20 (c.)

(Exchequer Court Act) ..............

See CRoW-.

R.S.C. [1906] c. 146, ss. 706, 761,

1024 (a) 1029 (Criminal Code) ......

11-R.S.C. c. 146, ss. 1013, 1014

(Criminal Code)...................

12-(D.) 60-61 Vict., c. 5 (Crow's Nest

Pass Act)........................ 155

13- (D.) 1 Edw. VII, c. 53 (Canadian

Northern Ry. Act).. ..............

(D.) 3 Edw. VII, c. 58 (Railway

A ct).............................

15-(D.) 2 Geo. V., c. 27 (Canada Grain

Act).. . . .. . . .. .. .. . . . .. . . . . . ... 434

16-(D.) 7-8 Geo. V., c. 23, s. 2 (Exchequer Court Act)...................

17-(D.) 7-8 Geo. V, c. 28, s. 3 (1)

(Income War Tax Act) .............

(D.) 7-8 Geo. V, c. 28, ss. 8, 9

(Income War Tax act) ..............

19-(D.) 9-10 Geo. V, c. 4, s. 3, adding ss. 7 to s. 95 (Canada Grain Act)....

20-(D.) 9-10 Geo. V, c. 13, s. 15 (Canadian National Railways Act) .......

21-(D.) 9-10 Geo. V, c. 36, as. 63, 66

74 and rule 72 (Bankruptcy Act) .....

22-9D.) 9-10 Geo. V., c. 55, s. 7 (Income

W ar Tax Act)....................

23-9-10 Geo. V, c. 68, S. 6,

(Railway Act).....................

24- 9-10 Geo. V, c. 185, s. 5 (Railway

Act).... .. .. . . ......

See LAW 3.

25-10-11 Geo. V, c. 32, s. 41 (Supreme

Court Act)........................

26-10-11 Geo. V, c. 49, ss. 11, 13

(Income War Tax Act).............

27-11-12 Geo. V, c. 24 (The Copyright

Act) .........................

28-11-12 Geo. V, c. 33, s. 4 (Income

War Tax Act).....................

29- R.S.O. c. 75, as. 20, 24

(Limitations Act)..................

STATUTES-Con*luded

30- R.S.O. [1914] c. 192, s. 406 (10) Municipal Institutions Act) ......... 31-R.S.O. [19141 c. 195, as. 5 (a) and 47 (3) (Ontario Assessment Act) ...... 32-(0.) 10-11 Geo. V, c. 100, 27 (1) (The Public Schools Act) ............ 33-R.S.Q. [1888] s. 4559 (Town Corporations A ct)........................ 34-R.S.Q. [1909] ss. 7027, 7028, ss. s. 1, 2 (Insurance Act)............... 35-(Q.) 8 Geo. V, c. 60, s. 5956 (t) (Cities and Towns Act) ............. 36-(Q.) 13 Geo. V, c. 65, s. 611 (Cities and Towns Act)................... 37-(N.B.) 5 Geo. V, c. 23, a. 113 (The Probate Courts Act)................ 38-(N.B.) 5 Geo. V., c. 27, sl 8 (la) (Succession Duty Act)............. 39-(N.B.) 6 Geo. V, c. 20 (Intoxicating Liquor Act)...................... 40-(N.B.) 9 Geo. V, c. 53 (Intoxicating Liquor Act)....................... 41-(N.B.)

10 Geo. V, c. 53 (Public Utilities Act)...................... 42-(N.B.) 14 Geo. V, c. 74 (Public Utilities Act)..................... 43- R.S.N.S.

c. 137, s. (Regis ry Act)..................... 44- R.S.A. [1922] c. 133, ss. 54, 55, 179 (Land Titles Act) .............. 45-R.S.A. [1922] c. 151, s. 19 (Bills of Sale A ct)......................... 46-R.S.A. [1922] c. 156, art. 55 of Table A (Companies Act) ........... 47-(B.C.) 3 Geo. V, c. 34, a. 31 (Jury Act)....... . .. .. ... . . ... . ..... 48-(B.C.) 12 Geol V, (2nd session) c. 48, s. 36 (Income and Personal Property Taxation Act)..................... 49- R.S.M. [1913] c. 133, ss. 667, 668 (The Municipal Act).............. 50- R.S. Sask. c. 67, s. 60 (Land Titles Act)........................ diction-Security for costs only-Execution for debt and costs below.] The appellant company, having been held liable in the courts below for a sum approximately

$7,000, appealed to this court giving security only for the sum of $500 for the costs of the appeal.

The appeal to this court was dismissed with costs. The appellant then applied for a stay of proceedings in the action pending a projected appeal to the Judicial Committee of the Privy Council.-Held that the application as made could not be granted as, security for the debt and costs in the courts below not having been given, the control of the issue of execution for them rests wholly with i he provincial courts; a judge of this court can only direct that further proceedings be stayed in this court until the appellant should have an opportunily of presenting a petition for leave to appeal to the Judicial

Committee of the Privy Council.

rrv-PnENIx FIRE CO.

N.Y. v.

2 - Co-defendants-Concurrent appeals to the Supreme

Court of Canada and Privy Council- Where, A. and B. being co-defendants,

A. has first inscribed an appeal for hearing in the Supreme Court of Canada and B. later on has inscribed an appeal to the Judicial Committee of the Privy

Council, upon motion on behalf of B.

the proceedings on the first appeal were stayed pending the decision of the Privy

Council upon B's. appeal.

SHAVER..........................

SUCCESSION DUTY-Specialty debt- Creditor out of province-Locality of debt.]- A mortgage debt due in New Brunswick at the time of the foreign creditor's death is property of the creditor's estate which may be liable to duty under the

Succession Duty Act, 1915.-Where liability to pay such duty depends on the situs of the debt in case of a specialty debt the situs is the place where the specialty was found. Commissioner of

Stamps v. Hope [1891] A.C. 476) appl - Property of the creditor's estate consisting of mortgages is not liable to duty where the creditor was domiciled out of the province and had possession of the specialty at his death; Idington J. dissenting. THE Co. v.

PRovIcIAL

NEW BRUNSWICK..................

TRADE-MARK - Secondary meaning- Evidence- Use of owner's name-Person of same name in same business- Passing of-ntent.] A manufacturer registered a trade-mark consisting of his own name and was stamped upon the

TRADE MARK-Concluded goods he sold.-Held, Idington J. dissenting, that in order to prove that the trade-mark had acquired a secondary meaning denoting that the goods on which it was stamped were those of its proprietor who has an exclusive right to the use of that particular name it must be shown that knowledge of such meaning was universal throughout the area in which the business was carried S. Chivers & Son v. S. Chivers & (17 Cut. P.C. 420) fol.-Though a tradesman cannot be prevented from bonestly using his name in connection with the sale of his goods he has no right to use it with the intent of passing off his goods as those of another person of the same name or, without such intent, of so using it and wilfully persist ing in such use that it will have that effect.-Held, affirming the judgment of the Exchequer Court ([1923] Ex. C.R. 136) Idington J. dissenting, that in this case neither such intent nor such effect was proved. HURL- Co. Co ..... 2-Registration in United States-Advertising in Canada-Same mark and purpose to expunge-" Person aggrieved" -R.S.C.

[19061 c. 71, s. 42.]

The W.C. Co., manufacturers of confectionery in the United States had the words "Oh Henry" registered in the Patent Office at Washington as a trade-mark for chocolate bars and advertised it extensively American papers and magazines having a substantial circulation in Canada but made no use of it there. The C. Co. in the same business in Kingston, Ont., registered these words in Canada as its own trade mark for the same goods.]- Held, affirming the judgment of the Exchequer Court ([1924] Ex. C.R. 183) Idington J. dissenting, that the W.C. while the Canadian registration stands, is prevented from making any use of said words in Canada in connection with the sale of their product, and is deprived of the benefit here of their extensive advertising; it is, therefore, "a person aggrieved" within the meaning of see. 42 of The Trade Mark and Design Act and entitled to bring an action to have them expunged from the Canadian registry.- Held also that the trade-mark of the C. Co. was 'Icalculated to deceive and mislead the public" and should be expunged from the Canadian registry. W. J. CROTHERS CO. v. TUTORSHIP - Paternal authority - Minor child in care of tutor-Right of parent to regain possession.......... VENDOR AND PURCHASER-Sale of land-Reservations in original grant from Croum-Disclosure by vendor-Land Titles VENDOR AND PURCHASER-Con.

Act, R.S. Sask. (1920) c. 67, s. 60.]

In an action for specific performance of an agreement for the sale of land, dated in

April, 1920, two defences were set up, the second of which was the alleged inability of the vendors to make title owing to the existence of reservations in certain original

Crown grants dated in 1906 and 1907.

The agreement for sale contained a covenant by the vendors "to convey the lands to the purchaser by good and sufficient deed or transfer" but contained no words of exception of limitation such as "subject to the conditions and reservations contained in the original grants

The agreement also contained a covenant by the purchaser accepting the title of the vendor.-Held, affirming the judgment of the Court of

Appeal (18 Sask. L.R. 443), Idington J.

dissenting, that, in the circumstances of this case and in view of the provisions of section 60 of the Land Titles Act, the vendor was under no obligation to caution the purchaser about the reservations in the original grant to which his title was normally subject and that the purchaser ought to have inquired himself about the nature of the title the vendor could give.

- Second-hand dealer-Latent defects-Accident- Liability - Presumed knowledge - Rebuttal - Contractual warrant y-Damages-"Foreseen"-Arts. 1053,

1056, 1074, 1075, 1522, 1526, 1527, 1528

C.C.]

These actions arise out of the death of an employee of D. caused by an explosion of gun cotton in an iron "secondhand" pipe in the course of its being heated for use for the purpose for which it had been bought by D. from S.

order given was for "used pipes in good working condition."

D. submitted to a judgment in favour of the representative of its employe under the Workmen's

Compensation Act for $2,560.

D. sued to recover this sum from S.; in a second action S. claimed the same sum by way of warranty from his vendor Z., and in a third action Z. sought to recover by way of sub-warranty from his vendor B.- Held, that since no care which could reasonably be expected from the vendors would have disclosed the presence of the gun cotton, there was no delictual liability under Art. 1053 C.C.-Held, that a merchant-vendor, not the manufacturer, is legally presumed to know latent defects in the thing sold only where his calling imports a profession of skill or knowledge in regard thereto on which the purchaser might reasonably rely.-Held that a dealer therefore not subject to the legal presumption of knowledge contained in par. 2 of Art.

1527 C.C. He is liable only to the extent indicated in Art. 1528 C.C., unless he had

VENDOR AND PURCHASER-Con. actual knowledge of the latent defect from which injury has arisen, or had some reason to suspect its existence, nondisclosure of which might amount to dol.- Held that the presumption of knowledge under par. 2 of Art. 1527 C.C. is rebuttable only by proof that the nature of the defect was such that its existence could not have been suspected by the vendor and that he could not have discovered it by any precaution he might reasonably be expected to take.-Held also that the damages claimed by D. from S. are not recoverable as resulting a conventional or contractual warranty, as these damages could not "have been foreseen" by the vendor within the meaning of Art. 1074 C.C.- Judgment from the Court of King's Bench (Q.R. 37 K.B. 451) reversed, & & WARRANTY

Contractual-Damages .... ..... WILL- Use of definite terms-Repetition -Presumption of uniformity.] When, in a deed or will, a word or phrase is used with a definite meaning and the same is repeated but the meaning is not so clear, prima facie the same meaning is intended to be conveyed.

2-Probate-Appeal from probate judge -Burden of proof-Weight of evidence Probate Courts Act," N.B.S., 5Geo. V, c. 23, s. 113.]

The general rule of legal procedure that the burden of proof is on the party who asserts the affirmative of the issue applies in the case of a will offered for probate--The Judge of Probate having refused to admit the will to probate on the ground that the execution of it had not been established by satisfactory his was affirmed by the Appeal Division of the Supreme Court, who held affirmatively that the will was a forgery.-Held, reversing the Appeal Division, Duff J. dissenting, that the weight of evidence was in favour of the validity of the will, which should be admitted to probate.- Per Duff J.: The onus was upon the party propounding the will to establish its execution, remained upon him throughout, and it was the duty of the trial judge to pronounce against the will if after considering the whole of the admissible evidence adduced, he was not judicially satisfied that the will had been duly executed; and that there was no sufficient reason for reversing the concurrent findings of the trial judge and WILL-Concluded the Appeal Division that the testimony of the proponent and of the attesting witnesses was not credible.-A

New

Brunswick statute provides that "the

Supreme Court (on appeal) shall decide questions of fact from the evidence sent up on appeal notwithstanding the finding of the judge in the court below."-Held, per Duff J., that this provision does not authorize the Supreme Court to deal with an appeal as if it were the court of original jurisdiction but it must proceed as on a re-hearing.-Judgment of the

Appeal Division (51 N.B. Rep. 1)reversed,

Duff J. (dissenting)

v. NEvINs 619

WORDS AND PHRASES-"Foreseen" ................................. 2- "Good arable land" ............ 671 3- "Person aggrieved"............. 4- Proceeding................... 5- 6- "Special Act"................ 7- " Used pipes in good working condition"......................

Cases cited

A.C. 589 A.C. 589 p 593
A.C. 137 A.C. 137 p 141
A.C. 405 A.C. 405 p 410
A.C. 197 A.C. 197 p 210
D.L.R. 277 D.L.R. 277
2 W.W.R. 926 2 W.W.R. 926
1 W.W.R. 1 1 W.W.R. 1
A.C. 476 A.C. 476
4 D.L.R. 259 4 D.L.R. 259
2 W.W.R. 40 2 W.W.R. 40

Statutes and regulations cited

Criminal Code
- s. 4
- ss. 706
- Section 9
- section 8
- s. 41
- s. 36
- s. 63
- 66
- 74
- s. 74
- s. 406
- section 1013
- s. 1014
- section 36
- s. 3
- ss. 5
- ss. 63
- section 41
- s. 15
- s. 95
- s. 5
- 761
- 1024
- Sections 1013
- 1014
- s. 31
- section 31
- s. 20
- s. 2
- ss. 20
- ss. 36
- ss. 1013
- ss. 8
- 9
Supreme Court Act
- section 41 of the Supreme Court Act
- s. 80
- s. 60
- 41
- ss. 60
- 69
- 80
- s. 41
Canada Grain Act
- s. 92
- 8.8
- s. 185
- s. 6
- s. 85
- ss. 10
- s. 4559
- ss. 7027
- 7028
- s. 113
Copyright Act
- s. 39 of the Copyright Act
- ss. 11
- 13
- 11
- s. 39
- s. 42
Exchequer Court Act
- s. 19
- ss. 54
- section 54
- sections 54
- 55
- section 179
- 24
- s. 5956
- section 5956
- s. 611
- Section 5684
- ss. 667
- ss. 7
- s. 7
- 179
Bank Act
- 668
Pension Fund Societies Act
Unresolved citations
- s. 297
- s. 27
- s. 8
- 9
- s. 7
- 10
- section 31 of the Jury Act
- Section 4559 of the Town Corporations Act
- s. 19 of the Bills of Sale Act
- s. (7)
- s. 6 of the Railway Act
- (c)
- section 54 of The Land Titles Act
- sections 667
- 668 of the Municipal Act
- s. 15 of the Canadian National Railways Act
- s. 185 of the Railway Act
- section 60 of the Land Titles Act
- sections 54
- 55 of The Land Titles Act