Judgment of the Court
J.-The principal appeal must fail. would have dismissed it at the hearing, without calling on the respondent.
Such an attempt to plunder this bank in the name of public order and public policy, such a self-constituted championship of public interests in order to defeat a legitimate claim, cannot receive the countenance of a court of justice. The appellants' contention that Langlais received no legal consideration for his undertaking to pay the bank the sum of $82,500, with interest, is to me an astonishing one.
Was not the good, legal coin to that amount (less discount) advanced to him by the bank, a consideration ? And a most valid and substantial one? On a contract of loan (mutuun) the thing lent is the consideration for the borrower's promise to pay, the cur promisit as Demolombe calls it
And in the case of a loan of money, the use and enjoyment of the amount lent for the time agreed upon is the consideration for the payment of the interest in addition to the amount lent. The word " consideration," I may here notice, in arts. 989 and 990 of the Quebec Code, is clearer than the word " cause " in the corresponding articles of the French Code.
Assuming that the bank had not the power to lend him that money, did not Langlais, nevertheless, receive, as matter of fact, a good and valid consideration for his promise to pay both capital and interest
Can he say that he gave his note without considera- J. tion, or for an illegal consideration ?
Is it not the converse, and he, or the appellants for him, who want to pocket over $82,000 of the bank's funds, without ever having given any consideration for it to the bank ?
He gave his note for value received.
Did he not receive this value?
Is there anything illegal in his promise to pay it back ? The illegality, it is plain, would be the other way; he would, if the appellants' contentions prevailed, have got richer by $82,500 to the clear detriment of the bank.
Then there is no direct prohibition in the statutory provision affecting this case, as there was in Bank
Toronto v. Perkins (1) ; and nullities. of the nature of those in question in that case must be restricted to the narrowest limits.
Solon, Nullites (2) ; Duncomb v.
N. Y. Housatonic and N. Rd. Co. ; Sistare v. Best
But, say the appellants, the statute does not empower the bank to effect loans on the pledge of such securities as those taken from Langlais, and consequently it acted ultra vires in the matter.
But assuming this to be so, that might perhaps affect the pledge as regards third parties interested in the securities pledged, but it does not bear in the least upon Langlais' contract to pay; and the appellants cannot avail themselves of it to repudiate Langlais' liability towards the bank.
The contract of loan and the contract of pledge, are so far reciprocally independent that one may stand and the other fall. They are separable contracts.
See per Miller J., National Bank v. Matthews borrower cannot be allowed to cheat his lender, eunder the pretext that the lender had not the power to J.
loan. Such a plea does not lie in his mouth; he is estopped from relying upon it: il n'a pas de qualii pour s'en privaloir. " Pas de nullitd sans griefs," says Solon, Nullit6s
Still less, would I say, " de nullit," to cover a glaring fraud.
The proposition laid down in Randolph that "One who borrows money from a corporation cannot in his own defence question its power to lend," is based on principles which must necessarily prevail through all the civilized world.
And, as put by Sedgwick on Stat. Constr. (4): The appellants' case rests on a fallacy. They assume as law the untenable proposition that the ultra vires act of the bank, always aesuming that ultra vires there was in lending this money to Langlais, is, by itself and ipso facto, a radical nullity of public order of such a character as to disentitle the bank, under arts. 989 and 990 0. to claim it back, and free Langlais for ever from his contract to repay it.
Pothier speaking of a case where a lender had no right to lend, says:
A And in the case of the loan of a thing not belonging to the lender, where the borrower has had the delivery of the thing lent, the contract is perfectly good between the lender and the borrower. The owner is the'only party entitled to complain (1).
On the same, or kindred principles, a depositary is estopped from controverting the depositor's title (2), an agent is precluded from questioning his principal's title to the subject matter of the agency, a bailee of any kind from disputing his bailor's rights, and a lessee from disputing the title of his landlord to the premises demised.
If Lauglais had leased a house from the bank, he could not refuse to pay the rent on the ground that the bank is not, by its charter, empowered to own real estate, supposing that to be so. And, even where by its charter a corporation is not empowered to contract but under seal, yet, where a contract, within the purposes for which it has been created, has been executed and the corporation has received the benefit of it, it is not permitted to claim exemption from liability upon the ground that the contract was not under the corporate seal Some modern writers seem to controvert Pothier's views as expressed in the passage I have quoted; (it seems to be thought a mark of distinction nowadays, A among a certain class of writers in France, to controvert Pothier).
But we adopt his opinion as a correct ' exposition of the law.
Then, no book goes to the length of saying that the borrower is at liberty to avail himself of his lender's legal incapacities, of whatever nature, in order to repudiate the repayment of the loan, J.
when the lender's part of the contract has been executed by the delivery of the thing lent to the borrower, and its consumption by him.
Of all the possible pleas to an action ex mutuo the appellants have the merit of having found a novel one. That is the only merit of their case.
It is an incontrovertible proposition that no private individual has the right to institute legal proceedings against a corporation, on account of ultra vires acts the said corporation, however great the detriment caused by these acts to the public or to others than himself, unless he has, himself, been personally damnified.
Now, as a general rule, what cannot be used as a weapon cannot be resorted to as a shield, and any one who has incurred liabilities under an executed contract with a corporation of which he has got the benefit, cannot get rid of his liabilities on the sole ground that the corporation acted in the matter beyond its powers, though within the purposes for which it was created, unless he has a legitimate interest to do so, or has suffered, or is exposed to suffer, from the alleged infringement of the corporation's charter. And here, not only has Langlais not suffered any prejudice or been damnified in any way by the act of the bank, but it is to damnify the bank and burden it with the loss of over $80,000 that, in the name of public order and public interests, he, or the appellants for him, impugn his dealing with the bank as ultra vires in order to repudiate his promise to pay, after having had the full benefit of the contract.
A more flagrant misapplication of the doctrine of ultra vires, it is hardly LA possible to conceive.
If the bank had lent this to Langlais without any security whatever, the appellauts would contend, forsooth, that Langlais was not bound to-repay it, because the bank is not authorized
J. to lend without security; they would contend that a party can go to a bank, get his note discounted, and at maturity refuse to pay it on the ground that the bank had no authority to advance him that money, and had acted beyond its statutory powers in doing so.
They were not able, as might be expected, to find any authorities to support their contentions, though their case was presented to us with great ability and learning.
Those they cited have no application.
Colh'ns v. Blantern and that class of cases under the
English law, are clearly distinguishable, and the authorities under the French law do not give them more assistance.
And it is not merely the contract of loan that
Langlais, and the appellants for him, are precluded from impugning.
The pledge itself of these securities, likewise, they cannot be admitted to assail.
For,
Langlais is, in law, the warrantor of the bank upon this contract of pledge; a pledge implies a warranty from the pledger, and even if these securities had not belonged to Langlais, yet this pledge would have been perfectly valid as between him and the bank Now, though here the alleged incapacity to contract is in the pledgee, the rule still applies, it seems to me, that as pledger, Langlais cannot impeach the contract pledge on the ground of that incapacity. He is presumed in law to have known of that incapacity when
7, he effected this loan. And had he, on any ground whatever, even for nullity of public order, if any such there be, at any time claimed the restitution of securities pledged, he never could have obtained it, in the terms of art. 1975 C.C., until full payment in principal, interest, and costs of his note to the bank. J.
And, on the other hand, upon such payment,,the bank would have been bound to return the pledge to -him, and would never have had the right to refuse to do so on the ground that their contract of pledge with him was null for reasons of public policy, as ultra vires their part.
Their attempt to prove that Langlais had not benefited from this loan was rightly checked by the Superior Court. The bank was not bound to see what disposition Langlais made of this money. He had the jus utendi et abutendi over it; it is, for the lender, a matter of total indifference whether the borrower doubles the amount lent, or keeps it idle, or throws it in the river. As to the appellants' contention, that as creditors they have the right to invoke the nullity of their debtor's contract in the matter, though their debtor himself might not have had the right to do so, it has been correctly rejected by the two courts below. There is no foundation for it in this case. Unquestionably, in cases of fraud, and of contracts made in fraud of creditors, the curator's or assignee's and creditors' interests are adverse to those of the insolvent, and they do not represent him when acting to set aside his fraudulent dealings; but here, there is nothing of the kind; and the appellants have no other rights than those their debtor himself had ; and the rule that " aequum est neminem cum alterius detrimento fieri locupletiorem"
applies to them as it did to their debtor. His insolvency has substituted them to all his rights, but they must, with his rights, bear the burden of his liabilities. They are seized with his estate, but cun onere. That estate is the common pledge of what is due to the bank by Langlais, as it is of what is due V. to -themselves; they are on an equal footing.
The appellants' contestation of the bank's claim was, in my opinion, rightly dismissed with costs in toto by Taschereau the Superior Court, whose judgment must be restored.
Appeal dismissed with costs.
Cross-appeal allowed with costs.
Costs in Queen's Bench against appellants.
Appeal dismissed with costs and cross-appeal allowed with costs.
Solicitor for Rolland, et al. : F. X. Drouin.
Solicitors for La Caisse d'Economie: Hanel, Tessier
4- Tessier.