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The following diagrams ilhtstrate the method: L'exemplaire filmi fut reproduit grAce d la g6n6rosit6 da: ^ Metropolitan Toronto Library Canadian History Department Les images suivantes ont 6t6 reproduites avec le plus grand soin. compte tenu de la condition et de la netteti de l'exemplaire filmd, et en conformity avec les conditions du contrat de filmage. Les exemplaires originaux dont la couverture en papier est imprim6a sont film6s en commenpant par le premier plat et en terminant soit par la dernidre page qui comporte une empreinte d'impression ou d'illustration, roit par la second plat, selon le cas. Tous les autres exemplaires originaux sont filrn^? en comn^enpant par la premidre page qui comporte une empreinte d'impression ou d'illustration et en terminant par la dernidre page qui comporte une telle empreinte. Un des symboles suivants apparaitra sur la dernidre image de ch in the above Report as "Me Con^ tractors'' \n jre Messrs. M. C. Stores . . Co.. who. more than £]'J0,000 of Stock having been subscr'bed for and taken, had made a contract with the Railroad Company for the construe- tion of the raihvoad conditional upon the above sum of £25,000 being granted by the Corporation of Toronto ; and by the agreement between Messrs. Storey & Co., and the Railroad Company it was provided that the Debentures to be issued by the Corporation for the said sum, if granted, should be the absolute property of the said Messrs. Storey & Company. ^ Immediately upon the passing of t!ie resolution of the 25th November. 1«50, the agreement between ihe Railroad Com- pany and Messrs. Storey iV ( on.-any was finally concluded, end Messrs. Storey & Company proceeded wiih the construe- tion of the Railroad upon the faith of the above resolution of the 25th November, 18.30, and relying upon its terms h it faithfully carried out. " Aitei- the passing of tho resohaion of the 25th November, 1850, and in the month of January, 1851. !.hj general election for municipal otficers took place, and the result of the election wa- in -M.r of persons throughoi.. the city who had either in Council voted for or who approv-d of the vote in Council upon the Resolution of 25ih Noycober, 1850, and it was generally deemed that ll;,j ratepayers on the occ'sioii of the said general election approved .k tho said resolution ; the ratepayers of St. James' Ward, with full knowledge of the rcsohuion re-elected Mr. Bowes as Alder nan for that ward, and he was by the Common Council elected as Mayor of the' city for (he latter year. In the summer, 1P5I, a public meeting of the ratepayers of the city ot Toronto was held, presided over by John Arnold, Esquire, an inhabitant and ratepayer of the said city, at which meeting several resolution, were passed recommcndin- the Common Council of the city to extend further aid by a°Joan to the Railroad Company, and on the 8th d^y of*A„..ict ture advances i of £25,000.*' OS " fhe Con^ lo. more than ind taken, had f the construc- bove sutn of Poronto ; and Co., and the 3 Debentures m, if granted, srs. Stoj-oy & n of t!io QrAh aih'oad Com- ly concluded, the construc- rosolution of t(>rms h .i:^ li November, leral election f the election o had cither tc in Council and it was ■'sioii of the aiiilion ; the Icdgo of the r tiiat ward, layer of the atopayers of ohn Arnold, ity, at which nending the d by a loan wmm 1851, resolii I Comm then tl tions £ meetir select 1851, "Tl *• Com « Chai " as w "Com " or ci « Dcb( *' twcn " issua •' as sc " pany " half-, "And " from " pleto " furth " May '• in an " (^om; " then " nomi " Com] . Tnc lion of said 16 Att only in I By the Uie Ru MO 1851, the Manager of the Railroad Company aided by the resolutions passed at the said public meeting applied to tha Common Council of the said city, of which the Appellant was then the Mayor, for the loan of £35,000 upon certain condi- tions set forth in the said resolutions passed at the suid public meeting, which application and resolutions were referred to a select Committee >f the Council. On the 18th day of August, 1851, the select Committee reported thereon as follows: — " That upon the most attentive consideration given by your "Committee to the TDropositions signed by Mr. Arnold as "Chairman ; and after frequent interviews with the Manager, " as well as with one of the Contractors of the Company, your "Committee would recommend that, in lieu of the proposit'ons, " or either of them, the Council loan to the said Company their " Debcntrrcs to an amount not exceeding £35,000 payable in •' twenty years, with interest on the same payable halt-yearly, " issuable in the sam.e ratio as the Bonus of £25,000, taking "as security fn- such Debentures the bonds of the said Com- " pany, i ;;i.. same amount payable in ten years with interest " half-vcarly secured on the road to the satisfaction of this "Corporation, upon the 'ecommendation of the city Solicitor. *' And furlher that it be a condition to this loan that the road " from this city to Lake Simcoe or the Holland river be com- "pletod in two years from the 1st of January next. And " further that as long as the loan of £35,000 continues the " Mayor of the city for the time being, if he be not a Director '• in any other Cc ipany, be a Director of the above-mentioned '' ('Ompany ; and if he be a Director in any other Compc.^y, " then any Alderman of the city for the time being to bo " nominated bv the Council to be a Director in the said " Company." . The report was almost unanimously adopted by a rcf^olu- tion of the Common Council of the city of Toronto on the said 18tli day of August, 1 8") I. At this meeting of the ComLnon Council the Appellant acted only in his capacity of presiding officer as Mayor of the city. By the agreement made by Messrs. Storey & Company and Uie Railroad Company it was among other things provided. iS-' 8 that as a means of securing- payment to the Messrs. Stor'^y & Company for the construction of the road, the Raih'oad Com- pany should secure private subscriptions of Stock in the Capital of the said Railroad Company to an amount of about £50,000 over and above an amount of Stock agreed to be taken by the Messrs. Storey & Company themselves. The Railroad Company failed in fulfilling this part of their agree- ment and succeeded in gcttin,'jr only £15,0C0 of such private Stock instead of £.)0,000 subscribed, and, by reason of such default of the Raih'oad Company, they were unnbie to pay the Messrs. Storey &, Company in the manner agreed upon, and in conse(iucnce, the Railroad Company exerted themselves to get the (Joiporation of the city of Toronto to advance by vvav of loan the diflcit of £96,000 and it was a«Treed upon between the Railroad Company and the said Messrs. Storey & Company that, upon the fuith of the resolution of the Coi/i:non Council of the city cl' Toronto which was passed on the ISth of Auirust, 1851, they the said Messrs. Storey «fc Company shoulu discharge the Railroad Company from their obligjition lo procure £50,0(;0 of Stock to be sub«c.ibcd, and should in lieu thereof a.'ccpt the Bonds of the Railroad Com- pany to the amount of £:j.j.0OO, to be exchanged lor the De- bentures of the said city of Toronto when the same should be issuable nndcr the said resolution of the 18lh ol August, 1851. Cpon the passing of the said resolution of the INth day of August, 1851, and very shortly thcicalter the said Messr?. Storey c'c Company acting on the lai'th and belief that the said resolution woiild be faithfully kept and adhered to, by and on behalf of the said city of Toronto, did discharge th.o said Railroad Company iVom the obligation to provide the said deficit of £95,000 of privaV Stock and did, in lieu thereof, accept the Bonds of the said Railway (.'ompany to the said amount of £95,000 and did use and jiledgo and hypothecate ?uch Bonds as their own absolute property upon the assurance that, and upon the faith and belief that, they should be cx- <:hangrd for Debentures of the said city of Toronto to bo issued under the said resolution of the 1 8th day of August, 1851, as the works upon the said railroad should be proceeded 'with. A ^Storey & Ition of th I security < I city of T iresolutioi * after the i said Mes ^ pany in Council < they the selves ar , and the : selves to i by the p i Debentu £95,000 { Com pan ' Me.^isrs. i of the sr I to the ] under tl; absolute for the ! work u] con tern I , 1851. r Compui I which ( ! under t and oti I 18th da 'I On ll I road Ca ] the Coi * Noven J Thisai * Com mi s. Stor«^y & ilroad Com- oclc in the mt of about greed to be elves. The their agree- iuch private ison of such !e to pay the d upon, and tiiemselves to advance was agreed aid Messrs. ^solution of was passed 3. Storey «fc • from their c.ibcd, and Iropd Com- fi»r the De- i^ should be i.iju.st, 1851. I Nth day of n'.d Messrs. icf that the 1 to, by and ■go the said do the said ieu thereof, to tho said lypothecatc c assurance oiiM bo cx- onto to bo of August, I proceeded 'with. And upon the like faith and assurance the said Messrs. Storey &. Company did raise and expend upon the construc- ition of the said railroad divers large sums of money upon the fsecurity of their right to receive the said Debentures of the I city of Toronto to the said amount of £25,000 under the said i resolution of the 25th day of November, 1850 ; and from and after the agreement as aforesaid being made between the , said Messrs. Storey & (Company and the said Railroad Com- I pany in consequence of the said resolution of the Common I Council of the city of Toronto of the 18th of August, 1851, they the said Messrs. Storey & Company regarded them- selves and were regarded by the said Railroad Company, as, and the said Messrs. Storey & Company represented them- I selves to the pubUc tc bo, and were treated with and regarded I by the public as being, the parties entitled to receive the said I Debentures of tlie city of Toronto to be issued for the said I £35,000 in exchange for the said Bonds of the said Railway I Company to tho like amount : and that the right of the said I Messrs. Storey & Company, or their assignees of the Bonds I of the said Railroad Company, to the said amount of x:a5,00G I to the Debentures of the said city of Toronto to be issued nmderthe said resolution of the 18tli of August, 1851, was absolute, and that under the said resolution the period only for the issuing of the said Debentures was postponed until the work upon tJiu said railroad should be proceeded with, as . contemplated by tho said resolution of the 18th day of August, l 1851. On the' 15th day of May. 1852, Messrs. Storey «fc. I Company had iiertbrmed work on the railroad to an amount which entillod them then to receive £10,000 of Debentures under the resolution of the 25th day of November, 1850, and ■ and other ?: 10,000 Debentures under the resolution of the I 18th day of August, 1851. '^- On the nth day of June, 1852, the Secretary of the Rail- 1 road Co-npany made application to the Finance Committee of f tho Council to have the object of the resolutions of the 25th of ^ November, 1850. and the I8ih of August, 1851, perfected. This application was taken into consideration by the Finance t Committee upon tho 21st oi June, 1852, and the Finance Vii 10 Committee adopted thereon the following resolution contained in a copy of the minutes ot the Finance Committee upon that occasion. " The communication of the Secretary of the Ontfi-Io. Sim- " coe and Huron Railroad was considered. The Committee " agreed to report a By-law for the issue of £25,000 Grant, " and £35,000 loan, in favour of the said Company ; at the " same time recommending the Council to issue the sum of '* £ 10,000 now asked for, so soon as the certificate of a com- " potent Surveyor, unconnected with the Company, shall be •• furnished to the (council, to the effect that the sum of £l00,- " 000 had been bona fide expended on the said road." On the evening of the 21st of June, 1852, the Finance Com- mittee made a report to the Council in the terms contained in the minutes of the proceedings of the Committee of that day, and the By-law reported by the Finance Committee was read a first time by the Council, and ordered to stand for a second reading at the then next meeting of the Council ; and tho report of the Finance Committee, which recommended the issue of £10,000 upon the certificate of an engineer, as mentioned in the minutes of the proceedings of tho Comm:tt( c, was adonicd by tho (-ouncil. Upon the debate in C'ouncil, on the fii\si -.-adiny: th Novem- ^nl cftbct to I I those He Council that the sel as to On the 2 merely < nfien of t ingly tal Finiiiice tion ; ar the folio « The " to thi! " bcntur M " were c lit *♦ advcrs " for thr " pro vis *♦ and U " red em " The C *• CO mm " Hin'oi] " luiiiini; The ( immcdi: Direct (H of tiie 1 I Compai issue ol The [tions of 1 1851, be iCitv of Ihclievin [iJebiMitt Kaiiroai Ivcmbcr, ihose He3olutions, the By-law, as introduced, was read by the Council a first time as above stated ; but it was suggested that the Finance Committee should take the opinion of Coun- sel as to the validity of the suggested objections to the By-law. On the 23rd of June, 1852, the Fmance Commiltre met, and merely came to the resolution, that the opinion of two gentle- men of the Bar should be taken. Two opinions were accord- ingly taken ; and on the morning of the 2r^th June, 1852, the Finniice (Committee met, to take those opinions into considera- tion ; and thcv came to the conclusion thereon, appearing in the following copy of their minutes of that day. " The opinions of Messrs. Hagarty and Mowat, in relation "to the legality of the By-law for the is^ue of £(50.000 I)e- " bentures, in aid of the Ontario, Simcoe, and llu -)n Haiiroad. " were considered. The substance of the said opinions being " adverse to the lerralitv of the said Bv-law. unless advertised " for three months, and also drawn up in ace ^'"^ "^e with the " provisions of the Municipal Corpuration Aci.-. u; 1> M>, 1850. •'and 1851, including the imposition of a speci.'.l ' ■^' for the " rcdetnption of the principal and interest within t iv years. "The Committee authorisiKJ the ('hairman. Mr. '\ a: .pson, to " communicate with the Diiectors of the Ontario, Simcoe, and *• Huron llailroad Union ('ompany, with the viewofascer- '* taining their vvishes on the subject." Tin; f'hairman of the Finance Committee did accordingly, immediately, on the same 28th of June, wait upon the huid I)iroct!»rs, atid had an intervi ;w with them, and also with one of iJic Members (jf the said lirm of Messrf. M. C. Storey «Sc Company, who were the parties imniediatt y interested in the issue ol the said City of Toronto Debcntu' s. The Messrs, Storey & ('ompany rely !,g upon the resolu- tions oft'iet'5lh November, 1850, an;! »ie 18th of August, 1851, bciu- I'lithfully carried out by the T ..eimon Council of the |(;ity of T.i )iio ; (previously to the sa'.;l 2Sthof June, 1852. |beli(!ving themselves to be cntilled to a puiictual rfeeipt of lh(; Debentures, in a ratio proj)ortionate to \Uq progre.^s of the j Haiiroad, as specified in the Resolutions of the 25th of No- Ivcinbcr, 1850, and the 18tb of August 1851 ;) had not only, for 18 the purposes of the said Railroad, already pledged and by- pothecated some of the said Debentures, and their right to receive tliem, but had also, upon the faith of the punctual re- ceipt of the said Debentures, purchased a large quantity of iron, for the purposes of the said Railway, at prices to be paid in cash, on delivery cf the said iron. The iron so purchased was, on the said 28th of June, coming out from England, and a large portion of it was tiien at sea, on the way out, to the order of the said Messrs. ^Storey & Company. In the inter- val between the date of the pur :hasc of the said iron, made by the said Messrs. Storey & Company, and the said 28th of June, the price of iron had risen, by an amount of about £50 or £G0 per £100. With the view of meeting the sums pay- able for the iron so purchased, Messrs. Storey &; Company, believing themselves to be entitled to sell the Debentures authorised to be issued by the Resolutions of the 25th day of November, 1850, and tlie 18th of August, 1851, (in anticipa- tion of their issue, which was restricted in a ratio propor- tionate to the progress of the Railroad.) had oUered the said Debentures for sale, previously to the said 28th of June, and had authorised the same to be s(.ld at X85 per cent. ; or it that sum could not be gotten at ^80 per cent, besides a de- duction for charge of agency upon sales effected. Upon De- bentures of the City of Toronto, jKiyablc in twenty years, with interest, half yearly, JCSO per cent, was the highest known value : and if any delay should have arisen on the issue of the said Debentures, for either of the objections sug- gested to the legality of ihc said By-hivv, the said Messrs. Storey & Company would have been deprived of their said beneficial purchase of iron, and to complete their contract with the Uailroad Company, would have been obliged to de- lay proceeding with the said Railroad, until ;hoy s'aould be able to purchase iron at ruinously advanced prices, and in the meantime the progress of the said Railroad would have been very injuriously postponed, if not indefinitely postponed or abandoned altogether. At the interview above mentioned, all those circumstances were explained to the Chairman of the Finance Committee, and subsequcntiy to almoat an inc .d and hy- ir riglit to mctual re- quantity of to be paid purchased igland, and out, to the I the inter- iron, made aid 28th of about £50 sums pay- Company, Debentures 25th day of [in anticipa- itio propor- I'cd the said f June, and cent. ; or it csides a de- Upon De- kcnty years, the iiighcst isen on the eclions sug- aid Messrs. >f their said eir contract jHgcd to de- y s'.iould bo s, and in the d have been ostponed or ; mentioned, Chairman of mo5t Uil iho nembers vvith the Storey & said City By-Law, Ie:?aliiy. in tliis vi I lie Pres (>(itnmil! To Mu. SlR,- Huron 1 said Coi to take without sume tl Contrac the best in wliic Shou i next be Council Accc all the the saic Com ml of Jun «)rdcre( On t siding ' the cit; The Ihe Fi i 13 nembers of the Common Council of the City of Toronto, and with the view solely to their own interests, the said Messrs. Storey & Company agreed to accept the Debentures of the said City of Toronto, to be issued under the said proposed By-Luw, notwithstanding the said suggested objections to its ^ legality. Tlie Dir dors of the Railroad Comi)any concurred in this view, as npixmrs by ihe following letter, addressed by the PrcMJeut of the (]rdered to ^^'^ signed by the Appellant, as Mayor of the city. On the su.d 28th of June the Appellant only acted as pre- siding officer of the said Council in his capacity as Mayor of I the city. I The Appellant, although as Mayor an ex-officio member ot the Finance Committee, was no party, in any way, to the I m or 14 proceedings of the Finance Committee of the 21st, 23rd, _. 28lh of June, he havinjr been absent from the said city during that period, and not having returned thereto, so far as appears in the evidence, and as it is believed to bo the fact, until the . said 28th of June, on the evening of which day he took his scat as Mayor of the city, presiding over the meeting of the Common Council of that evening. On the 24th of June, 1852, ho was (as appears by tho evidence) in Quebec, and by the evidence it appears ihat, on that day he proposed to Mr. Hincks who had only then just returned from England, and with whom, for that reason, he could have had no personal interview, for a period as appears by the evidence, of about three months, and it appears by the evidence further that until the said 24th of June, 1852, no communication verbal or written had passed between the said Bowes and the said Mr. Hincks relative to the purchase of these Debentures. On the 24th of June, 1852, the Appellant believing it to be a fact as it was universally in Toronto believed to be a fact, that the said Messrs. Storey & Co. would be entitled to* receive Debentures of the city of Toronto in a ratio propor- tionatc to the progress of the railroad, under the resolutions of the 25th November, 1850, and the 18th of August, 1851, and stating tliat tho .Messrs. Storey &, Company had, as the' fact was that they had, offered to sell tne said Debentures at the rate of £80 per £lOO, did mention such facts to the said Mr. Hincks, and the Appellant propose.], on behalf of the firm ofhimselfand his partner one John Hall trading under the name of Dowes & Hall to join with tho said Hincks in the purchase of the Debentures which the said Messrs. Storey &. Company should be entitled to receive under the said reso- lutions of the 25th of November, 1850, and 18th of August, 1851, if they could purchase the same from tho said Messrs.' Storey & Company at tho rate of £80 per JElOO which was then the utmost known or legitimate value of Debentures of the said city having 20 years to run. Upon this occasion the Mid Hincks expressed his willingness to embark in the pur- St, 23rd, or city during r as appears ct, until the he took his cting of the 31 rs by the ars I hat, on y then just reason, he as appears cars by the , 1852, no ton the said urchase of Iff it to be be a fact, :ntitiod to io propor- 'esolutions [ust, 1851, id, as the tntures at ) the said alf of the ng under lincks in s. Storey said reso- r August, 1 Messrs. licfi was nturcs of asion the lIiQ pur- m' ■ ■\r( I 11 i' ' w ^s 1 I 15 cliase of the said Debentures, but nothing further was then definitely arrani^ed between the said Bowes and Ilinck'?, nor had any proposition for tlie i^ale of sucli Debentures ever previously been nuide by tlie said Messrs. Storey & Company, or by any one for th-oin, to tlic said Appellant, or to the said Ilincks,, although it; may have been that the said Messrs. Storey '-Pauy had made such contract for iron as aforesaid, and tl'at they would lose the benefit thereof unless they should punctually receive the said Debentures of tlie city of Toronto. The Messrs. Storey and Company having urgently re- quested that the Bydaw, so as aforesaid on the 21st of June, 1852, reported by the Finance Committee, should be passed on the said 28th day of June, to enable them to receive Debentures to meet their contracts, notwithstanding the alleged objection to the By-law ; the Common Council of the City of Toronto, at the time of the passing of the By- law, pledged themselves, as also did the directors of the Kailway Company, to take the necessary steps to have the By-law legalised, if the objections raised to its validity should prove to be sound. Upon the 30th June, Messrs. Storey & Co., in consequence of a conversation they had with the appellant, within a day or two previously, addressed to the appellant the following letter : ToKONTO, June SOt/i, 1852. J. G. Bowes, Esq., SiR,_We propose to sell you the twenty-four thousand pounds of Toronto Debentures, authorised by the City Coun- cil, on the 28th instant, to be issued in aid of the Ontario, Simcoe, and Huron Union Eailroad ; you to puy us eighty cents on the dollar, on the deposit of said Debentures, in such T>__i_ i_ i-V - f^'i-~- /^-f^ T'^-^.^^^f/^ Qfi vr.1-, rn''v rJ^^qirifiinfp and iTft jjauk in liiu vity Oi iOiOiiU/ ao jv/il iii^j: vl^.■n.gJl■•— j -— It til receive tJie same, lis pro2>osition, iji to deposit said Debentures, as souii as we Let us know your acceptance or not of 1 writing to-morrow. Very respectfully, Your obedient servants, jvr. a sToiiEY & Co. Tlie £2J-,000 here mentioned with £10(H) already hypothe- cated elsewhere by Messrs. Storey it Co., constituted the €25,000 coiitenqjlated as a gift. Upon the lieceipt of this letter, the Appeilai.t inirae(ljately communicated its c(»ntents to Mr. Hiucks; and on the'^tii of July, the Ai)pellant, on behalf of himself and his partner, the said Hall, and also upon behalf of the said Illiieks, agreed with Messrs. Storey iSc Co.. to purchase tlie said ,£24,000 Debentures; and Messrs! Bowes and llail, in advance (>i\ and in anticipation of the issue of the Debentures, upon their own security, j)rocured an advance to the Messrs. Storey Sz Co. of £8,000; and on the 15jh of July, Messrjj. Storey ife Co. deposited £lO,000 ot Debentures issued by the Common Council of Toronto, jart of the £25,000 gift, in the Bank of (r]>per Canada, to the order of Mr. Ilincks, who had undertaken to provide the means, and did provide tlie means, to repay Messrs. Bowos & Hall their advance of £'S,Ooo. Upon the 2-,d of July, 1852 the Finance CoMimittee had under their consideration an ap- plication of the Secretary of the Kail way Company, the pur- port ot which appeai-s in the minutt 8 of the Finance Commit- tee of that day, viz. • ^' A letter of the Secretary <.f the Onta- " rio, Simcoe ,^ IJuron Railroad, applying for an issue of £14 - "000 Debentures, in accordance with the Bv-Iaw in favor oV " the said Company, and submitting a draft'of a Bond to be " given in security for £14,(MM) portion thereof, by way of loan " was considered, and the Committee resolved io instruct the "CitySobcitortodrawupan instrument forsecuringthe said ' £14,000, as a hen on the roa.l, next atk-r the (Jovernna nt '• gnarantee,and that tl.eChaniberlain do reply to Mr.Slaordinury tlie same. )sitioii, m nts, & Co. hypothe- iitud the pt of this contents 'Hunt, on lIso ujion y iSc Co.. Messrs), m of the >rocure(l ; and on 0,000 ot ito, [/.art !i, to the I'ide tlie I. Bowoa \y, 1852, n an ap- tJie pur- Joniniit- le Onta- of£U,- favor of nd to be of loan, rnct tlie the said -'rnimuL lad den's ■e(|uired ordinary 4 I 17 a ii " Bonds of the Company for the same amounts as those issued " by tlie Corporation, and not in any way rerstricted with re- gard to the riglit of the Council to transfer." " The Committee further agreed to recommend that in " consi'^leration of the verbal assurance of Mr. Keefer, the Government Inspector of Railroads, given to tb-^ Chair- " man of this Conmiittee, that the sum of £100,000 is now " actually expended on the Railroad : that such verbal as- ' surance, in addition to the certificate received from the " Contractors, be deemed sufficient ; ])ut that the Board of " Directors be noticed that before any further issue of De- " bentures be m-ide in their favor, a certificate will be re- (piired, in accordance with the ndnutes of June 21st." The £li,0(»(> here referred to, was for a part of the con- templated h»an of ,£85,000, and under the latter ])art of the reconmiendation of the Finance Committee, the £10,('00, part of the gift of £25,0 4 ' FiTnnrt n''ttee demanded o£5i^ailroa Jiailroad. ties to be giy^rf to to l>errilled, and so great was the danger of the [)roject being defeated, unless some arrange- ment should be come to, that the President of the Railroad Com]Miny sugijostod to tlie Chairman of th^ Finance Com- 18 ™ttee and to the Appellant (the Mayor of the city) on the IStenaer all clahne -- -^^ 'rCt t ''to: S^'orrStSentthi hands, and for ^r's^ck shoTle to Mess.. Storey & Con.pany £50 oTa; Debentures payable in 20 yea«. Th. A^^i- 1 f'Td? this proposition to Messrs. Storey & Co. who, ^e't ci — Tees in which they were placed a„d w.th ^:;t meeting their engagements, acceded to the same ; lair the evening of the said 29th Jnly, the proposition, tc> Til XZZ of the Messrs. Storey & Go's readiness to fSe to the same, was submitted by the Appelant, m his „?Jnf Mavor to the Common Council, and thereupon capacity of Mayoi, tot ADVANTAGEOUS to'ScI^ A^D THKBEST POSSIBLE AR. eI^mSoK THE CITY THAT COULD HAVE BE^DEVISED ORCAKBIED OUT the ioUowing re- Ixlon was almost unanimously adopted by the council. Resolution of 29«A of My 1852. _ " -Whereas his worship the Mayor has informed thiscomi- « cilThat the contractors of the Ontario, Simcoe, and Huron . «l.ilroad«ni«Companyhaveacccptedaproposit,onmade TTL.subject tothe approbation ofthis conned m view « of thHifficilties which have ""-t^V".', TTff S5 000 «„ortgage bond by thewayof security fortheloanofi;35000 .. to! ly votodby this council to thoeffect that the contrac- «tr2l surrender the grant of f25,000 made by ti^ " conncil and transferred to such contractors in part payment « of their contract; and also that the Directors shall waive .' the aforesaid loan of £35,000 altogether on condition that, « in lieu thereof, the council will take Stock to the amoun oi .. £50,000 to be paid by the issue of City Debentures in the " same proportions as the Debentures for the above loan and « ^antwere authorisedtobo issued. Bo itthcrefore resolved » that the Standing Committee on Finance t : authormed to « cnmnleto such arrangement provided that no legal difiiculty I! ■ '. V 10 . 1 M .r..ur in oarrvin- out. this resolution, and proyidcrl ::a; ti:^ no'aSU .hall tako place in tUo eoncUd.tjon. .. upon which a portion of the Ma.k.t block w- gra^^ J- >• aLai--. ^-^ -"^^^^^^^^ ation a Resolntiou of the C!ounci1, passo,! on the 29th inetant, rSn.^ to a proposed new arran.en.ent tor the >s™c of De- ben .res to the Contractors, a .ninnte of the I. nance C^nv mtoe tLreon, and a letter tVon.M. C. St«rcy &Oo-, M -That he Board of Directors agree 'f* f« P^v&Co "witot.rejndiee to the existing agrem^ts between rcl^dl andthinourd, and the Contractors in the even, „f the one now proposed not bang -ccomph hed An^ ther without prejudice to the other parts of the sai-. cM.t^^g Sement whiih are not to be affected in any .ray V, th. T f>!^v#* etc \VM. SLADDEN, Sewdary. The minute of the Finance Committee referred to in the .W ccnmioation, was as ^"ows ;^^ ^^^^^ ^^^^ .'Ihe Ke.olutiou of the Council of July 29;b, waB co-- " derex;. Tin- Oommittee had an niterview with C. l^erczy, I 20 >'Eiq»ire President of the Northe: n Kailmn.l Oompany. and *' Maior Lawmond, one of the Contractors. U u-ae taer or- "SthatBOBOo; as His Worship the Mayor «1.«>1 ^^«, ■> receive fro.a the Board of Directors of the Northe^ K^.^- «way their sanction, in writiag, to the cond.hons oi th R^ ."olution of the City Conncilof the 29thJnly ■"»'»"'. ''^'^ "anftorised to issue the balance ofthe grant to the sa.d Ba,^ 4o^viz: £10,000,fl5,000 having been already .s sued t» "t^e Contractor; upon receiving fromthempa.dnps^ocko .'the amount of 25,000, in security for the "^Pl^'f "^''^^ "arrangement contemplated ia the Resolution ot Council "aboTementiond.*' There was never any agreement between Messrs. Storey & Co and Messr. Bowe:^ Hall, and Hincks or any or eiO^er tfilm forthesaleby the Messrs. Story & Co of any C> of Toronto Debentures other than the agreement contain edn the letter of Messrs. Storey & Co. of the 30th J-e -^-^ waB«*to tiie £24,000 therein mentioned concluded on or ZuUhe^ftt of July, 1852, nor was there any obligation ■^n the Messrs. Storey & Co. to sell any other Debentures TMeasrs. Bowes, Hall, and Hincks. However Mess^, Storey & Co. being perfectly satisfied, aa the fact was^ that eighty cents on tiie dollar was th. full value of such Deben- tures and being unable to get a higher price therefor, did, from time to timers the residue of the said £50,000 Debentures became issuable, and were issued, in persuance of the reso- lutions of Council for the said 50,000 Stock, ch.posit 8uch D ^bentures to the credit of the ^aid Hincks, and 'lid receive pajment at the same rate for all of such Dcbentvres. In BO doing the said Messrs, Storey & C'o. believed, that binder the circumstances, they were absolutely entitled to sell the said Debentures to whomsoever they pleased, and they did sell them as their bona fide absolute property, as, they would any other negotiable security, t.ransferrable by delivery. The Debentiires of the City of Toronto so iesaed were, like all other Debentures, issued by th© said City, payable ^o • Bearer and traneferable by delivery. \ I m 21 ^he gist and subetance of the statement of faet6 above de" tailed is, — that different Common Councils of the City of Toroxito, having upon the solicitation of numerous Inhabi- tance and Rate-payers of the said City, by different resolu- tions upon mature deliberation, upon different occasions passed ; — entered into pledges with the Kailroad Company and Messrs. Storey & Co., the Contractors ; upon the faith of the first, of which resolutions the Railroad, which it is believed has conferred and will confer very great benefit upon the City of Toronto generally, and its Corporate pro- perty, was commenced ; and upon the faith of all of which Resolutions, pecuniary obligations were entered into by the Messrs. Storey ,& Co., which if not met, would have involved them in serious embarasments, and would have endangered the prospects of the completion of the Railroad, the Com- mon Council of the City of 1852, believing themselves to be morally and in honor and equity called upon to fulfil those pledges did, albeit, as is now alleged upon behalf of the City of Toronto, not according to strict form of law, but, this informal- ity forming no ingredient of inducement, pass the by-law of the 28th of June, 1852, and subsequently did, also, albeit not as it is alleged, in accordance with the strict form required by law, but such informality forming no ingredient of induce- ment, pass the resolution of the 29th of July 1852, which re- solution being carried out, was admittedly much more bene- ficial to the city than the plans comprised in the previous resoluti ms ; and the Appellant, although a member of the Common Conucil of the said City, conjointly with Messrs. Hincks and Hall who were not members of the said Common Council, and believing that the said Messrs. Storey & Co. had absolute right to sell such Debentures, did, in good faith, purchaae from the said Messi-s. Storey & Co, the Deben- tures 80 issued to them as aforesaid, at the lull legitimate Market Value of such Debentures at the time. The above facte h»Ye been deemed sufficient by the Judges of the Court 0. Chancery to justify the following Decree : m CHANOEBT. Monda/y tha Ni/nfA Day of October^ in the X%th year r^ i tyi> X- I ^U and ^ i^ y^^ J5.,tweeu tK- O.tJ ot ^ ^^„(. and John G. Bo^ es ^^^^ ^^^^^^^^^.^ This cause euming "" ':' ^'^';; ,f June last, in the ,n-c- Court outho 2Tth ^'^ ^^^''.f t&es and the plead.ngs scence of Connsol l'>''"\'''^;"J',^*,teoftUematter«udupon hearing, read the ^T'^-- ^ ^, f; ,e Kegfetrar's Book . mentioned in 'the nunutc ente.ert ^^^ ^^ ^y Counsel The time of hearing, ""t^fX tot ^hle cause should st,a«d ^.toreaald, this Court did order tna j„apement th.. r rag:-ent and t,u» >>ar- «» - ^^ ,,,, Ure the day in the paper o ^'^^^'^f^,,„ and to he a Trustee lo t.. said John G. Bowes to 1"™ .^^^f^^,, ,„„„ from the sale of Citv of Toronto of the pn^tH^em^^^^ the'DeVnturos m question th ^^^^^ ,^a this Co«tdo^^^ ^^X^^^:^ tal iucapahle of G. Bowes l-ei^g-f ^nX acquire any pe..onal »- Sn'thrsaidDehentures. ^nd this Cowtdothfind an aedare^^^^^ ^ ^^^^^^^^^ of profit derived hy the sa d John U ^ ^^ consists of the f-ll"-';?. ?:t?, ."to the sumof £4115 ".. sums of money a™"""'"- '"f L game sums from there- of to«tber with intere,st on «"-^^^^ j^e said John pttU times which •t^^y --;t ^thich interest upto I Bowes until the djy » ^rel amounts to the Bum of the day of the date ol '^>' ^^^ ^^,^ ^ay of the date £406 e.-fi.^ch F0« ^fj; i;. 3i. And this Court hereof being *"««»" 1^6 Bowes do within ten day. doth order that the said John ^. Bo ^^^ ^^ after service uponhm. of to 0»«^ P^ „f £,522 s,. 10 ^ •« » Bowes do pay to the Plaintiffs or the bearer hereof, their costs of this suit immediately after service upon him of this De- cree and the Master's Certificate of taxation ofth« said Costs. And it is hereby referred to the said Master to tax the said Costs in case the parties differ about the same. Signed, A. GRANT. Eegist/t'c/ir. It is true that the Bill of complaint, in a very vague, loose, insufficient and indefinite manner, stated other facts upon which it was attempted to establish actual fraud ; but the evidence was altogether defective in establishing any such fraud, in fact, the evidence completely disproved any such fraud ; and the judgements of the Judges of the Court, dis- carding all such matters, in respect of which a most tedious, prolix, and it is submitted, immaterial investigation took place, proceeds upon the simple fact, which was admitted in the answer, namely, that the Appellant, although a member of Common Council, was a party to the purchase of the Debentures from the Messrs. Storey «fe Co. It may be proper, however, briefly to state the other facta proved,"with the view of establishing, that, assuming tho reasons given by the Judges to be found insuflicient to war rant the Decree, there is nothing in the other facts proved, which can be construed so as to sustain that Decree. Tlie additional facts referred to were as follows : The Corporation of Toronto was indebted to a Mr. Cawthra in £20,000, for which he held not only debentures of the City, but also a mortgage upon the whole or the greater part of the real estate and buildings of the Coriwration ; these De- bentures fell duo on the first of January, 1854. The corpora- tion were, upon similar securities, indebted to the British American Insurance Company in £10,000, also falling due on the first of January, 1854. The later Company were willing that their debentures sliould be redeemed before the period oi their falling duo. Besides these debts the corpora- tion were liable to an amount of £16,000 ui)on promissory notes, issued by the Cori)oration, payable with interest. In couseciuenco of these notes being outstttuding,the (Corporation, I 24 f„„„a great aifficU, in ^^^r'^^, ^'ttu^lt t Banto to meet current demand , anj^ ^j^ ^awthra real estate of the ctty was held mmm^gy ^^^ ^^^ ^^^ ^d the I-«»»,«°3\-ii- to -nc for purposes of which the Oorporafon^gteciu,^^^^^^^^^ ^^^ ^^^_. public improvements, bccane so p .^^ j^^^; ^100 was the Ml -got.abl J* - of^L ^^ .^ ^,,^^^ ^^,_^_^^ twenty years to ™n. Jhe 1 - ^o-Toration, andiinan- the«e ca,.ses w». B<=r "^/f, J ,oan jlld he eftected for rial policy required, that a new „^,, ,iebe,>tures. the purpose of -f-™;;|^^^^ f^^ gSl opened ne,otiations With *f 7-1 «;f „^S Xada, with^apitalists in Eng- land ; but '«» -i;^ lri.et otherwise Than at pa, , and bentures on the Eng ,« i '"^ ^ , , ;„ ti.at or in any as no such price could be "''t?'""";, '",:,,,,,,,,, ^,,,. I,, 1862, other market, all those uogotrabons 11 n^ ^^^ ^^ however, the Corporatron resolved t app 5 ^^, ^^^^ authorise them to raise a suffic.ent >" -J'.^ „^i„„,d debentures, to enable *"<"" ^f^ C o ^ion, believing liabilities. At the same '""'= .* " ^; ',.,„ified any defect themselves te be in honor Y"' , ", lity o *!- debentures which --Thaveexi.ted .. to t l^^l^^^^^^^^^^^ ^^^ . , ,^^,,„^„. authorised tobe ''»«' ° *;*;^^^^^^ fevorable, caused aforesaid, and deenung the opportun.t ^^ ^_^ the City i^olicitor '» 1-1-;^, J , f^^r^ration to raise presented to Pavhaincnt to '=>■'*«' ;™ ' ^ ^he I'eti- IlOO,000 to consolidate a part ot the CVy .kbt^ ^ tion andBiU so prepared were se^^to M,. W li ^^ ^^j ^^ •""■r ir Z: ore n'l -i : active party to the member of the U>mmou V. bv viftuc ot winch arrangometa with Mes.. Mo^^^^ ^ ^„, ,„„ theHy-lawof the 28U. o«un 1 ^^.^^ ■ ^:::Ct : - oft Luamentof Canad„ rassc.. i„ October 1852. entitled "An Act to authorise '''« ^ ^ "' "trontot^ities of Hamilton and Kingston. After the passing of the act authorizing the City of To- ronto to negotiate the £100,000 loan, Mr. Hincks being then part proprietor in the debentures purchased from Messrs. Storey vt Co., and he having undertaken the disposal of these'debentures upon behalf of himself and his co-proprie- tors, caused a proposition to be made through Mr. T. G. Ridout to tlie Corporation of Toronto to purchase the £50,000 required to be raised by them at par, upon the condition that new dc sutures should be issued in lieu of those issued to Messrs. Storey & Co., and that all the debentures to be issued should be in sterling amount, and be made payable in England. Had net Mr. Hincks as part proprietor of the debentures issued to Messrs. Story & Co. had control over those debentures he could not have offered par for the other £50,000, nor could he, except by a sacrifice upon the deben- tures issued to the Messrs. Storey & Co. have given or ob- tained par for the other £50,000 required by the Corporation ; nor could the corporation in any other mode, or by any other operation, have procured par for the £50,000 debentures required to be issued to redeem the liabilities before men- tioned. The offer was accepted and the operation was the most beneficial arrangement which by possibility could have been -giade for the benefit of the City of Toronto. The Cor- poration accordingly received £50,000 cash for the £50,000 debentures issued to redeem their liabilities, and they issued new steriing debentures payable in twenty yoaro for the de- bentures which had been issued to the Mod^iN, J^torcy .;• f > i li 26 This is tlio substance ol all the other facts wliich, it is sub- mitted, have any bop'-inf^ upon the case. In making the de.v < above mentioned, the Chancenor, and both the Vice Chancellors, have in their judgments delivered, declared that their decision is based upon decided cases quoted by them in their judgments, and which they have pronounced to bo identically analogous with the case now in discussion. Mr. Vice Chuncellor Esten asserts the principles upon which the Com-t, in making the decree, pro- ceeded, in the following language:— "Tliis case seems to "depend upon two principles; one,— that an x\gent, con- ''ducti/ng a sale on behalf of his Principal, cannot stipulate " for a private advantage to himself in the same transaction ; " the other— that a corporate otTicer appointed ad eonsul- " endum cannot acquire an interest in a matter upon which " he is to deliberate in his official capacity for the benefit " of others." Now it is submitted that the two principles thus enuncia- ted are identically one and the same, and that the second principle upon which the decree in this case is based has no existence except in so far as the " corporate offia^r appointed ad consulendmn" is ^^an agcntP m tlie sense meant in the principle firstly enunciated, it will be therefore convenient to consider these two principles as one and the same^ for the purpose of testing the ai)pli«ation of the principle to the facta of the case in discussion. The cases ^^ hich the Court or Chancery have declared to be identicaliy analogous to the present case arc — Ex parte Lacey, 6 Ves. 625 ; ex parte James, 8 Ves. 337 ; ex parte Bennet, 10 Ves. 381 ; Cook vs. Colli ngridge, 1 Jacob, 607 *, Docker vs. Somes, 2 My. & K. 655; The Charitable Corpo- ration vs. Sutton, 2 Atk. 400; The Attorney General Wilson, Cr. &^h. 1 ; Tlie Attorney Gen^ vs. r. &^h STes. S» ; iijal vs. Clarendon, 17 Ves. fi^ ; Benson vs. Ileathorn, 1 Y. JRlST. C. 326 ; Hamilton vs. Wright, 9 CI. & Fin., Ill ; and, The Governor and Company of the York Building Society vs. McKenzie, Bro. P. 0. 84, also referred to inex parte James and tne note to the American edition of Ves. in exparte Lacey. II /•'a,r n f *['.<• I I 'f I jm-' - ft 27 Most of the above cases, together with Dr.vnes vs. Graze- brookes, 3 Mer. 200 ; Sandei-son vs. Walker, 13 Ves. 601.; The Attorney General vs. Aspinall, 2 My. & Cr. 613 ; Lees V. Nuttall, 1 Eus. & My. 53, and the dicta of various text writers were quoted by Counsel for the Defendant in the Court of Chancery, the now Appellant, for the purpose of elucidating the principle upon which perrons placed m a liduciary capacity are precluded from dealing with Trust Fun for their own benefit, and for the purpose of shewing the clear distinction which, it is submitted, exists between the tacts of the decided cases and the present case, and ot displacing all arguments to he deduced from any supposed analogy between them. As howe-er, the Judges of the Court of Chancery have jus- tified' the decree which they have made in this case upon the precise analogy which, they allege exists between the cir- cumstances of the present case and the circumstances ot the cases above cited, it will be convenient briefly to review the circumstances of each of the cases cited and to draw at- tention to the principle involved in eacli. In exparte Lacey, the Assignee of a Bankrupt estate had pm-chased for himself a portion of the Bankrupt's estate, and also several of the debts due by the Bankrupt to his credi- tors, and as to the purchase of the estate it was hold tliat as the Assignee was a Ti^stee to sell for the lenefit of the Credi- tors md the Bcmlcrupt, he omld noi hiiyfor Ms own lenefit, for thereby the principle that a Trustee for sale, cannot sell to himself would be ch-arly violated, and as to the purchase of the debts duo by the Bankrupt, it %vas held that the assigns e of a bankrupt is in the same position as an Executor who cannot buy for his own benefit the debts of the creditor. upon the principle that it is the duty of an assignee of a Bankrupt, and of an Executor to app]y the assets of tlie estate for the payment of the debts due by the estate and to fidminister the aesets for the benefit of the estate, and not for his own benefit, and it was further held as to the portion <>!' the (^state bought, that thcasBijrnee should be lield bnund by 28 t ■ PI hiR purcliasc unless on a new sale a higher price should be bid. In exparte James the same principle wa8 held in a case where the Solicitor for conducting tiie sale of a Bankrupt estate became purchaser of a portion of the estate, and had jointly with the assignee purchased several of the dividends payable to the creditors. In exparte Bennett the same principle was held to apply to the Comrmosioner of a bankrupt estate, and in all these cases, as well as in other similar ones, Lord Eldon held that the rule that ajperaon employed to sell fcyr the henefit of others cannot buy for his own benefit any part of the estate which it is his duty to sell for the best price, for the benefit of his principals, viz., the Bankrupt estate and the creditors, applied more strongly to a commission of bankruptcy than to any other case of trust or agency. The principle of these cases then is that, it is the duty of a Trustee or Agent ^appointed to selV to conduct the sale for his principal or cestui que Trust, precisely in the same man- ner as if the Trustee or Agent was selling his own property, and thathe must not acquire an interest in the trust estate inconsistent with that duty. The case of the Governor and Company of the York Build- ing Society vs. McKenzie, w»s precisely similar to the three cases just mentioned, and the principle involved identically the same : it was the case of a purchase of part of an estate by the person specially delegated by the Court to conduct the sale to the best advantage for the benefit of the parties in- terested in the estate. Sanderson vs. Walker, 13 Ves. 601, is a precisely similar case. There a Trustee appointed to sell, bought at an under- value for himself, through the medium of a third person, a part of an infant's estate. Cook vs. Collingridge, was a case where executors collu- sively conveyed to one of themselves and two others, their testator's estate, for the express purpose of being conveyed ■<„tmJim B-AT'iiWIfcl* i^-j^^.v, be ase upt lad ids ese liat ers ich his ed ny of for m- ite ee ly ,te be n- a ir I I It i -' SSK&amaaiiMBWMiWia action was void, and it was so declared to be, a« \n farl a mU bv oKecutora of the trust estate to one ot themselves. ^ Doeker vs. Somes was a case of executors ^^^^^^^;f ^heir Testator's estate in thei'- own trade, and it was held t uit The cestnisque Trustent w.. entitled ta an accoxmt^^^^^^^^ .profits arising from the trv--, in respect of the Testator s Ti^tal so invested, in preference to repayment of the capital ■-.vitli interest. . ,„ . j, ^i Domics vs. Grazebrook was the case ot a Trustee /or M. .,ale of an est make it good out of hir, owu estate, ana thereby ; ) II m lending large sums of money to the officer of the corporatior. who was not only himself the Gustos of the pledges but the Appraiser, upon behalf of tiie Corporation, of their value. 4th. Taking off all the checks upon the Warehousekee])or, imposed by the charter of incorporation. 5th. Making several orders to put it in tlie powei- of the Warehousekeeper and others, his servants, to commit the friands complained of, which appeared to be of a mostgigan- t* naturo, it having appeared tliat the value of the goods pledged was ouly £35,000 and £885,000 was the amount advanced upon the security of those pledges. Upon these points Lord Hardwick observes :— « As to the three first they "are actual breaches of trust." And again— "It was a " notorious fraud to suffer the Warthousekeeper, who v s to "set a value upon all the pledges, to borrow money " them himself." " As to the fourth and fifth, they are ' {i^ Colchester vs. Lowton, 1 Ves. & Bea. 226, tlie plaintiffn, by their bill sought to impeach certain securities as obtained under an abuse of Trust by the select body of the corporation of Colchester using the common seal for raising money to defray the ex- penses of actions against the Mayor and Town Clerk, relative to elections of the Recorder and a Representative of the Borough in Parliament, which, it was contended, were not corporate purposes. Much of the Judgment of Lord Eldon, in this case is valuable as enimciating the principles Which" governed the Court of Chancery ' in the case of Municipal Corporations prior to the passing of the General municipal Corporations act of 1835, since which time all the cases that have arisen depend upon the special terms of that act. Lord Eldon in giving judgment says,— "The bill in this case contends that all or part of the ex- "pondituro which is the subject of tliissuit, wad not for coi- " porate purposes ; and if not, that it was not competent lor ''the select body to cluirgethe Corporation with an expcndi- "turc, not for corporate purposes; and tlierefoie tlie select " body, if they have the capacity, could not pledge the pro- '' perty of the corporation for purpoies not corporate, at least " not without the assent of the body Rt large ; and upon that " hypothesis they might go further; and contend that the " body itself could not pledge the property tor purposes not "corporate." And again he proceeds, "Though all tl.e "authorities upon what is not often the subject ofconsidora^ " tion here have been most usefully brought forward, I hayo " no doubt that independent of positive law m to the legal ^' powers of a corporation ; Corporations, Civil, Ecclosiastical, r' 1 ' 32 .^^or of whatsoever nature could in polul of law, alieuate .qandB of which they were seized in fee ; -f ^^^^Yt^l >. what corporations, both aggregate and sde did before tU ..re training Statutes, is very useful, /-il CorporM.o^ar. « at this day in the constant habit ^f snaking those alena. " tions s their title to make which is asserted by Lord Coke ci I, the course of my experience in this court of my present *' researches, and of my examination of authorities, which -"having had occasion to consider them formeriy. this case « hal bfought back to my recollection, nothmg ^^b -cu^^^^^^^^ "shewiiig that there ever was a case m which his court . Itulied ^he Doctrine of Trust, as applied under the words " ' corporate purpom^ to the alienation of a civil, or indeed, ,. pfTeccliastlal corporation. With regard to what was ''stated by Sir Wm. Ashurst, a very respectable judge, and « who, I 4e this opportunity of saying, was a very usefu "Judge, as a commissioner in this court, I do not lay down « eitKer that this is the subject of jurisdiction here, as Trust, "or of Information in the court of King's Bench. The " opinion, that this co^rt. has jurisdiction, is to be considered u Jthe Opinion, not only of Sir William Ashhurst, bu of " the whole coml of King's Ben^h, stopping upon that « ground the argument upon that point, as to the breach of "trust ia) Sir Samuel Romilly has put it fairly, that the f' court is not to act upon the supposition, that corporations ^' are constantly al)U8ing their duty by applying the property .'not to corporate purposes ; but on the other hand when a f' case is brought Ibrwurd, the court is not to shut jte eyes " against the practice that has prevailed in all times, and the "judgment upon if, for speaking of corporate purposes, if f' the purpose, though the meet worthy that can be represen- ♦^ ted, has not that character, the use of the seal is equally " improper, and as much an abuse in a court of justice, though "not i a moral consideration. As to what obtains, for m- "stance, in the ecclesiastical bodies, that have been men- " tioned, the Bishop, the Dean and Chapter, &c., The sta- "tute8,that lessees fo r more than twenty-one years of three (•) a T. B«p. 200., Lord M»ni6em w»« •bunt ilieuate story of fore th« ions are 3 aliena- rd Coke, present , which, his case )ccurred lis court le words indeed, yhat was dge, and rv usefu ay down 08 Trust, li. The ►nsidered at, but of pon tljat breach of that the porations property I, when a it its eyes IS, and the irposes, if represen- is equally ce, though 18, for in- oeen men- The sta- rs of three I I 83 « lives and not at the old rent, or more, shall be bad, do not « say that any lease shall be good, which can be taken to "be an abuse of those corporate purposes, for which the pro- " perty was held ; and I apprehend it would not be difficult " now to find bishops' estates, the old rent reserved being « £50 and the actual estate worth £1,000 or £2,000 per " annum. All the excess of that rent taken by the bishop " himself, should, if he is a trustee in a fair sense, be taken " from him by this Court ; yot no such attempt was ever made " where the corporation was not holding for charitable pur 'Eposes Even these corporations ca/t alienate at law, but Ahe alienee mill be a trustee ; and the jurisdiction in those « cases must be rega/rded as a contrast to the other cases of -corporations, holding, not for charitable, but for corporate -morposes ; demonstrating that this Court shaU not 6# " calltd on in the latter case, as it is in the former:' ^ The result of this case was that the Bill was dismissed with costs. . 1 , . J 4. Now the case alluded to by Lord Eldon m his judgment in the " Corporation of Colchester vs. Lowten," as having been before the Court of Kings Bench,-viz. The King vs. Watson and others, 2 Term, Rep. 200 ; by no means justifies the assertion, that it was the opinion of Sir Wm. Ashhui'st and of the Court of Kings Bench, that even the appUcal/ion of a sum of money hj the select body of a corporation, out of corporate funds, to puiposes not corporate, constituted a breach of trust, cognizable in a Court of Ecjuity : much less can it be said, that there is any authority for holding, that it ever was the opinion of any Court of Justice, that a mem- ber of the select body of a civil corporation, could not pur- chase the Debentures issuec^ by the corporation, of whose select body he was a member. All iha!- the Court of Kings Brnch, in" the case referred to in 2 Term Kep. di.l intimate, was, tliat in a case of Breach of Trust, thu Court of Chan- cery is the proper Court, to which, application for redicsH should be made, and not the Court of Kings Bench. The case was this : one Watson, a servant of the corporation of Yamiouth, had, in a very wanton and vexatious manner, •r r ihi. . : ' h i J 1 1 ' I . ! ' r !; . 34 charged one -ffjwry with perjury, and after his acquittal, had in the pnhlie papei-p repeated the charge, attributing the aequittal to a defect of some form, and alleging that another Indictment would be preferred against him ; Hurry prose- cuted Watson in a civil action for a libel, and recovered a verdict of £3,000 which was compromised by Hurry agree- ing to accept £1,600 ; after the compromise, the select body of the corporation, by an ofi'ensive resolution reflecting on tlie justice of the verdict, awarded to Watson £2,300 out of the corporate funds, to indemnify him against the recovery of damages in Hurry's action ; under these circumstances, an application was made to the Court of Kings Bench, for a criminal information against the Mayor and others, constitu- ting the select body of the corporation, upon the following gi'ounds stated by counsel: 1st. That the payment of £ 300 by the defendants, as members of the corporation, to Watson, was a gross ohuse of their trust. 2ndly. Tliat the proceed- ings of the defendants, as members of the corporation, consti- tuted a high contempt of the administration of public justice, and, 3rdly. Tliat the manner in which the proceeding was carried on was a libel on Hurry, the prosecutor of the criminal information, and " The Court desired counsel not "to go on the first point which might be the subject of an " application to the Court of Chancery, but couU not be the "ground of a criminal information in this Court," viz. in the Court of Kings Bench. It is worthy of remark that Lord Mansfield, Chief Justice, was not present at the argument, and that there is no trace to be found in the Boolvs, of any application having been made to the Com-t of Chancery, in respect of the alleged breach of triis. referred to in Rex'vs. Watson, nor have I been able to find any other case of an application being made to the Court of Chancery, in any case of an alleged breach of trust similar, either to the case of the Corporation of Colchester vs. Lowten, or to that reported mRex vs. Watson; much less have I been able to find such an appUcation having ever been made, in a case of the pur- chase, by a Municipal Councillor, of Debentures of a muni- cipality, at their accustomed known and current value in littal, had uting the it another •ry prose- 30vered a iTj agree- lect body ecting on 00 out of recoveiy mstances, ich, for a constitu- following 3f £ 300 ) Watson, proceed- >n, ccnsti- ic justice, oceeding )r of the insel not 3ct of an ot be the iz. in the bat Lord rgument, , of any Qcery, in Rex vs. Be of an T^ in any e case of reported ind such the pur- a muni- ?"aluo in 11 i ;, I I 85 the market, from persons, to ■mhm, they wffe itMiM to U *1X »rW-* of a natter. mnth. 'T-^^^^^f^ tJ^JmHtiiiy. 'n-l<'g'''»^Tr "VotoToolC the iudjment of Lord Eldon, in the Corporation of Oolches- er vi I^wten is, that in those times, a clear d^tmConv andn;t a plain analogy, was held to exist between the case of \ mem Jof the select body of a Munic.pal ^o^'P—' ;«■ quiring corporatoRroperty ; and the common case of prinoi- palandagent, or^stee and cestui que trnst^ Smce th. passing ot' the ^e«--a?if«mofp«2 GorfOfatwru< Ad 0/1835 Te dedsions I be found in the Books of Eeport are based ponthat Act, and must be read with due regard to the special provisi;ns of that Act. The decision of a Judge m any case is not esteemed to come within iheprmc.paladopt- S by the courts, vi. " »ter. A«^V except m ^o fa as the decision i. warrant^dby thefacts ofthecase beforethe Judge •, and where the facts of the case to which the principle s pur- ported to be applied are parrallel with the fact, of he &- Ji»«Z««».. In the consideration therefore and m the a^ nhcation, to new cases arising of the decisions which have been made upon the " g^^-ol Mm.vovpal^ Gorporatwn. Act it is, all important that, the special provisions of Uiat Act shonld be bonie in mind. By that Act 5th and 6th Wm. 4 ch 76 " all Lav», Statute, mvi Usages, a-nd m much of all Hoyalar.d other Chaiiers, Grants, and ^ff^'/^l^f '" force ^relating to the several Boroughs (named m Schedules to the act annexed) or to the Inhabitants thereof, as were incon- sistent with, or contrary to the provisions of the Act Were, by the first clause, repealed and annulled. By the 92nd clause it was enacted that all monies which the Treasurer of such Boroughs should receive, under the act,'should be earned by him to the account of a fund to be called " the Borong^, Fund" and after providing tor the claims upon thftttund, it was provided that, "in case the Borough Fund shall be •' more than sufficient for the purposes aforesaid, the surplus " thereof shall be applied, under the direction of the council, " for the public benefit of the Inhabitants, and improvement " of the Borough." By the 94th, 95th, and 96th clauses, the ipr M ' 36 powei"8 of the Corporations over the Keal Estate wore defined and restraiHed within certain specially prescribed limits. By the 97th clause, provision was made for avoiding all coWusi/ve sales, purchases, leases, demises divisions, and appropriations of money for undue consideration made by the old councils of the Boroughs, not in accordance with the purposes and objects in the act specified. Now under this act the case of the Attorney General v^ Aspinall came up before Lord Langdale, Master of the IM^ I Keen 513, and before Lord Chancellor Cottenham 2. My. and Or. 613. The Bill was filed after the passing of the act, but before the first election of the new councils established by the act, and its object was to restrain the old corporation of Liverpool, as it existed before the passing of the act, from appropriating cer- tain property of the Corporation, amounting to £105,000, to purposes alleged to be foreign to the objects of the act. liTow the course of Lord Cottenham 's argument in delivering his Judgment in this case is, ?/ if A<3_p'0j!?<£rz!?/ in questioti he subject to any puhlic trust, and if the appropriation com- plained of, he not consistoit with such trust ; then that the f tend should he recalled, secured, and applied for the public, or,tnoth€rworas,^^ charitable uses, to which it is by the act devoted.-^ JBut admitting that the power of the corpor at^'-on, as it existed prior to the passing of the act, depended upon the law and usage then in farce, and for that reason, could not he iiderfered with by the Cour* of Chan- cery, all those laws and usages are by the act e^eprressly re- pealed, and so fair therfeore as swh law or uso/je authorised an exercise of power ircomistent with, or contrary to the provisions oftJie act, it was, from the time of passing the act annulled. Now the 92nd, %Uh, 95th, 9Qth and 91th sections construed together, clearly made the cmporate pro- perty, trust property, and therefore, in the legal sense of the term, pyroperty applicable to charitable pu/rposes, from the day of the passing of tlie act Assuming then that the cor porate property was, from the very passing of the act, made trust property appUcable to the s&veral purposes pyrescribed im the oof' - n/n/i, t.h/>. n,rvyw>fvrvv>iniirv%-\ ~X-J.' 'e defined id limits, iding all ms, and made by I with the ider this came up 513, and 13. The 3 the first , and its lool, as it atiug cer- fil05,000, tlie act. lelivering est ion he ion com- that ths hej)uhlicy 's hy the le corpor depended for that jf Chan- "esshj re- uthonsed •y to the ssing the md d7th Yirate pro- ^5(3 of the from the it the cor tct, made yrescribed I; Mi i I ) i 37 di/recUy at variance with, and made for t/te j^w'pose of de- feating^ the clject of the act, — the fund must he recalled. This is a brief synopsis of Lord Cottenham's Judgment. The Attorney General vs. "Wilson, Cr. and Pli. 1 is another case before Lord Cottenham, arising under tiie general Muni- cipal Corporations Act. It wj'" a most flagrant case of the select body of the Municipal Cojporation of Leeds, as it ex- isted prior to the passing of the act, which was passed on the 9th Septemper, 1835, attempting designedly to defeat the object of that act,as to the amount of £6,500 consols,the proper- ty of the corporation. Lord Cottenham in giving judgment in this case says, " from that moment, the 9th of September 1835, "whatever property belonged to tlie corporation became *' aflfected with the trusts declared by the act, and all attempts '''' 2X 'S)i\QT\2A\QiVL for purposes inconiiistent with the objects of " that act were illegal and void. This was the ground of ^^my decision in the Attorney General vs. Aspinall / it fol- ^Hows that the alienatum suhsequently att^impted of the pro- ^''perty in question, being obviously, and indeed ^professedly, *" for the puipose of defeating thejpurposes of the act, ^^*e*« " illegal and void." Lord Cottenham, in otlier parts of his judgement, declares liis opinion that " the proper view of "regarding the members of the governing body ff the cor- " poration, that is, of & cov\Kn'A\\Qmi')u1er the «fi^, is as its " agents, bc»und to exercise the functions of the corporation "/br the purposes for which they were given, and protect ita ^^ i7ite)'esi and 2^roj)erty, and it such agents exercise those ^^^unctionfi for the putpose of injuring (he interest of the ^^ corpo7'ation and aliemiting its property they shall be liable to the corporation." Again lio approves of the distinction drawn l)y Lord Ilardwicke, in " the charitable corporation vs. Sutton" between the acts of the governing body executed within their authority, i\s repealing JJye-laws and nuiking ordoi-B, to which may be fairly added making Jiye-Lavs — and acts clearly in violation of, or in maiufest J^ess of their authority. Now, with respect to those cases, it is con- fidenty submitted, tliat, having regard to the S])ecial circum- stances of the cases before Lord Cottenham and the nature of XrA^ V J I '■ 1. M I : I i! n I I! ■4 i ' i H I ! *Mf*^* 38 the breaches of trust therein complained of, ''<'/^f S^^^^^ between the circumstances of those cases and the ^ircum- stances of the case now in discussion, upon which the judge- ment of the Court of Chancery has proceeded ; "^deed the ianKuai?e of Lord Cottenham, as appearing m those cases never would have been, it is submitted, apphed by himself to the case of the member of the govermngbodyof a Munici- pal Corporation purchasing from a third person or from the lorporaLi Mf, debentures of the corporation legal y issued, or intended to be legally issued, for a purpose specially authorised by an Act of Parliament ^ By reference to the General Municipal Corporation ^ct of England, which became a law on 9th September 183o it will be found, that mider this act Municipal Corporations m England have not the power of raising money by the issue of debentures payable at a future period lor any purpose whatever ; as Municipal Corporations in Cajiada, from the necessities of tht . .untry, are, from time to time empower- ed to do, for various purposes. The property ot Mumcipal Oorpon'tions in England consist, of gifts, grants, and invest- ments made during a course of ages, the maladmmstrat.on of which (the Court of Chancery, except in the cases ot g.tts to charitable uses) having no jurisdiction or control, necessi- tated the act of Uth September, is;J5, and by that act all ho Di-operty of the Municipal Corporations was invested with a public, that is charitable use, for the express purpose ot in- troducing the jurisdiction and control of the Court ot Chan- cery -that this is the view entertained by the judges m Encland betbre whom cases, subsequent to the passing ot the act, have come, is apparent from the anxiety ^M^laje'lm their iudgements, of letting it be clearly apparent that they decide each - :o upon the especial provisions ot the^act and ^th respect to a fund, hy the act, specr^Uy dod^ccitcdto efumtahle imposes, to -^mti^yth^ decisioni at w nch they arrive ^Without that act then, it is apparent, th.t it never ^ was the opinion of the courts that mom Ws of a Municipal Con)oration, tliat is of the governing body thoreof, were ever i^irded in ec^uity in the simple character ot truBteeB or "'"*-! 89 as^euts, unless there was a charitable use ; and since tlie pass- ing of the Municipal Corporations Act of 1835, the result of the decisions is, that the members of the governing body of Muni- cipal Corporations affected by that act, are made responcible to the Corporation, fur any application of the funds of the corporation to purposes -foreign to the purposes of the act^ all such applications Ijeing in direct contravention of the act, a and/m' tlmt r^«swi, illegal and void.J^ JSTow tiie Municipal Jt *^i Ct^rporations Act of England not conferring, as it is submit- ted it does not confer, any power of raising money by the issue of debentures, and no such securities having appeared , in any of the cases which have arisen under the act of 1S35 ; and the cases -which have arisen imder that act displaying, as they all do, gross and designed breaches of the act itself ' and of the trusts thereby established, by a ma/i*/. the case of a lease of k portion of a charity estate executed by the trustees of the estate to one of themselves. Hamilton vs. Wri'^ht 9Ch and Fin. Ill, was the case of a trustee, (for the"' payment, out of the trust estate, firstly of £G00 per annum for life to the crerior of the trust, and for sale of the residue of the estate for the benefit of creditors,) acquiring an assignment of an annuity bond executed by the creator of the trust ; and the trustee claimed the benefit of this annuity bond in opposition to the provisions of the trust deed. Both of those cases were clearly within the com- mon rule, that a trustee for sale or management of a trust cannot himself purchase an interest at variance with the dutij heowedtothe trust. Benson vs. HeathornlY. and C.N.C. 326, was a similar case. There one of the directors of a Steam Navigation Company, specially appointed to purcJiase a Steam Vessel for the Company, not only charged the com- pany a larger sum than the price paid by him, for the Steam Vessel, but commission also and other charges,^ and he further paid to himself, out of the company's funds, amounts ordinarily allowed to ashii)S husband, although the Bhareholdei-s in the com[)any had never made him ships husband, nor had agklnorised the charges, but on the contrary, allows il the directors a consider;! hie annual sum to recom- pense them for their services as directors. . It is an exception to the rule reierred to, which exception, it*^ubmitted, is as univeraal as the nde itself, and is inseper- aijlo from it, that a trustee or ageit may deal with his ces- tuique— trust, or principal if he put the latter.in' possession of all the information acquired in the execution of the trust. Mr. Vice-ChancoUor Spraggein his judgment, says " ray idea "is that in no caaocan an agent in the position of the defend- ?i i i m I i '\ 41 "ant contract ^vith his principal ; for who in tl)e principal " to whom he is to make known all that is known to hiniselt, "and who is to consent to treat with him notwithstanding -his character of agent? not the otlier members ot the " same council ; for it is not their agent that he is, but thoy "are his co-agents, a«d he and they are the aj^eiits of the " whole body of corporators-the Inhabitants ol the city ; "and it is manifest between them and their agent no such "conmmnications could be made as are required in such ^ cases, between principal and agent ; nor is there any mode " by which the assent of the corporate body to treat witli ite " asrents could be ascertained.'^^^ ^^ .^ /^^^.^.,-.^^^f -<' ^^""^ "^ Now it is submitted tlui#.o^o... for M thy ler^gi.en and iojrroteet ihe interests and j^orrty of the ^Z.^^^^^ZpLtion»hutUontend, that when the.majonty ,ol the ^-'^ Sers of the council have deliberately adopted ^ tions upon a measure within, t/^ep. junmutum, it is the duty of the Municipal Council, and of all subsequent councils of the corporation, (especially if private interests have intervened upon the foithofthose resolutions) to give legal effect to such a measure, in the proper mode pointed out by the Acts of the Legislature which delegate to tTie corpor- ation its Corporate and Legislative powers. For examplo, if a Bye-law, and not a Resolution, is the proper mode indi- cated of effecting the purpose contemplated, and it upon the faith of a Resolution, private interests become affected, it becomes a moral and equitable duty upon the corporation througli its council to give legal effect to the obl.gatmn comprehended in a resolution, upon the ftuth ot which private parties had bona iida embarked their fortunes; and with respect to the office of Mayor of a Municipal Corpor- ation, who is also, (a .m'm.^^'n./ officeroi the Corporation " in certain events,) I contend that it is his duty to. preside overtbe deliberations of the council in- the same manner as the Speaker of the House of Assembly ; ^ ami Intend that if a measure before the council is adopted bj'-me conned unanimionsly, or without reference to a committee of the .whole, the position of Mayor is similar to that of Speaker of the Legislative Assembly, and that, except in committee ot the whole, he lias no opportunity given him, of expressing his own o^nion, arid that, thcrefore,.in the case assumed— of tl?e -council agreeing upon a resolution (involving though ^\ - r> 43 ....,„_ of Debentures) without relorence to a com- tiie whole, the Mayor can in no way be held re it may, *ho Issue mittec 01 the wh — , — - ^ - i i n sponsible for the propriety ofsuch resolution, or be precluded from pm-chasing those debentures when issued whether hi8 business be, or be not, that of a Broker specially dealmg m such securities ; even though as Mayor it be a part of lus 7nmlderial duty, as ^^ officer of the corporation, tosignsuch Debentures^ I contend also, that, the acts mcoriDorating those Municipal Institution^ making them, as they do make them, open, dellheratlve and Lcgislatim. Assembhes and establishing, as they do establish, the rule. that the opinion of a majority shall prevail, the acts of a majonty of such \,^^,., within the jurisdiotlon conferred upon them by the Legislature, cannocbe called in question in any^court^^«^ ever personal . r private motive may he assumed ^ influence a single individual of the counc:' in giving, or withholding his vote upon a question under deliberation, or m absenting himself altogether from the debate. And I contend that it is to the acts of the Legislature, which confer upon the cor- poration and upon its legislative, deliberative, council, their powers and which define their functions ; that we are alone to look for the purpose of determining, in any given case, wherein the conduct of ^member of the comicilis com- plained of by the corporate body ; and that the sole question upot, such an enquiry is, whether the measure itselt m which the conduct complained of arose, is within the juris- diction of the council-is authorised by the acts of the Legis- lature and therefore valid-or is in contravention of the acts of the Legislature giving powers to the council and there- fore invalid and void ? So that I say there are many things in the special nature of the agency involved in the position ot beino-amemberof a Municipal Council, which distinguish his position from that of ^?i ordinary agent appomtedto sell or purchase pv;pcrty for another. ^ ^ Even in the ordinary case referred to, ah enqmry into the nature and extent of the Agency delegated or assumed, is an essential requisite in determining, ^ohether any a^t ot w w „.-^ ' iii w |H ( !. I i the Agent, complained of, by his rnncipal ^^ mconm^ M the duty owed by the Agent to ^1- Pn^cipaU Jor example, in the case of an Agent apponited to .ell mack- acre L his principal; no trust or agency is imposed or assumed, affecting Whiteacre, the property ot the same I rin- cipal ; and yet, without pttributing any magic to the term " A-ent " The agent to sell Blackacrc may pnrcliasc, for his own benefit, at any rate of discoant, a mortgage ,vhich had been executed by his Principal, up.ni WhUeacre. So then in all cases it is essentially material to enquire ; what is the the nature and extent of the Agency ? Wh|it is the f such a Coiincil can ])ur- " chase fovhis own account such Debentures, from tin- i)er- "• sons to whom they were so or-lered to be issued, and the " bona tides of the purchase is a matter of no consecjuence ; " because an Agent appointed to sell, lias an interest, if he " sells to himseif, plainly inconsistent, and at vanancc with " with his /r, illegal and void ^ What was the duty which mnUn- the circmnstances of this case, the ■^ ['i For Blach- )osed or ne Prin- lie term liiisc, for ) \vhicli ci'<>. So •e ; what lat is tlio Scicnt to property luty is to y at the I Council any i)ar- Conncil )uy in, or .'hentnres 1, Avilhiu sorvicH'!^ ! can ]>nr- I) tlic pcr- , and tlic ecjuciico ; rest, it' ho ance with course of Clhancery, pmpiiro— j'uentiircs, iit'd, (!oin- 'ity »>t' the icd l»y the kVliat \va« I ciwe, Iho ■:.irr~ ''^• * ' . f * !* I a I li ' -# i 45 Appellant at the various stages, rei^rred to in the judgment of the Judges of the Court of Chancery, owed to the Corpo- ration i.. respect of the measure, for the tin.e hen.g, under ;;!scussion? lladheat any, and if any, at wh.choisuch ;tan hnv of the 28th ofJune (introduced into the Councd on the 2x.t of June 1852, in the absence of the ApicUant,) to have been insufficient, yet such informality can lorm no part ot the consideration of the present case ; and further that there >s not only no Statute or Rule of Law or K.iuity which pre- cluded"the Appellant, a whit more than any other Corpora- t.,, „ot a member of Council, front eml)arking m tlie ,,u,vluu^e of the Debentures reierred to, in the manner in 'vl.irh he did ; but that on the contrary, the Decree made i„ this case in Chancery cannot be snsfiined without a di^^.gar.l, nmonnting to a Judicial lleneiil, of Statutes ot tlie jA'uislatnre In f >rce. Tlu Act ofthe Legislature of the KMl, of August 18o0 speciall empowered' the Mnnicii.ai Co^-ponit^on of the City of T^aontu, to issue Debentures to an amount not ox- ^ding iil00,300forandt(.war.ls /<«.svV.mf/ vV Jte eon^^ ■hon ot thr. proposed Ontario, Simcoe, and Huron ITn.on lladroad, and to provide for ami secure the payment of such Deben- \AVyi^himrh mannn' a»d won- ns to the sr.hi idunicipal Corporatioti should seem proper and desirabh'. This power was by the Act declared to l)e given - upon the ground ot .u, public utility" of tl'e work and for b'- ."eason the Act unt!iMri.,.j.lthe uidto be given ^' hi . y wmne?r''-either by taking of stock, b m, or by gtil. Tb-^ Boar'i of Irade, jind numerous iuh:i.,dants and rute-pir, rs of tl-e City, Mumedtateiy upon the parsing ol" the \ct. urged rlie Muni- cij^al (Vtmicil, to avail tliemuelves of the Act, and b» grant assistance to the llailroad. Tiie nnitter was referred to the i. M ;; ' ■' 11 » 4f1 Finance Committee of the Council This Committee took the matter into their consideration, and reported to the Council a recommendation to grant the aid desired in one or other of two modes, suggested in the Report of the Com- mittee. The Council took this Eeport into their dehberate consideration, and thereupon on the 25th of Nov 1850 in accordance with one of the suggestions contained in the Export of the Committee, adopted a resolution approving ot the issue of £25,000 of Debentures redeemable in 20 years as a gift to the Eailroad Company, upon certain conditions. Tliese conditions were accepted by the Eailroad Company, and upon the faith of this Eesolution, the Eailroad Com- pany entered into a contract with Messrs. Storey & Co as Contractors for the construction of the work.- Ij th.8 agreement the Eailroad Company tra.isferred to the Messrs Storey & Co. their right to receive he said Debentures of £28,000. Upon the faith of this ' m^n^ Messrs btorey & Co. proceeded with, and expen large sum ot money in, the construction ot the Eoad. ISow, under these cir- cumstances, 1 contend that both the Eailroad Company and the Messrs. Storey & Co. acquired an indeteasible interest in those Debentures, and a right to call upon the Councd to pass the necessary By-law in <,ood. mfcumt ami legal fonn lo authorise the issue of the Debentures, an ot Angnst I80I Upon' ^ ^^^ ^^ ^y, ^^^U- .aJproccedea with ; and by an a"»7'"-' *' ™ ;"*^: betJceu the Eailroa.l Company and "^^ f ^J ^^.^.^^ 4.1.^ ..;r»]if tn rpf'i'ive these JJeoeuiaies ttiu<-j :Vof:St:.:;,&Co..hotheronponoxpendedfn,*^^^^^^^^ ly.U. to anthorizc tl.o i..no of "•-« D«l-'*>- :^'^^ transaction «-as .on.pl.ted in Angnst 18»1 . Tl K^ ^-y -ranstorrinL^ their right to receive these Deben uies, as hey >,ranbiciiii"f, b vihiable considera- S;;?rcXu «pon tl.0 Corporation to pass the neces- ™^:::tc,:^:r>Sudgn.ent,argnes.M.#- .^:ato„..,e.8tUot.„nel85.,..re.e,n^^^ " in existence uutlu.nsmj,' the l^^uc. oi i il p^„,„,on . „. 0: „c.tn,ont of such , lUM.UV .h,,«-mhng ™^' ^o -»"^ " Co„..cil, and the legality of pa*,n,' such ''j'.V- »^^ ('""f, ■ .. „„.u u.:re than donhtful, it «as the dn y o ^ '^ P _ " lent, a« a n.cn.her of the Couunou Councd, t> U ing t t c .. Session of the question <.f passing a By-hnv 1 u i„,„o of the Dehentun^ an in.partial .,udgn.ent, »>"">« «r;ise,of.suehiudgn,..ttoo;.^^^^^^^ :s:;=:i::i::";i:^^..-ndhccoutends "t'ff lir 48 " tliat the Appellant liad then sncli an interedt in tlie issue of " tlio Debentures as precluded the possihility of impartiality " in determining that fiuestion.'' Now in answer to tliis mode of reasoning, it is to be observed ^Aa^ the form only and not the pjjinciple of tlie By-law was the matter in discus- sion on the iiftli of June 1852. The (juestion^ was not— whether the Corporation should or not extend aid, or in any particular mode, towards the construction of the Eailroad ? That question had been twice gravely deliberated on in Nov. 1850 and August 1851, and the aid was conceded by the Councils of those years, upon the urgent solicitation of the Ratepayers and the Board of Trade ; but the question ^,ya?—whet/ler the forms required by law, in ])assing a By-law to give effect to the resolutions of Nov. 1850 and August 1851 liad been complied with so as to make the By taw which had becTi introduced into the comicil on the 21st of June, suflicient in point of form ? It was the daty of the council, as I contend, long previously, to have complied with all the necessary forms, and to have ].assed a valid ]3y-law to give effect t(» those res<.lutions, and I contend that to hold that^ on the 2Sth of .lum; lsr.i>, notwithstanding th.' resolutions of Nov. 1850anarties who acquired interests upon the faith of the resolutions of those years) |o do anything else than give eiiect to those resolutions, would be to hold. That it was the obvious duty of the Municipal (^juncil of 1852, and of every member of that body, to deliberate grave- Iv, upon the jn-oin-iety or improi)riety of ccjmmitting a fraud upon the Railroad (ji.nii)any and Messrs. Storey & Co., upon the propriety or impropriety of disajHrniting the hopes of the rat.'payers, of the benefits universally exi)ecte.'.eni)<)n ; of the is detei'- [)on the r (with- ts ui»,, upon hopes of froni the ih of the l>uilt--t(> ^ri\.'ty of /.v 11 I I .-TF^ Hi s?i -ID l,,iiv.iu.. tlic Ilalhuaa Company uikI Hes.rs Storey cV Co p^ Uably to buukruptry, l.v .Icprlvi.^' then, ot the ineanB ot M-Loras/lconftaoutly Hul.uit that no .uc-h dnty was imposed upon tlic Municipal Council, or ujK.n any ot it^ .ucnnber.. in Junea^52-thatsucl. a course <)t conduct Wd toeLec^^a,rosslraud,and would have been prohdMted and restrained in its operation, by a ja-oper appbcatiou to the Courts.-tbati>n-6Yi^cnnterests,andindeed^>///./.t; interests, (luivino- rei^^ard to the public benelit of the liailroad) were so aliceted'by the Kosolutions of 1850 and 1851, that m June 1852, or prior thereto, the Courts of the Country, by process of Mandamus or Injunction, or, if necessary, the Leoisiature, would have found means to liave con.pelled tlie Municipal Comicil to have perfected, by a good, valid and sufficient By-law, the objects of Resolutions, upon the faith „1- which, not only the existence of the Eailroad but the fortunes of innocent individuals who had embarked hundi-eds of thousands ^'^•W i!*v /I IMAGE EVALUATION TEST TARGET (MT-3) 1.0 I.I ■Sim iim 1^ i;^ IIIIIM 1.8 1.25 U III 1.6 6' Photographic Sciences Corporation A / o // 4. L<>/ 23 Wr*? mrtiT'e ?--•-—• WiBSTIR.NY 14580 (716) ira^soa ,';o ' .< , ! i application of the rule. - Alius Emptor,- '^ alms Venditor," lb the^ expression of the meaning of the rule, in the days of it8 origin.— A purchaser is me person, u seller l< a dr(Joriy>it person. " A purchaser buys at the cheapest rate, a vendor sells at the highest rate" is anotlier expression of the ineaning/nie rule. Therefore, it isohvious, that a man who Bells to himself holds two antagonistic and inconsistent positions ; and so the rule applle3,-that a man who 18 an agent to sell, or buy for another, cannot sell to, or buy ior himself. If then ^^ ,/,,/y J, ,,,,^; ,,/,,,v,,^,^ of neces>4;; the application of i\i<, rule must cease. Now, whatever uav have been the duty of the members of tlie Municipal Council in June 1 852, in relation to the aid in question, and to the issuing ot the Del)entures authorised by the Eesolu. tions oflSoO and 1851 ; it cannot be said that it was obviously a t be said, that such purchase comprehended an, hUercst Jn the issue ot those Debentures, oJmwH.ly at variance with a duttj^ not in its( // olvious. *^- . Hut the fact is, that on the 28th .luiie, lS52, the Ap].eHaiif iiad not made any agreement with Messrs. Storey & Co. for the purciiaso of these Debentures; ?m' had h^ avmthrd am, ■iiitetu'st m their issue. The Chancellor, in his Judgement, ai-ues to the ell'cet I" n.at It irt ,,uite clear that the Appellant:, interest in the ^' issue ot the Debentures accrued ])rior to the i>4th of June, " \^>yr. This view is not borne out by the evidence. Mr Conrfwrigl.t .../vr.,,that prior to his letter of the 30th of June m t ^„ (■ i'r ! ) >\,>*\»^ «»V» jfc ^ . , ' i of tlie debentures ; aii'i thut .iuch interview too said 30th of June ,k phu-e with :n two or three daysjyreGeedingthQ he liavinj:; then just et-urncd to Toronto, at t ter an absence of several months ; and that it was limited oned in tho ^*,v...u, ..... cww. mentic iotter of the 30th of June. Now, by the minutes of the council, it appear, that the Appellant was absent Irom the council on the 2ist of Juno, and natil the meeting m the ovenh.. of the 28th of June, By Hr. Hi nek's evidence it appears, that on the 2ith of , lane, ^^'^^^^^"^^ in Quebec, and that he then informed Mr. Ilincks, that Messrs. Storey & Co. had been, for some time back trvin- to sell 'the debentures, but without success, and that h; thought they would take £80per £100 for them (en.um- stance, confirmed by the evidence of Mr. Morrison) ^o , takin- into consideration the necessary time spent by llio Appellant in his going to, and returning from Q-bee .m thit occasion, and having regard to the terms of the letter of the 30th of June, which, if it alludes to any previous intervicwrelativetnthcAppellantpurchasingtheDebentures, that interview mu.t have been o, then very recent one ; and luivin.^ regard al.o to the fact, of the Appellant imined.ately comnmnirating to Mr. Ilincks, the letter of the 30th ot June, and of his waiting his reply, before answering that letter , and to the tact, also, of the Appellant and his partno^r on or aboiU tho 8th of July, procuring an advance to Messrs. Storey & Co. of £8,000, it appeai-s quite cJmr that Mr. Courtwright is right in fixing his interview with the Appel- lant which took place prior to the 30th of June, relatiy. to the Appellant purchasing the debentures, or any ot them, at a period y:\i\dicertaudyWiUnot earlier than Wx^i sworn to by him ; and it iscqually clepr that noagreement was arrived at between the Appellant ,.ad Messrs. Storey & Co prior to the advance of the £8,000. So that on the 28tli of June he Appellant had not acquired any inUrcU whatever m th^ Debentures. * i ^ ,u The evidence upon this point, is not only more to bo d€^. pended upon than, but i. subversive of, the presumpt.ori. ^1 HI 52 upon which the Chancellor arrive!^ at tit > conclusion that» prior to the 24th of .Time, 1852, the AppeHant had acquired an interest in the debentures in question. But, it is said, he certainly contemplated purc^hasing the dvbentures prior ta the 2'ith of June, 1852. AVell, (grantinir for the sake of argument that he had) Ireplj, independently of what I have urged as to the point of tlufy owed by him to the corpora- tion on the 28th of June, ls52, that, as his contemplation of acquiring an interest in the debentures, by purchase from the contractors, who were entitled to absolute control over them, could not give him av interest in the debentures, or in their issue, until the ]\ressr.s. Storey & Co. should consent to sell them, and should enter into an agreement to that effect ; mnd as no agreement wan concluded until the 8th of July 1852, and then only as to £24,000, it is erroneous to say (within the meaning of the rule referred to,) that the Ap^ pellant had, on the 28th of June, 1852, acquired an interest which could the7i he put in the scales^ in o})position to his duty. I contend, therefore that, both as regards the duty^ which on the by-law of the 28th of June coming up before the coimcii, if z assumed^ the Appellant owed to the cor- poration, upon the debate ot that measure ; and, ae regards the interest in the debentures, which, it is assumed y ho had thea acquired ; all the ingredients, which make the rule in question applicable, are, under the circumstances of the case, absent from the transaction. In 1852, it appears that a difficulty arose between the Railroad Company and Messrs. Storey & Co., of the one part, and the Finance Committee of the other part, relative to the security to be given for the £35,000 loan. (The £25,000 gift wacj deemed by all parties to have been concluded.) The difficulty appears to have arisen in this manner : the resolution of August, 1851, authorised City Debentures for £35,000, redeemable in twenty yearSy to be issued upon security of debentures of the Railroad Com- pany, to the like amount, payable in ten years ;— that is, payable ten years before the debentures of the City, to be issued by way of loan, should become redeemable. The J^ilroad Company, conceiving that their simple Bonds, 1 M ™u .»ti»n o^^ h.. month; under the arrangements then made, ^''^"-^'-"'^ & Co became entitled to the £85,000 debenture authorised tmiution. and upon the faith of the.r recemng them thrroad wh ch, otherwise, would probably havehad to tlndoned.wasproeeededwith. Mr.Thompson,Cha>rn>an of the Finance Committee, in 1852, seems to have called trallt lim upon the road; upon it. being explamed {hat no .ach lieu could be givou, without sacr.hcmg tt Government Guarantee, which was « be secured by a lien on the road, the K.nance Comnuttee, by the r minute of the Snd of July, demanded a mortgage on the road to take precedence next after the govermnenc hen. The kailroad Company did not wish to give any preferen, tial Bonds, except for the Government Guarantee, and hey contended that their b-.nds payable in ten years, which they were willing to give, would comply with the words of the Tetolution, I tnfy would with the -tention of a^^^part^s a the time of the resolution being passed. Ihe words m the resolution and in the by-law of the28tb of June, v^. '» edmthe road," were referred to, by the Chairman of the Knance Committee, as indicating a special lien or mortgage on the road. Indeed, it seems doubtful whether, not- withstanding the minute of the 2nd of July^ *e Finance Committee wholly abandoned the idea of a fiv^t hen. The Railroad Company conceived that their bonds would be, as they midonbtedly would be, a mur^ty vpon tM road, without being expressed to be a preferen lal Ueu or mortgage, and they were therefore anxious that the mat, ter shodd be so arranged ; but the Chairman of the I .nance Committee, seems to have thought that the committee was under those words, entitled to special lien or mortgage. A difference of opinion as to the proper construction ol the reso- lution, thus arose between the Railroad Company and the Finance Committee. The Raihroad Company, however, were so situated,l-v tlair arrangement with Me6St». Storey & u\ \ ■' I-? • * ' ^tli-'^^f^^^^^^^^'^^' 54 Co., tliat tlie security recjuired, by tlic lulmite of th» 2nd of Julv, if insistcnl on, would have liad to be given, not only in order to enable them to meet their en-. gngements with Messrs. Stoi-ey ik Co., but to secure tho Government Guarantee, wliicli, otherwise, would havo been lost. Time tlius became a matter of the utmost importance to the Kailroad Company, as well as to Messrs, Storey & Co., for if the Kailroad Company could not give the City Debentures, lo Messrs. Storey & Co. they would have come upon the Kailroad Company, for heavy damages which they would thus have sustained and wliich the Kailroad Company never could have paid. Under these circumstances the contractors yielded to a sugges- tion, which emanated from the President oi' the Kailroad Com- pany to the effect, that in lieu of the £25,000 gift and £35,000 loan, they, the contractors, should, out of stock iield by them in the Kailroad Company, transfer to the corporation £50,000 stock, for c£50,000 of Corporation Debentures redeemable in twenty years. The Appellant laid this proposition before the council on the 29th of July, 1852 and it was almost unanimously ado;pted, AS MOST AD- VANTAGEOUS TO THE CITY. Tlie transaction was, in fact, one of very considerable gain to the corporation, and therefore the resolution of the 29th July was passed almost unanimously — upon this point, Mr. Yice-Chancellor Esten, in his judgment says, " I have no reason to doubt that the plan " itself vjiis>, beneficialto the city, and that Mr. Bowes thought " so and advised the council to the best of his judgment '-' and ability ; and, perhaps the same remarks may apply to " the passing ofthe by-law of the 28th of June previous"; and the Vice-Chancellor proceeds to observe, " but Mr. Bowes '■' had tlie strotigest interest to advocate the proposad arranco- " ment right or wrong, b'^.causo upon its adoption by tho " City Council depended the success of the speculation in " which lie had engaged." Tlie argument ofthe Vice-ChancGller therefora ig— what? That the arrangement itself shall be set aside ? No such thing : but that the arrangement having been highly beneficial Ijo the city siuill remain good and obligatory, and that the # if''!! m^w m City shaUhavethe£30,000sto*-weUthenitfolloW3thatthe Contractors should have the £50,000 Debentures, the con- sideration agreed upon for the transfer of the stock to the Citv m ; tlien does Mr. Vice ChanceUor Esten hold ? Why simply this, that although the city shall hold the sto^ and although, therefore, the Contractors should huve the Debentures' ^et that they could not sell those Pebenture^^^ Mr. Smoes, andf at he shall not be able to hold Debemares f Lred/;^ the Contractors, ^hich Debentures became authorised to be issued to the Contractors by y..u. of an arrangcn>ent, nght in itself, and highly len^^i to the ^ %t;-lthStobe a fair interpretation of Mr. Vice Chancellor Esten's argnment --'^^^ '\^' ''''''l^l "^^Z a..etobefoundin this argument the ^^^'I'^'^f'f'f'r^ " Tliut an advent appointed to sell, cam.ot himself buy the " subiectof iiis agency «" But with respect to these obser- valnsoftho Vice Chancellor, I further contend, that the argmneut involved h. them, when rightly c-nsiderod, con- S a ccnplete denial, and displacement of the apphcat>«. rf the Rule which has been applied by the Court ot Chan- cery in the determination of this case. _ For what is the Rule i-that a person m a fidicmry cupacity cannot ac,uyo an ^^'^\r /^'''XJ^^n. hi, Mueian emtrol, adverso to hts duty.— Sow it tne hvs ><"'«»"-' J'"/* ' f J ■ 1S52 was, asit clearly was rxrnrnttt^iS^^^^^ *» *<> '^•^'t Ir "eneflcial than the previously existing a^ngemen^ ;, and if, as is also admitted, t. Appellant advised the Ooui.- ^' to the best of his judgment and ability, when he laid the ;ltlon before' th! Council, for their consideration; nlrclearthatit cannot be aUeged on the part of the City, that his conAnciw^otf^nm^thamdentteaUotihMs dJ, But an agent who sells to himself the sx^ect of his tSLyl^i.dieotcont>-aventio.ofMsd^ How t^n c an it be said that a rule for the apphcation of w hich it is Z^^r that «fc condnoi of the agent shall heplc^nly m ZZ:niu,n ,./■ /- ;-- d^tu, is applicable to a case wherem it] 11 I ill ') 'I I 56 IM 'IV. the conduct of the agent is admitted to havo been, for tha lest interests of his princijpaU^ and identically conformable with his duty ? But the Vice Cliancellor arf^ucs, that ''''right or vyrong the " Appellant had the strongest interest to advocate the pro- " posed arrangement, because upon its adoption by tlie City " Council depended the success of the sj^eculation in wliich " ho had engaged." Now here I submit is a plain confusion of terms and principles — for if tlie conduct of the Appellant in the matter here referred to — namely, advocating the adoption of the arrangement — could hy possiUUty be rlgJit^ then it is plain that it cannot be attended by consequences incident only upon wrongful conduct. But if the supposed interest was not plainly at variance with his duty, and it could not have been at variance with his duty if advocating the measure was in itself for the best interests of his prin- cipals and therefore conformable with his duty — tlieu tlie rule np})lied to the determination of this case is inapplicabifi, for the Rule p)resupposcs an interest at variance ivith a duty. However the trutli is that in fact the Appellant had no such interest as h suggested by Mr. Vice Chancellor Esten. For in the lirst place the only agreement which on the 29th of .Inly existed between the Apellant and Messrs Storey. & Co., ]'elati\e to the pur- chase of Debentures, was limited to,€24,9th of .Inly corld not havo altered the position of tlie Appellant in any manner. But (assuming for the sake of argument) that, contrary to the evidence, there was, ou the i?9th of July, an agreement existing between the Api)ellant and Mcssi-s. Storey & (>>. iov the [.urchaso of the .€35,r)0(> Debentures also ; then instead of the Ai)pellaut having had ail interest in jirocuring the adoption „r the i.roposed v^ I m ■\ I w I I 67 a,Tangemertlort'..,20tl,of.luly, he had, what, with .noM iustice, might b.' : rmeci » strong interost in bringing about the rejeeti.m oftii ,t atengement, for, si.ch was the position of the Raih-o,ul Company, that they would have had to viel.1 to the term- of the minute of the Finance Com.^ttee of the 2nd of July, and the Appellant would have had £60 000 instead of i. -,0,000, to receive from Messrs. Storey & Co. at £80 per i ! 00. If the simple bonds of the company without anv spec allien or mortgage on the road* satisfied he terms of the resolution of August, 1851, then it wa^ the duly Jf the corporation to have issued the £35,000 withou Imiiring anvsiLh special '.ieu, and if the special hen was prop rlv°demaud.d [s a condition upon which the resolution ^passed, the Railroad Company woiOd have had to give theUen.eqnircdbythe minute of the 2nd July. 9o ^t it is incorrect to .ay, that, "upon the «f'>Pt^'^^ [^ f^^ " Council, of the onamrr'^rit proposed onthe mhof JMy, " d..pe.nd.d, the access of the .peculation tn ,oh^ch theAp- " pfmnt had engaged." If the Appellant was, m fac^ at thfs time, the purchaser of M^ssr. Storey & Go's, interest m £35,000 debentures, and if be took advantage of ^e peculiar position of the Railroad Company and ol Messrs. S rey & Co., to procure an arrangement, much mo^ av<^. ,>ble for the corporation, then, his recommending to the lunci the adoption of such arrangement, so far from being ?, ac of which the corporation could complam, wa. m tact a service and a benefit rendered to the corporation. Indeed, if the rule could at all apply, it must be upon the pXcipe,thatitwasM«m;>er«ferf«ey,oftheAppellan^to Lve Is^ted the adoption of the arrangement, ioWj^had an interest in Us adopti^, which was ^nconsuUnt mth h. My, this could only be, by its being Ins /^ '--^ ^/^ arrangement; and if s,u^h was n^t hu duty, his ~t » p"rchaser of the debentures, from Mess™. Storey & Co, ^Zorproperly be said to have been adverse to h-jh^ty 1 sav then, that the conduct of the Appellant on the 29th ct Z 1852, was perfectly conformable with that which Lord C Inham, in tL Attorney General vs. Wilson lays own, t„ be th,. duty of that species of agent, which n membrr of 111 m hll i ■ i 4: ^i %m f r>8 isi m tlie council of a Municipal Curpomtioh U, nunu-Jy :— " iliat " he is bound to exercise his functions, for tlie purpt)S(h lV»r '' wliicli they were given, and to protect the interests and " property of the corporation ; but tliat if such agents exer- " cise their functions for the purpose of injuring the interests " of the corporation and alienating its property, they shall be " liable to th& corporation." But Mr. YiceChanccllor Esten^ in another part of his judgment, with the view of bringing this case within the. rule applied to the determination of it, characterises the arrangement of the 29th of July, 1852, as " a sale of debentures bi/ Mr. Bowes to himself, tlie transac- *' tion was i\ purchase of stock and a saZ(^ of the debentures." IS'ow my Lords if the stock, which was the thing given for the debentures, had beenihe property of the Ap2^eUa7it, and not of Messrs. Storey & Co., and if the names of Storey & Co. had been imported into the transaction, for tlie purpose collimvely of concealing, that it was tlu Appellant who was transferring the stock to the corporation, then perhaps, these observations, and the case of Cook vs. Collingridgo might apply. The case, however, does not admit of this colour put upon it by the Vice-Chancellor, for the transfer (if stock and the agreement to issue Debentures to Messrs. Storey ,:ndan( transucMo/if ami inueh more for the I od ijehetit of tli'e city than tlie jireviously Existing arrangehients ; tuid tho agreement between Messrs. Storey & Co. with tho Appellant being, as it was, an wholly, mdependant and dis- tinct transaction, it is erroneous to regard them as forming hut one transactio?i ; in the absence therefore of any, the slightest foundation for the suggestion of such c ollusion as I have alluded to, or of any collusion between Messrs. Storey & Co. and the A^ipellant, to bring abou|the. issue of the Debentures f(jr the mere benefit of tte appellant ; I confi- dently submit that, lo(ikingback to the resolutions of 1850 and 1851, and having regard to everything that had been done by the Messrs. Storey & Co;, upon the faith of those resolutions, it is unnecssary further to argue, thiitthismeWym which Mr. Tice-Chaneellor Esten regards the'transaction of the 29th of July, 1352, is fallacious and erroneous. How- ever*'imich the Messrs Storey & Co. may have had reason under the circumstances, to complain of the arrangement of the 29th of July, however.mucJii/i^?/.,.might have alleged that certain members of the Municipal Council had wrong- fully taken advantage of Ihe position in which' 'the Messrs. Storey & Qo. were plgxied, by .the: implicit confidence .which . they had reposed in the council, to give full efiect to the intent of the resolutions-of 1850 and 1851,— ?!o compel them . to yield io terms much more he^ieficial'to the coT^g^^atton, than t'le terms iTWolved in those resolutions ; certain it is, that the corporation,' so^far from having any .reason to .com-. plain of the arraiigpment of .July, 1852, haij^eyery^i^^^^^^^ GongratuUte themselves- upon the alteration involved m^^^-^ that arrangement. - ^ » „ lf^^^<'f TheChancellor in his judgement makes use of the follow- > V ^^^, ing language : ^-^ -• X— ^z^-'-^- ^^^ ^^^^ " " ';' ' " ^- ^^ It is enacted hy a recent Statute, IQ Vic. Ch. 181 ^ec: '^ 25, that no person, hannng hj himself or partner, any znr « tenst or share, in any contract with, or on lehalf of ths « Township, County, Village, Town or CJ^ in whtch U " %hall reside,shall he qualified to he an, or he elected Acderman ^'' 07- Councillor for the same, or far any wfaXd therein. " Now that i^a virtual mUptiun of tho equitable doctnnc; VV« , /"^'^y ""„ „.tabUsh the disqualifications, qualifications, for, while hey e^^^^^^^^ ^^^ J^.„„.„^ ,,, they do so upon the very gro ,, giification. In tence of the contract. c« the disqua ^^^^ ^^ '^'- Tbarrrarctvl 'ele ted Councillor ofthe Borough pears that rraiic.s « as ^^^^^^ . ^„j of Swansea, m Isov. l**"' *°;°"° ,,„« as councillor for .1 •"»V" ^" -orthrrr-- On^^^^^^^^ of *'*""y' "?• further period of three years. ^ ,„ the and bmdni^' ctrt.iin u ^ ^,^^^ :u.c.i>lod at a Bym7».»t cxceodinp .tVO, tbe J^ ,^ ^^^ ^^^^^^ ,„Ki;r the 8«pcnMenclancc of. ©^e Mayor «... . - - -- . ( tin Under a resolution, made on the 18th July, 1840, Franci* received from tbe Treasurer of the Borough Fund £50 on account of such cnipk.ynient and services rendered by him In Mav 1852, a.pio .varranto was moved for the purpose at removed Francis from liis office as comicillor, in consequence of the existence of thi. contract, and it was hekl that the act 5th andOth Wm. lY.,dis(iuahtied himfrom being electedm Novr., 1819, and that his disqualilication was r. continmng di'^ciualiiictition which subjected him to removal in May, 1852 and it was so held hecause of the continuing existence ot ■ 'the contract; and further, that he would not have been removable if a vear had expire^ from the fulfilment ot the contract before the motion by quo warranto had been made. So in our own courts, in Keg. ex. rcl. Lutz vs. Williamson, Practice Reports, V<,1. 1, No. 2, p. 91, Mr. Justice Burns construes our Statute, IG Vic, thus, he says -the ^wcsotthe « act are so tVamed that it; ccfUr a person be e ected, lie - enters ^.ito a contract with the corporation of which he is " Aldernian or Councillor, he ^/arc/.^. becomes discpialified to " Bit any longer as a member of the counpil" and in Reg. ex rel ■l>avies vs. Carruthei-s, Practice Report, Vol. 1, p. Ill, his Lordship, the Chief Justice, says,-nhe question as " to eacSi of these contracts is, did it exist at the time of the " election? "if it did, Mr. Carruthers not only had an int^erest i' in it but was solely interested in whatever could be " claimed, from the corporation mider it." Now, it is sub- mitted that the judgment of the Chief Justice would have been identically the same, if, as in Reg. ex. rel. Smith vs. Francis, the contracts had l)oen entered into by Carruthers after he had been elected. In that case the contracts from the moment of their being entered into, would have d.s- nualilied Carruthers from continuing to act as a membei' of the council. Ue would have held his ^^^i ^he corporation,"- a an interest in any d<;b'="t»"; ^^X^ Legislature instead ..<,uia cluubtless have been v.eOl^c^^^^„^ ,^^^^^ of the words-" havn.g I'J' ^™f^ ^J^^f „f tUe corporation." ...hare in any eontmctwith «' ^J^f ^^ ^„,,,^,,, iuto the Wta then such -1«— t.:^^^Zto'tl!eoriginalcontrac,, hand, of pe.«ms " '?Sf'^V *' " „ ^cen issued, it becomes ,. satisfaction of -^^-^^^^l^^y >" »* ^ security,should hupossible to conceive why, popcy ^^^^ reasons for inJolve a d-1"'''-'*^'^^''"';;;''^^ Application of the tcnn contending (i«dependenriy«tt^>l^^^^.^^,^^S^,t„,,^ to " contract," in the sense '^ '^Wf;^'! nfteatlou to property m s«ci.asecnrity,thatatac ga -Fj^^^^^^ such a security, mstead ot tend,, ^^^ ^^^ i,,„i,lature ration, wl>icl> "»«',1'»™^'''^" „," jf the corporation, and ,ould tend seriously to «- ^^ i of the irviees of the would have the eftoct ot <'H;' ' '^ ^^^^, ,,onritro3 ,uost eun,pctent ^'^Z,;^^'^. only value in being teing "''»''"^*"^;\t 'uSs,it is into the hands bt .merchantable, negotiable ^'" "^ ^^„^„ally they must capitalists and men ot » ;.^ ,tuhem for work done conic. To the man ^l'" ';^;Xrconsideratio„, they are of ,,,vices rendered or othei v-Jnablc ^^ ^^.^^^^^ ^^^ „„ value, except in so far "» J^^yj^^^'J^ J, excluded from transferable into money. U ^ ^ ^^^^._^_^^^_ ,^„i the transactions of men of c^ ^1 a ^ ^^^^^^^, attended witli the < -'l"'^ «f f » '„ ,endered less negotiable, council, then the debent mes e ^ ^^,„,„es de- and therefore less valuable, or tic c ^^^^.^^^^ ^^^^. ;rivedof thescrvicesofmoiivW^^^^^^^ ,, ,aVe part kcatious,pointtliem on a» Aon>*^ Takethe I I r vr" !'^*? wi )i jw i i nj iiii M"w i ' ' y ' 68 corporation of many par'tnere, iiaving large sums of money, from time to time, to invest. If property in such securities involves a disqualification, then every individual Stockliolder in these institutions or corporations would hecome disquali- fied, if any of the funds of the corporation should be invested in the purchase of a sing-lo ]VIunicii)al Debenture, and so per- haps four-fifths of the corporators of the Municipality would be rendered disqualified; and tluis those securities whose sole value consists hi the facility of their being negotiated and transferred from hand to hand at their full and fair value, would eitlier become depreciated by being excluded from the transactions of those monied in.stitutions, whose directors and managers might not feel juslificd in embai-k- ing in their purchase to the prejudice of the municipal rights and privilege of each individual stockholdei', or eveiy indi vidual stockliolder would be deprived of the privilege of taking part in administering the afiairs of the munici- pality. The privilege then, of conducting the affairs of the municipality would be limited to a class, having lor their qualification mainly, the want of capital. Men of business wx>uld be uawilling to take such securities in the way of their trade, if property in them involved a disqualification ; or if for reason of that disqualification, the moniod institu- tions having capital to inv^est, should refuse to deal in them ; and then a result most to bo avoided would inevitably ensue, namely, — th.it securities, which it is the interest of the cor- poration, and of all men of capital and of business, should be readily negotiable at par would be banished from the market, and become the prey of usurers and others, whose interest it would be to depreciate them to the lowest possi- ble amount, as iustruments deprived of their vitality, name- ly, their negotiability, and whic]i therefore, must needs be Bafely locked up till they should mature. In the casr^ again of an individual man of capital, if he be willing to advance money to the corporati'Jii at par upon the security of its de- bentures, he not only cannot safely do so by reason of the difficulty of negotiating them ; but let him be the fittest person in the world to be a vijeTubor of council^ he ca/nnot C07i/er a hmefit upon the corporation without subjecting the corporation to the loss of his services ; the aUachrmj a dis- qualification to pi'operty in f>uch securities is nothing short of aperpetual letter of discredit attending the issue of Muni- cipal Dehetitures. Now upon what principle is it, that a member of council, being a man of capital should be prevented from conferring- a benelit upon the corporation, by a loan at par, upon the security of the Municipal Debentures, to relieNo the corpor- ation from, perhaps, the most pressing difficulties, and the corporators from excessive taxation ? Take the case of Mr. Cawthra, a witness in this case. He was a large holder of Corporation Debentures ; secured by a collateral mortgage upon the whole of the real estate of the city. The British American Insurance Company, in like manner, held City Debentures to a large amount, secured by a similar colla- teral mortgage. The fact of the real estate of the city being mortgaged to secure these debentures, pre- vented the corporation from eft'ecting other necessary loans upon the issue of debentures. The privileged debentures {having tlie collateral security) depreciated the value of all other City Debentures. liound financial policy required a change from such a state of things, and imperatively de- manded that these debentui-es so secured, should, if possible, be redeemed before maturity, with a view to relieving the real estate of the city from the special lien, to which it was subjected for the payment of those debentures. Xow had Mr. Cawthra been a member of council in l.s51, when the corporation failed in affecting a loan at par, what prejudice could the city have received if Mr. Cawthra had said to the council — " I will surrender the debentures which I hold, al- " though they will not be due for some three years to come, " I will release also the mortgage which I hold, and I will " advance to you at par, all the money you may want to re- " deem the other debentures which are secured also by a mort- " gage, and your outstanding promisory notes, (thenon-pay- " ment of which latter so injuriously affects your credit,) and ' \rt what you may require for other munici]»al puj-poses. u ! IH i! luerel i I I 7(1 that vou give me new debentureb "upfnl canaiii(nim».»v,">'"J' » .,„„,,„ vears, as well II- Cfni-llti.r in Loudon, m twenty years, <» " for the debentm-es I "«- boU a^o ,^ ^^_^^ ^ ^^^^ " prepared to advance I"^,'"™; ^.^ ^eat benefit M^. Cawtbva ^7'^ t:d ut ifficnU tTineeive why he upon tlie coi-poration ; and . « «™J forfeiting his seat XuVd not be P-™-'"ftVV;;:;t^i!n of capital, and as a mertiber ofconncd, ^^I'-l' l'i^^*^°^^^^^^ ^-^ the most his business 'luaim^ations ,na.> 1^ -^« ^ ^^^^^ ^^, fit pc«on in the cty, to hold. " '. . j^, d„ne, tor the here Mr. Cawthra might have legitimately a ^ , h nefit 01 the corporation, had he been ^^J^^^ is in eflect, simply ;vhat tl- Appelh^^ a-^^ p J^ ^^^^ of the deoentnres issued to M''^^ .^- '' "^ they conld obtain They have given to the -'l— ,^^1 blld them to re- „o where else, a loan at par, ^ "^ .^f ^^j, i,,a ^neh an deem all those ontstamhng ^'f ^^ ' f ^ ,„d now the injurious efiect upon the ere lit o}^'^^J ^^ ,^^ ,,^^^,. corVor^'>^^^^^^''l^;t^, Ua of. most f tion, complain, not of ''''Jf( J ,,„t think that, and W 4U --f ' ^r: T"th7 In t Legislature was declaring, '' therefore I submit that, when "'^/^ » ; (erest or that no person, having by hnnselt °' "'^ 5i„„.„i ,1 share in any contract, with or on belaU »« ^ _^^I^_ corporation, should be ci«al.hcd t^^^ " ^ ^j nfi- ,.r of council, Jtiieveiji.^^^^^^^ ^^^ ^ l^^,.. cation to property m sudi m.^^ ..^ivrnits of common sense r^^tXttSS^'itS^^^^ to conceive, that tne x^^^ ^ i,„„v;nn. orotlier inst tiitions every -dividual Stockholder, inJ^anUng ofl e ^^^ Laving capital to >--»' ^ '^^^ J™'^, Municipal Deben- nraking "--'^f ;'; ^Ittl debentures' involves a tures ; and yet it propeity nresumption that the dis« ^^ Legislature intended to mfliot sucii * ^ . ^ ^ con- «to'ekholders,;» ^^<^^^:;;^^^^r^ appropriate nil 71 the Le^slature, it will be difficult to put npou the Statute, upon any principle of reasion or of sound policyAWe ba re how- ever the Imperial Statute 5th and (Jth Yic, Ch. lOi which, in eifect declares that the Imperial Statute 5th and Ctli Wm. IT., Oh. 76, did not contemplate " an interest in any as^ree- " ment for the loan of money or in any security for the i)ay- " ment o? money only" as involving a disqualification, and it seems but reasonable to conclude that the Provincial Legis- lature, when j.assing the Act 10th Yic, Ch. 181 conceived that the interpretation put by the Imperial Statute 5th and 6th Vic. upon the Imperial Statute 5th and 6th Wm. lY., would reasonably be ])nt, by -the conrts, upon the terms of the Provincial Statute 16 \' ic. However, whatever may be your Lordship's opinion upon this i)oint it is inunaterial to the decision of this case if I establish, as I submit I have estab- lished, that the purchase may be good and valid notwithstand- ing the discpudification which the peremptory terms of the Statute 16th, may, if they do, in your Lordships Judgment, attach to such i)urchaof^ applying those assets, in the ])ayment of the liabilities ot; Ins testator ; ^hc cannot therefore be pennittcd to apply m ..u ill! m 72 t'lK ^cu 7^ liis own monies in the^nirchase of his testatore' liabilities at a discount, and chargWli6' assets in his hands for the payment of them, with a greater amount than he has himself paid. The same reason precisely, governs the case ' ofa person employed in the administration of a bankrupt estate, and of every other agent who assumes the duty, v{pon the retainer of another, of purchasing up, on the best terms ^ he can effect for his principal, the liabilities of his principal, i €^ ^e^ Now, it cannot be said that either in fact, or ]>y construction of law, ihoie is any such duty imposed upon, or assumed by, amem])er ofa Municipal Council, as that he shall purchase in, for or on behalf of the corporation, the debentures of the Corporation either before or after they are, by their terms, redeemable, nor can it be said that any assets of the corporation are place., in the hands of an individual member of council, f >r that purpose. The assets to redeem those de- ^ bentures are taxes imposed by By-law upon the ratepayei-s, and these taxes cannot be raised in any other manner than the By-ln,w authorising the issue of the debentures warrants. If then it be not, and it unrpiestionably is not, the duty of a member of council, out of his own funds, to redeem, upon behalf of the corporation, the debentures of the corporation, there is nothing which Oan preclude him from investing his own money in the purchase of them from the holders for the time being, for his own benefit, whether they arc past due or are not redeemable for twenty years to come. If it be said that it is the duty ofa member of council to mantain as far as he can, the general negotiability of the del)entureB of the corporation at par, and that if he be permitted to buy them ^ himself from tlie holders, he has an interest jjlainly at variance with such duty, viz., an interest to depreciate them to the lowest possible amount ; I answer in the first place, that it i8 a fallacy to suppose that any individual has it in his power, by reason of his being a member of council, to exercise any in- fluence in depreciating such securities, whoso value depends not upon an individual will, but upon the value of money, for the time being, and upon the character which Buch Be- curitios hear in the public market ; and secondly, that it is a !: i' ; ^ \ .\ fc^ V >S >\v» ^-. nN K ^ \ \ . 'v ^ .\ '^ liitt N \ '■• \ ^ \ >;- -•%^ \ X 'o» \|X. V \ \ A ,VN U ■ N --V .^N N >\ \ »N f) \N V VN \-,N V. ^ - - V \ ^ .-^.^ :^ N . '^ . >. > S <\ N ' \ Xvy ^ '' \ I' I fallacy to suppose that a purchaser of such securities has any Buch interest as that suggested, for these securities having their value solely in the facility of their being negotiated at par, it is the interest of every person investing money in their purchase to maintain that negotiability ; and so the in- terest of a purchaser and of the corporation are not at variance with each other, but are identically the same ; and as to a debenture already authorised to he issued', I say that the corporation has no interest whatever in the rate of premium or discount at which such debenture may, at any particular time, be disposed of, by third persons into whose hands it may have come; and so that in respect to a debenture already aufhoriml to be issued by the corporation for value, as those to Messrs. Storey & Co. were, a member of council owes no duty to the corporation beyond the general duty which is identical with the interests of a purchaser, namely to maintam the general credit and negotiability of such securities. Now with respect to the suggested defect in the form ot the By-law of the 2Sth of Jmie, 1852, that defect, assuming it to have existed, can have no bearing upon this case, be- cause, the defect having been the fault and wi«ong of the comicil itself, it would have been fradulent and unjust m fne council, to have refused to pass the By-law, and to issue the debentures under it ; delay in passing a proper By-law and in issuing tlie debentures to wliich the contractors had become entitled by compliance with the terms of the reso- lutions, being the only consequences, and that delay affecting Jniuriously tlie Messrs. Story & Co. only, at whose special re- quest the council was induced to pass the By-law in the form in which it was, and to issue the debentures under it. When the council afterwards petitioned the legislature to remove and introduced a bill, for the puri)0se, among other things, o removing, all cause of objection arising from the suggested defect of form, they werelonly doing what in justice and equity they ought to have done, in discharge of a moral and eciuit- able obligation. The petition and l>ill transmitted to the legis- lature were prepared by the city solicitor, under the direction nf the r^mncil. The franu's of t!)e petition and biU were sane 1 -^5 II i ■ ■ ' 1 ^ Ih I;! W- ! I i)ort of the relief prayed by the bill filed in this cause, tliat the A])pel- lant wrongfully, and for his own benciit, issued .iJT,0()(> of de- bentures in direct violation of the terms of that Statute. That the corporation would have a cause of action against the Appellant for the wrongful issne by him, of dcbonturep i4| enti- ated i(\ in year hers, ants, rent- mge- ation nade nisli- 1 lia- and se of lame I'atifi- orpo- mncil •pora- Listicc mged t does iiisde- used, tvliich was a m , have of the stock 3 29tli le By- -)f the \])pcl- ol'do- tatuto. igaiiipt siitnrep I ..,ii-_rt*fc.-,>"v J 1^ M •-1 i 1 1 j 1 • ^i I ral)le to the coqioration than tlie then existing arrange- ment, and it is difficult to conceive upon what principle, Messrs. Storey &■ Co. should tender a bribe for the Appellant's vote in bringing about an arrangement so mucli more beneficial to the corporation than to Messrs. Storey & Co., that the fact of Messrs. Storey & Co. being willing to concur in it was no sooner mentioned in council, than the wonder of the members of Council was excited, and their unanimous adoption of the arrangement obtained, without the vote ot tlie Appellant at all. These, and similar arguments, are those which we have used in the Court of Chancery, and now urge hero, in sup- port of the view which we entertain namely,- — that there is nothing to bo found in the decided cases, nor in any Statute, or principle of law or Ecpiity, which gives to the cor2)oration the right contended for in this case, of interfer- ing with the purchase of the debentures from Messrs. Storey :ilL-i. It is a fact also, that for many years, that compauy borrowed money upon their debentures, for the payment of their annual divi- dends; and I have not the slightest doubt, but that all those directors have been in the constant habit of investing capital in the purchase of the debentures so issued, as weU for themselves, as upon behalf of their clients, and that if it were not for those directors, (all of whom were so well known in the English money market,) expressing their confidence in the value of those securities, by purchasing them, the se- curities would never have obtained any confidence in the market, and money could not have been raised upon them ; and yet if the principle, upon which this case is decided, be correct, all such transactions were absolutely illegal and void. The case to which I allude is that of Feversham vs. Ca- meron's Steam, Coal and Railway Company, 5 English Rail- way and Canal cases 492. This was a company established under the provisions of the Joint i^tock Companies Registration Act, 7th & 8th Vic, ch. 110. The bill was filed by certain directors of the company, (who had advanced monies, to the company, upon the secu- rities of the company,) against the company for an account of monies due to the plaintiffs upon the footing of those se- curities. The suit was defended, but not upon any such principle, that such a transaction and loan was prohibited by, or at variance with, any well established equitable doctrine, but because the bill did not allege that the loan was ap- proved, in the special manner required hy the Statute 7ih <& Uh Vic.^ ch. 110; and leave was given to amend the bill in this pi ^^icular, not upon any general principle applicable to all cases of loans made by directors of a company, to the company, which require the allegation to be made, which was omitted ; but upon the principle that, inasmuch as the Plaintiffs had to come into court, claiming under the Statute, it was necessary that they should bring themselve within the provisions and rest/rictions of the Statute. The 29th Section of the Statute relerred to, provided, %\ % N II ''U 'f: U'\ \'ri d2 ^' That, if any Director of a Joint Stock Company, registered - under this Act, b6 either directly or indirectly concerned " in any contract proposed to be made by or on behalt ot « the company, whether for land, materials, work to be done, « or for any pm-pose whatsoever, during the time heshaU be « a directois he shall, on the subject of any such contract m « which he may be so concerned or interested, be precluded « from voting or otherwise acting as a director ; and that, it « any contract or dealing, (except a policy of Insurance, « Grant of annuity, or contract for the purchase of an arti- «cle or of service which is respectively the subject of the » proper business of the Company, such contract bemg made t' upon the same or the like terms as any like c ntract with " other customei-s or purchasers,) shall be entered into, in « which any director shall be intb.^sted then the terms ot « such contract or dealing shall be submitted to the next " general or special meeting of the shareholders, to be sum- " moned for that purpose ; and that no such contract shall " have f wee, until appnyoed and confirmed, hy the majority « of the votes of the shareholders present at such meeting. The allegation wanting, in the Bill filed in the case alluded to, was an allegation that the contract sued ^\Pon, was con- firmed in the manner required by this latter portion of the 29th section of the Statute, and the court found it impossible to get over this difficulty, appearing on the Bill, created by he peremptory terms of the Statute. Now this clause ot the Statue would have been superfluous, if the contracts {therein prohibited, unless confirmed in a partimlar manner,) were already illegal and void by the doctrine of equity, indepen- dently of the Statute. And again, if the rules of eqmty independantly of the Statute, prohibited the transaction which was the subject of the suit in Feversham vs. the Coal and Kailway Company, (namely, a loan, by directors of the company, to the company, upon the secim lesof he company) then it is not likely that in 1849 the Bill for the account would have been filed, or that, when filed, objection should have been made to the suit upon tlie P«remptory terms of the Statute, and not upon a violation of a well i \\ , » ih ■•** la Ww | |,«! | I1J*MJ|L- •I ,(,■'■■ « J f I *i 83 estublished equitable doctrine, or that such a ground of objection, if it existed, should have escaped both the Bar and the Clourt, n rt hm t I m m i i n wnnlrl lin i vr h r nngiir rn tmiunni i n li ii U il Kj if III >i( i i1l ii lM ii m iii ( d i j ni lii j '^ id J Hjj^tltf^^^^jl^^ ^^ t^iitfeaniiinifc. The proper inference to be drawn from this Statute, and from the decision of the Court, in the case instituted under the Statute, is, that the transaction as set forth in the Bill would have been good, and relief would have been given in equity, in respect of it, if it were not for the peremptoi'y tci'ms of the Statute prohibiting and restrain- ing parties so situated from entering into such contracts otherwise than in the mode required by the Statute. In the case then of Joint Stock Companies and in cases of transactions between their directors and the com- panies, a different rule seems to prevail, from that establish- ed as existing between ordinary trustees or agents, and their cestuis que trustent or principals ; and the Statute incorporating Joint Stock Companies seems to afford, in such cases, the only guide in determiniiig cases arising between director of the company and the company. Kow in transactions between Members of a Municipal Corpora- tion and tlie Corporation, there is much stronger reason for holding, that the ordinary rule, regulating the dealings of a principal and his agent, is not the rule to be referred to ; but that the Statute or Statutes under which the corporation is em- powered to act, afford the only guide, in determining whether in any given case, an act complained of, is prohibited by the Statutes, and therefore is illegal, or is not prohibited by the Statutes and is th'^refore legal. For, in the case of Munici- pal Corporations, every act of council being attended with the same formalities as, (for example, reference to com- raitteee, reports tnereon and debate of the measures before the council, at several and distinct stages, and every measure bei ng openly conducted under the eye and in the presence of the cor porators, and being attended with the siirae publicity a8,)an Act of Parliament itself, and according to the. practice and ■4 '.s Uj I ! ! 84 usage of Parliament, there is not the same danger of injury beiL inflicted upon the Mnnicipnlity or Corporators by a:;!cto£..Ke^er -of .^ouucil. W ?nterest^^J;;^ the Shareholders ^iq. .-v-^Jmnt 'Stock'- 'W^^^b^ and transactions in secret, in the absence of '*^^-S^ holders. The forms then which prevail, before any naeasure of a MuTiicipal Corporation is matured In.o a ^y-hiw oi Kesolution, being sufficient to protect the -.^^^^^^^^^^^^^ corporators, there appears to be no necessity tor appeahng to a rule, established for governing the conduct of persons, simply in the position of ordinary i)rincipals and agents nor is there any reason why the same rule should not mvabdate the purchase, by a Member of Parliament, of aProvmcial DebeBture, authorised to be issued by the Legislature of which the purchaser is a member ; and yet the application of the rule to such a case has never hitherto been suggested In a body so constituted as a Municipal Council, which exists only, and possesses its powers only, by the will of the Legislature, a Member of Council can be subject t^ no disabilities, not constituted sucl), by the Statute establishing the corporation, or by some Statute aifecting its powers; and it is but in accordance with natural law and reason to conclude, that the Legislature did not contemplate divesting any individual of his natural right to contract with a pubhc Municipal body, unless the Statute or Statutes constituting, o;- relating to, the municipalty, specially restrains the md^ividual, when a Member of Council, from deahng with . .3 municipal corporate body. A disability imposed upon an individual from dealing with a corporate body, bemg m restraint of natural law, and the freedom of commercia transactions, can only be created by positive Statute. All the cases to be found reported in the books, wherem Members of Municipal Councils, have beenheld to be amen« able 'to the corporation, for their acts in council, have been only where their acts were in contiravention of the^^exp^ess terms of the act constitutmg the immcipality^i^^^^ • • fr < :K >5 absence of any sucli act. of the Appellant, in contra- vention of an Act of Parliament, I confidently submit that the Decree made in this case must be reversed. '^"■" ■* It was argued, on behalf of the Plaintiff's, in the Court of ': Chancery, as a reason v/hy a Member of a Municipal Council |l could not bo the purchaser, or holder of any debenture of the municipality ; that, by being such holder, he would have an interest, (in the event of other bebentures being issued) to raise the character and value of those debentures, with the view of increasing, at tlie same time, the value of those held by himself ; but it is plain, that such an interest, so far i\ om being an interest at variance with, is perfectly coincident, and identical with, his duty, if it be his duty to raise the value of the debentures of the municipality : and it is a reason, which is clearly not referable to the rule in question, for the interest involved in the rulc^ is a private interest of the agent, whicli coiifilcts with, and is opposed to^ the in- terents of his lyrincipal, and therefore conflicts with, a.id is opposed to, the duty, which, in respect of such interest the Agent owes to his l^rincipal. If the rule alluded to, be applied lo a transaction, (like the one in question in the present case,) which is not prohibited by any positive Statute, it will be difficult to deiarmine, what course a Member of Council is to pursue, in the very many cases of public im])rovement8, which must come under his consideration in council ; and to hold that such a rule, is applicable to all cases coming before the council, when a Member of Council has a distinct, individual interest, is to circumscribe the duties of a Member of a Municipal Council, within a very narrow compass, and in a manner which appears to be altogether inconsistent with, the object of the Legislature, in making the council an open, deliberative. Legislative Assembly. For it is sufficiently clear, within the meaning of the rule referred to, that an agent has no right to invest the funds of his j^rincipal, in the improvement of his, the agents, own property. Now, if upon the princi- ple, that a trustee for sale, cannot sell to himself, it can be- hold that a Municipfll Councillor cannot become the purchaser 'ii I ill I 'T} r mmmm settn ^iril wit 1 II ^ 11 1 w ^ t^l J. 86 ,.f Mui.icipal Debentures, from persons to whom they hftvc been antUorised, by resolutions in council, to be issued ui respect of a matter within the jurisdiction of the council, it must, with equal, if not greater, propriety, be held, Ihat a Member of a Municipal Council cannot vote for the applica- tion of municipal funds, to a plumose, which, (however great the public benefit to be derived may be) at the same time confers a peculiar benefit upon the property ot the Member of Council. Take, for example, the ca*e of a question arismg in council, of the propriety of making a sewer through a street, upon which, (to take an extreme case for tte Purposo of elucidation,) tour-fifths of the members ot council hold .eat estate. Assume that the street in question presents the most desirable locality for the construction of a mam sewei, into which all other sewere in the city might be most ad- vantageously drain«l ; must the owners of property upon this street, who are in the council, vote against the construc- tion of this public improvement, with the funds of the municipality, because, at the same time, it might increase to an incalcuble extent, the value of the property on the . street held bya majority ofthecouncil ? Thesame question may be put in respect of paving, or macadamiang a s reet- the location of a market or other public edifice,-tlie con- struction of side walks-the erection of gas !ami«, or any other public improvement. All tlicse questions mus be answeJed in the affirmative, if the rule applies ; and yet he principle upon which, Municipal OomiciUoi-s are ^^^^'f>f^ throughout several wards in a city, seems to be, that the« priva^ interests, as holders of property and as rate-payers within their ward, affords the strongest guarantee tor he faithlW discharge of their duty to their <=>"f^'=^^ >" "V* ward, in seeing that the public improvements of the Wird, ,Tdl not be neglected Again, a«suiiie that a marsh, from WW h avery f.f.1 miasma may arise, isowned witkntlje c^y, by aeveral Members of council, shall it b« he^l to b« a bre^ of trust, in those members, to vote for U.e ^^\^J2 m«-sh It the public ojpem*, because, by eo doing, lo own Toftl-e soil would derive inc» \ .S v.N.v^ :v. X -N "^ ■■■> . 7. ■% » . V JWjS t- N -N ■SI* •*• v. ^ .f^v"^^ » CVk. X., _*A %-V " . V if-. \ X \v V-< > «• » ■>- , ••>*.' ''i 'Mi T5» • . \, •«a.^\%>' \ v., ."^-s > X V .>^ -iSV » >'% ^> >«? \ .^ \ > ^\ \ ^"^ l\ I li 87 reclaimed and made available for building purposes { With reference to the debentures in question in this case, tlu- Appellant might have actually voted against their issue at every stage, and, according to the judgment of tlie Court of Chancery, this would have made no difference whatever, — he would still have been equally liable to the Corporation. As a matter of fact, he did not vote, and indeed, so unani- mous was the council, he had no o^pe^tuiiilijf ofnuitiug upon any of the questions before the council in 1852, in relation to the debentures. All those questions wore decided by the council upon their apparent merits, without the necessity of the vote of the Mayor being taken at all. Assume then, that some of the owners of the nuii*sh, should vote against the municipal funds being applied to draining it, and should contend that the owners of the soil would derive sufficient benefit if they drained it themselves, and, notwithstanding, that the council should resolve upon the improvement being made, at the expense of the public ; the objecting members of council, might, with equal justice, be made to pay, to the corporation, the amount of the increased value of their land, reclaimed by the draining of the marsh, or, at least, the cost of the work, proportionate to the quantity of land, held by them, as the Appellant in this case, may bo made to pay to the corporation, the dift\jrence between the amount, at which, .the debentures authorised to be issued u) Messrs. Storey tt Co., were sold by them, and the amount at which these de- bentures, or those substituted for them, under the Act lOth Vic, Ch. 5, were sold by the Appellant and his co-pro- prietors. - ^ ''^"'^ '>/*" ^' '- In relation to the duty, wh'ch, it is argued, that the Apel- lant owed to the corporation, in respect of the debentures in question, Mr. Vioe-Chancellor Spi-agge, in his judgment, says : " His duty as agent, was to advise and vot^, in regard to " the issue of the debentures, with a single eye to the benefit " of the city, to have as few issued as might bo consistent *' with its engagements and its interests, and upon the beat " tf»rmH poPKiblo ; hm intorent was to have as large an t">. :^ ■ m iiji n r ^t ■. ^ :! ': / f ■ / , '1 •■ ( Ii duty ) the still ibers those atter liout pro- ,with f the hem, isolu- posed ;ed to al to ellant itures ;h the have Kow, solely the vould terms, »arked us im- ncil to or to icisting ffering to the Ftorey >ellant, to the ded in icial to onable^ Vv m 1 'I ;1 ■ -r-^^ 01 and is admitted or all sides. It cannot, therefore, "with proproiety, be said that, on this occasion, the Appellants interest in the debentures, by his purchase of them from Messrs. Storey & Co., '■'■paralysed him in his position as " agenty^^ nor can it be said that — " his position as agent and " his fidiiciary character was more than j^a^ralysed^ for that " he had made it his interest to advise and vote against the " interests of the city ;" when the interests of the city, and the prejudice of Messrs Storey & Co., was the sole thing in- volved in the proposition recommended by the Appellant, to the council, for its adoption. Now " the interest" com- prehended in the rule as conflicting with a "duty" is an interest in the subject matter in respect of which the duty is owed ; in the case of an agent appointed to sell property, becoming himself the purchaser, the property to be sold is the subject - latter, and the interest alluded to in the rule^ which prohibits such a transaction, is an interest in the estate or thing whicli is the subject matter of the sale. So on the 29th of July, 1852, if the rule could apply, the interest of the Appellant, assumed to be in conflict with his duty, would be, to make the cases parallel, an interest on the subject matter, or proposition then before the council, that is — an interest in having the proposition of the 29th of July adopted by the council. I have already shown that if he was then one of the purchasei-s, from the Messrs. Storey & Co., of the £60,000 of debentures, his interest was to prevent the adoption of that proposition, which contemplated only the issue of £50,000 of debentures, and that, having regard to the interests of the city, he waived such his interest. However, it may, perhaps, be argued that the Messrs. Storey & Co., having consented to the Apellants making the pro- position to the council, were, in fact, the applicants for the adoption of the proposition, and so, it may be argued, that they had an interest in its adoption, although much to their prejudice, and it may, perhaps, then be argued, that the Appellant, as one of the purcbasei-s of the debentures from Messrs. Storey & Co., had, through them, as the applicants for the adoption of the propositien of the 29th of July, also it ' 1 Jht> J III H ■■■lil 11 93 l,n intereBt in its adoption,and so an interc.f in the eabject' matter then before the council, in respect of which it is conteiaded that he owed a di^y to the corporation ; but i it was, and it undoubtedly wa., the interest also of he city • to adopt the proposed arrangement in preference to the then existing one, then, it cannot be said, that the ..^.m^. of the Messrs. Storey & Co. and of the Appellant, through them ^a.,inconflietwlththe interest, of t^^/^%' ^^.^^/^^^ nile cannot apply. Again, the proposition ot the 29th o^ July suggested a diminution on the amount of debentures to be issued, from £60,000 to £50,000, if then, it was the ,lu(y of the Appellont to advise and vote for a d^m^f ^^^J" the amount of debentures to be issued, as suggested by Mr. ^ice^hancellorSpragge ; in recommending to the council, the adoption of this proposition, it is manifest that he com^ plied with sueh duty, and so it cannot, with any degi'ee of propriety, be said, that on this occasion, the ^nterest ot the Appellant so co^^icted ^hh his duty as to paralyse himin th. discharge of the latter. It is one thmg to hold, if an agent appointed to sell property, s . lis that property to himself, that his interest-^aB^mely, to obtain the property at the lowest possible amount, is so paramount to his futy-- namely, to obtain for his principal the highest possible amount, as to paralyse him in the discharge of that duty ; but it is a very different thing, and it is by no means referrable to the same principle, to hold, that the interest of the Api>ellant, as one of the purchasers, from tl.o Messrs. Storey & Co., ot the debentures in which they had become interested, under the resolutions of 1850 and 1851, was so i.iramount «« i^ paralyse him, in the discharge of any duty, owed by him to the corporation, in respect of tl.ese debentures, when such duty, without the consent of Mossrs. Storey ^ Co. to any Bub^ * Btituted tenns, must have been, unless the resolutions of 1860 and 1851 were a delusion and a snare, simply to gme ffect to those resolutions. If then, the observations of Mr. Vice-Chanccllor Spraggo, cannot, a« I contend they cannot, apply t.) any of the prj)- riouH orcasionH. they rloarly .-.•mnot npi'ly «o \ho onlv 1 - . ^ r f|l|f [bject' it i» tif it ! city, ! then .f the them^ BO the ►th ot nturea 18 the ion in L)y Mr. nmcily com- ree of of the iralyse 3 hold,, erty to •operty (*uty — mounty t it in a i to the jellantt Co., of , under t as to ' him to !U such my Hub- tions of to gi/oe Jpraggo, lie pFc- hf> onlv .. ■%..:-^# p,1 v^ \ eubgequeiit question in council, nftniely, the raisirtp^ the loan* • under tlie Act IGth Vic, Ch. 5 ; nor indeed Ih relief prayed by the bill as founded upon this latter transaction, and if it were,nosuch relief as that granted by the Decree in this cause could have been given. Now, with respect to the loan, the only duty which, it can be said, the members of council owed to the corporation, was, to ob^in the loan upon the best possible terms upon which, in the best exercise of the judgment of the membere of council, it coula be obtained. Tliis, it is proved, has been done, and that, 'm fact, so favorable terms, could not h ve been obtained if the Appellant and his co-proprietors of the debentures,^ pur- chased from Messrs. Storey & Co., had not, by submitting to a discount v^on time debentures, been enabled to give to the corboration a loan at par. The only alteration made, was, that sterling debentures, payable in London, were sub- stituted for those already issued to the Messrs. Store/ & Co., this was an alteration beneficial to the city. Now, with respect to this transaction it is sufficient to say, that not . only is no relief prayed in respect of it, nor is the bill framed in respect of it, but no relief could be prayed in respect of it, because it was i. transaction sprrially authorised by an Act of Parliament, and }iavin<; solely for its object the benefit of the city. If th3 cLppellant could uavc been the holder of tho debentures purchased from tb Messrs. Storey & Co., there can be no objoct'on to hi ;ing Sterling Debentures, equal in amount, 8ubstitu:ed lor ciiem, and even if the corporation had not obtained their loan of £50,000 at par, by means of the discour^ submitted v., hy tho Ai.ix-Uant and his co-pro- prietors, up< .n the del entures issued in lieu of those issued to Messrs. Storey & Co., the corporntion could not, upom any principle of equitv ' •^ablinh a claim against the Appellant, founded on tho t .tj circumstance that, under the Act 16th "ic, Oh. 5, Sterhnr^ Debc^rtures, payable in England, were .obstitutcd forth, which had been issued to Messrs. St-orey & Co. If then, the nere fact of a member of co-ir uil, pur- chasli-.nf, from rliird pers^iiis, dcbonturos of the ' ..nicipality, logaMy '.mthotwed ^,o be issued to vhem, doen uuf cf.np-i-Mt© h Itt I I r :;■! ■ a \ fl . ' &4 fraiul u?>oii the corporation, every particle of the foundation^ / . upon which, thi^: Decree is based, must fall to the ground. t>f/^/^^ Upou a careful reading of the bill, answer and evidence, ^ it will be found, that every allegation, not admitted by the answer, is disproved by the evidence, and that there ib nothing admitted in tlie answer which can support the decree ; although it is upon matters admitted in the answer that the decree has been based. Indeed the bill itself,- I submit, contains nothing, assuming every allegation in it to . be true, which can support the decree made in this cause. The statements of the bill, are : 1. "That on the 25th day of November, 1.850, the City « Council of the City of Toronto aforesaid, passed a resolution " agreeing to grant as a gift in aid of the Toronto, Simcoe " and Huron Union Eailroad Company, on certain conditions " therein mention d, the sum of £25,000 in Debentures of " the said City ,*** ^^e in Twenty Years, with interest half " yearly, in th^ "- atime, at Six per cent. ; the said deben- "tures to be delivered as the iiuih'oad proceeded, and in a " ])roportion of one to ten upon the expenditm-e there^^n. « That on the 18th day of August, 1851, the said Council " passed another resolution agreemg to lend the said Compa- " ny, on certain conditions in such resolutions mentioned, the " further sum of £35,000 in like Debentures, to be delivered « in Hke proportions. Tliat by some arrangement between " the said Company and Messieurs M. C. Storey & Compa- « ny, tlie persons who were employed by, and who contra'-' .>d " with, the said company, to build the said Railroad, tie '•' said Debentures were to be delivered to the said Coutrac- " tors ; and that divers private negotiations took place " between John G. Bowes, tlio Defendant hereto, Mayor of *' the said City, and the said Contractors, for the sale of the " said Dedentures to the said Mayor. That Debentures of " the said City, payable in England, were worth par or a pre- " mium in the English Market, and could, as the said Mayor »* knew or believed, bo negotiated there at par or a premium, »' if what he knew or believed to bo the proper moans for '' Hmt ^.urp(^se wore lakon. Ti.at the City ould have nogo J^ /^ /^ ■A I amm \ , M-^\ ii 1 ? i n i . ,)■> II ' •' n mm i f> m II v^' , ^^ • ■ i ;, ! 'j. ^■^. 95 *' tiated the same, even in Canada, at a higlier rate than fur " Eighty per cent, on the amount thereof. That, however, " the said Mayor, being desirous of making a profit out and " by means of the said Debentures, and to facilitate tlie pur- " chasing legalising and paying for the same, secretly'proposed " to, and prevailed upon the Honorable Francis Plincks, who " resides in the City of Quebec, in Lower Canada, out of the " jurisdiction of this Honorable Court, and then was and is " still Inspector Generol of the Province of Canada, and a " Member of the Parliament and Executive Council respec- " tively thereof, to join him in the purchase of such Deben- " tures as the City would issue to the said Contractors, and " that half the profits of the transaction should be paid to or " retained by the said Hinchs, for his agency in the matter." With respect to the allegations in this paragraph, the evidence proves, that debentures of the City of Toronto, even though payable in England, were not worth par or a premium, in.the English, or in any other, market, and that they could not be negotiated, in England or elsewhere, at a premium, or at par; and ihat, if negotiated in Canada, £80 per £100 was the full vahie of debentures having 20 yeai-s to riui. It is not in this paragraph, nor in any part of the bill, nor in the evidence, alleged or pretended, that the Appel- lant was the agent of the city, for the purpose of negotiating the debentures, upon behalf of the city, either in the English, or in any other market ; on the contranj it is, in this paragraph, alleged and admitted, that, by the resolutions of 1850 and 1851, and by an arrangement, existing between Me^srt^. Storey & (/O. and the Eailroad Co., the Messrs. Storey & Co. were to be the absolute proprietoi*s, of the debentures, by those resolutions, authorised to be issued, and, unless those resolutions, were a delusion and a snare, it follows that, Messrs. Storey «fc Co. were intended to have, and of right, ought to have luid, and had, full power to bqW. them to the Appellant, or to any other person ; it is not alleged or pretended that, nor is it a fact that, the Appellant had any power, or owed any duty 'o the corporation, to rescind, or vary, the will of the councils of 1S50 or 1851, aa ^ I: I is i ^ :;•! conveyed and expressed in the resolutionB of those years : all, then, that this paragraph, in fact, alleges, is, that the Appel- lant and Mr. Ilincks, contracted with Messrs. fetorey .te Co., to purchase from them, at a certain rate, debentures of the City ofToronto, of which, the Messrs. Storey & Co. were the absolute proprietors, and, in which, m' in the rate at which, they might be sold by the Messrs. Storey & Co., the corporation of Toronto, had not, and could not have had, any interest. The admission, involved in this allegation, dis- places every particle of claim to the relief, prayed by the Bill, and granted by the Decree. The bill proceeds to state, .oko „ 2 " That afterwards, and on the 28th day of June, 1852, a "By-law was passed by the said Council, embodying the « effect of the said two resolutions, but not providing any rate "for the payment or redemption of the said Debentures, and , ' without the prior publication of such By-law, as the law r^ ."quired, and though the attention of the said Mayor and « Common Council liad been called before the passing of the ^ said By-law, to the illegality thereof by reason of the said "circumstances, ajid though some members of the Council " obiected to the passing thereof on the ground ot such ille- " gality That on the Thirtieth day of June aforesaid, the " said Contractors, in pursuance of the said negotations with « the said Mayor, addressed a letter to him at his requ^t, " proposing to sell to him £24,000 of the said Debentures (to "which sum thereof they supposed themselves to bo inime- « diately entitled under the said By-law,) ho paying them ." Eic^hty per cent, therefor on the deposit of the said Deben- >« tures in such Bank in the City ofToronto as he might de- *' signate. That the said Mayor secretly accepted the said - proposal, inhisownname, but really in pursuance of the said »' arrangements between him and the said Hincks, and com- *' municated the said letter and acceptance to the said HmckB. ^* That the intention and agreement of all parties tojhe said .« sale were, that the whole of the Debentures to be issued to " the Contractors by the said City should.be,sold under the ^ - J -i. *i »*« yr.fQvi.orl frt in the said letter. " arraugemeui auu a^ li^- ♦s,*^^ i^i-iv. - l« 4! all, )el' yO., the ere at the any dis- the 2, a the rate and V re- •and fthe said uncil I ille- l, the with j^uest, es (to mme- them leben- htde- 3 said le eaid I com- incks. le said ued to ler the letter. ^it f\ :^?S**"S/ 97 ** That the said Mayor managed to defer the issuing of any of *' the said Debentures sintil the Twenty-tirst day of July, in " order to afford time for the raising of the money by the said " Hincks. That on that day £10,000 of the said Debentures " were issued and deposited by the Chamberlain by direction *' of the said Contractors in the Upper CanadaBank atToron- " to, being the Bank where the Cash account ofthe City was "kept, and through which the money transactions of the *' City always took place ; and that the sum of £8,000 was « paid by the said Bank as^age ntg^to the said Contractors " tlierefor, through the instrumeutaUty of the said Bowes and " Hincks, and partly on the security of the Debentures so de- " posited." With respect to the allegations in this par'^f];raph, the evidence proves, that the Appellant did not, either with the object, in the paragraph alleged, or with any other object, "manage" to defer, and that he did not at all, defer, and that he could have had no object in deferring, the issuing of the. debentures until " the 2l8t of July," or until any other time ; on the coni/rary, it is clearly proved, that any delay which took place in the issue of the debentures, arose, from a difficulty in getting them ready, as fast as Messrs. Storey & Co. became entitled to them, and that, they were issued, as fast as they could be got ready^ In *^ ', j paragraph, " it would seem to be insinuated^, although it is not alleged, that the Bank of Upper Canada, as agents of the /. IMAGE EVALUATION TEST TARGET (MTO) m. .V «>. .**1<^' «. <«>^. 1.0 I.I us 1^ |||||22^ ■Wbu 1.8 ■ 1.25 1.4 16 ^ 6" ». ^ ^^ o 'J / >^ ^ .^ ^-^ I V' '/ Photographic oCibiiLiOii ■ ^-^-^r^ tr \ ^-"x r^ Corporation 23 WIST MAIN STRUT (716) t/a^sos „<^. IJ^ inciUeutally, auJ, there is ao ^Uegf o"' '°*»y ^^^ upon theB deleete, aor coald there bo ; the defects, at most Xo, from an error ia judgment or m stake of the councd , those defects have been, upon the application of *« couna - most properly rectified by an Act of l^""*',?^*^* wouldbe preposterous, that now, the corporation should base Their claim to relief, upon defects which, the corpo^a^^ ought not to have ever permitted to, exist and winch, haling existed, were, upon their own application, most pro- perly rectified by Act of ParUament ; but further, it is in To way alleged, nor does it appear, how it is c aimed, that . Zequityfin favor of the corporation, fonuded upon the 2ged defects in the by-law, could arise J AH, hen, tba^ this paragraph, in fact, alleges, is, that the Al'l?»"^° ; 'f ° behdf of himself and others, accq^ed the P™1— f the Messrs. Storey & Co., contained m their letter o the 30th of June, as to the £21,000, therem referred to, with a secret intent, or undei^tanding, that the residue of tlie debentures, to which the Messrs. Storey & Co. jore entitled, under the resolutions of 1850 and 1851, should be Bold by them at the same rate. Ihe bill proceeds to state, . • „„ 3 "That afterwards the said Eailroad Company, being un- " able or unwiUingto grant the security required by *«^y, - " law.for the said loan, the said Mayor proposed to the sau^ " Cot^tractors, and it was arranged between them (subject to « the approbation and concurrence of thesaul Common Coun- " oil, sofar assuch approbation and concurrence might be ne- " ce sL) that the said gift and loan should be abandoned, and • " iSluthereof, thesaidContract.;rs ^J""'' ^f '"'^'-- " City 10,000 Shares of ihe Stock, which they then held m the " said Railroad Company, and which was of the nomma hu «aotaetualvaluoof£5aSharc,andeouldhavebeenbm.glitfor ■ /el at the time forless thanhalf the nominal valijethcr^^^^^^ u and that Debentures, or instrimionts purporting to be Deben- " tures, of the said Gty, to the nommal amomit of £40,0x0 • " lu d thereupon be issued to the said fonU-i^rs "n-l tha . " the same, with the said Debentures already .ssuod, should -\\ V ■^ \v^ >^ \»1^ :^ i^^>(\ T*" •v i.v VJ *VV»^ ^*-V\V X,»^ N ^s^ ¥ ^ ... ? \. \ v . >; y i* \' -v \ r <;-*- ..V*. *^ -^ * > >V '<" 'NnV V\ V >iH ,-'^^ ,*SrV," J. v*V- ,*v ;\ v> ..>>N V • '^ ■^" \N ^v%\ , .w, > ^ ,-V ~-s^ .> \.., AM s , > .\ i V. N iN ^ . ,>>^nN-^ \ \ .,\ ,-, vivWT"^ > ,^N n. > 1 •> * ' •> *> V -^- N • Vv \ n •\ <\ .v..v...'it:.\..i:,^\;.;^ A v\ >». v* 'v V I \ » «• > y. '( '' be the purchase money of the said Stock ; and^ that the pri *' vate agreement hereinbefore mentioned for cashing the De- *' bentures at eighty per cent, should apply to the Debentures *' to be 60 issued as last mentioned ; and that such Debentures ^' should accordingly be deposited in the Bank of Upper Can- «^ ada, as mentioned in the said letter ; and that the said Con- " tractor should receive therefor in cash, the sum of £40,000 " only or four-fifths of the nominal amount of such Deben- " tures in full payment thereof and therefor, thus leaving a " profit on the transaction of £10,uuO or thereabouts, for the *' said Bowes and Ilincks." With respect to the allegations in this paragraph, the evidence proved, that the proposition, in this paragraph stated to have been made, by the Appellant, to the contrac- tors, and accepted by them, emanated, from the President of the Kailroad Co., and that the arrangement, involved in the proposition, was most beneficial to the city, and was only prejudicial to the Messrs. Storey & Co. A distmction is attempted to be drawn, between tU ''nominal and " the actual,'' value of the Eailway Shares. If there was any- thino- in this distinction, it is of no importance, in so far as this "case is concerned, for a like distinction, must be drawn between the nominal and the actual vabie of the City Debentures; the " actual" value in both cases, being, the amount at which, the securities could be sold for cash, m the marV3t, and the " nominal" value, the amount appear- ing on the face of the securities. But no argument, in favor of the Plaintifis, can be urged, founded upon this dis- tinction between the " nominal" and the " actual" value of Railway Shares. 1st. Because the Railway Shares were not in the' market, nor had they any market price at all, different from the amount appearing on the face ( . the Shares. 2nd. No Shares were offered to the corporation, nt any amount less than par, nor at all /or eaffh. 3rd. The corporation had not any cash, wherewith to buy Shares at cash prices ; nrid if they had casli, tliey n-ould not have po applied it. bnt Avoiild have purchased still with I!! lit I *.> .^^- ployed by '•'^"^"d^rof &; Ippe^^nt, or of a»y other is it shewn how they could get, the ^f%^\^y^„^,„^^ sr:h:^sxrci^^^^^^^ ■ ^"S'^e::enoton,yw.thoA^eiJ.t u^^^^^^^^^^^ ,ation,ordut, tooht.n^for«.^^^^^^^^ at a discour,, b»t, Buch » ^^ ^„g„rt_ i860 inconsistent with the Act oi J. »r ^ to «««, nnder which alone, the corporat^ "?" ^a have a„dnotto«.Jarra»,<«- *!f;'lf ^^^ ^j^e corporation, been inconsistent also with "^^„ ^ect rd inte.^ and the '— ?f ""^ Xt^il^ *« M-y^--* est also was, to aid and not ^^"^^^ .evolutions of 1850 Co. had acquired, under the Tesolut.om ot 1 ^^.^^_ and, having regard to t he acte d"- ^ ^^\,^dulen^ and of those resolutions '' -""rjidy, to have entertain- unjust in the council, on t''" 29th ot ^ J' .^^^^ ^ them, „,,lany other prop^.tion, than he ^no s ^^^^^^^^^^ «'* ''"iT'onanrrany '..teniherofcouncil,wa., 1:1- In the terinB of that proposition, or to endeavor to drive a hard er bargain with Messrs. Storey & Co. ^ ,, . f i . All in fact, that this paragraph alleges, is, that the debentures of the city for £50,000 hemg jmrchased, by the Appellant, and others, for £40,000 cash, mreby and not otherwise a profit, oil the transaction, of £10,000, accrued to the Appellant and Mr. Hincks. The ^''^^ f ^^^^^^^^^^^^^^^ -« thus learns a^ojlt on tU trammtwn of £10 000 ai « tUreabmtBjy , . -^nfniq tn tlTP coTineil, the agreement existing having communicated to the con^i > .. ;i„ceB altogether, between him and Messrs. ^tor^^ ^ ^^^^^^^^^^ thai gain, to the prejudice of the corporation. ^JjjjJjL^ T'Srtjrof 4e said conce^ment by the said u Lvo?! to ^n^hle the said Mayor to obtain ^i appr- mayor wdo v iHeeal uses as he upriate to his own "-> "[^^^.^^"/iio'oOOasshonld « miffht choose, so much ot the saia sum ui x , «Se required for paying disbursements connected^^A "^e transition, or for compensating the said Hincto lor " tresis i^».-ph, it.s^ be.ob».eM Jia! there ^^ ration'^ hXeC,T, communicate, .to the councu, tu ^ p y^ . ^^q assent 103 municating the agreement, i8 not properly attributable to him, nor is it a necessary consequence upon the alleged concealment, nor is there any r.ecmar.v/ Gonnectwii shewn to exist, between, the fact of the alleged concealment, and the adoption of the proposition submitted to the council, nor would, nor should, the council haCrejected the proposition, had the nature of tlie Agreement existing between the Ap- pellant and Messrs. Storey & Co. been communicated ; had the council, for such a cause, rejected the proposition, a cul- pable disregard of the interests ot the corp-- >"^'^" ion :U ill might, with more justicOj be attributed to the me r^ei-s of council, who, for euch an insufficient reason,';^should hf^ve y . , voted against a proposition so highly beneficial to the city. ^■^^'^''f/^. \ The Bill proceeds to state, 6 "That the eaid'Mayormigh. have made or procured an . "arrangement.to.save.the City the .said sum/lnstead-of arr " ranging for obtaining the same for himself^ but 'naade r.o ^ ".attempt to do so." ;„ With' respect to this paragraph, it is only necessary to say, that, the city having lost nothing, by the transaction, but on the contrary, having gained, it is ridiculous to say that the Appellant, might have made an arrangement " to save the " city," a Slim which it never lost, and it is not attempted to be shewn how, in the circumstances of the ,case, the Appel- lant could have sav.ed the city- the sum. whicli,.it is' ..untruly, and contrary to the other parts of the bill, alleged, the^ city have lost. It cannot be held ;hat it was the duty of the council, to purchase, upon behalf of the city, from Messrs. Storey & Co. their right to the f^ -hentures, authorised to be issued to them, under the resolutions ot 1850 and 1851, by the payment £40,000 cash ; in the words of Mr. Thompson, the Chairman of the Finance Committee in 1852, and a witness in this cause " the city never would hwoe shaved " their own debentures ;" but even if such an obligation, or duty, was imposed upon the members of council, it is not attempted to be shewn, how the corporation could have shaved their own debentures, in the absence of cash to do so. It seems, therefore, impossible to understand how it is con- |i=» #■■ if 104 teud.a by the Plaintifli, that the Appellant, ahoM, or i hav« done for the corpo:.Uon, what the c^^ra^ ham done, and what, If the corporation could have done, Whaddone, would have been highly reprehensible, and riud in morals, if not in law, nor does the m s^ upon what principle it is, that the corporation should assert any Tlata founded upo; the application of the Appellant's own . X^teLi., or ae funds of himself, and his co-propnetors, in the purchase of the debentures. The Bill proceeds to state, j.ft„,. 7 " That after the making of the said agreement, and after « the same had been sanctioned by a resolution ot the " akl CouncU, but not otherwise, the Contractors m pur- « sl^ Td part pertbrmance of the s«d ^r^m^^ so « entered into with the said Mayor for the sa^d City as ..mr transferred to the City *'--?!'*«« " of tue sJd Mayor, 10,000 Shares of the said Stock , and u Lt Debentui ; the amount of £3^000 in the whok, « were from time to time issued, af -«'?' »P»",,^'' ^ « issued, deposited by the Chamberlain o< the City in the " said BankV by direction of the Contractors, given at the . :,uest of 'the'said Bowes under and >« P-J^w of <' said agreement hereinbefore mentioned; a»d "'''"y «' "Se said Debentures were issued before any actual trans- " fer of the Stock therefor took place." %il respect to this paragraph, it is quite true as seated that tlie Messi.. Storey & Co., did not transfer ^^ * to th^ city, until the city, by the resolution m couuc. oUh^ 29d^f Julv had agreed to take such stock ; nor, m fact, until Messrs. etom & Co hau released their ckim under the resolu ions !S and 1851. It is also quite true, that previously to "ie m: of S the M-" r»y %«"-;i"^:£ \ X * . ^f *>!« ritv under the resolution of 1850, wnicn it" Zfefn^ to Kpellant and his co-purchascrs, I'nL «eelnt. Z in this P-^^VtC ^^ ^ling furthe? than an aUegation, to the effect that the e e le of &• he of re. )ns to fod ich [irs, SCO tbo i I Messrs. Storey & Co. faithfully fullilled the agreement, en- tered into by them, in pm-siiance of their letter of the 30th of June. The bill proceeds to state, 8. " That the money agreed to be paid to the Contractors "on, and for, the said" Debentures was, from time to time, « paid to them by the said Bank, through the security "and instrumentality of the said Hincks, in pursuruce of " the said arrangement between him and the said Bowes, « and without the said Mayor's making any payment or " advance whatever for or on account thereof." With respect to this paragraph, it is admitted that, with the exception of the first £8,000, procured to be advanced upon the credit ot Messrs. Bowes and Hall, Mr. Hmcks made all the other payments to Messrs. Storey & Co. ; but, admitting the allegations in this paragraph to be true, namely, that Mr. Hincks advanced everything, and the Ap- pellant nothing, then, I subnitthat there is nothing stated in tlie bill, or wlitcli could be stated in it, to shew how payments made by Mr. Ilincks, in tlie purchase of City of Toronto Debentures, could give, to the City of Toronto, a right tu upset the purchase, or to claim any interest in the transac- tion. It is not pretended that Mr. Hincks owed any duty to the corporation which prevented Mm from investing his money in the purchase of City Debentm-es ; nor, is it alleged that the appellant owed a duty to the corporation, to compel Mr. Hincks to invest his money in purchasing the de-^ benturesofthe corporation, for the benefit of, or on behalf of, the corporation. The bill proceeds to state, 9. " Tliat meanwhile, and on the 23rd day of August, 1852, " the said Council agreed to petition Parliament for an Act to "legalise the isHUO of £100,000 of Debentures of the said " City, one half for the pur(;hase of the Stock, and the other « half for consolidating the City Dcl)t ; and a petition to that « effect was accordingly presented at the opening of the " Legislature." 10. " That on the 22nd day of September a bill f(»r that pui- 11 N ■mediately sent to England, and eitl.er ™™ j' ';' • ^^ " before sold to other persons, at or above par, foi the jomt " benefit ^f the said Bowes and Hincks. That there .wa« " a profit made by the said Bowes and Hincks on the pur- " chase aforesaid, after deducting disbursements of nearly « £10 000, one half of which was retamed by the said " Hincks for his agency in the matter, and the other hal ^ " or tlie sum of nearly £5,000 was received by the sa a « Bowes which the said Bowes improperly and illegally « ^7Sb7cachof hisduty in that behalf, to thocty asM^or « thereof, paid into the funds of the firm of Bowes & Hall, « of whicli the said Bowes is theprincipal partner, instead ot « pa^ng the same o.er to the saidcity. That the said Mayor «'prsl in illegally holding the -'''-"'^^^-VJ^ « Ld for his own benefit, without any acco.mt to the said « Srporation therefor, and will do so, unless prevented " hv the decree of this Court, to be pronounced m Ous suit. With respoet to the allegations in this pa^fapl'- the evW^ce pr vcs, that the debentures therein alluded to, and which were is.u'ed, a. admitted, in pursuance of- and 'n a^- cordmice with, an Act of Parliament, w« «o« sold at par but that, m the contrary, all were sold at « discount, jae !ub.t,itution of Sterling Debentures for those previously i 109 ["' iBSued to Messrs. Storey & Co,, formed part of the terms, upon wmch, the corporation effected their £50,000 loan at jpar. ^e evidence shews, that the corporation, never conld have obtained that loan at par, except through the medium of the discount which the Appellant and his co-proprietors sub- mitted to, (on the debentures substituted ] or those purchased from Messrs. Storey & Co.,) for the purpose of giving to the corporation a loan at par ; and the evidence proves, that the transaction was a gain to the corporation ; for that, although the interest on the whole £100,000 cy., is payable in London, yet the expense of remittance is much more than balanced by the gain, which the corporation have made, in havmg- gotten ^d/- for their £50,000 loan. There is nothing in this paragraph contdned, which tends to establish, or to confirm, the claim mat^.e on behalf of the Plaintiffs,— namely, that the Appellant, under the circum- stances, is liable to be called to account, by the corporation, in respect of the transaction. The bill proceeds to state. 14. " That throughout the whole of the said transactions •" the said Defendant Bowes was an active party, and used <' the influence he had, and which was considerable, as " Mayor, and otherwise, to procure the passing of the « several Kesolutions and By-laws of the Council hereinbefore "mentioned, and to procure the several acts and proceedings « hereinbefore mentioned, to be performed and taken on the « part of the Council .ind its officei-s, respectively as aforesaid : « in all which the said Mayor had it in view to facilitate the " making of the said profit, but that through the contrivance of « the said Mayor, the said Common Council, until long "after the several matters hereinbefore mentioned had taken " place, was kept wholly ignorant, and did not even suspect, « that the Mayor had any such private interest therein as " hereinbefore appears, or had, or expected having, any part " or interest whatever, m the negotiation, or sale, of any of the « said Debentures, or in the profit thereof; but, on the con-. *' trary, the said Council believed that, in tlie advice and ^' recommendations lie from time to time gave to the Coun- 1 r 110 1 ('" I ill i' ill \.i m " ciU and the members thereof, and upon which they acted, " or by which they were influenced, and in the active part " he took from time to time in reference to the same m^t- " ters, he was wholly disinterested, except as he had an in- « terest in common with all the other inhabitants and Rate- " payers of the City, and that in fact the said agreement with « the Contractors, and the said By-law and Act of Parlia- « ment were all shaped, framed, and carried out through « his means in such a way as might enable him, and under " the hope that he would be enabled, to possess himself of « the said £5,000, without any discovery being ever made « thereof by any of the parties interested tfierein, or entitl- *' ed to call him to account therefor." With respect to the allegations in this, paragraph, the evidence proves, that all the resolutions, by-laws, and proceed- ings of the council, were adopted and passed, by the council, upon, the intrinsic merits, of the seperate matters before the council, solely, and without any influence of the Appellant. The concealment alleged in the 5th paragraph of the bill, Bhews that the Appellant, exercised no pei-sonal influence, if he had any, to induce the council, for his gain and against the interests of the city, to pass any of the resolutions which were passed, or to take any of the proceedings which were taken.^ 6l, ^^-^-^/-^^ - , , .^ • Every proceeding of the council, was, (under the circum- stances, even alleged in the bill,) upon public consideration, iustifiable and proper, and being so, no personal motive can be imputed to the Appellant, nor,if any personal motive could be imputed to the Appellant, would that nullify the proceedings of the council. The council would be wholly divested ot all power of exercising their discretion for the henejit of the city if the mere circumstance of a member of council being, or contemplating becoming, the purchaser of Municipal Debentures, from third persons, to whom they were proposed to be issued, for value, should be pronounced to be a breach of trust, and to be, in law, conclusive evidence, of an impro- per exercise, by the council, of the confidence, and discre- Hon reDosed in them. This is what the decree, in effect, I" 111 declares ; for, the wiiole argument, upon which, the decree is based, .is comprehended in this syllogism, namely : — 1. The corporation is absolutely entitled, to tlie exercise, by every member of council, of an impartial judgement, in every matter, brought under the council ; but, 2. K any single member of council, cont»acts with, or contemplates contracting with, parties, to whom, de- bentures of the municipality, are proposed to be issued, for value, for the purchase of those debentares, he thereby, acquires an interest, which the law, inexorably regards, as altogether inconsistent with the proper exercise of his judge- ment and discretion, upun the question of issuing the de- bentures. Therefore, the resolution of the council, authorising the iesu J of the debentures, to the third parties, involves an improper exercise, by the council, of the confidence and discretion reposed in them, and amounts to a breach of trust. Now, my Lords, this is a conclusion, which, I submit, is not deducible from the rule - that agents appointed to sell ..property for another, cannot sell that property to one of themselves^.^The sole remedy also, which the court applies to a case, involving a breach of the riile, is wholly , inapplicable to the "circumstances of the present case.. When an agent buys from his co-agents, the subject of the' agency, the court sets aside the siale rriade by the co-agents, ■ not a sale made by third parties, and, at the same time, the court wders a re-sale under the eye of the court, and if more be mot obtained upon such re-sale, than was given by the purchasing agent, it holds the agent to his purchase. Now, such a remedy is wholly inapplicable to the circum- stances of the present case ; for, not only does the interest of Messrs. Storey & Co., from whom the consideration given for the issue of the debentures proceeded, intervene • not only is the sale, which, the decree professes to set aside, not a sde made by co-agents to one ot themselves, but a sale made by third parties, whose interest in the debentures is noiflioi' dismited or sought to be affected i but there i* no process, by which, the court could apply the only remedy ff ^/ I ;i '..»^: 112 Which is appropriate to a case invoWi«ga b'^^^"'' "^ f « "^"^^ for the cotirt cannot place matters statu quo ante, aa . can orc» l^een vn^aied , -;;n;S:ii;un^the Appellant bought no Property fr»™ or belonging to -the corporation, and, on the i»atte« before L co«>rcil,'.u> iterative 4at,, but on y a *-«» daU, was imposed upon the meu.bera oi o.uncii, loi-tliey Sril the/had dicn.d it advisable, Lave mado^free mtY of air the debentures to Mesrs. Storey .V! Co. '^ *- Lorcrilardwicko says, that when a body has the power of making resolutions, *pa.sing .y-Iaw., there is no breacnof trust, even.tk,ugh,e«l should result from the reso ution or Cllw.-liowmuch less, can there be said to bo a breach of trust, where benefit to the ooi*oration, and not ovil, is the result. , The bill proceeds to state. 15 " Tliat the sai.i Contractors hare not and do not pro- « tend to have any claim to the eaid sum of i;5,000, or any « part thereof. Tliat the said sum hath been wrongfully and '• illceally diverted from the funds and uses of the said City, "and that sinco the discovery thereof the said Mayor frc- » ciuently and solemnly denied that ho had any concern *' therein." i .•*. • . *« With respect to the allegations in this paragraph, it is ta bo observed, that the fact of the contractora clainung no interest in the discount, to whicb they agreed upon tiio sale p .V j_i-__t. . ♦.^ «u;/.K fliov wnr« ontitlca ; ,-x^\ >l \ Xn 'w..*iS:?^ :\N .. ^ ^ J»K. v.; % ^ ** X V' V < 'V N V^ »^ ' \ N. ,X^' ■. . s ■,.V" \ 113 that they assert iio claim at variance with their contract ol sale, cannot give, to the corporation, aright to assert a claim to any portion of the diiference between the amounts at which the contractors at oile time, and their assignees at another time, sold those debentures, the contractors were the parties entitled to the debentures ; they had then a perfect riglit to sell them to whom they pleasod,-to the Appellant as well as to any otic else ; the contractors being the proprietors of the debentures, the corporation could not have been. The de- bentures were then, the ^operty oUhQ contractors, and the licMUties of the corporation ; and as there was not, and is not, any obligation npon a member of council, to purchaae* with his own monies, upon behalf of the corporation, the liabilities of the corporation, the latter can assert no claim against the Appellant. The bill then prays, 16. " To the end, therefore, that the said John G. Bowes " may be ordered to restore and repay to the said Corpora- " tlon, to be apphed to the proper uses and purposes of the " City, the funds so diverted and misappropriated by him as '' aforesaid ; and that an account of the said funds may be tak- '' en and all proper directions in respect of the said accounts <' and funds respectively given. And that your Complainants " may have such further and other relief in the premises as " shall seem meet. Your Complainants pray that a subpoena « may issue under the seal of this Honorable Court directed " to the said John G. Bowes, calling upon him to appear to « this Bill and observe what this Honorable Court shall *' direct in that behalf." " And your complainants will ever pray, &c." With respect to the prayer of the bill, it is to be observed, that nofimds of the corporation hamng emer leen, or hdng capable ofhmig, dmcrted or misappropriated by the Ap- pellant, no such funds can be restore! or repaid ; should the decree, made in this case, bo sustained, then it would bo establiahod, that although the corporation have lost no- thing, but, on the contrary, have gained considerably, they shall have the right, although claiming the benefit of the o 114 T- fj! X full comUWi-atiun contnu-ted u, be '7""^' >>. ':^Xim . heir debenture*, to rocove,- also a sum "^ -^ l^^,:*^^"^ which never did form.^ud wlucl,, ^X "" '^J^« "*7„f j^e and should have made, trom v.hi h '«™jl'«^^;^ ^j,^ „,,. that, it was his imperative duty '" ~*''^f ;„, ,,„i :: wLre disputed, and noth- 1 wha^e is stated in the bill, withthe view of cancelhng^ • o/in tT" "-' '>«'-'=''""8 *"" r"f 7' '^f 7lt or 111 an J' which, such claim ot Messrs. . that the allegations contamod m it, are n«ura /^'5f'''"^rLrrrotrJpoint. not^deed of -nuch^mport- Thnt «till a point wherein also, we contend, the Court ot So' ; ta e eTd i« the Decree that they have mad. ?olu. IWl, the Appena,.tM.artnerin busmess, wasa party i; •1 r ill l4 If ^R' V U5 to tUo purcliiwe of the Debentures from Messrs. Storey & Co. ; his credit, as well as the Appellants, was used in procuring the money, for the first payment of £8,000 made to the Messrs Storey & Co., and he was therefore interested m the transaction, which is the subject matter of this suit, and^ he is not a party to the suit ; now it is an undoubted prmciple of equity, that the interest of a person, not a party to a suit, in the subject matter or object of the suit, cannot be, m any ■ manner, affected by a Decree of the Court ; and the principle is carried to this extent, that such an interest in an absent party, not only precludes the court, from making a decree, affecting the rights of such a person, but also from making any decree against the persons, who may be before the court, as parties to the suit; upon the principle that, as the decision lith respect to the parties before the court, would still leave fV>r adjudication, the rights as existing between the plaintiffs, and the pei-son not before the court, equity will not adjudi- cate upon the matter at all, in the absence of the party not before the court, for equity abhors multiplicity of suits, and insists upon aajyersm^ interestedin ih^ whole mycirmattm^ or object of the suith^mg before the court,^ before it wi I mJ^ any Decree. Now the Decree in this case, directs the Appellant to pay an amount, which includes not only his own proportion, of the difference between the amount at which the debentures, purchased from Messrs Storey & Co., wer . purchased, and the amount at which, the Bebentures substituted therefor in pursuance of the provisions ot the Sta- tute 16th Vic, ch. 5, were sold ; but also John Hall s propor- tion or interest therein. For this reason therefore also, we contend, that the Decree made in this case, is erroneous, t is however, upon the more important objections referred to in the previous part of my argument, that we contend the decree ought to be wholly reversed, and the Bill ot com- plaint should be dismissed from the Court of Chancery with / I I