Abank borrowed from the Dominion Government two sums of $100,000 each, giving deposit receipts therefor respectively numbered 323 and 329.
Having asked for a further loan of a like amount it was refused, but afterwards the loan was made on 0., one of the directors of the bank, becoming personally responsible for repayment, and the receipt for such last loan was numbered The Government having demanded payment of $50,000 on account that sum was transferred in the bank books to the general account of the Government, and a letter from the president to the Finance Department stated that this had been done, enclosed another receipt numbered 358 for $50,000 on special deposit, and concluded, " Please return deposit receipt no. 323- $100,000 now in your possession."
Subsequently $50,000 more was paid and a return of receipt no. 358 requested. The bank having failed the Government took proceedings against 0. on his guarantee for the last loan made to recover the balance after crediting said payments and dividends received.
The defence to these proceedings was that it had been agreed between the bank and 0. that any payments made on account of the borrowed money should be first applied to the guarantee loan and that the president had instructed the accountant so to apply the two sums of $50,000 paid, but he had omitted to do so.
The trial judge gave effect to this objection and dismissed the information of the Crown.
IUeld, reversing the judgment of the Exchequer Court (6 Ex. C. R. 21), Tasehereau and Girouard JJ. dissenting, that as the evidence showed that the president knew what the accountant had done :-Sir Henry Strong C.J. and Taschereau, Sedgewick, King and Girouard JJ.