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mi
BANKS AND BANKING
CONTAININCf
A FULL ANNOTATION OF
" The Bank Act"
53 VIC. (D.) CHAPTKR 3«, ('890).
TOGFTHKR WITH
PHOSE SECTIONS OF THE CRIMINAL CODE,
1892, WHICH ARE OF SPECIAL
IMPORTANCE TO BANKERS.
/3p.
SECOND EDITION.
IIY
J. J. G ORMULL Y, Kdq.
OiK' ol Her Majesty's Couiisul,
AND
k. V. SINCLAIR, Ksi].^
<it().stroo<l(.' H;\1I. li.irristcr .it law.
OTTAWA :
I'KIXTEI) HY A. S. WOuDHUKN
18 4 5 4 8
HG- ^^03
Kntsretl according to Act of the Parliament of Canada, in the year 1892.
I>y J. J. Gormully and R. V. Sinclair at the DepartmciU uf
Agriculture.
TABLE OF CASES
11
A.
Allan V. First National Bank of Xenia.
Alma Spinning Co., in re
Athill, in re Athill v. Athill
Ayers v. South Australian Banking Co .
■74
.16
97
73
B.
Bailey v. Finch J26
Baincs' Case ,n ^r nr ,^^
„ . , ^ . 29, 35, 75, 139
Baird v. Bank of Washington ^q g,
Brulk ofB. N. A. v. Ciarkson .......98
Bank of Hamilton V. Noye 98, lor, 112, 1,3, ,,5
Bank of Liverpool v. Bigelow -q
Bank of Ontario, in re 28 t8
Bank of Montreal v. McWhirter ge
Bank of Montreal v. Sweeney
Bank of New South Wales v. Campbell . 74, 88
Bank of 'i oronto V. Perkins 71 7^ Si ,,n
hank of I oronto v. Lambe
Bank of Toronto v. Wilmot ,
Bank of U. C v. Covert
Bank of U. C. v. Killaly gl
Bank of U. C. v. Scott ..."
Bank of U. C. v. Widmer
Barrs v. Hank of Nova Scotia ' 28
Becher v. W^oods
Bottomley's Case
Brooke v. Bank of Upper Canada
Brown v. MacNab
Biirland v. Moffatt
Bush v. Fry
88
14
'33,
.90
30
137
.90
85
'05
c.
Cameron v. Kerr..
Carver v. Braintree .
«3
83
IV.
Hanks nnd ISankinc
flentral Bank, re, IJaines' Case 29, 35, 75, 139
('entral Bank, re, Nasn>illi's Case 29, 35, 75
Central Bank, re, J. I). Henderson's Case 75, 139
Central Bank, re. Home Savings iV L. C'o's Case. ■ • . 35, «34
Central Bank, re, Hogg's Case 35
(."entral Bank v. (Jarland 86
('entral Bank, re, Morion (,\: Blocks Claims 123
Chaudiere Cold Mining Co. v. Uesbarets 89
City Bank v. Barrow 104
Clench v. Consolidated Bank 127
Cockburn v. Sylvester 113
Coffee V. Quebec Bank 101,115
Cole V. North Western Bank 104, 105
Coleinan, in re i o i , 113, 115
Colonial Bank v. Whinney 28
Commercial Bank v. Bank of U|)per Canarla 74, 80
Commercial Bank v. Cotton 120
Cook v. Royal Canadian Bank 36, 38, 76
D.
Dominion Bank v. Davidson 99
Dominion liank v. Oliver 84, 1 1 2
Duggan V. London & Canadian Loan & Agency Co . . . . 44
Dupuy v. Cushing 94
E.
Earl of Sheffield v. London Joint Stock Bank 44
Early v. Early 97
Exchange Bank v. Barnes 19. 46
Exchange Bank v. Fletcher 70, 7 1, 89.
Exchange Bank v. M. C. & D. S. Bank 134
Exchange Bank v. Regina 53
Exchange Bank v. Springer i9> 46
F.
Foley V. Hill 126
Foster v. Bowes 1 1 1
'I' Mill-. OK Casks
V.
Q.
Clanlcn (lully, I'fer., Co. v. MrMstcr 30
(i(}()(lfall()w, re Traders Hank v. (loodtallnw 101
Cioodwin v. Robarts 126
(Irani v. La Hamiiic Nationalc 74i ^5
Croat Western Ry. Co. v. Hodgson 101
drey v. Johnson ...126
Hallork v. Wilson 90
Harben v. Phillips 21
Henderson's rase 75. ' .V^
Heynian v. Flewker 104, 105
Hogg's case 35
Home Savings iV Loan Co's Case -SSi '34
Hopkins v. .Abbott 1 24
Husband v. Davis ... 1 26
Hutton V. Federal Bank 120
I
Imperial Hy. Hotel Co. Blackpool v. Hampson 21
Innes v. Stephenson 126
J.
Jackson v. Munster Bank 14
Johnson v. Credit Lyonnaise 104
Jones v. Inii)erial Bank 67
K.
Kansas Valley National Bank v. Powell 74
Kecne v. Robarts 126
Kingston, Ex parte 1 26
L.
Llado V. Morgan 10 1
London t\: Canada Loan, itc, Co. v. Graham 89
London Joint Stork Bank v. Simmons 44
Leazure v. Hillegas go
VI.
I'.WKS \Nli IIVNKINC
M.
McCrac v. Molstni's IJank
McD.'iirmid v. Huj^hcs
McDonall v. Hank of Ui)per Canada .
Maritime IJank v. (^uccn
Maritime iJaiik v. 'I'rot)]) . .
Mason V. (Ircal Western Ky. Co .. . . loi, 102
Merchant's liank of Canada v. Hoslwu k
Merchant's Hank of Canada v. Moffat t
Merchant's Hank of Canada v. Smith 1,9
9S, 99, 101
Milloy V. Kerr
Molleur v. I,oupret
Molson's Hank v. Hrockville
Molson's Hank v. Janes
Molson's Hank v. Kennedy
Molson's Hank v. McDonald . .
Monteith in re
Muir V. City of Clasgow Bank
S,)
«5
54
134
"5
•«5
.84
3. 94.
102
94
141
127
.98
.69
■85
95
•45
N.
Nasmith's Case 29, ,^5, 75' '39
National Hank of Australasia v. Cherry 72, 74
P.
I'etry v. La Caisse d'Economie 44
Portalis V. Tetley 106
Horteous v. Reynar 85
Q.
Quinlan v. Gordon 1 20
Quirt V. Queen i, 68
Radford v. Merchant's Hank of Canada 69
Rainy Lake Lumber Co. in re 85
Raphael v. McFarlane 44
Regina v. Hank of Upper Canada 22
'r.Mii.i: (II Casks
VII.
Retina v. Hank of Nova Scotia
Kf,i;ina v. liiintin. . .
Rcgiiia V. Ilincks
Kccsc V. M.ink of (■ommcrcc. . . .
Richer V. \'oyer
Robertson v. I, a l!an(|iic (i'llochela^ia
Rohinson v. Cook
Royal (lanadian I5aiik v. Carriithers.
Royal Canadian iJank v. (aniinicr. ..
Royal Canadian l;ank V. Miller.
Royal Canadian ilank v. Ross ....
Royal Canadian J'>ank v. .Shaw. . . .
Royal Canadian liank v. Vales. . .
Ryan v. McConnell
s.
T.
54
1 40
I »i
77
I -'4
3". .?,^ i.U
.^5
«;«
. .Si, S.^
«;<^
..112
... 1 20
I 'J
^5
9
124
Sackett's Head Dank v. I.ewis" Hank c,
Sadercjuist v. Ontario liank
Scottish Petroleum Co. in re
Sibree v. Tripp
Smith V. |}ank of Nova Scotia
Societe (Jenerale dc Paris v. Walker
Stockton v. Malleable lion Co
Suter v. .Merchants Pank of Canada
124
•27
.42
•77
"3
Tennar.t v. Union Bank .S5, 94, 95, yS, ,,0, 106, ,,,
Thompson v. Molson's Ijank g ,
Tomiinson v. Cilby . .
Trader's IJank V. Prow n .Manu(a( turiny Co
Trueman v. Appleyard
102
V.
Vigcrs V. St. I'auls
97
iJO
w.
Wilmot V. Maiiland
101
VIM
Hanks a\i» ISANKisti
HOOKS KKIKKKKD IC).
Al)l>i)t's Dij;. Corporations.
Ann- -11 iV Ames on (lorporations.
Hrict on Ultra Vires.
(livil ( 'ode of Lower Canada.
(Irant ^n Hanking.
\[or.;e on Hanking.
I'othicr.
Rohinson \- Joseph's Digests.
Sheldon on Mortmain.
53 VlCTohl.x] (C.HM' ^i.
AN ACT IJESPECTLNG BANKS AND
HANKING.
[^sstn/tJ to i6th Max, /li'yo.]
HER M;ij«'!st\ . hv nnd v.ilh the itdvicf mid
eoni-eiit of the SousUl' jiiid Hou.se of
Coiiiiiioiis ct Caii;ida, eniif.'t?* as li.ll(»w.>< : —
SHORT TITLE.
I. This Act iiiny he citi-d as '• Tiic- Bank ^s,„„, ^,1,,,
Act," (R.S.C. oai). 120, sec. I.)
The power to incorporate Hanks and i(j legislate
j^cncrally in respect oi them is expressly conftrretl
on the Parliament of Canada by section oi of the H. X, .A.
Act. There have been several cases in \ hich the extent
of this power has been considered. .See Quirt v. Queen. 19
S. C. R. 510, (1S71). Merchants v. Smith, 8, S. C. R. 512,
(.S84).
.As to the power of the Provincial Legislatures to nnpose
taxes on iJanks. See Hank of Toronto v. Lambe, i2.\p|)-
Cas. 575, (18S7).
INTERPRETATION
3. In this Act, unless the context otherwise i"toiiMititwn.
requires, —
((f) The expression " the hank " means any ..T,...,uu.k.■•
hank to which this Act applies: (R.S.C. cap.
120, sec. 2, ss. e.)
"■Trftasury
lioird."
wares and
inerehaiulise
2 Banks and Banking
{b] The expression " Treasury Board '*
means the board provided for by section
nine of chapter twenty-eight of the Re-
vised Statutes of Canada, or any Act in
amendment thereof or substitution therefor.
(New.)
(c.) The expression " goods, wares and mer-
chandise " incUides, in addition to the things
usually understood thereby, timber, deals,
boards, staves, saw-logs and other lumber,
petroleum, crude oil, and all agricultural
produce, and other articles of commerce. (R.S.
C. cap. 120, sec. 2, ss. a.)
For further notes on this subsection see Sec. 73.
" Wart'lioiLse
receipt."
{<!.) The expression "warehouse receipt''
means any receipt given by any person for any
goods, wares, or merchandise, in his actual,
visible and continued possession, as bailee
thereof, in good faith, and not as of his own
property, and includes receipts given by any
person who is the owner or keeper of a harbor,
cove, pond, wharf, yard, warehouse, shed, store-
house or other place for the storage of goods,
wares or merchandise, for goods, wares and mer-
chandise delivered to him as bailee and actually
in the place, or in one or more of the places
owned or kept by him, whether such person is
engaged in other business or not.
The corresponding subsection in the Repealed Act is
R. S. C. Cap. 120, Sec. 2, ss. b. The present subsection
Interpretation 3
omits words from and adds words to the repealed subsection.
For notes on the meaning of the expression " warehouse
receipt " see Sec. 73.
(e.) The expression "bill of lading " includes ..Bin of
all receipts fcr goods, wares or merchandise, ''"'"'*■'
accompanied by an undertaking to transport the
same from the place where they were received
to some other place, whether by land or water,
or partly by land and partly by water, and by
any mode of carriage whatever. (RS.C. cap.
120, sec. 2, ss. c. slightly changed).
For further notes on this subsection see sec. 73.
(/.) The word ''manufacturer" includes Mnmifuc
malt.^ters, distillers, brewers refiners and pro-
ducers of petroleum, tanners, curriers, packers,
canners of meat, pork, fish, fruit or vegetables,
and any person who produces by hand, art,
process or mechanical means any goods, wares
or merchandise. (New.)
For notes on this subsection see sec. 74.
APPLICATION OF ACT.
». Tlie provisions of this Act apply to the,,
several banks enumerated in Schedule A t() '•'' '^^''•'I'l'ii'^**^
this Act, and to every bank incorporated after
the first day of January, in the year one
thousand eight hundred and ninety, whether
this Act is specially mentioned in its Act of in-
corporation or not, but not to any other bank,
except as hereinafter specially provided.
1
('liarti.T.'i ton-
tiiiii(!il t) 1st
July, l!"a.
As to otlic'V
p;irtiriil.ir<.
forl'eitiiri'.
4 Banks and Bankinc
The corresponding section of the old Act is R. S. C. Cap.
120, Sec. 3. The language of the present section is slightly
changed to meet the new circumstances.
4. The charters or Acts of incorporation, and
any Acts in amendment thereof, of tjiciieveral
])ank.s enumerated in Sp]ipf ]ule A/to this Act
are continued in force, so far as regards incor-
poration and corpov;ate name, the amount of
<-a})ital stock, the amount of ea\^h share of such
stock and the chief phice of business of each
bank, until the first day of July, in the yei^r
(mo t|^^iiiRfti4d-.w4jn Imndrpd and one, siil.ject to
the riirht of each ])ank to increase or reduce its
capital stock in the manner hereinafter provided ;
and as to all other particulars this Act shall
form and be the charter of each of the
said banks until the said first day of July, in the
year one thousand nine hundred and one, —
subject in the case of La Banque du Peuple to
the provisions hereinafter made in respect to
that bank : Provided always, that the said
charters or Acts of incorporation are hereby con-
tinued in force only in so far as they, or any of
them, are not forfeited or rendered void under
the terms thereof, or of this Act, or of any
other Act passed or to be passed, by reason of
the non-performance of the conditions thereof,
or by insolvency or otherwise.
The corresponding section of the old Act is R. S. C. Cap.
1 20, Sec. 4. The language of the present section is changed
to meet the new circumstances, and a reference is made to
the power to reduce the capital stock which is given for the
first time by this Act. (See Sec. 28).
I
-/ /^ l^
lat provi-
Al'i'LICVllJN- OV Aci 2
.». All the provisions of this Act, except those xyi,
contained in sections three, six to seventeen aS Si
(l)oth inclusive), nineteen to twenty-seveii i'^'"i'^^^^^^^
mcl 1 ('H^th inclusive), thirty-three, forty-five, and
Jral / ,. i I '''?^''ty-"ine to ninety-six (both inclusive), apply
AcTT^^ ^^ I ^^ ^''^ Banque du Peuple : Provided that wher- i'-omho: as
ever the word " directors " is used in un./ of the
sections which apply to the said bank, it shall
be read and construed as meaning the principal
partners or members of the corporation of the
said bank ; and so much of the Act incorporatinfr
the said b.-ink, or of any Act amendin.ii: or eon- \''"''f'"''>t*^
tinning it, as is inconsistent with any section of '
this Act applying to the said bank, or which
makes any provision in any matter provided for
by such sections other than is hereby made, is
hereby repealed ; otherwise the said Acts are
continued in force, subject to the proviso con-
tained in section four of this Act.
This is a special section applying to the Banijue In
Peuple. The corresponding section of the old Act is K.
S. C. Cap. 12 3, S c. 88.
«. The provisions contained in sections two, ^\.,,.^j ,,.,^^j
seven, thirty-seven, forty -seven tc eighty -eight g^VlP'''''
(both inclusive), and ninety-seven to one liruM.N .,t!,
hundred and four (both inclusive), apply to the '''"i* '<'•''"'
Bank of British North America and the Bank of
British Columbia respectively ; and the
provisions contained in the other sections of
this Act do not apply to the said banks.
This and the following section are applicable specially to
the Bank of British North America and the Bank of British
6
Ban'ks and Banking
• 'liicf seat of
bunincss of tin
sail] hanks.
Columbia, both of which possess English Charters. The
corresponding sections are R. S. C. Cap, 120, Sees. 87 and 89
7. For the purposes of the several sections of
tliis Act made applicable to the Bank of British
North America and the Bank of British Colum-
bia, the chief office of the Bank of British North
America shall be the office of the Bank of Mon-
t»'eal, in the Province of Quebec, and the chief
oilice of the Bank of British Colunil)ia shall be
the office of the Bank at Victoria, in the
Province of British Columl)i;i.
How Mer-
cliiiiits' Hank
of IV K.I may
roniL- iiiuliT
this Act.
.S. The provisions of this Act may be extended
to the Merchants' Bank of Prince Edward Island
by the Treasury Board, upon the application of
the directors of the said bink before the expira-
tion of the present charter of the said bank ;
and upon publication in the Quiwht G<izette of
the resolution t)f the directors applying here-
under, and of the minute of the Treasury Board
thereon allowing such application, the provisions
of this Act shall, from the time nanied in such
minute, or if theie is no time named therein,
from the date of the publication thereof in the
Cnnndii Gdzttte, apply to the said bank ; and its
charter and Act of incorporation, and any Acts
in amendment thereof, shall thereupon be ex-
tended for the same time and to the extent as
if the name of the said bank hjid been includ-
ed in Schedule A to this Act. (New).
The provisions of this Act were extended to the Merchants
Bank of Prince Edward Island on the ist of February 1892.
T
Incorpokaiion and C)kgani/?ai ion-
incorporation
AND ORGANIZATION
BANKS.
OF
tt. The capital stock of every bank hereafter Mattes to »«>
incorporated, the name ol" the bank, the ph>ce sP'i^^^^^^^^ "'
where its chief office is to be situate, and the
name of the provisional directors shall be de-
clared in tlie Act of incorporation of every such
bank. (R.S.C. cap. 120, sec. 0, slightly changed.)
2. An Act of incorporation of a bank in the t '"■'""'' a*' ««
'■ iiuiir|ii«ration.
form set forth in Schedule B to this Act shall
be construed to confer upon the bank thereby
incorporated all the powers, privileges and
immunities, and to subject it to all the liabil-
ities and provisions set forth in this Act. (New).
10. The capital stock of any bank hereafter cpuni .tock
incorporated shall be not less than five hundred '""'"'""^
thousand dollars, and shall be divided into shares
of one hundred dollars each. (New.)
11. The number of provisional directors shall
not be less than five nor more than ten, and '''''''^''s"'
they shall hold office until directors are elected
by the subscribers to the stock, as hereinafter
provided. (New.)
12. For the purpose of organizing the bank. ^ . ,
the provisional directors may cause stock books *'"^'' ''**°'^
to be opened, after giving public notice thereof,
—upon which stock books shall be recorded the
8
r>\NKS ASM; nANKINC.
FiiNt mertiii-'
of sulwiTibii •».
Notiie.
Elcvtiuii of
(lirecti'is.
!subsci'iption!j ot such per.sons as desire to become
fcihareholc'errf in the bank ; and such bo >ks shall
be opened at the place where the chief ollice of
the bank is to be situate, and elsewhere, in the
discretion of the provisional directors, and may
be kept open for such time as they deem
necessary. (New).
i:i. So soon as a sura not less than five
hundred thousand dollars of the capital stock of
the bank has been hona ji<Je subscribed, and a
sum not less than two hundred and fifty thou-
sand dollars thereof has been paid to the
Minister of Finance and Receiver General, the
provisional directors may, by public notice, pub-
lished, for at least four weeks, call a n.eeting of
the subscribers to the said stock, to be held in
the place named in the Act of incorporation as
the chief place of business of the bank, at such
time and at such place therein as set forth in the
said notice ; at which meetini? the subscribers
shall determine the day upon which the annual
general meeting of the bank is to be held, and
shall elect such number of directors, duly quali-
fied under this Act. not less than five nor more
than ten, as they think necessary, who shall hold
olHce until the annual general meeting ^v- t?..>j
year next succeeding their election ; a;j * .>n
the election of directors as aforesaid X\n: ' k>
tions of the provisional directors shall cesise.
(New),
This section provides for the first meeting of shareholders
and for fixing the day of the annual meeting and for the
election of the first board of directors.
Incorporation \nii Orcanizaiion
l-l. The b.iiik shiill not issue iK)tes nor con:- ' "'"'''''^ «
previous to
mence the business of banking until it litis ob- 1;;;^5~^'.''
tained from the Treasury Board a certilicate '""'""''
permitting it to do so, and no application for
such certificate shall be made until directors
have been elected by the subscribers to the
stock in the manner hereinbefore provided ;
and every director, provisi(jnal director, or
other person, issuing or authorizing the issue of
the notes of such bank or transacting or author-
izing the transaction of any business in connec-
tion with such bank, except such as is herein-
before provided, before the obtaining of the
certificate from the Treasury Board, shall be
guilty of an offence against the Act. (New).
This section prohibits the commencement of business by
the bank until it has obtained a certificate of permission to
do so from the Treasury Board.
nay
irranti'd.
15. No certificate shall be given by the \\''i" "^rtiri-
_, o ./ j.,,t^, may l,j;
ireasury Board until it has been shown to the
satisfaction of the Board, by affidavit or other-
wise, that all the requirements of this A.ct and
of the special Act of incorporation of the bank,
as to the payment required to be made to the
Minister of Finance and Receiver General, the
election of directors, deposit for secui-ity for note
issue, or otherwise, have been complied, with,
and that the sum so paid was then held by the
Minister of Financi^ and Receiver General •, and
no certificate as aforesaid shall be given except
within one year from the passing of the Act of
incorporation of the bank applyinu- for the sjiid
certificate. (New).
10
Banks and Banking
If certiHi-atc is
not (rraiitiMl.
Disjjosal of
amount rteiK)
sited with
Minister of
Finani'c.
This section prescribes the conditions upon which the
Certificate of the Treasury Board referred to in Section 14
will issue. It is important to note that this certificate must
be obtained within one year from the passing of the Act of
incoporation of the bank, and if not so obtained that the
Charter of the bank lapses. (See Section 16).
1ft. In the event of the bank not obtaining
ii certificate from the Treasury BoHrd within
one year from the time of the passing of its Act
of incorporation, all rights, powers and privi-
leges conferred upon such bank by its Act ol"
incorporation shall thereupon cease and deter-
mine and be of no force and effect whatever.
(New).
17. Upon the issue of the certificate in
manner hereinbefore provided, the Minister of
Finance and Iikeceiver General shall forthwith
pay to the bank the amonnt of money so de-
posited ^ith him as aforesaid, without interest,
after deducting therefrom the amount required
to be deposited under section fifty-tour of this
Act ; and in case no certificate is issued by the
Treasury Board within the time limited for the
issue thereof, the amount so deposited shall be
returned to the person depositing the same ;
but in no case shall the Minister of Finance and
Receiver General be under any obligation to
see to the proper application of the same in any
way. (New).
Internal Rkgii.ations
11
INTERNAL RECIULATIONS
IH. The sharehoUlerH of ilie Ijiink (or, in the lu iaw«mnj
case of La Banque du Peuple, Uie princi^:.! '"' """'"
partners or nieinbers of thecorimration thereof.)
mav rejjuhite bv bv-hiw. the foUowhig matters
incident to the nianageinent and administration
of the affiiirs of the bank, that is to say : The
day upon which the annual general meeting of
the shareholders for the election of directors
shall be held ; the record to be kept of proxies,
and the time, not exceeding thirty days, within
which proxies must be produced and recorded
prior to a meeting in order to entitle the holder
to vote thereon ; the number of the directors,
which shall not be less than five and not more
than ten, and the quorum thereof, which shall
not be less than three; their qualification, sub-
ject to the provisions hereinafter made ; the
method of tilling vacancies in the board of
directors whenever the same occur during each
year, and the time and proceedings for the elec-
tion of directors, in case of failure of any elec-
tion on the day appointed for it ; the remunera-
tion of the president, vice-president and other
directors ; and the amount of discounts or loans
which may be made to directors, either jointly
or severally, or to any one firm or person, or to
uny shareholder, or to corporations.
12
B\NKS \M) UanKIXC.
SHARhHOiiitks' Powers.
This section is a coinbin.itiun of several sertions of the old
Act with some change^ .'in.i additions. (See R. S. C. Caj).
I JO. Sec. 9, is, I tV 3, and Sees. 14 A: 16). Hy it the share-
huklers are enii)Owered to regulate by by-law certain specified
matters, viz ;
(i) The day upon which the annual general meeting of
shareholders tor the election of directors shall be held.
(See also Sees. 13 iS: 19, ss. 4).
(2) The record to be kept of proxies.
(3) The time, not exceeding 30 days prior to a meeting,
within which proxies must be produced and recorded. (See
also Sec. 25. ss. 4 & 5),
(4) The number of directors, which shall not be less than
five nor more than ten.
(5) The riuorum, of directors which shall not be less than
three.
(6) The (jualification of the dire'^tors, which must also
conform to certain statutory requirements. (See ss. 3,
hereof and Sec. 19, ss. 2).
(7) The filling of vacancies in the Board during each year.
(See Sec. 19, ss. 7).
(8) The time and proceedings for the election of directors
in case of failure of election on the proper day. (See Sec. 20)
(9) The remuneration of the President, Vice-President
and other directors.
(10) The amount of discounts or loans to directors and
others. (The aggregate of these have to be shewn in the
monthly statement to the government see schedule D.)
The next sub-section empowers the shareholders to estab-
lish guarantee and pension funds for bank officials.
Sec. 24, ss. I, empowers a certain proportion of the share-
holders to call a special general meeting.
Sec. 24, ss. 2, by implication empowers the shareholders
to remove the President, Vice-President or Directors fo
misconduct.
Sec. 26 empowers the shareholders to increase the capital
stock.
Sec. 28 empowers the shareholders to reduce the capital
stock under certain conditions and restrictions.
ISIKRNAI. F^KdlLAllONS
13
'J. The hliureholders mjiy aiitliori/.e the direc- o,,,, ..n... >.n.i
tora to e>*tal)liHli guu-iintee and pension tunds
for the olHeer.s and employees of the Ijunk and
tlieir families, and to contribute tlierero out of
the funds of the bank. (New).
The power to create guarantee and pensiun funds is here
ex|)ressl) conferred and contribution thereto authorized out
of the funds of the bank. The i.rior practice of creating a guar
antce fund was however recognised and impliedly legalized
by the old Act. (See R. S C. Cap 120, Sec. 17) and the
prior practice of creating a pension fund is recognized and
impliedly legalized b) this Act by Sec. 22.
3. Until it is otherwise prescribed bv bv-law c.itiii.hy.
, * ' ^n^■.•* coil
nuder this section, the bv-hiws of the bank on ''""'•
any matter which may be regulated by by-law
under this section shall remain in foue, except
as to any provision fixing the qualification of
directors at an amount le.ssthan that prescribed
by this Act ; and no person shall be elected or
continue to be a director unle.ss he holds stock
paid up to the amount required by this Act, or
such greater amount as i.s required by any by-
law in that behalf. (R.S.C. cap. 120, sec. 4).
By this clause it is provided that no person shall be elected
a director unless at the time of his election he possesses the
necessary stock qualification and also that no director shall
continue as such unless he continues to possess such stock
qualification.
4. The lbre<T;oiut>; provisions of this section, Banmf ,iu
° ° ^ ' Pfiiiiif ex-
touching directors, shall not ajjply to La Banque fi't'''-
du Penple, which shall in these matters be
governed by the provisions of its charter. (R.
S.C. cap. 120, sec. 9. ss. 2, slightly changed}.
14
Hanks ani» Ban kino
Bofinl of
ijirei'turit.
lO. The stock, property, nHairs and conceriia
ot* the bank shall be managed by a board of
directors who shall be elected annually in
manner hereinafter provided, and shall be
eligil)le for re-election. (R.S.C. cap. TJO, sec.
9, »s. 2 and wc. TJ).
This clause places the property and business of the bank
under the management of the board of directors subject to
the control of the shareholders in certain specified matters.
For the powers of the shareholders, see notes to sec. iJ^,
As to the powers of the directors to make by laws, calls,
convene meetings, allot stock, and sue \'c., see Section 19,
ss. 7, and Sections 22, 23, 24, 27, 29, 30, 31, ^2, ^s, 39, 46,
47, 58 and 92.
As to the (lualifications required by, and the duties and
liabilities expressly inijjosed on directors, sec sec. 18, ss. 2,
Sec. 19, ss. 2, 4, 6 and 7, and Sections 45, 48, 52, 92, 97
and 99.
.•\s to the quorum of directors, see Section. iS.
A bond may be given up to be cancelled by the president
and directors of a banking c<?rporation without their assent
being signified under the corporate seal. The Hank of
Upper Canada vs. Widmer 2 O. S. 222 (1829).
A director of a company from the time he becomes aware
of breaches of trust by his co-directors, incurs liability even
though he did not directly sanction them, and may be held
personally answerable for any losses sustained thereby, if he
remains passive and omits to take proper steins to prevent
such misconduct, and to institute if necessary proceedings
against his colleagues in default. Jackson vs. The Munster
Bank 15 L. R. Ir. 356(1885).
QuaiiHcati'.ii. 2. Each director shall hold capital stock of
the bank as tollows : — When the paid-up capital
stock is one million dollars or less, each director
shall hold stock on which not less than three
Internal Rhculaiions
15
thuiiHand dollars has been paid up ; when the
paid-up capital atock is over one million ''ollara,
and does not exceed tliree million dollars,
each director shall hold stock on wiiich not less
than four thousand dollars has been paid up ;
and when the paid-up capital stock exceeds
tiiree million dollars, each director shall hold
stock on which not less than five thoasand
dollars has been paid up: (R.S.C. cap. 120, sec. '.),
,*<H, 2, changed).
Hy the above sub-section the minimum share <iualification
of a director is fixed. (See also Section iS).
•\ A majority of the directors shall he ^|;{','ii|'^,Ii; '"
natural-born or naturalized subjects of Her'"'"*
Majesty: (R.S.C. cap. 120, sec. 12).
4. The directors shall be elected by the Ki.ition
shareholders on such day in each year as is
appointed by the charter or by any by-law of
the bank, and such election shall take place at
the head office of the bank at such time of the
day as the directors appoint ; and public notice ^'"<'^''
thereof shall be given by the directors, by pul)-
lishing the same lor at least four weeks i)re-
vious to the time of holding such election, in a
newspaper published at the place where tlie
said head office is situate: (R.S.C cap. J 20, sec.
12, part, slightly changed).
5. The persons, to the number authorized to \yiio simii bu
be elected, who have the greatest number of'
votes at any election, shall be directors: (R.S.
C. cap. 120, sec. 12, ss. 3, slightly changed).
16
Banks and Banking
I'rovisioM ill
<-:iscof'c'|ii;ilit.y
of vaU-a
Ehatiou of
(Iresideni. &c'.
G If it happens at any election that two or
more persons have an equal number of votes
and the election or non-election of one or more
such persons as a director or directors depends
on such equalit}', then the directors who have
a greater number, or the majority of them,
shnll determine which of the said persons so
having an equal number of votes shall be the
din.'ctor or directors, so as to complete the full
number ; and the said directors, as soon as may
be, after the said election, shall proceed U
elect, by ballot, two of their number to be presi
dent and vice-president respectively : (R-S.C
cap. 120, sec. 12, ss. 4, slightly changed).
o
Vacancies,
how tilled.
7 If a vacancy occurs in the board of direc-
tors, .such vacancy shall be filled in the manner
provided by the by-laws ; but the non filling of
the vacancy shall not vitiate the acts of a
quorum of the remaining directors; and if the
vacancy so created is in the office of the presi-
dent or vice-president, the directors shall, from
among themselves, elect a president or vice-
president, who shall continue in office for the
remainder of the year. (R.S,C. cap. 120, sec.
12, ss. 5, slightly changed).
Section i8 provides that the directors shall not be less
than five nor more than ten, and that the quorum shall not
be less than three. Where there is a maximum and mini
mum number of directors fixed by law, then directors can-
not act if the number falls belov,- the minimum. Alma
Spinning Co. L. R. i6 Chy. Div. 68i (iSSo), unless as in
this sub-section, there is power given to act notwithstanding
Internal Regulations
17
:o
'i
vacancies, Scottish Petroleum Co. L R. 23 Chy. Dlv. 431
(1883). Here the power to act continued as long as there
is a (juorum present at a meeting of the hoard.
20. If an election of directors is not made on ,^,';7'ot'fkirure
the day appointed for that purpose, such elec- "* '''''*'°"'
tion of directors may take phice on any other
day according to the by-hiws made by the
shareholders in that behalf; and the directors
then in office shall remain in office until a new
election is made. (R.S.C. cap 120, sec. 15,
changed).
21. At all meetin<Ts of the directors, the Mivtintrs of
•^* "- ^ / (lirc'ftors.
president, or in his absence the vice-president,
or in the absence of both of them, one of the
directors present, chosen to act pro tempore.
shiill preside ; and the president, \dce-pretident ;;n'^;^;^i'''"^'
or president pro tempore so presiding shall vote
as a director, and if there is an equal division
on any ([uestion shall also have a casting vc.te.
(R.S.C. cnp. 120, sec. 10, part).
It may be noted that this section gives to the ])residing
otificer of a directors' meeting in addition to his own vote a
casting vote in case of an c(|uaiity of votes.
2a. The directors ni;»y make by-bnvs and ,^;,.„,,rai
regulations (not re})ugiiant to tho provisions ()f .yhvi'torl
this Act o)' the laws of Canada) toiicliing the
management and disposition of the stock,
property, afi'airs and concerns of the bank, and
touching the duties and conduct of the officers,
clerks and servants employed therein, and all
ote
18
Banks and Banking
force.
such other matters as appertain to the business
by^uw8iD*'° of a bank: Provided ahvays, that all by-laws
of the bank heretofore lawfully made and now
in force, in regard to any matter respecting which
the directors mav make bv-laws under this
section (including any by-laws for establishing
guarantee and pension funds for the employees
of the bank), shall remain in Ibrce until they
are repealed or altered b\' others made under
this Act. (R.'S.C. cap. 120, sec. 17, changed).
The power to authorize the crea'tion of pension and guar-
antee funds is now expressly conferred on the shareholders
by Sec. i8, ss. 2 of this Act.
As to the shareholders' powers to make by-laws see notes
to Sec. 18.
As to the shareholders' power of repealing or changing
existing by-laws that under this Act can only be made by
shareholders, see Sec. 18, ss. 3.
Aj)i)ointment
or officers, &c.
Security to be
given.
2». The directors may appoint as many
officers, clerks and servants for carrying on the
business of the bank, and with such salaries and
allowances, as they consider necessary, and
they may also appoint a director or directors
for any branch of the bank : (R.S.C. cap. 120,
sec. 18).
2. Before permitting any cashier, officer,
clerk or servant of the bank to enter upon the
duties of his office, the directors shall require
him to give bond, guarantee, or other security
to the siitisfaction of the directors, for the due
and faithful peribnuance of his duties ; R.S.C.
cap. 120, sec. IS. ss. 2 slightly changed).
Intkrnal Regulations
19
business
by-laws
and now
ig which
der this
Wishing
iployees
til they
le under
LUged).
and guar-
areholders
see notes
chansinq
made by-
many
on the
lies and
'V, and
irectors
ip. 120,
officer,
)on the
require
acurity
he due
R.S.C.
A surety by bond for the due performance of the ofifice of
a bank agent is not responsible for losses occurring after the
nature of the agency has been changed and the agent
appointed a cashier. Bank of Upper Canada v. Covert, 5
O.S. 541 (1834).
In an action on a bond. Plea, that the mode of paying
the clerk's salary had been changed from the manner stipu-
lated in the bond. Held, no defence. Bank of Toronto v.
Wilmot, 19 U. C. Q. B. 73 (1859).
Where the bond was for due performance of duties as
■clerk, or in any other capacity inhat soever, and it was pleaded
that the clerk was, without the defendant's consent, made
teller, which was another and more responsible office, and
that the defendant was thereby discharged, it was held
that this defence was bad. Royal Canadian Bank v. Yates,
19 U. C. C. P. 439 (1869).
In an action against the sureties on a bond guaranteeing
the honesty of one M. as cashier, a defence was pleaded
by the sureties of neglect of the directors of the bank in
not ins[)ecting the books so as to detect any malversation on
the part of M. Held, that io sustain this defence the
sureties must show connivance or such gross negligence as
to warrant the inference of fraud or connivance between
the bank and M. A further defence was raised that the
cashier had lieen employed by the directors in unlawful
speculalif)ns in the stock of the bank and other stocks in
the course of which he appropriated to his own use certain
funds of the bank kept at special accounts in connection
with such speculations.
Held, no defence — as the claim of the bank against the
sureties was for moneys so misappropriated and not for
losses occasioned by such unlawful speculations.
„ , ,, , „ ( 7 O.R., ^,09 (1884) affirmed.
Kxchange lank vs Barnes, ; , .vR . ^9° ( .886) -,4
hxchange Bank vs. Springer, | 3- ^. ,^ -,6-(,887).
•>4. The directors of the bank, or nnv four of >^,i"'ifii. l-oirt
them, — or any number not less than twenty-
five of the shareholders of the bunk, who jire
20
Banks and Banking
together proprietors of at least one-tenth of the
paid-up capital stock of the bank, by themselves
or by their proxies, — may, at any time, call a
special general meeting of the shareholders, to
be held at their usual place of meeting, upon
giving six weeks' previous public notice, speci-
fying in such notice the object of such meeting:
(R.S.C. cap, 120, sec. 11).
It is a general principle of corporation law that the notice
convening a meeting should specify in a general way the
business intended to be transacted thereat.
3
I
Removal of
president,
airector, &c.
New election.
2. If the object of any such special general
meeting is to consider the proposed removal of
the president or vice-president, or of a director
of the bunk, for maladministration or other
specified and apparently just cause, and if a
majority of the votes of the shareholders at
such meeting is iriven for such removal, a direc-
tor to replace him shall be elected or appointed
in the manner provided by the by-laws of the
bank, or if there are no by-laws providing
therefor, then by the shareholders at, such meet-
ing; and if it is the president or vice-president
who is removed, his office shall be filled by the
directors in the manner provided in caya of
a vacancy occurring in the office of president or
vice-president. (R.8.C. cap. 120. sec. 11, ss. 2).
As to shareholders' jjowers generally see notes to See. i8.
This sub-section gives the shareholders power to remove
directors for cause. Without this statutory power it would
appear that a company whose directors are aj)pointed for a
definite period has no inherent power to remove them before
Internal Regulations
21
the expiration of that period. Imperial Hy. Hotel Co.
Blackpool vs. Hampson, L. R. 23 Ch. Div. i (1882). See
also Harben vs Phillips, L. R. 23 Ch. Div. 14 (1S83).
25. Every shareholder shall, on all occasions votesonsharcs
on which the votes of the shareholders are
taken, have one vote for each share held by
him for at least thirty days before the time of
meetino- (see also ss. 6 hereof) ; and in all cases Ballot.
when the votes of the shareholders are taken,
the voting shall be by ballot : (R S.C. cap. 120,
sec. 10, ss. 1 part, ss. 4).
2 All (luestions proposed for the con sid era- Majority to
tion of the .l...reholders shall be determined by
the majority of the votes of the shareholders
present in person or represented by proxy ; and
the chairman elected to preside at any such meet-
ing of the shareholders shall vote as a share-
holder only, unless there is a tie, —in which case,
except as to the election of a director, he shall casting vote,
have a casting vote : (R.S.C, cap. 120, sec. 10, ss.
2, slightly changed.)
It is inii)urtaiit to observe that this clause in case ot an
equality ot votes gives the chairman of a shareholders
meeting a casting vote on all (juestions except that of the
election of a "irector, which is otherwise provided for, see sec.
19 ss. 6.
3. If two or more i)'*rsons are joint holders A>tM.i,,iiit
"^ _ _ liolilurs lit
of shares, any one such joint holder may he *'''="'^'^-
empowered, by letter of attorney from the
other joint holder or holders, or a majority of
them, to represent the said shares, and vote
accordingly : (R.S.C. cap. 120, sec. 10 ss. 3).
90!
Banks and Bankinc;
Proxies.
Renewal of
proxitis.
In certain
canes calls
must l)c paid
betbro votins,'.
4. Shareholders may vote by proxy, but no
person other than a shareholder eligible to vote>
shall be permitted to vote or act as such proxy*
and no manager, cashier, clerk or other subor-
dinate officer of the bank shall vote either in
person or by proxy, or hold a proxy for that
purpose : (R.S.C. cap. 120, sec, 10, ss. 1 part,
slightly changed).
It must be noted that by this sub-section the proxy must
not only be a shareholder, but a shareholder eligible to vote-
(see ss. I, 3 & 6 hereof).
As to the proxies see next subsection and section i8
hereof.
The president of a bank is not prohibited from voting on
proxies handed to him by other shareholders. Kegina vs.
The Bank of Upper Canada, 5 U. C. Q. B., 338 (1849).
5. No appointment of a proxy to vote at any
meeting of the shareholders of the bank shall
be valid for that purpose unless it hns been
made or renewed in writing within the two
years next preceding the time of such meeting:
(R.S.C. cap. 120, sec. 4, changed).
Under this Act proxies must bo renewed every two years
instead of three years as prescribed by the repealed Act.
As to the recording of proxies see .Sec. iS.
6. No shareholder shall vote, either in person
or by proxy, on any question proposed for the
consideration of the shareholders of" the bank at
any meeting of such shareholders, or in any
case in which the votes of the shareholders of
the bank are taken, unless he has paid all calls
made by the directors which are then due and
Internal Regulations.
23
payable: (R.S.C. cap. 120, sec. 13, i^liglitly
changed).
As to what shareholders are entitled to vote see Sec. 25,
ss. I and 3.
,r?>,^Z^-^>-^^'"^-"*"^
iection 18
CAPITAL STOCK. (^^
3CJ. The capital stock of the bank may be capftai^^ °
increased from time to time, by such percentage
or by such amount, as is determined upon by
by-law passed by the shareholders, at the
annual general meeting, or at any special
general meeting called for the purpose: Pr< > xi'lasury *'^
vided always, that no such by-law shall come
into operation, or be of any force or effect,
unless and until a certificate approving thereof
has been issued by the Treasury Board : (R.S.C.
cap. I'iO. sec. 7 part, changed).
The proviso at the end of the above section reijuiring the
approval of the Treasury Eoard is new. For the meaning
of the expression " Treasujy Board " see sec. 2 ss (b).
As to the powers of shareholders generally, see notes to
section iS.
2. No such certificate shall be issued by the *^-'>",'l'''''."3»|
J :i)iplK'iition for
Treasury Board unless application therefor is '^■'i"'^''^'
made within three months from the time of
the passing of such by-law, nor unless it appears
to the satisfaction of the Treasury Board that a
copy of such by-law, together with notice of in-
tention to apply for such certificate, has been
published for at least four weeks in the Caitmla
r-
^70
24
Banks anu Bankinc.
i^
Gazetfe, and in one or more newspapers pu)j-
lislied in the place where the chief otfice or
place of business of the bank is situate ; nothinj^
herein contained, however, shall be construed
to prevent the Treasury Board from refusing to
issue such certificate if it thinks best so to do.
(New).
How stock 27. Any of the original unsubscribed capital
ted. " stock, or of the increased stock of the bank,
shall, when the directors so determine, be
allotted to the then shareholders of the bank
pro rata, and at such rate as is fixed by the
directors, but no fraction of a share shall be so
allotted ; provided that in no case shall a rate
be fixed by the directors, which will make the
premium (if any) paid or payable on such
stock so allotted exceed the percentage which
the reserve fund of the bank then bears to the
paid-up capital stock thereof ; and any of such
alloted stock which is not taken up by the
shareholder to whom such allotment has been
made, within six mouths from the time when
notice of the allotment was mailed to his
address, or which ho d'/clines to accei)t, may be
offered for subscription to the public,, in such
manner and on such terms as the directors pre-
scribe. (R.S.C. cap. 120. sec. 8, added to
and changed).
The proviso which limits the Directors in tlxinu the
premium price of the stocks to be allotted hereunder i'. new.
Cai)ital stuck
tna.v lie re-
duced.
as. The capital stock of the bank may be
reduced by by-hiw pas.sed by the shareholders
C'aI'hai. Siucis
ira pub-
office or
not hill <>■
)nstrued
using to
to do.
capital
J bank,
ne. be
le bank
by the
II be 80
i a rate
ike the
1 such
which
to the
)!' such
)y the
s been
when
to his
lav be
I such
's pre-
?d to
'ig the
i*^ new.
ay be
>hlers
'si
;it the ;miiiiil u\MU'ral meeting, or at a special
geiiernl uiecting called for the i)urp()sc ; but no
such bv-liiw sliall coMie into oi)eration or bo of
fvrcf or I'lfcct until a certificate approving
thereof h.is b en issued by the Treasurx' Board :
(New).
Until ihc l),ls^,||l:^ of this Act tlic capital Nto( k of a hank
could (jtily i). icdiiccd by Act of Parliament. l!y this sec-
tion, Iiowi'vi r, jioucr to reduce the capital stock is ^iven to
the sh.iri'liol(lt.is to he exercised as provided herein. (See
sections 4 and 48).
2. No such certificate slndl be issued bv the crrtiHeauof
Iretisury iJoaid unless ai)plication therefor isHoam.
in;ide within three mi)nths from the time of
tlie ])assing of the by-law, nor unless it appears
to the siiti.sfaction of the Board that the .share-
hohleis voting for such by-law represent a
mnjority in value ol all the shares then issued
by the bank, and that a copy of the by-la iv,
together witii notice of intention to apply to
the Treasury Board for the issue of a certificate
approving thereof, has been published for at
least four weeks in the Qniadx Gazdte, and in
one or more newspai)ers published in the place
where the chief office or place of business of the
bank is situate; nothing herein contained, how-
ever, shall be construed to i)revent the Treasury
iioard fi'oui rel'using to issue sucli ccriiticate if
it thinks l)est so to d'>: (New),
3. In addition to evidence of the passing oi stat..ment.sto
the by-law and the publication thereof in the
mannei' above provided, statements sh(jwin<i-
It; ^iiliiiiittt'd.
26
]^\NK.-i AMI l'»ANKlN(i
Rt'duftion not
toattVctlia
the amount of stock isHiied and the munijcr of
sliareliolderw, with the amount of .stock held hy
each, ropre.sented at such mcetinj;, and the
nuniher of sharehohlers, with the amount of
stock hehl by each, wlio voted for such hy-hiw,
and also full statements of the assets and liabili-
ties of the bank, tojiether with a statement of
the reasons and causes why such reduction is
sought, shall be laid before the Treasury Board
at the time of the application for the issue of a
certificate approving such by-hvw : (New).
4. The passing of such by-law, and any
lloldiTS.
aj
If Icyisliitioii
i.s askiil to
saiictidu ru-
cUiction.
WHu'ofihare reduction of the capital stock of the bank there-
under, shall not, in any way, diminish or inter-
fere with the liability of the shareholders of the
bank to the creditors thereof at ihe time of the
issue of the certificate approving such by-law :
(New).
5. If, in anv cuse, leiiislation is souiiht to
sanction any reduction of the ca[)ital stock of
any bank, a copy of the by-law or resolution
passed by the sliiireholders in regard thereto,
together with statements similar to those above
provided to be laid before the Treasury Bjard,
shall be filed with the Minister of Finance and
lieceiver-General, at least one month prior to
the introduction into Parliament of the Bill
relating to such reduction : (New).
6. The capital shall not be reduced below the
amount of two hundred and fifty thousand
doll ars of paid-up stock. (New).
Limit to re-
duction.
'■■fi
SllAUI.S AM) C.\I.L.>.
27
SHARES AND CALLS.
ail. Tlic shares of the capital stock of the shar.-, an.i
hank shall he personal estate, and shall he or.'"" "^
assignal>le and transferahle at the chief place
of business of the bank, or at such of its
branches, or at such other place or places in the
United Kinj/doni, or in anv of the British
colonies or possessions, and according to such
form, and subject to such rules and regulations.
a>> the directors prescribe : and books of suii- "'!"'<'' "f
scription may be opened, and the dividends
accruing on any sh.-.res of such stock may be
uiade payable at any of the places aforesaid;
and the directors may appoint such agents in
the United Kingdom, or in any of the British
colonies or possessions, for the purposes of this
section, as they deem necessary. (R. S. C. cap.
120, sees. 11) in part and 20 in part, with addi-
tions ; see also sees, oo to 4 i of this Act).
ptioii.
SHARKS AkK V.\ THIS CLArSK I lECI.AKEI . TK ANSI' KKAKLE.
In Smitli V. The Hank of Xm-a .Scoti.i, 8 S.C.R. 558 (18S3)
It was held, ihai share> are, by the ex|)ress provisions of the
Banic Act (then 34 V., c. 5, s. 19) transferable at the will of
the holder, and that the directors are bound to register the
transfer unless there are debts or liabilities owing by the
shareholder to the bank, and that to justify the directors in
refusing to register transfers of shares they must bring them-
selves strictly within the terms of the section, and that a
resolution passed at a meeting of directors and shareholders,
28
HaNKm and H.\NKIN<i
purporting to restrain for a certain tiuK- the transfer of shares,
was ultra rins, and ronstipiently not hindin^ on dissenting
or absent sharehoider-i. Sue also Har^s v. IJank of Nova
Scotia, 6 C.l./r. 44,^ (i'S85).
Opinions have hcen recently expressed in ttic Hou-^e of
Lords in ICngland, that where the stock certificale issued by
a l).ink contains a note that the certificate nuist be sur-
rendered with the in^^trunlent ot or at th(; time of transfer, it
would be wrong for the l)aiik to register a transfer until the
certificate was produced, or its non-i)roduction satisfactorily
accounted for. This was decided in the case of a company
to which the Companies Clauses Consolidation (Scotland)
Acts ajjplied (S i*c 9 \'ic. ch. 17) the language of section 21
of which is almost identical with section 43 of this Act, it
was argued that the directors had no right to haini)er the
transfer of shares by such a condition or regulation, but Lord
Blackburn said he thought they had. See Colonial Hank v.
Whinney, L R. 11 Apr. Cas. 426(1886).
Payment of
sbcircs.
WHERE SHAKES CAN UE SOLD IN E.\ECUTION.
Jit re The Bank of Ontario, 44 U.C.Q.B., 247 (1879).
It did not appear in this case that the Ontario Bank had a
share register in Montreil, but it was decided that a sale in
execution in the Province of Quebec might be made of
shares of this bank whose head otitice was in Ontario, it
appearing that by the law of the Province of Quebec service
of process could be legally effected at the bran( h of such
bank in Montreal, and that the Consolidated Statute of
Canada, c. 70, is in Icrce in that province, tiy which
statute (section 2) ii is provided that where service of process
can be legally made on the com [-any, there the shares may
be seized and notice given.
ao. The share.s of the Ciipital f^tock sliall be
paid in by such instalments and at .such times
and places as tlie directors appoint : Provided
Sharks \ni> Calls.
39
always, that the diroctorH may cancel any huI- i'rf)vuo : tei
^ '' ^ '' ♦' per cent. Ill
scription for any share unlesH a sum equal tc>"/4Vption.''
ten per cent, at least on the amount subscribed
tor is actually |)aid at the time of, or within
thirty days nfter, the time of subscribing; but
such cancellaliun shall not relieve the subscriber
from his liability to creditors in the event of
insolvency as hereinafter provided. (R. S. C.
cap. lUO, sec. 20 changed).
The lan,miaL:c (jf the proviso to sec. 20 of the previous
Bank .\rt was as follows : " I'rovided always that no share
shall [)e held to he lawfully subscribed for unless a sum
efjual to at least ten per centum on the amount sul)scribed
for is actually paid at the time of or within thirty days after
the time of subscribing.'' Its meaning was discussed in the
winding u|. proceedings of the Central I^ank. Some of the
contribuiorits contended, though unsuccessfully, that if the
ten per cent, on the anM)unt subscribed was not paid at the
timeof theoriginalsubscriiHionfor bank shares or within thirty
days thereafter as re(iuired by the above proviso—although
afterwards paid to and accepted by the bank before the first
traii>fer of ihe shares took place, subsetiuent transferees of
the shares could not be placed on the list of contributories
in the winding up. In Haines A: Nasmuh's case (16 Ont. R.
39;,, 1S8.S, affd. 1 6 Ai)p. K. 237. 1S89, iS A.R. 209, ^889), the
Chancellor held that the provision as to jjaynient of the ten
per cent, is for the protection of the public, and till i)ayment
is n-.ade the [icrsfju subscribing may not be able to deal with
the slock, l)ut he is at least etjuitable owner, and may
beconu' legally entitled oti making the jjrescribed payment.
The contention thus put forward by the contributories in
liaines case would not be possible as the law now stands. The
language of the old proviso " no share shall be held to be law-
fully subscribed, kc" has been changed, and instead thereof a
power is given to the directors to cancel the subscription, the
subscriber still, however, remaining liable to creditors in the
event of the insolvency of the bank. (See sec. 89 et seq.)
ay-
30
IJ.VNKS AND LJaNKING
Calls on Shares, jjf^ Tlie directors may make such calls of
money from the several shareholders for the
time being, upon the shares subscribed for by
them respectively, as they find necessary : (R.
S.C. cap. 120, sec. 21).
A call was iiiade by four directors, one of whom was
not legally appointed. It was held that though on; of the
directors who joined in making the call was not legally
appointed, the call was valid, three of the directors who
made it being duly qualified, and that number being
sufficient under section 1 6. Bank of Liverpool v. Bigelow,
3 R. & C. 23*3, Nova Scotia (187S). The facts on which
this dtcisio;) i'^ founded do not appear very clearly in the
report. In Brice on Ultra Vires, 2nd edition, page 362, it
is laid down that where the power to make calls is vested in
the directors, a call made b) those who are actually directors
and not yet removed, even though illegally elected, will be
good. It would ajjpear, however, from the decision of the
Privy Council in The Garden Gully United Quartz Mining
Company v. McLister, L.R., i App. Cases, 39 (1875), ^'"'^^
to justify a forfeiture for non-payment of calls, the calls must
have been regularly made by a board oi directors who had
been duly elected, and this case seems to throw doubt on
the validity of calls made by a (k fact,i board of directors.
See also Bottomley's Case, 16 Ch. Div. 68 1 (1S80). As to
the powers and duties of directors to make calls when the
bank is insolvent, see section 92.
Time of calls
and notice.
Limitation.
2. Such calls shall be made at intervals of not
less than thirtv davs. and ui)on notice to be
given at least thirty days prior to the day on
which such calls shall be payable ; and no such
call shall exceed ten per cent, of each share
subscribed. (R.S.C. cap. 120. sec. 21, ss. 2).
There must be an interval of not less than thirty days
between the makint; of two successive calls as well as an
Shares and Calls.
31
interval of at least thiity days between the time of making
a call and the time fixed for payment thereof. Robertbon v.
La Banque d'Hochehiga, 4 L.N. 314(1881).
aa. The directors may, in case of the non- R,.eoveryof
pnyrueiit c)i" any call, ill the corporate name of'""^
the bank, sue for, recover, collect and get in all
such calls, or may cause and declare such shares
to be forfeited to the bank. (R,S.C. cap. 120,
sec. 22, slightly changed).
See also sections ^^ and 34.
This section gives power to the directors to forfeit shares
for non-payment of calls.
See Robertson v. Ban.jue d'Hochelaga, 4 L.N. 314
(i88i). The plaintiff in this action sought to have restored to
him certain shares in the defendant bank, which had been
forfeited by the directors for non-payment of calls. The
directors on three .several occasions notified the plaintiff that
unless the calls were paid they would sue him for the
amount. Without any further or other notification than this
they ijassed a resolution confiscating the shares. The court
decided that the directors having elected to sue could not
alter iheir election and proceed to confiscate the shares
without first giving the plaintiff a notice of their intention so to
do.
It has been decided that where the holder of stock dies
intestate and a call is made thereon after his death, admin-
istration will be grant, d to the nominee of the comjjany as a
creditor of the estate of the deceased. Totnlinson v. Gilby,
54 L J., 80(1885).
»» If any shareholder refuses or neglects to ForiVituro of
pay any instalment upon his shares^ of the Svi'mmor'"
c:»pital stock at the time a[)p<)inted therefor/''
sucli shareholder shall incur a i)enaltv to the
use (){ the bank of a sum of money equal to ten
;^2
Banks and Banking
case.
And traiist'er.
Sale in such per CGiit. of the aipount of such shares; and if
the directors declare any sh-ires to be forfeited
to the bank they shall within six months there-
after, without any previous formality other than
thirty days' public notice of their intention so
to do, sell at public auction the said share ', or
so many of the said siiares ai. sluill, after deduct-
ing the reasonable expenses of the sale, yieM a
sura of m(>ney sufficient to pay the unpaid
instalments due on the remjiinder of the said
shares and tne amount of penalties incurred
upon the whole ; and the president or vice-
president, manager or cashier of the bank shall
execute the transfer to the pi;rcliaser of the
shares so sold ; and such transfvr shall be as
valid and effect u;il in law as if it had been
executed by the original holder of the shares
thereby transferred ; but the directors, or the
shareholders at a general meeting, mav, notwith-
standing anything in this section contained,
remit, either in whole or in part, and condi-
tionally or unconditionally, any forfeiture or
penalty incurred by the nun-payment of
instalments as aforesaid, or the bank may
entbrce the [)ayment of any call or calls by suit,
instead of declaring the shares forteited. (R.S.
C. cap. 120, sec. 23, slightly changed).
Under section t,2 the dircct(jrs are empowered to
forfeit shares absolutely in case of nor.-jiaynient of calls.
Under this section the shareholder by nej.;lect to pay
calls incurs a forfeiture to the use of the bank of a sum of
money equal to ten per cent, on the amount of his shares ;
and the directors are empowered to sell— at public auction
Proviso.
Internal Regulations.
33
on giving thirty days' jirior public notice of sa'e — the said
shares or so many of them as shall, after deducting reasonable
expenses of sale, yield sufficient to pay the unpaid instalments
due on the remainder thereof and the amount of forfeitures
incurred on the whole.
Section ^t, would, therefore, seem to limit to the extent
therein provided tlie apparently larger right of forfeiture
given by section 32.
As to forfeiture for non-payment when bank is insolvent.
(See sees. 92 to 94).
Under this and also the preceding section the directors
are empowered to sue the shareholders for the amount due
on any call.
It would seem, however, that the directors have no ])ower
to forfeit and to sue. I'he jjower is apparently conferred in
the alternative— either to forfeit or sue. See Robertson v.
La Banque d'Hochelaga (1881), cited in note to section 32-
34. In any action brought to recover any
money due on any such call it shall not be -^"'t-
necessary to set forth the special matter in the
declaration or statement of claim, but it shall
be sufhcient to allege that the defendant is
holder of one share or more, as the c.ise may
be, in the capital stock of the bank, and is n I'ab.'prnv. d.
indebted lo the bank for a call or calls upon
such share or shares, in the sura to which the
call or calls amount, as the case may be, stating
the amount and number of such calls, whereby
an action has accrued to the bank to recover the
same from such defendant by virtue of this Act ;
and it shall not be necessary to prove the
appointment of the directors. (R.S.C. cap. 120,
sec. 22, ss. 2, changed)-
84
Banks and Banking
Conditimis m'
transfer dt'
shares.
Fraction of
sliarc not
transforablc
TRANSFER AND TRANSMISSION OF SHARES.
J$5. No assignment or transfer of the shares
of the capital st^ck of the bank shall be valid
unless it is made and registered and accepted
bj the person to whom tlie transfer is made, in
a book or books ke})t for that purpose, nor unless
the person making the same has, if required by
the bank, previously discharged all his debts
or liabilities to the bank which exceed in
amount the remaining stock, if :iny, belonging
to such person, valued at the then current rate :
and no I'ractional part of a share, or less than a
whole share, shall he assignable or transferable.
(R.S.C. cap. 120, sec. 20, in part).
In the liquidation of the Central Bank (a bank having its
head office in the Province of Ontario) the evidence showed
that the bank had adoj^ted the practice of dealing with its
shares by way of marginal transfer, that the first transferor
executed a transfer in blank, subject as by marginal note,
initialed by him, to the order of a broker, and that the
ultimate purcha'ser signed an accei)tance in the transfer
book immediately under the transfer so signed in blank by
the first transferor, the intermediate dealing of the broker
being omitted from extended record in the bank books, and
the ultimate purchaser being duly entered as a shareholder
in the stock ledger of the bank :— Held, that this amounted
substantially to an acceptance of shares transferred in blank,
which was lawful where transfer by deed was not prescribed,
and the entry in the stock ledger amounted to registration
within the meaning of the Act.
Where it api)eared that in one such case the transferee
did not sign the acceptance, but that he subsequently dealt
Transfer and Transmission of Shares.
35
with the shares by selling and transferring them : —
Held, that the transferees from him were properly placed
upon the list of contributories, notwithstanding anything in
the corresponding section of the Act then in force :— In re-
Central Bank-Baines& Nasmithscase i6 Ont. R. 293 (1888)
affirmed in App. 16 Apj). R. 237 (1889); 18 App. R. 209
(1891).
After a winding up order has been made it is too late for
holders of shares entered as such in the books of the bank,
to escape liability by showing irregularities in transfers to more
or less remote i)redecessors in title. A loan company which
advances money on the security of shares, which are trans-
ferred to and accepted by it in the ordinary absolute
form cannot escape liability on the ground that it is merely
a trustee for the borrower. — In re Central Bank of Canada-
Home Savings and Loan Company's case 18 Ont. Appeal
Reports 489 (1891).
An infant, however, may repudiate his liability as a con-
tributory. — thus when the infant's father signed her name
to a stock subscription book of a bank, paid the calls, and
received the dividend cheques, which were endorsed by
her at her father's request, the moneys being received by
him, and the bank was put into liquidation by winding up
proceedings, and the order for call against contributories
was made three months before she came of age ; and a
year after the liijuidation commenced she took proceedings
to have her name removed from the list of contributories : —
Held, that she was not liable as a contributory and that
her name must be removed from the list. In re Central
Bank-Hoggs case 19 Ont. R. 7 (1S90).
Where an intending purchaser of stock enquired of the
bank officers what claims the bank held against such stock,
and certain information was given, but before the arrange-
ment for the transfer of the slock was completed another
claim, which was then current in one of the other agencies
of the bank, was returned unpaid :— Held, that the bank had
a right to retain its lien on the slock for the additional sum
before allowing the transfer of the stock in its books :— Cook
wm
36
Banks and Banking
V. Royal Canadian Bank, 20 Chy., i (1873). See also sec-
tions 29, 37, 38 and 65.
'I'ransterors of' shares whose transfers have been registered
within sixty days of the suspension of payment by the bank,
remain liable for calls. See sections 89 and 96.
By the combined effect of this section and section 65 the
bank is entitled to a lien upon the shares of any shareholder
for any debt or liability for any debt to the bank and
wh».ther matured or only maturing — and may decline to
l)erinit any transfer of such shareholder's shares until pay-
ment of such debt.
;?f? \ list of all transfers of shares registered
f<!rsuf/"koi'.t CM .' in the books of the bank, showing the
piu.ioj. u, such transfers and the number of
sliM'es transferred in each case, shall^be made
up at tii en.i oi e.ncb day and kept at the chief
place of business oi' the bank, for the inspection
of its shareholders. (R.S.C. cap. 120, sec. 30).
*S7. AH sales or transfers of shares, and all
j.iiar(smii8t 1)0 contracts and agreements in respect thereof,
rt'Kisfert'd " , *■ '
owner. hereafter made or purporting to be made, shall
be null and void (saving however, as to a pur-
chaser not having knowledge of the defect, his
rights and remedies under the contract of sale),
unless the person making such sale or transfer,
or in whose name or on whose behalf the same
is made, is at the time thereof the registered
owner in the books of the bank of the share or
shares so sold or transferred, or intended or
purported so to be, or has the registered owner's
assent to the sale, and the distinguishing
number or numbers of such share or shares, if
Transfer and 'l'kANs.\ii>,sio\ oi Shark-. 37
any, shall be de.Mgiiated in the contvaot or
agreement of sale or traiislcr ; and any i)ei'son,
whether principal, broker or agent, who violates
the provisions of this section bv wilRillv sellin"'
or transferring, or attempting to sell or trans-
fer, any share or shares by a false nnmber, or
of which the principal is not, at tlie time of
such sale or attempted sale, tlie regist(!red
owner, or acting with the registered owner's
assent to the sale, shall be ouiltv of an oifence
against this Act. (New).
This is a new section and is intended to prevent as much
as possible the rigging of the marl^ct and the traffuking in
bank shares.
;\H. When any share of the capital stock has
been sold under a writ of execution, the ollicer [?'''' ""^ "'""""^
by whom the writ was executed shall, within
thirty days after the stile, leave with the bank
an attested copy of the w^it, Avith the certificate
of such officer endorsed thereon, certifying to
whom the sale has been made ; and thereupon
(but not until after all debts and liabilities of
the holder of the share to the baidc, and all
liens existing in favor of tin; bank thereon,
have been discharged, as herein provided), the
president, vice-president, manager or cashier of
the bank shall execute the transfer of the share
so sold to the purchaser; and such transfer
shall be, to all intents and purposes, as valid
and eflectual in law as if it had Ijcen executed
by the holder of tlie said share. (R.S.C. cap.
120, sec ol, slightlv changed).
S.ile (It
!ii(i. r I'Xfi'U-
tioJI.
38
Banks and Banking
!
!
.
1*V
t-
ejttnl.
By 34 Vic, c. 5, s. 19, the sheriff was the officer
empowered to sell shares under a writ of execution. But it
was, notwithstanding, held in /// ;r The Bank of Ontario,
44 U.C.Q.B., 250 (1879), that an execution from the Sui^orior
Court of ^^ontreal niij^ht be validly executed by a sworn
bailiff of the court instead of by the sheriff, and the bailiff
might fulfil the duties imposed on the sheriff by that section,
it appearing that under the law of the Province of Quebec
the bailiff is authorized to act and sell in the same way as
the sheriff This last point would not arise under this section
as now worded.
Cook V. Royal Canadian Bank, 20 Chy., (1873), "'"^^
notes to section 35 and section 65.
30. If the interest in any share in the capital
Transmission ^ ' _ '
otiirnvNMb.nn ^^^^^ becomcs transmitted in consequence of
ilow'airtin'nti. tlie death, bankruptcy, or insolvency of
any shareholder, or in consequence of the
marriage of a feniale shareholder, or by any
other lawful means than by a transfer according
to the provisions of this Act, such transmission
shall be authenticated by a declaration in
writing, as hereinafter mentioned, or in such
other manner as the directors of the bank
require ; and every such declaration shall
distinctlv slate the manner in which and the
person to whom such shares have been trans-
mitted, and shall be made and signed by such
person ; and the person making and signing
such declaration sijall acknowledge the s:\nie
before a judge of a court of record, or before
the mayor, provost or chief magistrate of a city,
town, borough or other place, or belore a notary
public, where the same is made and signed;
and every declaration so signed and acknowl-
Transfer and Transmission of Shares,
39
edged shall be left with the cashier, inannger or
other oflicer or agent of the hunk, who shall
thereupon enter the nnn.e of the person entitled
under such transmission in the register of share-
holders; and until sucli transmission has been
so authenticated, no person churning by virtue
of any such transmission shall be entitled to
participate in the profits of the bank, or to vote
in respect of any such share of the capital
stock: Provided always, that every such
;is t(j
declaration and instrument as, by this and the i ,'i"''ii<'>'.
next following section of this Act, are required '''''''''"^^
to perfect the transmission of a share in the
bank which is made in any country other than
Canada, or any other British colony, or the
United Kingdom, shall be further autiienticated
by the clerk of a court of record and under the
seal of such court, or by the British consul or
vice-consul, or other accredited representative
of the British Government in the country
where the declaration is made, or shall be made
directly before such British consul or vice-
consul or other accredited representative ; and
provider^ also, that the directors, cashier oi r.^isonp-
other ollicer or agmt of the bank may require ^S' ^'.l' n^lln-
corroborativo evidence of an\' fact afloized in "''
any such declaration. ( R S.d cap. 120, sec. 32,
slightly changed).
40. If the transmission of any share of the
capital stock has taken place b^^' virtue of the Karrinti^'l.f
marriage of a female shareholder, the declara- ''''''''' '"""
tion shall be accompanied by a copy of the
TP"
40
Banks and Dwkim;
Trnnsinissioii
by diiccnsi;.
register ol' siicli marriage, or other purticular.s
of tlie celehrntioi! thereof, and shall deehire the
identity of the wiie witli tlie hohler ot snch
share, and sliall \h' made and signed by such
female shaieholder and her husband ; and thev
may inolude therein a (h'claration to the elVect
that the' share transmitted is the separate
|)ro[)('rty and innler the sole control of the wife,
and tliat she may receive and grant receipts for
the dividends and profits acciuing in respect
thereof, and dispose of and transfer the share
itseU, Avithont reipiiring the consent or authority
of her hns!)and : ajid such declaration shall be
binding u[)on the br.idc and persons making
the same, until the said persons see lit to
revoke it by a written notice to that eiVect to
the bank ; but the omission of a statement in
any such declaration that the wife making the
same is (hdy authorized by her husband to
make the same shall not invalidate the declara-
tion. (R.S.C. cap. 120, sec. oo).
II. If the transmission has taken place by
virtue of any testamentary instrument, or by
intestacy, the probate of the will, or the
letters of administration, or act oi curatorship
or tutorship, or an ollicial extract therefrom,
shall, together Avith such declaration, be pro-
duced and left with the cashier or other ollicor
or agent of the bank, w^ho shall, thereupon,
enter in the reiiister of shareholders the name
of the person entitled under such transmission.
(R.S.C. cap. 120, sec. o4).
:
TRANSri.R AM) rRANS.\ri.SM()\ OF SlIAKKS.
41
A'i. ir tbu triiiismisHioii oi' any sliare of the I'nitiMii.n.
capital .stock lias taken place hy virtue of the ^"'■
decease of any shareholder, the [jrodnciion to
the directors and the deposit with theui of an
authentic notarial copy of the will of the
drceased shareholder, if sueh will is in notarial
form accordin,!;' to the law of the Province of
Quebec, or of any authenticated copy of the
prohate of the will of the deceased shareholder,
or of letters of Mdniiuistration of his estate,
or of letters of verifieation of heirship, or of the
act of curatorship or tutorshii), uranted hv iinv
court 111 Canada having power to grant the
same, or by any court or authority in Kngland,
WmIcs, Ireland, or any iJritish colony, or of any
testament testamentary or testament dative
expcde in Scotland, or, if the deceased share-
holder died out ol Her Majesty's dominions,
the i)roduction to and deposit with the directors
of any authenticated copy of the prol)ate of his
will or letters of administration of his property,
or other document of like import, granted by
any court or authority having the requisite
power in such matters, .vhall be sulficient justi-
fication and authority to the directors for paviiiir
any (lividend, or for transferring or authorizing
the transfer of any sliar.', in pursuance of and
ill conformity to such probate, letters of adniin-
istnition, or other such document as aforesaid.
(R.S.C. cap. 120, sec. 34, changed).
'I'his section gives more specific directions than its [prede-
cessors as to the proofs to be produced hereunder.
w
43
Banks and I^vnkino
lliiiik not
hoilllil to Mc'c to
truHtsrpf itt
Mhiin-x.
't:t. The biUik hIuiU not ho bound to .see to the
oxocution of any trust, whether oxih'osh, iin[)Ue(l
or constiMuUivo, to which any sliare of its stock
is suhje(!t ; and the recei[)t of the person in
wliose name any such sliare stands in the hooks
of the bank, or, if it stands in tiie name of uiore
persons tlian one, tlie receipt of 'jneof such pi-r-
sons sliall he a sulficient discharge to the hunk
for any (Uvidend or any other sum of money
payable in respect of such shiire, unless express
notice to the contrary has been given to the
hank; and the hank shall not be bound to see
t') the ap[)lication of the money paid upon such
receipt, whether given by one of such persons
or all of them. (ll.SC. cap. 120, sec. 37.)
This scclion deals wiili trusts to which shares may be
subject — see also sections 29, 35 it 30. As to trusts to which
deposits may be subject, see section 84, ss. 3.
Under 25 and 26 \'ic., (-ap. cSq, sec. 30 (imp.) " 'I'he Com-
pany's Act, 1862" which is as follow^ : " No notice of any
trust, e.\[)ressed, implied, or coiihtructive, shall be entered on
the register, or be receivable by the registrar, in the case of
Companies under this Act," it was decided that where the
owner of shares at different limes makes in fa\or of each of
two persons, an cfpiilable assignment of such shares, such
assignments rank according to their resj.ective dates, and the
second transferee by giving notice of his assignment to the
bank, before the first transferee does so, does not thereby
acquire any priority over the first transferee because to hold
otherwise would be to convert the bank into a trustee and to
bind it with the notice of a trust. Societe Gcnerale de Paris
vs. Walker, L.R. 11 App. Cases, 20 (18S5) affirming S.C. in
L.R. 14 Q.H.D. 426.
From the opinions expressed by the Lord Justices in the
above case it would seem that section 43 of this Act on this
Transfer and Transmission ok Sharks.
4M
point would probably receive a similar interpretation to that
placed upon section 30 of the ("uni|)atiies Act, i86j. ll
will of course be observed that section 44 of this Act evid-
ently contemplates the entry of trusts to some extent t)n the
book^ of the bank.
Now if a slinre stands on the books of the b.uik, earmarked
with a tru >t — or, if stands on its books, not so earmarkiil but
the b.ink has in f.u l received actual notice that such share is
affected by a trust, is it Liwlul for the bank to allow a transttr
of the same, without the concurrence of any one except the
person in whose name the share stands in the books of the
bank? This is a very nni)ortant (piestion. It is cjnceived
that the bank will he safe, if the transfer is executed by the
person who is the registered shareholder. It has been the
universal practice and rightly so, as we think, to act u])on
transfers so executed. But Mr. Justice Lindley in the case
cited in his judgment says : " I have no doubt that if direct-
ors allow a transferor to make a transfer which they know to
be fraudulent they could be made liable for ihe value of the
shares transferred ; they would make themselves parties to
his fraud. Moreover, a refusal by directors, or an omission
on their part, to pay attention to a notice given to them by a
person having an equitable interest in shares, and requiring
the directors not to register a transfer for such time as may
be necessary to allow him time to apply for a proper restrain-
ing order, would \)c prima facie improper. Such conduct on
the part of directors, unless explained, would be strong evi-
dence of fraud on their part, liut this is quite consistent
with holding comjianies not bound to take notice of etpiitable
interests in shares, not followed \\\^ by jiroccedings to restrain
a transfer."
Though a bank is not bound to see to the execution of
any trust in regard to its own shares — it, like all other persons,
is bound by notices of trust in resiiecl of shares which may
be accepted by it as collateral security for advances.
There have been several important cases decided on this
point quite recently, — In the bank of Montreal vs. Sweeny,
L.R. 12 App. Cases 617 (1887), where shares of a Rolling
w
44
Banks and Banking
i|:
Mill Co. stood in the name of one Rose, in trust, and he
transferred the same to the bank as security for a debt which
he owed to it, the Privy Council decided that the bank
had express notice tliat, as regards the shares transferred to
it, Rose stood to some person in the reiucion expressed by
the words " in trust," and it was the duty of the bank to de-
cline to take tlie shares until it had ascertained that Rose's
transfer was authorized by the nature of the trust, and as
Rose had no authoritv to make such a transfer, the bank
could not retain the shares against the person proved to be
beneficially entitled to them and for whoui Rose held them
intrust; see also Rai)hael vs. McFarlane, i8 S.C.R. 183
(189c); Petry vs. La Caisse D'Economie, 19 S.C.R. 713
(1891). Duggan vs. London & Canadian Loan & Agency
Co. 19O.R. 272 (1890); 18A.R. 305(1891); 20 S.C.R.
481 (1892) ; Earl of Sheffield vs. London Joint S:ock I5ank,
13 App. Cas. 333 (1S88) ; London Joint Stock Bank vs.
Simmons, 1892, App. Cas. 201.
Executors .111(1
tnistciis not
iifisoiially
lialdu. '
Kxciiiilio 1.
41. No person holding stock in the bank as
executor, administrator, guardian or trustee, of
or for any person named in the books of the
bank as being so represented by him, shall be
personally subject to any liability as a share-
holder, but the estate and funds in his hands
shall be liable in like manner and to the same
extent as the testator, intestate, ward or person
interested in such trust fund would be, if living
and competent to hold the stock in his own
name; and if the trust is lor a living person,
such person shall also himself be liable as a
shareholder; but if such testator, intestate,
ward or person so represented is not so named
in the books of the bank, the executor, admin-
istrator, guardian or trustee shall be personally
Transfer axd Transmission of Shakes. 45
liable in respect of such stock as if he held it in
his own name as owner thereof.
In order to exempt the executor, administrator, guardian
or trustee from personal liability under this section, the name
of the testator, intestate, ward or person oeneficially interest-
ed must appear on the books of the bank. After the City of
Glasgow Bank faWure the personal liability of Trustee Share-
holders was brought prominently before the public and led
It ir, believed, to the adding of this clause to the Bank Act'
See .\ruir vs. City of Glasgow Bank, L R. 4 App. Cas. 427
(1879),
ANNUAL STATEMENT AND INSPECTION.
45. At every annual meeting of the «hare- sHt.,,,. t
holders for the election of directors, the out- SHlH?
going directors shall submit a clear and full ""'
statement of the affairs of the bank, containing
on the one part,—
The amount of the capital .stock paid in, the
amount of notes of the bank in circulation, the '''^•'"i"'^«
net profits made, the balances due to other
banks, and the cash deposited in the bank, dis-
tinguishing deposits bearing interest from those
not bearing interest; and on the other part,—
The amount of the current coin, the gold and
silver bullion, and the Dominion notes held by '''"''•
the bank, the balances duo to the bank fr..ni
other banks, the value of the real and otlier
property of the bank, and the amount of debts
M
Uanks and Banking
What state-
iTioiit shall
show
II f<i 'i
Ins|)(!C'tioii
liooks, &c.
of
II >'
■s
III
owing to the bank, including and particulariz-
ing the amounts so owing upon bills of ex-
change, discounted notes, mortgages and other
securities, —
Exhibiting, on the one hand, the liabilities
of, or the debts due by the bank, and on the
other hand the assets and resources thereof;
and the said statement shall also exhibit the
rate and amount of the last dividend declared by
the directors, the amount ol reserved profits at
the date of such statement, and the amount of
debts due to the bank, over-due and not paid,
with an estimate of the loss which will probably
accrue thereon. (R.S.C. cap. 120, sec. 24,
changed.)
40. The books, correspondence and funds of
the biink shidl. at all times, be subject to the
inspection of the directors ; but no person, who
is not a director, shall be jiUowed to inspect the
account of any person dealing with the bank.
(RS.C. cap. 120, sec. 25).
In an action against tlie sureties on a bond guarantee-
ing the honesty of one M. as cashier, a defence was pleaded
by the sureties of neglect of the directors of the bank in not
inspecting the books so as to detect any nalversation on the
])art of M. Held, that to sustain this defence the sureties
must show connivance or such gross negligence as to warrant
the inference of fraud or connivance b<^tween the bank and M.
Exchange Bank vs. Barnes, I ;,^^^:^;,^3,^j;f8^i);'^^ '^•
Exchange Bank vs. Springer, | ^;^ ^^.R 716 (1887).
Dividends.
47
DIVIDENDS.
4T. The directors of the bank shall, subject
to the provisions of this Act, defi^re quarterly ^- ''''''■'"'8-
or halfyearly dividends of so much of the profits
of the bank ns to the nuijority of them seems
advisable ; and they shall give at least thirty
days' public notice of the payment of such divi-
dends previously to the date fixed for such pay-
ment ; and they may close the transfer books
during a certain time, not exceeding fifteen
days, before the payment of each dividend.
(R.S.C. cap. 120, sec. 9 part, sec, 26 part, slight-
ly changed).
The restrictions imposed on directors in connection with
the declaration of dividends are contained in the next two
sections, viz :— Sections 48 and 49.
•4'*<. No dividend cr bonus shall ever be de-
clared so as to impair the paid-up capital; aiul pii'Si' "'''
if any dividend or bonus is so declared or made """"
payable, the directors who knowingly and wil-
fully concur therein shall be jointly and sever-
ally liable for the amount thereof as a debt due
by them to the bank ; and if any part of the
paid-up capital is lost, the directors shall, if all
j.K^ 1 •! 1 , , . . , Cai)ital lost tn
the subscribed stock is not paid up, forthwith ''''"'*'"'''"•'
make calls upon the shareholders to an amount
equivalent to such loss ; and such loss and the
calls, if any, snail be mentioned in the next re-
;(
48
Banks and Ban.cing
Proviso
turn raade by the bank to the Minister of
Finance and Receiver-General : Provided that,
in any case in which the capital has been im-
paired tis aforesaid, all net profits shall be
applied to make good such loss. (R.S.C. cap.
120, sec. 27).
When a bank has impaired its paid-up capital hy losses it
is expressly forbidden by the proviso at the end of ti.e above
section to pay any dividend until such impairment has been
made good. Consequently, heretofore the bank has generally
made application to Parliament to reduce its capital so as to
enable it to go on paying dividends. By this Act, however,
power is given to the shareholders to reduce the capital of
the bank by bylaw. See sections ^ ..nd 28.
4«. No division of profits, either by way of
P'uS ti^re dividends or bonus, or both combined, or in any
IS a cortainn.- q^^qj. ^.^^^ exceeding the rate of eight per cent
per annum, shall be raade by the hank, unless,
after making the same, it has a rest or reserve
fund equal to at least thirty per cent of its paid-
up capital ; and all bad and doubtful debts shall
be deducted before the amount of such rest is
calculated. (R.S-C. cap, 120, sec. 28, slightly
changed).
serve
Reserves.
49
RESERVES.
50. The bank shall hold not less than forty
per cent of its cash reserves in Dominion notes ;£SF''
and every bank holding at any time a less
amuiint of its cash reserves in Dominion notes
than IS prescribed by this section shall incur a
penalty of five hundred dollars for each and
eve. y violation of the provisions of this section • P^^^'tv for
(R.S.C. cap. 120, sec. 39 part, slightly changed)' "-•"'''''
•^. The Minister of Finance and Receiver
General shall make such arrangements as aresu,.p,vo,
necessary for insuring the delivery of Dominion not':4'"""
notes to any bank, in exchange for an equival-
ent amount of specie, at the several offices at
Avhich Dominion notes are redeemable, in the
cities of Toronto, Montreal, Halifax, St. John
N.l>., Winnipeg, Charlottetown and Victoria,
respectively; and such notes shall be redeeni-
able at the office for redemi)tion of Dominion
notes in the place where such specie is o-iven in
exchange. (R.S.C. cap. 120, sec. 31?, ss 2
added to).
As to issue and payment of Dominion notes generally se
Kc vised Statutes of Canada, cap. 31.
see
60
Banks and Banking
Amount and
(It'iioniination
(>( bank notes.
Note issue of
Han(|iie uu
INui)le and
Hank of B.I -
tis<h North
America.
NOTE ISSUE.
iSl. The bank may issue and re-issue notes
payable to bearer on demand and intended lor
circulation ; but no such note shall be for a sura
less than five dollars, or for any sum which is
not a multiple of five dollars, and the total
amount of such notes, in circulation at any time,
shall not exceed tne amount of the unimpaired
paid-up capital of the bank : (R.S.C, cap. 120,
sec. 40, changed).
2. Notwithstanding anything contained in
the next preceding sub-section, the total
amount of such notes in circulation at any time
of La Banque du Peuple and the Bank of !5rit-
ish North America respectively shall not exceed
seventy-five per cent of the unimpaired paid-up
capital of such banks respectively, but each of
such banks may issue such notes in excess of the
said seventy-five per cent upon depositing, with
respect to such excess, with the Minister of
Finance and Receiver General, in cash or bonds
of the Dominion of Canada, an amount equal to
the excess ; provided always that in no case
shall the total amount of the notes of either of
the said banks in circulation at any time exceed
the unimpaired paid-up capital of such bank ;
and the cash or bonds so deposited shall be
available by the Minister of Finance and
Receiver General for the redemption of notes
issued in excess as aforesaid, in the event ot the
Note Issuk.
51
suspension of the said banks respectively
(New). ^ ^'
3. If the total amount of the notes of the
bank in circulation at any time exceeds the i^si':;.-^';;':
auiount authorized by this section, the bank "'"'' '
shall incur penalties as follows: If the amount
of such excess is not over one thousand dollars,
a penalty equal to the amount of such excess •
if the amount of such excess is over one tlious-
and dollars and is not over twenty thousand
dollars, a pe.ialty of one thousaiKf dollars; if
the amount of such excess is over twenty thous-
and dollars and is not over one hundred thous-
and dollars, a penalty of ten thousand dollars ;
if the amount of such excess is over one hun-
dred thousand dollars and not ovei- two hundred
thousand dollars, a penalty of fifty thousand
dollars; and if the amount of such excess is
over two hundred thousand dollars, a penalty of
one hundred thousand dollars: (R S.C. cap.
120, sec. 40, ss. 2, changed )
Xotes under |5
to In- fiill.il in.
4. All notes heretofore issued or re-issued by
the bank, and now in circulation, which are for
a sum less than five dollars, or for a sum whicu
is not a multiple of live dollars, shall be called
in and cancelled as soon as practicable. (R.S.C.
cap, 120, part of sec. 40.)
53. The bank shall not pledge, assign, or ,
hypothecate its notes; and no advance or loan J!^^'''-^^^^^^^^^^^
made on the security of the notes of a bank
Penalty (or
plcd^iinu--.
52 Banks and Banking
ahnll be recoverable from the bank or its assets :
(New).
This sub-section strikes at and prohibits the creation of
preferences by the transfer of blocks of bank notes by the
bank ofificers by way of pledge or assignment or hypotheca-
tion.
2. Every person who, being the president,
vice-president, director, principal partner en
commandite, general manager, manager, cashier,
or other officer of the bank, pledges, assigns, or
hypothecates, or authorizes, or is concerned in
the pledge, assignment or hypothecation of the
notes of the bank, and every person who accepts,
receives or takes, or authorizes or is concerned
in the acceptance or receipt or taking of such
notes as a pledge, assignment or hypothecation,
shall be liable to a fine of not less than four
hundred dollars and not more than two thous-
and dollars, or to imprisonment for not more
than two years, or to both: (New).
3. Every person who, being the president,
ini|'ivl|;y.r'isMK; vloc-president, director, principal partner en
conimaudite, general manager, manager, cashier,
or other officer of a bank, with intent to de-
fraud, issues or delivers, or authorizes or is con-
cerned in the issue or delivery of notes of the
bank intended for circulation and not then in
circulation, — and every person who, with know-
ledge of such intent, accepts, receives or takes,
or authorizes or is concerned in the accept-
ance, receiptor taking of such notes, — shall be
guilty of a mis-demeanor, and liable to im-
Peiialtv lor
or takiiii;' ol
IlOtL'S.
Note Issue.
53
prisonnient for a term nut exceeding seven
years, or to a fine not exceeding two thousand
dollars, or to both. (New.)
The currency of this country consisting substantially of
the notes of chartered banks, this act contains several provi-
sions for increasing the circulating power thereof and in the
event of the insolvency of the bank for ensuring the payment
of the same. (See sees. 53, 54, 55, 56.) These provisions
it is believed will prove sufficient for the purpose, but they
were only designed to ensure payment of notes bond fide in
circulation and performing the functions of currency or
money.
5a. The payment of the notes issued or re-
issued by the bank and intended for circulation. Notes to iiotirst
and then mcirculation, together with any interest ''^^*'''--
paid or payable thereon as hereinafter provided,
shall be the first charge upon the assets of the
bank in case of its insolvency; and the payment
of any amount due to the Government of Canada,
in trust or otherwise, shall be the second
charge upon such assets; and the payment of
any amount due to the Government of any
of the Provinces, in trust or otherwise, shall be
the third charge upon such assets: (R.S C.
cap. 120, sec. 79, added to.)
In cases of insolvency of the bank this section makes the
" notes in circulation " a first charge upon its assets and
then declares that the Dominion Cloverninent's indebtedness
shall be the second charge and the Provincial Government's
indebtedness the third charge. 'I'he priority of Ciown
debts on the bank's assets now depends on this legislation.
See cases on this question decided prior hereto — Exchange
Bank vs. Queen (Quebec) L.R., 1 1. Ai>p. Cas. 157 (18S6)
54
Banks and Bankinc.
Queen vs. Bank of Nova Scotia (P.E.I.) ii S.C.R. i (1885),
I-iciuidators Maritime Bank vs. Queen (N.H.) 17 "^.C.R. 657
(18S9). (This last case deals with moneys held in trust by
the Crown as represented by the Dominion Government.)
Liquidators Maritime Bank vs. Queen (N.l?.) App. Cas.,
(:;;.;.).
2. The uinount of any peiinlties for which tl)e
p.'n!.1''/^s ill' bank is liable shall not form a charge upon the
veney.. "*' as.scts ot" sucli bauk, in case of its insolvency,
until all other liabilities are paid. (New.)
to live per
cent 111' Mot<'
I'irciiliilioii.
ill. Every bank to which this Act a])plies,
E.\i>tiii^'- banks i i • i • • "i. i • i. j.i j.*
toiMiik,. (!-■ and wliicli is carrying on its business at the tune
i)c)sit with llio i"» • • 111 -i"
ijinisi,!- .,1 when this Act comes into Jorce, sliall, within
fifteen days thereafter, pay to the Minister of
Finance and Receiver General, a sum ol money
ecpial to two and one-lrilf per cent, of the aver-
aue amount of its notes in circulation duriiiL^
the twelve uioulhs next ])re{''.'ding the date of
the coming into force of this Act, or if such
bank has not been in operation foi- twelve
numths, a sum of money equal to two and one-
half per cent, of the average amount of its notes
in cii'culation during the time it has been in
operation ; and each bank shall, within fifteen
days, fiom and alter the first day of July, in
the ye.ir one thousand eight hundred and
ninety-two, pay to the Minister of Finance and
Receiver General such further sum of money
as is necessary to make the total amount so
paid by each bank to be a sum equal to five per
cent, of the average amount of its notes in cir-
Note Issue. 55
ciilation during the twelve montliH next pre-
ceding the date In.st mentioned, — which huui
shall be adjusted annuullv as hereinafter pro-
vided : (New.)
li. Tlie Merch'.ints' IJank of I'riiice Edward
Am to Mil-
Lslitud shall, on or betove the dav upon which '''■',','':,' '^"''<
it beconu'S subject to the provisions of this Act,
pay to tlie Minister of Finance and Receiver
General such sum as appears to the satisfaction
of the Treasury Board to be equal to two and
one-half per cent of the average amount of its
notes in circulation during the then preceding
twelve monllis; and shall lurther ])My to the
Minister ol" Fiiumce and Receiver General,
within fifteen days from and after the first day
of July in the year then next following, such
i'urthci' sum as is necessary to make the total
sum paid by the said bank to be a sum ecpial
to five per cent, of the average amount of its
notes in circulation from the time the said bank
became subject to the provisions of this Act to
the said first dav of Julv, — whicii sum shall l)e
adjusted annuallv as hereinafter provided :
(New^)
3. The Minister of Finance and Receiver
General shall, upon the issue of a certificate tuk^ '"''"
unc^er this Act authorizing a bank to issue notes
and commence the business of banking, retain
out of any moneys of such Ijank then in his
possession the sum of five thousand dollars, —
which sum shall be held for the purposes of this
t il
(' I
f
M
Banks anh I'.\Msin(.
Formation of
ciroulRtloii
rprl<'itiiilion
t'linil.
Hoctioii, until tlie annual ailjustniunt horeundiT
takes placo in tho year then next lollowing,
at u'liioh timo the amount at tlio credit of tho
bank shall be adjusted by payment to or l>y the
bank of" such sum as is necessary to make the
amount at tlie credit of tiie bani-c to be a sum of
money ecjual to fiv<» per cent, of tin; average
amount of its notes in circulation from the time
it commenced business to the time of such nd-
justment, — which sum shall be adjusted an-
nually as hereinafter provided : (New.)
4. The amounts so paid, retained, and
kept on deposit as aforesaid shall form a fund to
be known as "The Bank Circulation Redemp-
tion Fund," — which fund shall be held for the
following purpose, and for no other, namely :
In the event of the «uspension by the bank of
payment in specie or Dominion notes ot any of
its liabilities as they accrue, for the payment of
the notes then issued or re-issued by such bank,
and intended for circulation, and then in circu-
lation, and interest thereon ; and the Minister
of Finance and Receiver General shall, with
respect to all notes paid out of the said fund,
have the same rights as any other holder of the
notes of the bank : (New.)
., ,,i*n. „. '5- Tlie fund shall bear interest at the rate of
jiiKiest. three per cent, per annum, and it shall b^
justed, as soon as possible after the thin, h
day of June in eaeli year, in such a way as to
make the amount at the credit of each bank
NoTK Issue.
at
X(.t.'
tloll,
tlTIIl
cil-Clllll-
llOW (If-
llll'll.
contributing tlioroto. uhIchh JuMvin otlicrwiHc
Hpeciiilly providL'd, tM[tuil to five per cont.ol'tlu!
aveni,s;o note circulation ofnucli bank durin- tiic
then next preceding twelve n.ontliH: (New. )
b. The average note circulation of a bank
during any period .shall be determined tVoni the
avenigeoC the amount of it.s notcH in circulation,
ah .shown by the monthly return.s for .such period
made by the bank to the Mini.ster of Finance
and Receiver General ; and where, in any re-
turn, the greatest amount of notes in circula-
tion at any time during the month is given,
such amount shall, for the purposes of this
section, be taken to be the amount of the notes
of the bank in circulation during the month to
which such return relates : (New.)
7. In the event of the suspension by the ^.„,,,^ ^^^. ,,^j^^
bank of payment in .specie or Dominion notes- fMybilri '
of any of it.*^ liabilities as they accrue, the notes u'',aiimi;.'"c;m..,i.
of such bank, i.ssued or re-is.sued and intended
for circulation, and then in circulation, .shall
bear interest at the rate of .six per cent, per
annum, from the day of .such suspension to
such day as is named by the directors, or by
the liquidator, receiver, assignee or other pro-
per oHicial, for the payment Lliereof,— of which
day notice shall be given by advertisement for
at least three days in a newspaper published in
the place in which the head ollice of the Oiink
is situate ; but in case any notes presented for
payment on or after any day named for pay-
' I
w
58
Banks and Banking
out of fiiiid
ment thereof are not paid, all notes then un-
paid and in circulation shall continue to bear
interest to such further day as is named for
payment thereof, — of which day notice shall be
given in manner above provided : Provided
If not miccm always, that in case of failure on the part of
the directors of the bank, or of the liquidator,
receiver, assignee or other proper official, to
make .arrangements within two months Irom
the day of suspension of payment by the bank
as aforesaid for the payment of iill its notes and
interest thereon, the Minister of Finance and
Receiver General may thereupon, make arrange ■
menls for the payment of the notes remaining
unj)aid, and all interest thereon, out of the
said iund, and shall give such notice of such
l)ayinent as ho thinks expedient, and on the
day named by him for such payment all interest
on such notes shall cease, anything herein con-
tained to the contrary uotwithstauditig ; but
nothing herein contained shall be constrii'id to
impose any liability on the Government of Can-
ada or on the Minister of Finance and Receiver
General beyond the amount available from
time to time out of the said fnud : (New.)
I'roviso.
Piiynu'iils
from fmiil in In
williiiiil ii'jiri
to aiiioiiiil con
iriliUtid.
8. All payments nuule froui the said fund shall
be without regard to the amount contributed
thereto by the bank in respect of whose notes
the payments aie made ; and in case the pay-
ments from the fund exceed the amount contri-
buted by such bank to the fund, and all
interest due or accruiuii; due to such bank there-
Note Issue.
59
on, the other banks shall, on demand, make
pjcod to the fund the amount of such excess, />yo
raid to the amount which each bank has at that
time contributed to the fund ; and all amounts
recovered and received by the Minister of Fin-
ance and Receiver General from the Ixank im
whose account such payments were made shall,
after the amount of such excess hr.s been made
good as aforesaid, be distributed among the
banks contributing to make good such excess
pro mtt, to the amount contributed by each :
Provided always, that each of such oth 'r banks i''
shall (mly be called upon to make good to the
said fund its share of such excess, in payments
not exceeding' in any one year one per cent of
the average amount of its notes in circulition, —
such circulation U) be ascertained in such man-
ner as the Minister of Finance and Receiver
General decides; :iiid hi^ decision shall be
final: (New.)
i'. In the event of tlie winding up the busi- ,.,.,„,,„„„t,„
i\i»().
ness
of a hank by ivason of in«suivencv or i- tt'S''''
otherwise, tlie Treaniry Board may, on the ap-
plication of the director.^, or of the liquidator,
receiver, assignee or otiier proper ollicial, and on
being satisfied that ])i()i)er arrangements have
been made for the payment of tiie notes of the
bank and any interest thereon, pay ovei- to such
directors, li([uidator, receiver, as.signee (m- other
proper ollicial, the amount at the credit of the
bank, or such portion thereof as it thinks ex-
pedient : (New.)
60
Daxks ami Hanking
fund.
10. The Treasury Board may make all .such
MfiariTmay n- I'ulcs and reguhitioiis as it thinks exi)odient
t:iilatc mail- 'ii »» j. ii . p
amitidii 01 With reierence to the payment oi any moneys
out of the said iund, and the manner, phice and
time of such payments, the collection of all
amounts due to the said fund, all accounts to be
kept in connection therewith, and generally
the management of the said fund and all mat-
ters relating thereto : (New.)
Enforcemt'iit
of payiiR'iit.
11. The Minister of Finance and Receiver
General may, in his official name, by action in
the Exchequer Court of Canada enforce pay-
ment (with costs of action) of any sum due
and payable by any bank under the provisions
of this section. (New.)
All the provisions of this section are new. They provide
for the formation of a safety fund, called "The Bank
Circulation Redemption P'und," created for the purpose ot
ensuring the speedy redemption of the notes of any insol-
vent bank bona fide in circulation at the time of the suspen-
sion of payment by such bank.
Note:* 01' liaiik
to lie iiayalili'
at iiartliroiifrli-
out ("aiiada.
5,1. The bank shall make such arrangements
as are necessary to ensure the circulation at par
in any and every part of Canada of all notes
issued or re-issued bv it and intended for circu-
latitm ; and towards this purpose the bank shall
establish agencies for the redemption and pay-
ment of its notts at the cities of Halifax, St.
John, Charlottetown, Montreal, Toronto, Win-
nipeg and Victoria, and at such other places as
are. from time to time, designated by the Trea-
sury Boaril. (New.)
Note Issuk.
61
5«. The bank shall always receive in pay- Rwi'inpnon o
ment its own notes at par at any of its offices,
and whether they are made payable there or
not : (R.S,C. cap. 120, sec. 41, part.)
2. The chief place of business of the bunk p„,.,,,„ ,,
shall alwi.ys be one of the places at which its imSL^i"'' "^
notes are raade payable. (R.S.C. cap. 120, sec.
41, ss. 2.)
,'57. The bank, when making any payment,
shall, on the request of the person to\vhom dSiou "'
the payment is to be made, pay the same, or ""'''''
such part thereof, not exceeding one hundred
dollars, as such person requests, in Dominion
notes for one, two or four doll.irs each, at
the option of such person : Provided always,
that no payment, whether in Dominion notes t,,,,,,,,!, -
or bank notes, shall be made in bills that are ""'"'""■'■
torn or partially defaced by excessive handling:-.
(R.SC. cap. 120, sec. 42. with proviso added. )
as. The bonds, obligations and bills, ol)liga-
tory or of credit, of the bank under its corpor- J^r',^,,,;.".;';;,^
ate seal, aiKl signed by the president or vice- ££""'''''''
president and countersigned bv a cashier or as-
sistant cashier, which are mad(! payable
to any person, shall be assignable by endorse-
ment thereon ; and bills or notes of the bank
signed by the president, vice-president, casl)ier
or other officer appointed by the directors ol"
the bank to sign the same, promising the pay-
02
Ranks and Banking
I'voviso :
liinvcr may li
lU'iiiitcil to
otiK'or.
ment of money to any person or to his order, or
to the be.'irer, though not under the corporate
seal of the bank, sliall be binding and obliga-
tory on it in like manner and with the like
force and effect as they would be upon any
private person, if issued by him in his private
or natural capacity, and shall be assignable in
like manner as if they were no issued by a
private person in his natural capacity : Pro-
vided always, that the directors of the bank
may, from time to time, authorize, or depute any
cashier, assistant cashier or oflicer of the bank,
or any director other than the president or
vice-president, or any cashier, manager or local
director of any branch or office of discount and
deposit of the bank, to sign the notes of the
bank intended for circulation. (R.S.C. cap.
120, sec. 43.)
itrs may be
riK'd by
u'luiiery.
5?K All bank notes and bills of the bank
whereon the name of any person intrusted or
authorized to sign such notes or bills on behalf
of the bank is impressed by machinery provided
for that purpose, by or with the authority of
the bank shall be good and valid to all intents
and purposes as if such notes and bills had been
subscribed in the proper handwriting of the
person intrusted or authorized by the bank to
sign the same respectively, and shall be bank
notes and bills within the meaning of all laws
and statutes whatever, and may be described ns
bank notes or bills in all indictments and civil
Note Issue.
63
iitiire
Ibr circulation
or criminal proceedings whatsoever : Provided
always, that, at least one signature to each note **'"^ r'-"
or bill must be in the actual handwriting of a "''"'"•
person authorized to sign such note or bill.
(R.S.C. cap. 120, sec. 1 i, with proviso added.)
;>0. Every person, except a bank to which i.„„auv ,•,...„„
this Act applies, who issues or re-issues, makes, istlXlIt,.
'h-aws, or indorses any bill, bond, note, cheque
or other instrument, intended to circulate as
money, or to be used as a substitute for money,
for any amount whatsoever, shall incur a peii-
alty of four hundred dollars, which shall be re-
coverable with costs, in any court of competent
jurisdiction, by any person Avho sues for th.'
same ; and a moiety of such penalty shall belong
to the person suing for same, and the other
moiety to Her Majesty for the public uses of
Canada. (R.S.C. cap 120, sec. 83, ss. 1.)
This section is intended to secure to Banks and the Gov-
ernment the exclusive privilege of issuing and circulating
bank notes as money. '^
2. The intention to pass any such instrument
as money shall be presumed, if it is made forr,ffi,^|.V"
the payment of a less sum than twenty ""'''"
dollars, and is payable either in form or in fact
to the bearer thereof, or at sight, or on demand,
or at less than thirty days thereafter, or is over-
due, or is in any way calculated or designed for
circulation, or as a substitute for money ; unless
such instrument is a cheque on some chartered
M
fi4
! !
l;
Banks and Banking
bank paid by the maker directly to his im-
mediate creditor, or a promissory note, bill of
exchange, bond or other undertaking for the
payment of money, paid or delivered by the
maker thereof to his immediate creditor, and is
not designed to circulate as money or as a substi-
tute for money. (R.S.C. cap. 120, sec. 83, ss. 2.)
«1. Every person who in any way defaces
Defacement of tv** T»"'ii. i-i i.
notes. any Dominion or Provincial note or bank note,
whether by writing, printing, drawing or stamp-
ing thereon, or by attaching or affixing thereto,
anything in the nature or form of an adver
Penalty. tisemcnt, shall be liable to a pciirJty not exceed-
ing twenty dollars. (New.)
«2. Every officer charged with the receipt
couuteif.it or disbursement of public moneys, and every
aurl tViiudulont re n ^ t i
notes to lie oihcer 01 any bank, and every person nctinji; as
sudi. QY employed by any banker, shall stamp or
Avrite in plain letters the word '' counterfeit,"
"altered" or " worthless," upon every counter-
feit or fraudulent note issued in the form of a
Dominion or bank note, and intended to circu-
late as money, which is presented to him at his
place of business; and if such officer or person
wrongfully stamps any genuine note he shall,
upon presentation, redeem it at the fiice value
thereof. (New. Taken from the Criminal
Law, 50 and 5i Yict., cap. 47, sec. 1.)
M
Note Issue.
65
«». Every peAson who designs, engraves, xoa.iv.nbe-
prints or in iiny manner makes, executes, ut- 1"' i^'^n'r'i h?
ters, issues, distributes, circulates or uses any "^''^'
business or professional card, notice, placard,
circular, hand-bill or advertisement in the like-
ness or similitude of anv Dominion or bank
note, or any obligation or security of any Gov-
ernment, or of any bank, is liable to a penalty
of one hundred dollars or to three months' im-
prisonment, or to botii. (New. — Taken from
the Crimiiuil Law, 50 and 51 Yict , cap. 47, sec.
2, slightly changed.)
BUSINESS AND POWERS OF THE BANK.
«4. (<') The bank ma}- open branches, agencies h,.„iic1ios aiK
and offices, and may engage in and carry on '*"="""*-"*•
business as a dealer in gold and silver coin apd
bullion, and it may deal in, discount, and lend ei'sof ballk?'
money and make advances upon the security of,
and may take as collateral security for any loan
made by it, bills of exchange, promissory notes
and other negotiable securities, or the stock,
bonds, debentures and obligations of municipal
and other corporations, whether secured by
mortgage or otherwise, or Dominion, Provincial,
British, foreign and other public securities,
and it may engage in and carry on such busi-
ness generally as appertains to the business of
banking; (h) but, except as authorized by this c;;^"^'"ij'^'^|.";,-;;-
Act, it shall not, either directly or indirectly,deal brt™bai>k!'
C6
Banks and H\nkin(;
in the buying, or selling, or bartering of goods,
wares and merchandise, or engage or be
engaged in any trade or l)iisiness whatsoever ;
and it shall not, either directly or indirectly,
purchase, or deal in, or lend money, or make
advances U[)on the security or pledge of any
share of its own capital stock, or of the capital
stock of any bank ; and it shall not, either
directly or indirectly, lend money or make ad-
vances upon the security, mortgage, or hypothe-
cation of any land, tenements, or immovable
property, or of any ships or other vessels, or
upon the security of any goods, wares and mer-
chandise.
(a.) This section is a combination with some changes erf
several sections and parts of sections of the Repealed Act
R.S.C. Cap. 1 20, viz: sections 45, 46, 59 and 60.
POWEKS OF THE BANK.
The first part of the section, after giving power to open
branches, agencies and offices, expressly authorizes the bank
(i) to carry on business as a dealer in gold and silver coin
and bullion :
(2) To deal in /Bills of Exchange and
(3) To discount
(4) To lend money and make
advances upon the security of
(5) And to take as collateral
security for any loan made by it /
Promissory Notes and
other negotiable securi-
ties or the stock, bonds,
debentures and obliga-
tions of municipal and
other Corporations
whether secured by mort-
gage or otherwise, or
Dominion, Provincial,
British, Foreign and other
\ public securities.
(6) and to engage in and carry on such business as generally
appertains to the business of banking.
I
IIlsinkss and Powkks ok thi: Dank
67
Tlic previous acts did not in express and i)asitive terms
confer many of ihe above powers on hanks, hut hanks were
nevertheless held to have some of them by implica-
tion. I'or exam[)le in the case of Jones vs. The Imperial
IJank, 23 dr. 269 (1876) an attem|)t was made, by means of
an injunction, to prevent the Imperial ]iink from purchasing,
from the Water Commissioners of the City of Toronto, cer-
tain debentures of the City of Toronto. It was contended,
by the applicants for the injunction, that section 60 of R.S.C.
c. 120, by implication, gave i)ower to the bank only to lend
money on this class of debentures, that there was no ■. xprecs
power to purchase such det)cntures and by implication, aris-
ing from the provisions of said section 60, the bank was pre-
vented from ])urchasing as distinguished from lending money
upon the same. Mr. Justice Proudfoot, however, after dis-
cussing very fully the meaning of the word " discount," and
citing several authorities giving definitions of it, held that the
dealing in bonds was covered by the words of exception con-
tained in section 45 of the same statute, viz : " except as a
" dealer in . . . Bills of Exchange, discounting of Pro-
"missory Notes and negotiable securities and in such trade
"generally as appertains to the business of banking ; " at page
274, he thus summarizes his opinion,--" The con-
" elusion which seems to me deducible from these
" acts is that the business of banking consists in dealing in
" money, the precious metals, and in bonds and negotiable
" securities ; that this dealing confers the power of lending on
" them or of purchasing them, whichever the bank directors
" may deem most for the advantage of the corporation and
'' that whether to buy cr lend is a matter of internal manage-
" ment which the directors may determine;" and at page 270
he says : " To discount a negotiable security is to buy
" it at a discount or to lend money on
" its security."
See also Grant on banking (1884) p. 291, where
it is laid down that " where a banker discounts a bill
for a customer, giving him credit for the amount of the bill
and debiting him with the discount, there is a complete pur-
68
Banks and Baxkint;
chase of the bill by the banker in whom the whole property
and interest vest as much as in any chattel he possessos. A
banker discounting a bill, whether for a customer or a
stranger, there being no indorsement by the customer or
stranger and the bill not being given in payment of an ante-
cedent debt, is a mere purchaser and un the bankruptcy of
the acceptor has no recourse against the party from whom he
took it."
By the present act the powers of the bank do not rest on
implication but are conferred in express terms. The bank
is authorized expressly " to deal in " the securities mentioned
in clause C4. This would clearly authorize the bank to buy
or sell any of such securities. It must be noticed that power
is also given, as well to make advances and lend money upon
such securities, as to take them as security for past loans.
The bank cannot, however, lend money on the ordinary bank
notes, see sec. 52.
As to what comes within the definition of the business of
banking— See Abbott's Dig. Corp. p. 56 and Quirt vs. Queen
19 S.C.R. 510 (1891) and the cases there refcned to.
LIMITATIONS ON THi: I'OWKK OV THE liANK.
(/-) The second part of section 64 commencing with the
words, " but except as authorized by this Act,"— is in restric-
tion of the powers of the bank.
It IS conceived that the words " cxcc/'t (7i ant]icrizcd by this
ad" are intended to be read before the words, "it shall not,"
wherever they subsequently occur in this section.
Assuming this construction to be correct then : —
First!}' : — a bank is forbidden, except as aiiiliorizcd by t/iis
act " either directly or indirectly to deal in the buying or
" selling or bartering of goods, wares and merchandise or en-
""age or be engaged in any trade or business whatsoever.'
It is to be observed, that by this part of the clause, banks
are prohibited only/;w;/ dealing in the buying or selling or
bartering of goods, wares or merchandise, it would therefore
seem most probable that banks may, owing to special cir-
cumstances or for reasons which could not have been fore-
seen or anticipated, acquire and sell, or dispose of goods.
li
Business and Powkrs ok rtiK Bank
69
wares or nicrchaiidisc and for that purpose engage to some
extent in business otlier than hanking. Thus, if a hank were
to acquire a valid security, say on a mill and a stock of lum-
ber and logs, and [afterwards, owing to the inability (jf the
debtor to pay his indebtedness, were to duly obtain an abso-
lute title to the i)roperty, it seems to us that the bank could,
under such circumstances, proceed to sell the lumber and to
convert the'saw logs into Imnljcr, if that would make them
more val;..,l)le for sale, and for this ])urpose to work the mill.
This appears to be the result of the English and American
authorities on the subject. See Sacketts Mead Bank vs.
Lewis I'ank, ii llarb., 43. Ikice on Ultra Vires, p. 210.
In (Quebec, too, it has been held in the Molson's Hank vs.
Kennedy, 10 K, L. iio(i6'j(j), that where a bank wishing
o guarantee a purchase of goods telegraphs to the sellers —
" If you send to the M. I'.ank, Montreal, goods to the amount
of ^ purchased by K Ov Co. about July ist, sending
us the bills of lading and documents in time, we will guaran-
tee the collection," — the bank does not thereby violate the
provisions of the Banking Act.
In Radford vs. the Merchant's Bank of Canada, 3 Ont. R.
529 (18S3), the facts were as follows : The Agent ot the
Merchant's Bank at Kint'ston represented to the plaintiff
that the defendants had purchased the business of one A, a
manufacturer of horse power machines, and were manufac-
turing horse power machines of A's make, and had them foi
sale, and that he recommended them highly. 'I"he !)lainlirf
purchased a machine, and subsctjuently brought an action
against the bank for breach of warranty on the sale of this
machine. It appeared in the evidence that A was a debtor
of the bank, and having become insolvent, the bank had ac-
quired the machines from his assignee. The case was decid-
ed on two grounds, but both the judgi,^s who decided it e\
pressed the opinion that the bank, being expressly prohibited
from buying and selling goods, could not be bound by any
warranty, express or implied on their sale. It is true that in
this case the bank had improperly acquired the machines
(section 69 not authorizing the purchase) and the decision
Banks and Bankin(;
may have been hascd on that fart ; hut, if tlio mat liincs had
l)cc'n proiiL'ily acqiiircd say, — hy a legal and valid mortgage
to the hank and thcrcat'tcr hy th'; exlingiiishinent of the
eiiuity of redemption hy release under section 70 — surely the
hank could then sell and dispose of the machines, and i( so,
why could not it give a warranty on their sale if that would
he the most advantageous course to pursue, — see also Ex-
change Bank vs. I'"letcher 19, S.C.R. 278, (1S91).
ScLond/y : — a hank is forhiddcn, excel^t as auiliorbcd hy this
act, " either directly or indirectly to purchase, deal in or lend
" money or make advances upon the security or pledge of
'' any share of its own stock or of the stock of any other
" bank." 'Hiis will set at rest all doubt as to the existence
of a prohibition in the previous acts against lending money
on the stock of other banks [see i)er Patterson J. in ICxchange
Bank vs. Fletcher, 19 S.C.R. at p. 284, (1891)]. In the last
named case the court held that the jjrohibition to lend money
on the shares of other hanks only applied to the hank lend-
ing the money — and not to the borrower ot the money who
gave the shares as security, so that on payment of tlie loan
the bank was hound to return the shares or pay their value
to the borrower, and this case would still seem lo he law
under the present Act.
Although a hank is ])rohihited from lending money on its
own shares it is given a lien thereon tor all debts owing by
a shareholder ; see sections 35, 38 and 65.
Tliirdly : — a bank is forbidden, except as aiitliflrized by this
act, " either directly or indirectly to lend money or make ad-
" vances upon the security, mortgage or hypothecation of any
" land or tenements or inuuoveahle ])ioperty or of any ships
*• or other vessels or of any goods, wares or merchandise."
For the exceptions to the above prohibitions see the sub-
sequent clauses of this act from 68 to 79 inclusive.
The general policy of clause 64, no doubt, is to compel
banks t(,) carry on a pro[)er and legitimate hanking business
and to keep llie cai)ital of the hanks flowing in the daily
channels of commerce and to deter them from locking up
their monev hv lending it or investing it in real estate, or
Business and Powkks of iin I!.\nk 71
oilier classL'S of i)roi)LTty which arc not easily coiivtjrtihlc into
casli.
I'or an infraction of the jirovisions of this section a iicnalty
is iinposcil on the banhs hy section 79. Sn|)i)osing a bank
enters into a forbidden transaction, lends money on the se-
curity of a mortgage on real estate for example, liow does the
statute affect such a transaction ? Does it merely subject the
bank to a penalty and perhajjs its charter to possible forfei-
ture or does it go further still and also avoid the mortgage
security— or further still and also make the contract of loan
illegal so as to be irrecoverable by the bank ?
In a recent case on the subject it has been held, that it not
only exposes the bank to the jienalty, but also avoids the
transaction.
"' This prohibition is a law of public policy in the public
interest and any transaction in violation thereof is neces-
sarily null and void. No court can be called on to give
effect to any such transaction, or to enforce any contract or
security on which money is lent, or advances, as thus prohi-
bited, aie made," per Ritchie, C. J., in IJank of Toronto vs.
Perkins, 8 S.C.R., 610 (f.SS;,).
In the above extract, the Chief Justice, if correctly re-
ported, seems to us to go too far. His judgment would
seem to imply not only that the mortgage was void, but that
the advance which it was given to secure created no valid
debt. The other judges who expressed opinions did not go
so far. Strong, J., at page 611 of the report says: "All
we have to decide is whether a bank making an advance or
loan of money on a mortgage of real property in violation
of the [jrohibition contained in the section referred to is not-
withstanding entitled to the benefit of the security."
In the case of Exchange liank vs. Metcher, 19 SCR.
27S, (1891), it was api)arentl)- held that a prohibited trans-
action was only avoided as against the bank. That a man
who had transferred to the bank shares in another bank as
security for a debt could on i)aymenl of the debt come into
a Court of Justice and demand the return of the shares or
the value thereof.
72
Banks and Banking
i i
. 8 I
There are two cases in llie I'rivy (,'oun( il both of which
are referred to in the Bank of Toronto vs. Perkins, above
cited, in which the construction of liank ("barters containii 3
similar jjrohibitory clauses was much discussed. In tlie first
case, the National Bank of Australasia vs. Cherry, !-. R., 3
B.C., 299(1870), Lord Cairns in dcliveruig judgment at p. 307,
says : " It appears, therefore, to tlicir lordships that there
are considerations of public policy involved in this clause,
but it is also true to say, that those considerations of public
policy look to and deal with the management of the bank,
and have for their object the liniilation of the powers and
authority of the bank."
" 'I'hat being so, and wUhout for the present turning to the
facts of this particular case, it would seem to have been the
object of the Legislature in this clause, not to make void
the contracts f(jr such advances as Ijetween the bank and
their customers, in the same way that in former times contracts
open to the objections of the usury laws were made void,
but rather to make it sometiiing ultra vires the bank to take,
u[)on the occasion of contracts for those advances, securi-
ties of the kind mentioned in this section. .\nd this con-
struction of the section would harmonize with what was very
properly, as their lordships think, admitted at the bar on be-
half of the respondents — tliat upon a transaction o( the
kind described, the contract for the loan of money would be
perfectly valid, and the cpiestion would be confined to a
question as to whether the bank had the ])ower to take the
security which it took for the advance
At the time of the advance, and as part of the
contract of advance, the bank was not to be at
liberty to stiinilate for, or to obtain, landed or mercantile
securit)'. T//a/ /s ilic coiistriui/'on contended for by tlir Rc-
spoudcnts^ and their Lordships, at all events for the purpose of
argument, •,<.<ill assume that it i.\ the proper construction. On
the other hand, if there should be an advance made, and a
debt incurred and due fiom the customer to the bank, the
bank was to be at liberty to take security for that overdue ad-
vance, either in the shape of land or in the shape of
merchandise as described in the Act."
DrSINF.SS AND POWKRS OF THK B.WK
73
In the second case, Ayers vs. The South Australian Bank-
ing Co., l,.k. ;, I'.C, 54S, (1S71), Lord Justice
Mcllish in the course of dehvcring the judgment of the
Privy Council and in answer to the argument
founded on a clause in the charter declarmg that it shall
not he lawful for the bank to make advances on nicrchandi>e
says at p. 559: ''There may he also iiuestion whether,
under any circumstaiuxs, the effect of violating such a pro-
vision is more than this, the Crown may take advantage of
it as a forfeiture of the charter, hut the only ])oint which it
appears to their Lordships is necessary to be determined in
the present case is this that whatever effect such a clause
may have, it d')es not iirevent property i)assing, either in
goods or in lands, under a conveyaiice or instrument which,
under the ordinary cir umslances of law. would pass it
Their Lordships are of oi)inion, that whatever other effect it
has, it cannot have the effect of preventing the property jiass-
ing. If that were otiierwise, the consequei'.ces might be
most lamentable, because if the i)r(j|)erty never passed to
them, they could not themselves convey any ])roperty to
thn-d persons. Transactions of the most honest descrii)tion
might be set aside. They might do what is a very common
thing, make advances and take Bills of Exchange with the
Bills of l,ading attached. If it is to l)e said that the proper-
ty in the goods mentioned in the Bill of Lading does not
pass to them, then any ])urchaser to whom they might sell
the goods under the Bill of Lading would get no title, and
the original owner who had received the full prof:eeds of the
goods, or a large advance up( n th.em, niigiit say, 'Oh, the
property never iiassed to the South .\ustralian I'.ank, and there-
fore it never passed to you.' Counsel for the ai)i)ellants admitted
that he could find no authority for the proposition, that any
violation of such a condition of a charter wor'd prevent th.e
property in goods passing to the persv^n to whom an instru-
ment otherwise valid professed to |)ass it, and their Lordships
are of opinion, that whatever effect the violation of such a
condition may have, it has not the effect of preventing the
property in the goods jiassing, or of preventing an action of
Trover being maintained if there is a wrongful conversion.'
w
74
Banks and Uankixg
— Sec also IJaiik of New South Wales vs. CanipljcU L.R. ii
A])]). Cases 192 (1S86).
It has been decided here, and in the United States, that it
a mortgage of lands he given to a bank to secure indebted-
ness previously,- incurred, and also advances then made on
the security of such mortgage, such mortgage is not void in
toto, but constitutes a good and valid security to the bank to
the extent of the pre-existing indebtedness, if the amount
thereof can be clearly shewn. See the following cases —
Commercial Bank vs. Bank of U. C. 7 Gr. 430 (1S59).
Kansas Valley National r>ank vs. Powell, 2 Dill. C.C. 371.
Allen vs. First /Tational Bank of Xenia, 23 Ohio St. R. 97.
It has also been decided in the National Bank of Australasia
vs. Cherry, above cited, and also in the Commercial Bank vs.
Bank of Upj^er Canada, above cited, that though the taking
by the bank of a mortgrge on real estate, to secure an advance
made on such security, would be ultra vires and invalid, the
advance itself would create a valid debt and consequently,
the bank could acquire a valid charge on the same property,
to secure re-payment of the same debt, by a mortgage subse-
quently given by the debtor to the bank ; accord also, (Jrant
vs. La Banque Nationale, 9 O.K. 411, (1S85). It does not
seem to us, that the law is quite settled yet, in regard to the
consequences of an infraction by the bank of the provisions
of this act in relation to taking securities. At present the
law in Canada appears to be, tliat the act not only imposes a
penalty on the bank for lending money or making advances
upon the security of real estate, ^:c., but also renders invalid
the secuiity so taken. \\q do not think any thing further
than this has been decided.
EFFICCT OF TRAFFlCKINt; IN SHARL.S ON TFIi: LIAlULFrV
OV A SHAKEHOLDEK.
In the winding up of the Central Bank, some shareholders
objected to be placed on the list of conlributories, on the
ground that the bank had been trafficking in its own shares,
and that the sliares in (iue>tion had been acquired in the
course of such traflic and transferred to the cashier of the
bank, in trust for the bank, by and through whom they had
Bur^IXKSS AND POMERfS OF THi: li.WK
«■)
been transferred lo or acquired by the contributories. Held,
assuming these facts to be irur, tliat th(/ugh this rniuht give
the contributories a right to resriiui, during the currency ot"
the banking institution, tliey were of no moment after the
rights of creditors represented by the hejuidators arose. The
matter was not an absolute nullity, but at most, one which
the shareholders could waive as voidable, and it became, by
the suspension, of unimpeachable validity as between these
coitributories and the liquidators. In the matter of the
Central Bank of Canada, Maine's case — -Nasmith's case — i6
Ontario Reports 293, (1S8S), 16 Ont. App. R. 237, (1889^
iS Ont. App. R. 209 (1891).
A shareholder having been placed on the list of contril)U-
tories, in the winding up [)roceedings of the Central ]]ank, in
respect of certain shares owned l)y him at the lime of the
suspension of the bank, appealed on the ground that the
transfer . f his shares was a fraudulent transaction, since, in
violation of the provisions of the liank act R.C.S., cap 120,
sec. 45 (now sec. 64), the bank had been trafficking in its own
shares, for the pur[iose of keei>ing up the appearance of boia
jhic sales and so increasing the market poice of its shares, and
had taken ti-ie appellant's promissory notes in payment for
his shares, undertaking not to enforce such notes, but to de-
liver them up U])on a re-sale of th-^ shares being effected,
which transactions were ultra vires of the bank. Held, that
this was no defence as against the liiiuidaturs, who represent-
ed the creditors as well as the bank, ke Cential liank — J.
D. HendersonV rase, 17 O.K. no (1889).
"Goods, wares and nierc handise '' — for the meaning of
these words, see sec j, ss. 3. and the notes to sec. 73.
«,->. The biuik slitill liave ;i privileged lien, for ,.,„,,, ,„,„„.«
tinv debt or liabilitv for aiiv debt to tlie bank. t''r'>'-<i.;i'r.s.
on the .sh'ires of its own capital stock and on
any ini])aid dividends of tlie debtor or per.son
liable, and may decline to allow any trarisfer ot
the .shares of sucli d-ditor or ptM'sun until siieh
70
Banks and Uankinc;
Ji
! ' 1
Sulc oi'
Noti(
case <•!'
r III
debt is paid ; and the bank shall, within twelve
months after snch debt has accrued and become
payable, sell such shares, and notice shall be
iriven to the holder thereof of the intention of
the baiik to sell the same, l)y mailing such no-
tice in the post ollicc to the last known address
of snch holder, at least thirty days prior to such
sale ; and upon such sale being made the presi-
dent, vice-pr'isident, manager or cashier shall
execute a transfer of such shares to the pur-
chaser thereof in the usual transfer book of the
bank, which transfer shall vest in such pur-
chaser all the rights in or to such shares which
were possessed by the holder thereof, with the
same obligation of warranty on his part as if he
were the vendor thereof, but without any war-
ranty from the bank or by the officer of the
bank executing such transfer. (R.S.C. cap. 120,
sec. 59, changed).
This section now makes it tlie duty of the bank, to sell the
shares on which it is given a lien within 12 months after the
debt, secured by such lien, has become payable — otherwise
the section is substantially the same as it was in ttie repealed
act.
In the case of Cook vs. Royal Canadian r.ank, 20 Or.,
I (1S73), it was held under the law as it then stood, that
the bank had a lien on tlie stock of any debtor for overdue
debts, and could refuse to allow a transfer of such stock un-
til such overdue debts were jx^id. At page 12, Vice Chan-
cellor Blake uses the following language : " I am of opinion
that a statement by the bank of the amount for which stock
is held on account of past due liabilities, without any further
representation, c; any agreement in respect thereof, does not
bind it at a future day to accept such sum where other lia-
BrsiNKss Axn Powers of rm: ]!.\xr
77
bilities incurred at llic time tb.e inquiry was made, liave
rneanwliile matured and remain unpaid."
Since this judiiment was delivered sections 19 and 51 of
34 Vic, c. 5, liave been epealed and new sections, from
time to tune, substituted therefor, and a clause has been
added to what is now section 45. The sections which now
deal with the question of the bank's lien are sections 35, 38
and 65 and from their language we think that they give the
bank a lien for all debts owi.ig to it, as well those "07^1//^
and payable,''' as those '■'o-inng but not payable:' This pre-
sent section now provides that the bank shall have a privi-
leged lien for any debt or liability for any debt to the bank,
(not saying as the repealed section of 34 \'ict., cap. 5, sec.
51, did '• for any overdue debt"), and may decline to allow
any transfer of shares till such debt is paid. Having regard
therefore to this change of language, we are inclined to think
that the bank, under the present act, has a lien on the stock
cf a debtor for all current as well as matured debts, See on
this point Stockton vs. Malleable Iron Co., L.R. 2 Ch Div.
loi (1875). See also Reese vs. The Bank of Commerce, 14
Aid. 271. Angell & Amos on Corporations (1SS2) sees.
57I-574-
In addition to the above lien the banker, !iy th.u common
law, would, it is conceived, have a general lien tor the general
balance due by the customer on all bills and negotiable
instruments and perhaps other securities handed by the
customer to the banker generally ; that is, without siiecific
ap))ropriation, for the purpose of being realized or collected
and the proceeds carried into the account of the customer.
The lien does not extend to securities handed to the banker
for safe-keeping or for the [nirpose of being dealt with in a
specific manner. See Walker on Banking Law p. 1S5.
ISO. The stock, bonds, debentures or securi- c.,,iiat,.!ai
ties, Jicquired and held by the bank as eolbiteral u^slmVuriy
security, may, in case of default to pay the debt.
for securing which they were so ticquired and
held, be dealt with, sold and conveyed either
'W
7S
Banks and Baxkinc;
in like manner and subject to the same restric-
tions as are herein provided in res])ect of slock
of the bank on which it has acquired a lien under
this Act, or in like manner as and subject to
the restrictions under which a private in-
dividual might in like circiunstances deal with,
sell and convey the same, but without obliga-
tion to sell the same within twelve months:
(R.S.C. cap. 120, sec. (jO, ss. 2, in part with ad-
dition.)
All the words of this section after the words " this Act "
are new. They give additional powers of sale to the bank.
By the law of iMigland if personal jjropcrty is pledged to
secure a debt payable at a fixed time, if the debt is not paid
at such time then the pledgee has a right to sell the pro-
perty pledged in order to have his debt. If there is no
time fixed for the payment of the debt the pledgee has a
right upon recjuest to insist upon prompt payment thereof,
and in default thereof the pledgee upon reasonable demand
and notice to pledgor may sell the property pledged for the
purpose of satisfying the debt.C (XA /y- 4aljp ^/ •//?»- <»^
.^C 3, (pS-J "
2. The right so to deal with and dispose of
mfyiUwui'v^S. such stock, bonds, debentures or securities in
manner aforesaid may be waived or varied by
any agreement between the bank and the
owner of such stock, bonds, debentures or se-
curities, made at the time at which such debt was
incurred, or if the time of payment of such debt
has been extended, then by an agreement madf.
at <-he time of such extension. (R S.C. cap. 120,
sec. 60, ss. 2 part.)
m\
Business and Powers oi- thk TIank
-n
«7. The bank may acciuire and hold real and ifo >i >-'t,ito ,..i-
immovable property for its actual use and occu-
pation and the management of its l)usiness, and
may sell or dispose of the s ime, iind acquire
other property in its stead for the same purpose.
(R.S.C. cap. 120, sec. 47.)
OS.' The baidv may take, hold and dispose of M.Mt-,u:es u
mortgages and lnjp()tli('(ines upon real or personal, ^'••niiiy.
immovable or movable property, by way of addi-
tional security for debts contracted to the bank
in the course of its business ; and the rights,
powers and privileges which the bank is by this
Act declared to have or to have had in respect
of real or immovable property mortgaged to it,
shall be held and possessed by it in respect of
any personal or movable property which is mort-
gaged or hypothecated to it. (R.S.C. cap. 120,
sec. 48 with slight additions).
The only change in this section is the addition of the
words " immovable and movable " wherever they occur
therein.
Section 64 in substance enacts that the bank shall not
" except as authorized by this Act," either directly or
indirectly, lend money or make advances upon the security
or mortgage of lands, or of goods, wares or merchandize.
The present section, therefore, is one of the enabhng sec-
tions referied to in section 64 and authorizes the bank to
acquire security on real and personal property under the
limitations herein imposed.
MORTGAGES MAY BK TAKEN 1 OR " DEBTS CONTRACTED."
It will be observed that the bank is authorized to take and
hold mortgages on real or personal [iroperly only />y rcay of
additional siciirity for '■'■dclds contracted to the bank, in the
course of its t'ltsiness."
so
r.ANKS ANIi DaNKING
Su|)])Osinf^ a bank at^rces to discount a note, can it take
security for the debt thereby contracted co-temporaneously
witli the discount of tlie note? 0;jini(jns have l)cen e.\-
presi^ed that if the bank reaUy advances money on the secur-
ity of a note or bill (and this is a (luesiion of fact t'' be
determined on a considerati(jn of all the circumstances of
each case), it may co-temporaneously with such advance
validly take a mortgage as collateral security to secure repay-
ment thereof. Whenever this is done, however, it will
always be a question of fact, whether the money was not
really advanced on the mortgage and the note created merely
to give color and lend the appearance of legality to the trans-
action. It would, therefore, be extremely dangerous f<jr a
bank to make an advance on negotiable paper and at the
same time take a mortgage as collateral security for repay-
ment thereof. There are numerous cases on this section.
Only two will be cited at any length, as they really ap|jear to
contain a full exposition of the proper interpretation of the
clause.
In the Commercial ]]ank vs. Bank of U.C., 7 Gr., 430,
decided in 1859 (and in the court below, 7 Gr. 250) Chief
Justice Robinson, at jjage 430, thus discusses the ([uestion
now under consideration : " It is (juite true that whenever
tile money is advanced, whether it be just before or at the
time of making the mortgage, then there is literally a debt
due but not a debt C(jntracted in the course of the
business of the bank — that is, of its legitimate and proper
business, which the leiuiiih^ jitoih.y upon iiiorfga^^e of real i)ro-
perty certainly cannot be, until the statutes are repealed or
altered. When it is shewn that the mortgage in any case
was taken by a bank ' as an additional security for a debt
contracted to it in the course of its business,' then the ques-
tion occurs whether that can only be taken to mean a debt
that had been prroiously incurred with it in the course of its
business, or whether a mortgage may not be taken as addi-
tional security tor a debt that had no previous existence, but
which the bank were about to allow a jjarty to contract, by
advancing him money at that time, in the proper course of
their business ; as, for instance, if any merchant haH brought
lilSlNESS AN'I) 1'o\V1:KS (IF I UK 1!\NK
81
to the hank, on the -ist of May, 1855, for discount, u ln!l
drawn by Mcnry IJiill, jr., on liull Ilrothcrs, and accepted by
the latter, could the bank projjerly have taken a mortgai^e
from cither party to the bill, or from the i^erson who brought
it and got the money, to secure them the money which they
advanced upon the bill ? That is not this case, and I shall
only therefore say, that, as the words of the statute are not
against it, so I think it might, perhaps, be held that the spirit
ar,d intention of the Act are not opposed to it ; and that a
mortgage so taken might be upheld, when it appears that the
moitgage was really and in truth taken to secure the transac-
tion upon the bill, and not that the bill was created for the
mere purpose of upholding and giving color to the mortgage.
That would be a (]ue«tion of fact, upon which the conclusion
that a jury might come to would be in general so uncertain
that I dare say the banks will not think it [irudent tf) risk
their mone\- on a r:al security in any such case, where the
nature of the transaction might appear to be at all equivocal
—so long, I mean, as the present statutes continue in force."
In the case of the Royal Canadian Bank vs. Cummer, 15
(Jr., p. 627 (decided in 1869), the late Chief Justice .Spragge
(then v'ice-Chancellor) in his judgment said, at p. 631 :
"take the simple fact of deposit by way of security by the
debtor of a bank, to a bank, there being a debt, and there
being further advances contemplated but not yet made, a
dejTOsit for the debt due would be lawful ; but a dejiosit by
way of security, against which the uank customer might draw,
would be against the law ; and the law upon this point is so
well known to bankers that they would hardly be likely to
transgress it."
In the linnk of Toronto vs. I'erkins, 8 S.CR, 603
(decided in 1883), Chief Justice Ritchie in his opinion uses
the following language : " I agree with Chief Justice Dorion
that the transfer made to the a|)pel!ants q{ a mortgage to
secure an advance on a iM-omissory note discounted at the
same time that the transfer was made, was on the part of the
bank in violatif)n of the lianking .A.ct, a clumsy attempt at
evasion of the 34th Vic, ch. 5, sec. 40, which enacts that
' the bank shall not, either directly or indirectly, lend money
82
Banks ami I!anki.mi
or make advances upon the security, mortgage or hyijotheca-
tion of any lands and tenements ' "
Strong, J., in his oijinion in the same case uses the follow-
ing language : " We must therefore take the transaction to
have been a mortgage given, not to secure a past debt, Init
to cover a contemporaneous loan, and therefore void under
the statute."
Owynne, J., after citing Chief Justice Robinson's ojjinion
above given in the case of the (Jommercial Bank vs. Bank of
Up])er Canada, proceeds as follows : " Now, 1 do not desire
to call in question any part of the opinion of the learned
Chief lustice as here expressed as to the validity of a mort-
gage bona fide given or assigned to a bank by way of collat-
eral security for an advance made by the bank upon regular
business paper, or in the ordinary course of their business as
bankers, concurrently with the giving or assigning to them of
a mortgage upon lands as additional security, or to e.\|>ress
any opinion upon that point, inasmuch as sitting here as a
juror, and having the duty imposed upon me of fmding the
facts in the case, I have been unable to bring my mind to
the conclusion that this is such a case ; on the contrary, the
conviction formed in my mind by the tacts is that the trans-
action between Bunnell and the bank, of the T9th January,
1876, was primarily based upon the security of the mortgages
upon real estate assigned to the bank by the deed of that
date. That the note for $26,000 recited in that deed had
not then been, if ever it was, in fact, discounted or agreed to
be discounted as an ordinary banking transaction. A note
made by one payable to his own order twelve months after
date; is not ordinary business jiaper ; that the note did not
then constitute any debt due from Bunnell to the bank, that
it was not made for the purpose of being discounted by ihem
in the ordinary course of their business as bankers, but was
given existence for the mere ])urpose of uph(jlding and giving
color to the assignment of the mortgages, the whole having
been assigned, and contrived for the purpose of evading the
statute, and the mortgages were not assigned really and in
truth to secure an independent banking transaction on the
note. . . . Upon the whole, therefore, as I have
lifsiNKss AMI I'dWi.Rs (i|- 1111, Hank
83
said, I can conic to no other conclusior. than that the note
was Hiven existence f..r the ;;ole purpose of upholding and
.Uiving color to the niortgnge and its transfer, which latter
contained a false recital of a debt due for the purpose of
eluding a discovery of the true nature of the transaction."
The meaning of the words " dehls contracted " was very
nuich considered and discussed by Mr. Justice .Story in the
case of Carver v. liraintree, 2 Story, ('.(i, at pag- 44S. He
thought it was not a violent construction ot the statute to
read these words as equivalent to " liabilities incurred.' In
the I'rench law the terms debtor and creditor are applied to
the iiarties who contract any species of obligation. IVthier,
\'"1. I, p. 74.
AS To illK I'KIiSUMl'llOX IN I AVOR Of VAIIhllV OF A
TRANS ACTION.
^ In the case of 'I'he Royal Canadian I'.ank v. Cummer, 15
('I., 627 (1869), t'li-ro being a doubt whether the mortgage
in (luestion was intended to secure future advances (>;i/y,
or to secure all past indebtedness as well as future advances,
—the court decided in fav(jr of the bank, on the ground
that where there is a doubt the presuiiii)tion should be that
the transaction was in conformity with the statute, and so
legal, the maxim being omnia prcstimmuntcr rite esse actn.
-AS TO THK APPMCATION OF I'AVMKNIS WIIKRK MORTCIAOES
ARFC INTKNDKD AS CONTINUING SICCUKITV, \c., AND AS
TO VWV. KKFKCT ON THE SKCURITV OF THK R1;NI;\\ AL
OF THK I'Al'KR REPRKSKNTING THE IN-
I)i:i;ti;iinkss.
As to the construction of mortgages given under this
section, as a continuing security to secure an indebtedness,
where the indebtedness has been changed but not reduced
in amount, see Cameron v. Kerr, 3 Ont. App. R. ;,o (1878).
In this case, after the mortgage was given the mortgagors'
line of discount was increased, but no separate account of
the liabilities secured by the mortgage and the further
advances was kept, the proceeds of the discounts and cash
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84
15\NKS AMI llANKINii
deposits l)oing tarried to ihc mortgagors' credit in unc open
current account, against which tliey drew chtciues and retired
the notes secured by the mortgage as they matured. The
mortgagors became insolvent on the i3th August, 1S75,
their indebtedness ni the meantime never having been
really reduced below the amount (^t" the mortgage debt.
Held, aftirming thj judgment uf Illake, \'.C., that
this mode oi keeping the accounts had not operated as
a discharge of the mortgage debt. See also Merchants
Hank v. Muffatt, 5 Ont. R., 122 (1883) and 11 S.C R., 46
(1885). T 1 Dominion Hank v. Oliver, 17 Ont. R., 402
(1889) it •,• . iield by Chancellor IJoyd that "Where a bank,
holding a mortuoge as additional security for the payment ot
eer'.r<;p '.Mtt"; .I'^tioues for these notes renewals from time
to tivr.e .'•! however, receiving actual payment, the
whole series of n 'tes and renewals form links in one and the
same chain of liability, which is secured by the mortgage,
although, as a matter of book-keeping the bank may have
treated the first notes, and the subsequent substituted notes
as paid by the api)lication of the proceeds, from time to time,
of the renewals."
n
I U '
m^
I
RIGHl'S AND rOWKKS OI" HANK OVKR I'KRSONAI, I'Kul'KK 1 V
MORr(;.A.(;i:i) to it.
By this section the bank is declared to have the same
rights, powers and privileges in respect of " personal property
mortgaged to it as it possesses in respect of real property
mortgaged or hypothecated to it." For the powers which
the bank has in resiiect of real proi)erty mortgaged or
hypothecated to it, see sections 70 and 71.
In Thomjjson V. Molsons P»ank, 16 S.C.R., 664 (1889),
the Supreme Court of Canada held, that when an advance is
made on a warehouse recei|)t, the bank may stipulate that
any surplus moneys, arising from a sale by the bank of the
goods covered by such warehouse receipt, after payment
of such advance, may be ai)plied in payment of other
indebtedness owing to the bank and existing at the time of
the making of su(-h advance.
.■. Il
I>rslM.>> AND I'l.WKUS ni I III l;\NK
85
Sec also the following cases, and ihc cases therein cited,
onthe construction of this section generally : McDonell v.
Lank of Upper Canada, 7 U. C i). 15. 25J (1S50). J'.ank
of Upper (Canada v. Killaly, 21 LA". (J. 15. 9 (1861). Hank
of Montreal v. Mv Whirter. 17 U. C. C. !'. 51;, (11SC7).
Molson's Bank v. .McDonnld, 2 Ont. .\. R. 102 (1877),
affirming S. C. 40 U. ('. (J. 15. 529. Merchants 15ank v.
Bostwick, 3 Oni. A. K 24(1878), and (Jrant v. l.a Banque
Nationale, 9 Ont. R. 411 (1S85), which was a case of a
pledge of a timber limit in (Quebec, wherein the construc-
tion of section 2S of The (Quebec Timber Regulations
aro-;c.
TEC'iiNH Ai, Di.rix r> i.\ >i:ciKri V.
Can a Licjuidator under the ^\■inding-up Act, (R.S.C.,
cap. 129,) or an assignee under the Ontario Act resjiecting
assignments (R.S.O. 18S7, cap. 124,) object to the
want of registration or other formal defects in the security ?
See in Re Rainy Lake I-umber Co.. 15 Or.t. Api^. R. 749.
(18S8), iSurland vs. Moffat, 11 S.C.R. 76 (18S5), Porteous
v>. Reynar, L.R. 13 Ajip. Cas. 120 (1887), Robinson vs.
Cook, 6 Ont. R., 590 (1S.S4), Teniiani vs. Union Hank, 19
Ont. A].]). R. (1S92).
HoiM.N(. .\ori:> .\s coi.i.AiKK.M. situkriv.
A bank holding notes of (jther [tersons as collateral secur-
ity for a customer's debt is bound to use reasonable diligence
in collecting the same, and if loss ensues the bank is liable
to the customer to the extent of the loss occasioned by its
want of diligence. Ryan v-. McCcnnell. S Ont. R. 409
(1889).
r.KNKl 1 I (>i SlXL'Kll V.
The bank sometimes gets the benefit of a security without
expressly stipulating for it. Thus in a recent case it ai)pears
that a tradesman sold goods to customers, taking promissory
notes for the i)rice, and al>(j hire ret eijils. by which the pro-
H^
86
Banks and 1]a.nkin(;
I
J! I
;' ;
I'liic'liaso oi'
laiiil iniil<'i'
t'XITIIli'lll. \c
l)erty remained in him until full payment thereof was made,
and that the notes were discounted throu;;h the medium of
u third ])erson by the Central Hank, and it furthe/ appeared
that the hank was made aware, when the line of discfjunt was
opened, of the course of dealing and of the securities held,
but was not put in actual jHjssession of the securities and
there was no express contract in regard to them. Neverthe-
less, in an action by the bank to recover the securities or
their proceeds from the assignee for creditors of the trades-
man, it was held, that the securities were accessory .o the
debt ; that in equity the transfer of the notes was a transfer of
the securities ; that the defendant was in no higher position
than his assignor, and could not resist the claim to have
the receipts accompany the notes ; and that it was not mater-
ial that the relation of assignor and assignee did ncjl immedi-
ately exist between the tradesman and the Central I5ank.
Central Bank vs. C.arland, 20 Ont. R. 142 (1890), 18 A.
R. 438 (1891).
iHK The bniik inav nm-cliiise niiv laiuls ov
real or iTiimovjihU' property oflered tbrKiile under
execution, or in iusolvencv, or under the onhr
or deciee of u court, as heh)ngintr to ;iny debtor
to the bank, orollered lor side by a niortgiiLiee or
other encumbrancer ha \' in Li' priority oxer a inoit-
gHLie or other <'ncund)raiice hohl b\- the ba,niv or
oflered for sale by thi' baid\ under a power of
sale tiivi'n to it for that pU!-[)ose, in cases in
which, niuler similar circumstances, an indi-
vidual coidd so pnichase, without any restric-
tion as to the value ol the property which it
nuiy so purcliase, and may acquire a title there-
to as an\ indivi(hial purchasing atslierifl"'. .-alo.
or under a power i)l' sale, in like circumstances,
could do, and may take, have, hold and tlispose
of the same at pleasm-e (R.S.C. cap. I'lO, sec.
49, slightly changed tind added to).
lU-'lM.SS AM) I'OWl-.KS UK Mil IjANK
S7
This SL'( lion apparently enables the bank to i)iirchasc
" hinds ur real or immovable property," (i) offered for sale
under execution or (2) in insolvency or (3) under the order or
decree of a court, as belongint; to a debtor of the bank, or
(4) offered for sale by a morti^at^ee or other incumbrancer
having priority over a mortgage or other encum-
brance held by the bank. (This power is an additional one
given by this Act). (5) or offered for salel)y the bank under
a power of sale given to it for that purpose, in cases when, in
similar circumstances, an individual could so purchase (Hy
rCnglish law a mortgagee selling cannot purchase — he cannot
occupy the antagonistic positions of seller and buyer at the
same time.)
lly the conjoint operation of this section, as it now read-,
and sec. 68 the bank, holding an incumbrance on personal or
moveable properly, could purchase the same if offered for
sale by a mortgagee or other incumbrancer having a prior
incumbrance thereon ; the last mentioned ;.eclion declarin:;
that the rights, powers and |)rivilcgcs which the bank is by
this .\cl declared h.ive or to h.ive had in res[)cct of real
property mcjrtgaged to it, shall be hi^ld or possessed by it, in
respect of any personal property which is mortgaged or
hyi)othecated to ii.
VO. The hunk ina\' iKMiuirc and hold an \i.-..iut. un,-
. ■ . in.iy lie ac
absohitc title in or to real or mnnoxahle 'Hiirr.i.
propntv niortLi'aLi'i'd to it as s.MMirity tor 1 drht
(hit or owiiii:' to it. I'ithrr l»y ohtainin;:: a r<'h'a.st'
of the ('(jiiity ot' rrdenii)tion in ihc inort'jaLr'ed
propiTty. or hy ])rociii ini:' a lor^'-'losiice. of \)\
otlier lilt ans \vh»'iH'i)y. as holweon indiviihials.
an et|nity ot rt'(h'iiiptioii can. hy \;i\\ . he hai'ro(L
tind may purchase and arqniro any pi'ior iiioit-
,iia,ire or charii'e on snch property: L'roviihd |.,.„vis.,; ,,aie
always, that no hank .•^liall hold any real or ,c,|iiir.,i.
inmiovahle property, howsoever acquired, ex-
88
UaNKs ami liANklM
cept such MS is r<(jniiH'(i lor its own use, for any
pi'iiod e\cc!0(liiiii' scximi vi'iirs IVoni the date of
tli«' ;ici(uisiiioii thcrrol. (RS.C.cap. TJe. sec.
•"•0. sliirhlly clian.u'cil).
See also sections 69 and 71.
Banks are entitled to a decree of foreclosure upon mort-
gages held by them as additional security. Bank of Upiicr
Canada v. Scott, 6 Chy., 451 (1S5S).
It will be observed that, under this section, the power of
the bank to accpiire an absolute title or to arcjuire a prior
'•harge is restricted to "real or inunovable i)ropfrty." The
latter part of section 68, however, provides that the hmk
shall have t!ie same rights, powcs and privileges in respect
of personal property, mortgaged or hypothecated to it, as by
the Act it is declared to have over real estate mortgaged to
it.
The c()nstr'.i(ti(jn of a statute of a similar character,
though not in identical language, will be four.d in the Bank
of \ew South Wales v. Cami)!)ell, L. R. 11, App. Cas., i<):.
(1886).
If
I I
\vii.\r IS nil. irii( r of iiii: i-roviso 10 ai!0\k sixriON:^
The proviso is as follows : —
" Provided always, that no bank shall h(.!d any real or im
'• movable property howsoever acquired, except such as is
'■ re(]uired for its own use, for any period exceeding seven
•• years from the date of the acquisition thereof."
Under the Enulish Common Law corporations had [)owei
to take and hold lands just as natural persons had. By a
series of Statutes known as the Mortmain .\(ls, and which
have been held to be in force in Ontario, corporations, though
not prevented from taking lands, were forl)idtlen from hold-
ing the 'iame without a license in mortmain from the Crown
under ])ain of forfeiture of the lands (in this country) to the
Crown. .As only the power of holding the lands was pro-
hibited by these statutes, it followed that grancs of land to
Iii:>INl.-S AM) l'Ci\VtI<> (M nil. liANK
corporations were uikkI so as to |)ass tlic lands to iht.'in. hul
so soon as such lands were taken by the corporations without
a license m ninrtniain from the (Town, the lands became
liable to be I'urfeiled to the Crown. We do not know
exactly what the law of (^uel)ec is as to the h 'din^ of lands
m mortmain by corjiorations. The (Quebec !:: . of mortmain
was under discussion in tiie Chaudiere (lold Mining Com-
pany V. Dcsbarats, L. R. 5, 1'. C. ^"'7, (1873) and it would
.i])l)ear Irom that case that the French Law of mortmain is
not identical with the iMiglish.
The construction of this proviso would have to be the
same in all the Provinces, for as Mr. Justice I'atterson
recently observed in the Enchan<.;e I.ank v. Metchcr, 19
S.C.R. 388 (1891). "The Banking Act mii.-.t receive the
■ same construction in all i»arts of the Dominicni, what it
■■ allows or prohibits in Quebec it must allow or proliibit in
'• all tlie other jjrovinces. If the article (of the C'ode')
" enunciates a rule of law peculiar to one province which
'• is to govern in 'hat province the (;iieralion of this Statute.
" each provinc ( nay also establisli a rule of interpretation to
'• prevail within .'.s borders, and the uniformity o\ the law on
" this important branch of trade and commerce, which, was
" to be secured by confiding it to the exclusive legislative
"jurisdiction of the Dominion Parliament, will be in peril."
It is submitted that the breach of the proviso would ex-
pose the bank U) the penalty prescribed by sec. 79. If the
breach were -i<'ilfiil and lon^i continued it might be regarded
as an abuse of the corporate powers ot the l^ank, and might
form the foundation of proceedings fur a forle.ture of the
Charter. 'l"he land mit;ln also become forfeitable to t[;e
(>own, this however is doubtful and has not been decided
so tar as we know. We have only been able to
find two cases in Unta'io in which the effe::t of a
I lause of this character has been under di'cussion.
Tlie tuNt is, London (S; Canadian Loan iV Agency (Jo., vs.
( Irahani, 16 Onl., R. j;j9 (1888). the second is, .\bl)airmid
vs. Hughes, 16 (^)nt., K. 570(1888), in which the clause
there in question is somewhat similar in its language to the
no
Hanks and Hwkim.
t'M
above provisu. The statutu in question in the second of these
two rases, after ^ivin^ the Williams Mfi;. Co. power to ac(iuire
and hold lands, ^ocs on to say, " and thecouii)any may retain
the whulc (ir any part thereof, f(jr a [)criod not exceeding five
years."
'I'he Chief Justice in his jud^'inent iii this case says at
I)ai;e 576:
•' It seems that under tliese statutes an alienation in mort-
" main is v()idal)le only, and not void, and that in this Pro-
•' vince where lands are held in free and common socage,
" the lands so aliened can only he forfeited by the Cr(;wn,
" and that only after office found. See Crant on Corpora-
" tions, p. 98 ; Green's Brice's Ultra Vires, ]). 12 ; Ikcher
" vs. Woods, 16 C. P. 29 (1865); Sheldon on .Mortm.iin, p. i ;
" Hallockvs. Wilson, 7 C.l'. 28 ( 1S57) ; Brown vs. McNah,
" 20 (ir. 179(1873) : Vigf rs V. St. hull's, 14 (^. !!. 909 ( 1849'.
" I am of opinion therefore, tliat the defendant cannot
" tak advantage of the statutes of inorimain as against the
■' alienation by Dawson to the company ; but th;it the Crown
" alone cm take advantage of them."
Mr. Justice Street in his judgment after reviewing and
discussing the statutes of mortmain proceeds as follows
at page 580 :-—
"'I'he l.iw under which the naMon d banks in [he United
" Stales are constituted contains a similar provision to this,
" but I have been unable lo llnd any express decisions as to
" it-effi (••.. A somewhat similar ciuesiion iy discussed in IJaird
" vs. The Bank ofWashingtiMi, 1 1 Serg. iN: Rawle, .pi, where
" the opinion is expressed that even if the grantees, who had
■' taken a conveyance in satisfaction of a debt, had no right
" to hold the property conveyed, it woul 1 not therefore
•' follow that the ac(p,iiltance ol the debt would be cancelled,
"and the land revert to the grantor, but rather that the
'■ rights of the parties to the C(jnveyance, inter se, would be
" preserved, leaving to the state the right to take advantage
" of the defective title of the grantees. See also Lea/ure vs.
" Hillegas, 7 Serg. i"v Rawle, 313. This view of the l.iw is
" approved in Morse on Banks and IJanking, 3rd ed. sec. 754,
■' where tlv:se cases are cited and commented upon. In my
I r
IJUSINKSS AND ToWKKS Ol I HI. 1'aNK
(•1
" opinion the same consideration should govern the stipiila-
" lions in this statute \vhi( h limits the rii^ht of the rompany
" to holii for five years. I'he title of the company became
" defeasible by the ("rown alter the land had bcjn retained
" beyond that iierind, and may be dcteasiblc still on the
" f;round of the limitation in the statute :
" but I can find no authority for the proposition that the
" title of the company, ipso fact.i, terminated at the exjiia-
" tion of five years from the passim; of the Act, or the com-
" mencement of their holding of the property ; and I am,
" therefore, of o[)inion that their conveyance to the plaintiff
" wis efTectual to pass to him the title which they held, sub-
" i';ct to any right of entry or defeasance which the (!ro\\n
" might possess.''
If the Crown should intervene to forfeit the land, the loss
occasioned would have to be borne by the bank alone ; see
Morse on Hanking, s. 74, and ISaird vs. I!. ink of Washington,
1 1 Serg. it Kawle, 411.
Tl. Xotliuii; ill any charttT, Act of law shall
ho const nu'd as over having provoiitod or as
prevontlng' tiio 1)ank IVoiii a(.'([iiiriii!X and hold-
ing an ahsoliito title to and in any suohniortgairod
I'Oiii or imniovahlo property, whatever the valne
thon^ol' is, or from excreisiiiL'' or actiiiii' upon
an\' i)ower of silo contained in a!i\' inortirairo
U'iveii to it or held h\ it, authorizin<'()r enahlini;
it to sell or convey away tmy property ho
iiioi'tgMged. iR.S.C. cai). 120 s. 01, changed
slightly.)
See also section 70.
Section 70 expressly authorizes the bank to get in the title
to mortgaged land and immovables by forclosure, or release,
or by any f)ther means whereby, as between individuals, an
eiiuity of redemption can by law be barred. The present
Till
f<( 1 ,'1'
' til laiiils
i|iiiriil ;
■I- III' .".lie
m
92
UaNKS and iJANKINd
If"
sertion after a^ain authorizing this to ho done, without any
limitation as to the vahio of tlic property, further exfjrcssly
authorizes the hank to cxeici.se powers of sale contained in
mortgages.
ahi.i ...ivnnc.s '^*** Kvcrv huiik ;i(lviincin'j; n.oiu'v In aiil of
lor liiiihliii^' , I'll'*
"'•'I'N the fjiiilditii;- ol any slii[) or vi.'ssel slial! have
(he saiMc rijiht ol ae(jiiiriii<:' and lioldiiig security
iil)on siieli ship or vessel, while hiiihrmir iuul
when completed, either hy uay of niortLM,i:e,
ht//K)f/iri/n(; hypethecation, privilejxe, or lien
thereon, or pnndiase or transfer theri-ol". as
individnals have in the Province wherein snch
ship or vessel is hein.ii" hnilt. and I'.r that
pnrpose may avail itself of all such ri.irhts and
means of ohtaiiunii' and eid'orcitiij: snch secnritv,
and shall hesnhject to all snch oMiirations, limit-
ations and conditions as ;ir.'. hy the law of such
Province, conferred or im[)os('d n|)on individnals
inakinu- such advances, .RS.C. cap. lliO, sec.
52.)
This would appear to enable the hank to take security for
future, as well as past, advances when made in aid cf the
building of any ship or vessel. It is no doubt intended to
promote and encourage the ship-building industries ot the
Dominion
Warehouse .V. ^'^' "^^^^ ^'^"^ "^'^^ Jicquire and hold any
'i::l!:^u]::t^X warehouse receipt or hill of lading as collateral
i.rai srcuri.N j^ycurity for the payment of any deht incurred
in its favor in the course of its hanking business ;
and the warehouse receipt or bill of lading so
acqnired shall vest in the haidv, from the date
of the acquisition thereof, all the riirlit and title
HfSlNI-SS AMI I'nU I:K.S 1)1 |||l. DwK
;;j
"I lilt' previous lioldcr or owium' tlieii'nt. (ir of
the |)('i".«^()ii IVoii' w lioiii such ^odds. \\ar«'s mid
lULTcliiiiidisc ut'ic it'ccivcd or .icijuircd !y tho
bimk, il'tlic Wiireliousc rt'ct'ipt or hill <'ri;idiiii:'
is iiiiidc dircctlv in fjivor of the l);iiik. iiistral of
to the |irevi()UH holder or owiui of siicli -ouds,
wares and nierchiindise. (H.S.C ciijt. 121). sec.
0:;, ss. 2.)
'This scclion and ihc five following ones arc generally
known as tlie Warclifnisc Receipt Clauses of the Hanlc Act.
They were passed, no'douht, for the |)urpose of increasing i!;c
purchasing power of the cajjital employed in mercantile
business, by enabling merchants and manufacturers to obtain
advances on their goods whilst on hand or in transit and
awaiting sale. l'"or a short review of the previous legislation
on this subject, sec the judgment of Burton, J., in .Smith vs.
Merchants Rank, 8 Ont.,A.R. at page 19(1883.) 'I'hrough the
instrumentality of warehouse receipts, acquired in the manner
prescribed, the hank is, in effect, authorized to make ad' ances
or loans on the security of goods, wares and merchandise.
CONSriTI'TIONAMI V.
The constitutionality of the warehouse receipt clau'-es has
been ([uestioned. By the I!. N. A. .Act the Parliament of
C^anada has exclusive legislative jjower over Hanks and
Hanking It is contended that these clauses have nothing to
do with " Banks and lianking,'' but deal with '' i'ropcrty and
Civil Rights," — one of the subject matters which by the B.
N. .\. Act are assigned exclusively to the legislative authority
of the Provincial Legislatures. The Supreme Court of
Canada has, however, decided in t'avor of the constitutional-
ity of these clauses, being of opinion that the Dominion
Parliament, having power to legislate.on the subject matter of
Banking, might, in the legitimate exercise of that power, sa)
that banks might take warehouse receipts as collateral ^ecur
!>*
nANK,> \M> 11\NKIN<.
r*
t f
ity for thi; repay incru (if advarK cs made, even though inci-
(Ifntally such k'j^islalidti ini^ht inlerfire with " l'.ti|ifrty aiul
Civil Rights in the I'rovinccs." Merchants Hank of Canada
vs. Smith, 8 S.Cl.K. 512 (1884) — Sec also on this point
Diipiiy vs. CushiriK, I- R. 5 App. Cas. 409 (i8So). In the
case of Tennant vs. Union Mank, 19 Out., k. 1. (i.Si;j)
now under appeal to the Privy Council, the (juestion (jf run
stitutionali'.y was aj^ain formally raised in the (,'ourl below
so that it might be liiscussed in the aruuinetil ol the case in
the I'rivy Council.
" \v\iu;iK)r-«K Kixi.ii'i."
The expression warehcjiise re("eipt used in liie above
clause is defiiieil in sec'. 2, r;s. (d) as follows :
''(d). The expression "warehouse receipt " means any
" receiptgiven by any persuii lor any uiods, wares, or nierchan-
" dise, in his actual, visible and <'ontinued possession, as
" bailee thereof, in good faith, and not as (jf his own properly,
" and includes receijjts given by any person who is the cu'/icr
'"or keeper of a hai'jor, cove, pond, whait, yard, warehouse,
" shed, storehouse (jr other pUu e for the Uora^^e of ^^ooJs,
" riuirts or merchciiidise^ for goods, wares and nieichandise
" delivered to him as bailee and actually in the place, or in
" one or more of the places oioncd or kept by him, whether
" such i)erson is engaged in other business or not :"
The above definition of a warehouse recei|)t differs, to
some e.xtenl, \\o\\\ the one in the prec:eeding ac:t, R.S,C.,
cap. 120, sec. 2, ss. (b). 'I'he words in italics have been
added and the words " aho specification of timber " have
been omitted from tlie end of the clause.
The (L'finilion of "warehouse receipt" was first intro-
duced into the liank .Act by 43 Vic. Ca[). 22 sec. 7. It is
gener.illy supposed that it was frameil to meet the difficulties
caused by a series of decisions in Ontario, ending in the
cases of the Mercliants Hank v. Smith, .S S.(J. R. 512 (1884).
and Milloy v. Kerr, 8 S.(!. R. 474 (iSSo), deciding that
under the section c(;rresponding nearly to section 73 of this
IW >IM -> AM> I'liWI.K- (il nil. 1!ank
:•:•
Art, a warehouse rt'ct-ipt to he valid must be jiivcn liy a person
exen isin;; the hii->iiiess()f a warelioiisenian. Il is corK eived that
under tlie law asit at present st;iriils, A, adry j,'()ods merchant,
can dehver a hale i;( silk into the possession of 15, another
dry goods inerrhanl, to l)e deposited and kept in It's store,
15 can then is>ue a valid warehouse rereii)t to A for this
haleofsilk. This is the opinion of lioyil (,'. in re. Montieth,
lo Ont. R, 529 (iSSf)) where the meaning' of the expression
"warehouse receipt" as used herein is much discussed.
At pa^e 540 of his judgment the Chancellor says : •' the
"present ilefmition diseriininales lielwien iwo 'lasses of
*' persons who are authorized to i>>-ue receipts.
" I. .\ny bona fide bailee of goods wIik h are 111 his actuil
'• visible and continueil possession may give r • . ipls tlierefor
" J. .An" person who is the keeper of a w.irehouse '-r oiher
'• i)lace lor goods ran in respect of goods being in th..i wore-
•' house or place givesu;:Ii receipts The same son of proof
is not refpiireil in she case of a warehouseman granting su( h
*• documents as in the case of .i bailee of goods, and the v.ilidity
" of M-.ch recei|)tsdoes not necessarily depend upon proof that
" the warehouseman was actually, visibly, and conti .iiously in
" |j(jssession of the goods covereil thereby."
The meanmg of the expression " warehouse receipt " was
again under discussion in 'IVnnant v. Union bank, 19 Ont.
App, R. I (1892), anil the opinion is expressed that a ware-
house receipt givn by the keeper of a warelunisi', ^Vc., mu.^i
cover goods in some particular warehouse or place kept b\
such warehouseman. Macleiinan, J-, at page 15 says "The
" next (piestion is whether this pajjer was a good warehouse
" receiin under the Hank A<-t so that the bank might lake it
"as a security under R.S.C. Cap. 120, sec. 5^, ss. 2,
" (now sec. 73), the log-, havin- been at the time in
'• transit fr(jin the woods where they weie cut. to llie mill,
•'and being as desciibed in the d .cumLiu. in Lakes St.
" John and Couchiching en route for Hradford's Mill "
" I think that even if the logs were confined by a boom or
" booms in those lakes a warehouse receipt could ncjt l)egi\cn
' upon them. What the Statute R S.C. cap. i jo, sec. 2 (b)says
fwm^^^mmt
W
1].\M>;> AN!) llANislNt;
•' is in sub,.tancc this : 'I'hc uxpn'ssioi, ' warchiAi^f receipt '
" means a receipt given by a pcrs.,n lor goods in his ueiual
•' possession as bailee .... and includes receipts
" from any person who is keeper of a . . • • null 'J^
" other i)lace in Canada, for goods in the place so kept by
" him. I am unable to sec how I-akes St. John and Couch-
•' iching where these logs were at the date of the receipt, can
•' be regarded as- place- /r/Z/M' ///. si^./ns •/ the truipt:'
'Pennant's case was decided under the I'.ank Act R.S.of C.
c. I 20, The change in the language of the definition of" ware-
house receipt" in the present Act seems stronger in fivor of
the view expressed by Mr. Justice Maclennan.
1
l;ll.L Ol- I.AlilNd.
Section 2 ss. (<■) of the Act defines the expression " bill of
la'ling ■' as follows :
" {£.) The expression "bill of lading ' includes all receipts
" for goods, wares or merchandise, accompanied by an under-
" taking to transport the same from the i)lace where tliey were
"received to some other place, whether by land or water, or
" partly l)y land and partly by water, and by any mode of
" carriage whatever ;"
A bill of lading is a memorandum signed by the
master acknowledging the receii.t of goods to be
carried as therein mentioned. It generally has a twofold
character, containing not only a receipt for the goods, but
also the contract upon which they are to be carried. By
the English law its use is confined to maritime adventures.
The above definition however extends its meaning to cover
all receipts for goods to be carried by sea or by land.
GOODS, WARKS AM) M F.KCH AM )ISi:.
Section 3, ss. (r) defines these words as follows :
"(,-) I'lie expression 'goods, wares and merchandise
•' includes, in addition to the things usually understood there-
" by, timber, deals, boards, staves, saw-logs and other lumber,
Ill-SINI.-S \\|) I'mWI KS III- THi: I'wi
!t7
"lietroleuiii, crude oil, and all agricultural produce and (Jlher
■' articles of commerce " ;
These words " ijoods, wares and merchandise " will be
found used only in the al)ove sub-clause, and in Section u \,
and in the sections of the Act relatinic to warehouse re-
ceipts, vi/ , Sections 75 to ;,S : as so used they would prob-
ably include only "snoods, wares [\u(\ merchandise," dealt
'vith in a mercantile transaction. Under the I'lnglish I'actors
Acts similar words were held not t'l uk lude stuck certificates
in a joint stock eompjiiy, ^ee Tniemin vs. .\[iiileyatd, ^2
I,. J. 1C\, 175 ; I, N. K 30, (iSOjj.
(Ml \ I IK \l, ^l:( IkCl'V.
I:i MulvN- \',.iv', I, K., lO, ('h\- !).. 214 (iS7,S)and in
/v ;v .\thill -.\thil! vs. Athill 1 ,. K , 1 r,, Chy., I). 2:2 (1S80)
the word "collateral" was much, discussed and its meaninu
was held to be "parallel" ur " ad.iitiwp.a! " and not
" secondary."
" DiiMs ivcrkkKo. '
Section 73 declares that the bank m.iy acquire and hold
any warehouse receipt or bill of lading ascollateial security
for the payment of any debts incurred in its favor in the
course of its banking business. In order to ascertain the
meaning of the words "debts incurred'', as used in this
section, reference must be made to sectiin 75. which in effect
tleclares that the debts must be incurred at the time when
the warehouse receipt or bill of lading is tr.c^ferred or pro-
mised in writing to he transferred to the bank.
rill-: i;\NK m \v AiijriKi ano iioi.m \x\ w \u!iior>K
ivi cr.ii'i. \! ,
In a case arising under the ('.S.(.'., ca|). 54, and 2 \ \'ic., c.
J3 (Can ), where a i)ank took a warehou:.e receipt fiwin a
warehouse-man (^'/v/^/a-Av/^vV/;,' t(^ have received. //ew //u- bank
6,000 bales ot wool deposited ;n the warehouse, sul)ject to
the order of the b:mk, it was hehi by the Ontario ('ourts, that
98
liANR- AM) ilWKIXC
such warehouse receipt being given direclly lo the l)aiik was
wholly inoperative, the language of the statutes then in force
contemplating and authorizing transfers of warehouse receipts
to banks by indorsement only. See Jiank of liritish North
America vs. Clarkson, 19 U. C. C. !',, i8j (1868); Royal
Canadian Bank vs. Miller, 28 U. C.C. 1'., 593 (1869).
(In apijeal) 29 U. C. Q. IJ., 266 (1870). 'I'his war, a very
rigid constru'tion of the statutes, and was, it is believed, a
su-orise to the mercantile community. An opjjosite view
had, moreover, been arrived at by the Courts in (^u<.!)ec.
vide Molsons J]ank v.s. Janes, 9 I,. C. Jur., Si (1864), ,ind
a less rigid construction had been ai'idied to !)ills of lading
in the very same year in the Ontario Court of Appeal, ride
Royal Canadian liank vs. Carruthers, 29 U.C.Q.15., 283
(1870) ; consei[uently, shorUy after ihe pronouncing of the
decision in api)eal in Ontario, above cited, the language of
the clauses was clian.ued {vide 34 \"\v., c. 5, s. 46, ei so/.),
and subsciiuentl)', doubts having l)een again raised, was agam
changed {vide 43 \'ic., c. 22, s. 7). h is now believed that
the words used in the present .Act are large enough to enable
a bank under this section, lo accjuire title u) a warehouse
recci])!, either directly from the warehouseman, or by way ot
endorsement from the htjlder thereof, — See Merchants i!ank
of Canada vs. Smith, 8 S.C.R., 512 (1884) : 8 Ont. .\pp. R .
15 (1SS3): 28 Or. 620 (1881): and see i). <,f Ibmulton v>.
Xoye, 9 Ont. R. at ]>. 673 (1885).
W
V.\ \\IIC>.M M \V NIK WARl HOLM:, lU.Cl.ll'l UK (..W V.S. ?
It may undoubtedly be given by the borrower from the
bank. Hut may it be given by aiiybod) else? In Tennanl
vs. Union liank, 19 Ont., App. R. at p. 6 (1892), Mr.
Justice O-ler answers this (piestion "It does noi appear to
" l)e essential that the borrower slnnild be the holder or owner
*• of a warehouse receipt. 'I'he bank may ac([uire it as collat-
" eral security for him from a third party."
It is now declaretl by this section, that the warehouse
receipt or bill of lading, so acquired, shall vest m the l)ank,
tVom t!:e date of the ai (piisiiion thereof, all the riiiht and
I]l>INI.-S ANh I'dWI.k.- OK -illl r.ANK
;•!!
title :~-(i ) "OflliL' 1 ircviinis //.'/</,•;• or f'r>7/,v thereof (tlierel)\
implyinu that there must i)C a previous holder or owner ot
of the w.irehouse receiin or l)ill of lading) ; or, (2) -'Of the
person f nun i.'/io'n s/r/i i^',his, avc/vy, ar nierehinJise u'erere-
ceived or acquired by the hank, if t lie i.'tire/ionse receipt or hiH of
ladini:: '•< "/'fde directly in faro- of the iuvii^. instead of to th.
frerions holder or o^w/er of siicli X'>'>ds, wares or nierchand.s- ."
I'hese latter words in italics were added by 4,:; \"\r. c. 22, s.
7 (iSSo), probably in anticipation of an ohjertion which was
afterwards raised in the Court of .\pi)eal in Ontari.i in
Merchant's l!ank of Canada vs. Smith, (1S83), (8 Ont. App.
K. 15), that even under the wide lani^uage used in 34 \'ic.,
c. 5, s. 46, it is still necessary that there shcnild he a previous
holder or oroner o{ tlie warehmise receipt or hill of lading
before it can be validly transferred to or acquired by the
bank.
Lnder the j-resent law a warehouse receij)! given directly
to t'-'^ hank by the bailee or warehousemen, would certainly
be g 0(1.
1-1 1 1 1 I or nil: A( i.pii-i 1 1(,\ ,,|. 1 m, w Aki:iiorsi: ri-ckii'i
'The section now de<-lares that the w.u-ehou>e receipt oi'
bill ,,f lading, a<-(|uiied under the act, >hall v.st in the t)ar.!x
troni the dale ot the ac(jui>ition thereof, all the right and
title : -~( I ) "O/ th, prerious holder or oK<ner thereof or, {2)
''Or the person J r in :ohoni sneii ^oods, hurres or merchandise
were received or ae,/u/r,d by ilie bank, if the warehouse receipt
or bill ot ladii/:^- is made directly in favor ,f the bank, instead
ot to the pnvious holder or or.'ner if such ^i:;oods, ;oares n
merc/iandise."
A recent ca>.e on the subject is I'he Dominion I'.ank \.
Davidson, i .' Ont. Ap|;. K. 90 (1SS6), in which the fact-
were as follows :— Tile execution t!ebtor<. Chapman iV Son.
bought the oats in (juestion from the owners thereof', wIkj
•shipped them to I'oroiUo consigned to their own order or to
the order of sijine bank other than the plaintiffs', sending the
ship|)ing receij^t, with a draf't f'or the pri( e of the oat-
attached, to Chapman \- Son at '{'(jronto. i'he latter then
\^y
100
?)\.\KS AND BaNKINC.
took the shipping iL'(:ci|it to the plaintiff hank who advanced
the money thereon to pay the draft, returning; the shipping
receipt to C]hapnian \: Son for the purpose of getting same
endorsed by consignee thereof and obtaining the oats from
the carriers, first taking from (.'ha|)man & Son a receipt in
these words : —
" Received in trust from the Dominion liank bill of lading
for bushels oats, and I hereby undertake to sell the
]iroperty specified for said bank and collect the proceeds of
sale or sales thereof and deposit the same with the said
bank, in Toronto, to the credit of same, I hert;by acknow-
ledging myself to be bailee of the said property for the said
iiank."
( hapman .S: Sun received the oats from the carriers and
warehoused them, taking warehouse receipts in their own
name, which they endorsed to the iplaintiff bank who gave
up the bailee receipt.
Held, that no property in the oats had passed to Chapman
i^ Son when the plaintiffs made the advance, and that the
latter were therefore entitled at least as equitable owners, as
against execution creditors of Chapman & Son, — and held
also that the Chattel Mortgage Act could have no applica-
tion, for when the oats first came into the possession of
Chapman \- Son, they came charged with or subject to the
plaintiffs' title.
Another recent case is Tennant v. Union Bank, iq Out.
A|)p. Is. I ( 1892).
(iOOD.S Slim in Kf IM'.SCR 1111:11 in KIX KIPI' Willi KK.\SONAl'.l,h
( i;k 1 AiN TV Aur. srnsi;^ 1 r 1 md ooods covkrkd?
l''. If 1(1 111- (.(INi
♦sioN Of i'kcu'i:uiA'.
When taking warehouse receipts, the goods intended to be
covered thereby shuuldbc described therein with reasmiable
certainty', and the agent of the bank should, if possible, see
that the goods themselves are in the warehouse and
separated from other goods of a similar class. The receipt
only covers the actual gooiis mentioned therein ; it does not
onlinarily cover substituted goods. This was exDressly
HrsiM -■< \M) PcWKR^ ol llll llwK
III
decided in I.lado v. MovL'aii, 2_:; L'.CM'.l'., 525 (1N74). In
that cast.' the rcccijit ( nvcrcd thirty hales of corks, and the
C(nirt held that il cmered the specilic hales, and those (jn!\,
in the ivarehou^e at the time of the ,L;ivin^' oi the same
\\'here, Ii.)\vever, there is a ciisloni or usaij;e of trade, (such
as exists in the ^rain trade), not to deliver hack the specifu
goods, hut the same i|uanlity of '^oods of a similar kind anti
quality (or such as exists in the millinL; husme .i, not to
deliver i)ack die wheat at all hut ils equivalent in llour; the
ciperation of liie receipt would pmhahl) not he restricted as
in Ltado v. Morgan.
Sl(.- on this p(.)ini Wilinoi v. .\hiilland, _:; ( ir., 107(1 S5 1 ), in
whii h a usage in the Hour tracle is mentioned.
Coffee \. 'i'he <^Hiehec li.iiik, 20 l'.('.(" I'., 1 1 1 and 555
(1869). in which the nature and con^LqueCi e> oi the u>age
in the grain trade are dis<-ussed.
.Mason v. (".real Western Ry. C'o., ;,i L'.C(J. I!., 7^ 1 i87-l-i
in which the nature and conseipiences of the usage in the
milling tratie are iliscussed.
Where the warehou'^eman improperl)- mixes the goods
covered by the warehou-e receipt, with his own goods, esjjeci-
all) where in the warehouse recei[)t he ])romises to kee|) the
goods separate; the holder of the receipt, as against the ware-
houseman himself and as against his assignee in in.-iolvencyt
or for the benefit of creditors, is entitled to he satisfied <ju
ot sii
-rl
nuar goods in tlie warelKHHe. to the ([uantuy menti(;nec!
in the warehouse receipt. .Merciiants Ilan!; ol Canada v.
Smith, jcS, Cir., pp. f)V^f>,Vi 'i.SSi). (ireat Weslerii \\) ,
( 'o. v. Hodgson, 44 l'.(' (J 11 , \i)(> • 1S79). 11, ink of llani
ilton V. Xoye. 9 Om. K. /.j;i (1885). Re () jodlaliow.
Traders Hank v CioudJ.ill .w, 19 ( )iit. Kep, ^'99 (iS90)-
Sf ,■ also in ^'' ( ".oiem.m, :;() l'.("(^) Il ;r)4(i;S7 5i.
i<i;Mi.iiii.> 111 Nil. i;a\k aiii-.k ki.m-m. loiu.inr.K.
.\fter demand of delivery and refu>al to deliver, the bank,
;t possession of the goods covered h\ die warehouse re( eipl
can be obtained witlunit force, (an take po^-session of the
same, even though on llie land of the warehouseman, with"
Iu2
UaNKs ANI) liWKINC,
I
I i^
kW
Wluii |iri
liolilfi i<
\ loll
III
out being liable in trespass. Traders Hank v, Drown Mann
facturing Company, iJS ( )nt. Rep. 4:;o (18S9).
i.l.XIJ<AI .\U'J-Ks.
It has been decided that i>n the reendorscinent of a ware-
house receipt by the bank, the i)ledgor is in as ..f hisoriguial
title, and that his rights must lie considered as il" the li:ink
had never intervened. Mason v. The Creal Western Ky.
Co., 31 U.C.(j.n., 73(1X71).
There is an .\''t in force in Ontaiio relating to wareli'Use
rei-eipts, vi/. R>, ot On;. h,SS7) cap. 122, sections i4etse(i.
~. ir the pri'vioii.^s liolder of siicli Wiuvhouse
reoei[)t oi' bill of lading is the im'eiit of rlir owner
of the goods, ware's and iiieivliaiidisu iiK'iitioiici]
tlicrein. tlic !)aid< .<1im11 he vested with all tin
fight and title of the owner thereol. suhject to
liis right to liave the same re-transferred to him,
if the deht. as seeiiritv for wlueh the\- ai'e held
h_v the i-ank. is [)ai(i : (K.S.(;. cap. 1 20, see. ■)'.),
s.s. ;; . )
It will be noticed th.u th.e lanuuagc U'^ed in ihis siib-scclion
■-till is '' {f f/'ir /^/^'/(ins I/o/dcr u\ siu'h warehouse receij)t " is
the agent, .Vc, consecjuently ii may be held that '• an agei t ''
must iransfcf an exiitiiv^ ^ihjrduiusc recci[>t to the bank. See
on this jMjint notes to section 73 and the remarks of the
Ontario Court of .\ppeal in .Merchants Hank of Canada v-,.
Smith, 8 Ont. .\\\\\ R. 15 (1S.S3).
'I'his sub-section enables an agent, in r crtain cases, to cre-
ate in favor of a bank, a valid pledge on gtjods fjelonging to
his princijjal, even though such pledge may be a wr(;ngfiil
and unlawful dealing v.-ith the goods as between the
agent and the principal.
; Ib;
Miwivc, 111 1 iir; woRi) "\ia.Nr".
'I'he defmition of " ai^ent ", as used in section 73. will be
I'lr-ININS AN' I) I'tiWKRS 01' THK F'.WK
lit:;
t')iiiiil in sec. 7,^, ss. 5, and i-, .is follows : '* I'hc expression
" ' .i,_'ent ' nuans any person intiu^led wiili the possession > i'
"goods, wares and inerrhandise, or to whom the same ai ■
•' consiL;ned, or who is possessed of any bill of lading, receii)!-
■' order, oi oilier document used in the course of business a-
'■ proof of the possession or control of goods, wares and
•' niercha!idi>e, or authori/in^ or purporting to authori/L.
either by indorsement (jr by delivery, the possessor of suci.
■' docinnent to transfer or receive the goods, wares and me ■
■' chanilise lliereby re[)re>ented ; and such [ler-^on shall Ik
deemed the iMjssessor of such goods, wares and nierchan
•' dise, bill of huling, re<-eipt, order, or </ther document as
aforesaid, as well if the same are IilKI by any person for
him or subject to his control as if he is in aclua! possession
• thereof.'"
It is no (ioul)t f lundeti on the defmition of Agent givei"
in the Consolidated Statutes ot (!aiMda, cha|)ter 59, which i-
itself based on the I'nghsh I'artors Acts _| Cc 1. I\'. ca[), S3 ;
6 Geo. 1\'. caj). 94 ; and 5 and 6 \'ic. cap. 39 ; see also R.S.
of Ontario (1887) cap. 128. The present definition ^1
.Agent i-^ not, ho.vuvcr, identical with its del'milion in ti c
above SMtutes. In some respects the ] 'resent definition ;-
much wider, es|)ecially in regard to the possession n{ do( n
nients of title. In the (Consolidated Statutes, chapter 5.;,
the ageiu must be ''entrusted with "' tlie i)ussessi(»n of gooti-,
or "entrusted with" the posses->ion of the documents 1 !
the title the reto. ]]y section 73, ss. 3, (jf :!iis Act it is dr
dared that "Agent •' sh ill me.in ''any person entrust>-d witii
the possession of goods .... or who is possessed
'not "entrusted with'' the possesion) ui any document ot
title. \\ lien this (juestion — Who is an agent within tl.«.
meaning of I'lis subsection an<l section 73, ss. 3 comes U'
before the ('ourts, fir decision, we think it will be answered,
that only those |)ersons who are agents within the meaning of
t-he Knglish Factors .Acts ami the Consolidated Statutes ot
('anada, chajt'er 59 and K.S. ot Ontario, cap. i jS, are agents
under this .Act. It m.iy, consequeiiti}', be u-^eful to st.ite the
w
m
104
I!ank> .\m> I!\nkin';
view-, svliidi have been adi
of
)])i (1 in iMii;iaiul on tlll^ iUK'^tion
Wlln |> AN .\(,i:\I INDl.k I III r\( KpKs m \> '
Nuu it has l)ccn luld m IlcMiian \. I''lc\vkcr, i;, C H \.S.
519 (1S63), that iIk' Icni) '•a-cnt," under thr Ivkkhs Acts,
does not iiuhide a iiK'ic -tivant (H 1 arctakcr, or oiie wiio
has possession of goods for carriage, safj custody or other-
wise, as an independent contracting |)art\, hut only "/"(V.svv/v.
'i^'hosc tniplnxDhitt concs/'cihh to tliiit of s,o//,- known kind of
r.onin.ciciol a;^,nt like tlial riass ( /■'actors ) J/oni 7,'/iir/i ///,• .-/,■/
/ids tak n its nanii-r In Cole v. North We.v.eiii Hank, I, K.
10 C. 1'. 369 (1.S75), which contains a most elaborate review
ot tile Fact(jrs Acts and the decisions thereon, Mr. justice
151ackl)urn says : "If a furnished house he let to one who
carries on the business of an auctioneer, he is entrusted a-,
tenant with the furniaire, being in tact an auctioneer ; but it
nevt:r was the coininon law, and coukl not be intended to be
t'huicJ, that, if he carried the furniture to hi.-. aiK tioii rooiu
and there sold it, he could confe: any belter title on tiie pur
chaser than if he had as auctioneer acted for some othe:
tena'i; who committed a similar larceny, as a fraudulent bailee:
nor. to come nearer to the present case, that a wareh(juscman
or wharfingei, who, as such, is intrusted with d^j custody oi
goods, if he hajipens also to pursue the trade of a factor, can
give a better title by the sale of the goods than if they had
been intrusted to some other warehouseman who emplf)ved
hull to sell." See also Johnson v. Credit I-vonnais, I,. R
3 C. V. I), JJ (iSj;).
In the City Hank v. iJairow, I,. R. 5 Aiip Cas. 664 (iS.So),
a taimer in Montreal received from a merchant in laigland
hides to be tanned and it was agreed that freight was to \n-
procured for them l)y the tanner and the hides returned to
l-'ngland ; .hey were tanned, and freight was accordinuly
l)ro(ured for them, but in the iiieantiiiie the imiier had ob
lamed from the Toronto Hank advances on his oaii account
on bills, and hyi)i)thecated the hides to the bankers as secur-
ity for such advances, engaging to hand over to them the
bills of lading if his IiiUs of exchange were not duly honored.
lllMM^^ ANh I'dWl.K- III I Ml. IIXNK
id.'i
'I'licv were lint (iu'.v huiiiiiL'd. and thch inkci> (whi) hail actoilin
Liitirc u'dnrancc ut' tlif tiaiisai tioii bclwcLH the mcii lianl ami
tht tanner, claniu'il u> retam tlic l)ilis (jf hulin- and tlio hides
tiiitil their demands were s.iti-lieil. The Umise of l-or-ls.
however, decided tliat the tanner was r it a factor or a^eni
entitled to [jledue under any law, Canadian (ir i'ln^lish, ami
that the Hank ol 'I'Dronto :u quired nn valid lien on the hiiles,
either lUider the ('i\il Cnde, the Coii-^olidated Statutes ot
Canada, Cap. 51;, or the Hank .\( t.
l,(iril SelWorne. in the ( our^e i^t hi-. iudi;incnt, at ])a.i;c 67;,,
-ays : "Jt is manifest that the (jjjeration of thc-e I'aciurs
'.lauses under the Canadian Code (which i- the -^ame as Cun-
solidated Statutes of Canada. < . 59. in this respect) is the
same as the operation of the I .uti^r- .\( i> m lMv.;l,iml in a
-imil.ir case. TheN' are taken alnio-t entirely I'rom the I'.n;.;-
li-h factors Act-." .X'j.iin. at ji.i-e 675. he says : •• I do not
propose to dwell longer iijton the ca-e. Tlie Hankers .\ct
seem- to me to carry it no t'lirther It i- true it reters to the
("onsolidated Statutes and not to the Code : hut the code is
>jn this j)oint. on!\ a re|ietiiion of the ( 'oii-olidateil Statutes,
and i- a le^i-lative decl.UMtion of the true meanitiL; ni tho-e
former statutes which are incorporated in it."
I.'.rd Hlackhurn, m the c nir-e of hi- judumeiU. at pa-e
67S, say- : '' It i- sufticieiU to -.iw hriclly, that the decision
in Cole V. the Xorth-\Ve-,iei n Hank 'I'rom which an extrict
is ^iven ahove) come- to thi- : tint an a.;ent who iww jiled^^e
or sell mu-t he an a.uent of that class which, like factors,
(tak:nu almost the word- of Mr. justice Willi- in the ca-e
which has alread\' heen referred I > of Ileyman v. llewker)
have a business, which, when carri' d to it- le-:;itiinale re-idt,
would i)roi)erly end in -.ellim; or in receivin^j; payment lor
^oods. 'i'hat would he .i kind of clas- ; factors, and agents
in the cl.is- of factor,-. If ^uch .1 person i- " eiuru-ted " and
•' is cii/ni.<frJ ill tfiaf i(jp,ici!\\" then, in the absence of h.id
I'aith on the pari of the ]ilediiee, the pledge is L;ood."
See also Hu-h v. l-r\, i5 0nt. R. p. 122 ( i,SS7), where llu-
nie."iidn;4 of the word a^eiit under t'u- H. S. ot <)nt. (1NS7)
Call. r::S, was discussed. See also the rem, irks of Hurton J.
lOfJ
15\.\K> \Mi II\.NKIN(,
in
I'lmant v. rni,,n l;,ink. ivOnt. K. at up. jS r.iid -.,
'I'Ih' incaninu uf the Nvonis -'ami surh person shall !r
<l^'unM| ihe possessor,,! -oods or documents of title as
well II ihc sa.iic arc held l.y any person t\>r h;n, or sill)
Jtrt to his .-onlrol a> ifhe is in actual possession thereof," a >
used in the ro,;cludin- part of i;,e deliniii.jn <;f a-cnt m s,.
"'^"73, ss. 3, will he found discusse.l in the rase of l'urlall^
V. Fetlcy, I, R. 5 |.;,| ,,jo (r.sr,;) where it was held that "a
ta'-tor hy jiled.u'in- goods in his pos-jssion or under his eon
trol, as a-ent, for an ainoiun wliiri, did not exhaust their
value had not thereby parted with his co.Urol uver the -oods,
-o as to preclude himself from uiakiiv^ a further pledge
f"! the. balance of their value, which should he valid as
a-ainst the primipal under the Factors Acts."
AS IT) xoncr: ok K\t)\\\ i-ah,; mi .\i;k
.N( V.
1,1
i
f
Ill^(■l■lJ(■l ; I
'•I "A,I;.-ii!.
L'nder this Act no ])rovisions are made similar lo th(^se in
the hactors Acts as to the effect of notice to the bank of the
fact of t!',e person pled^iuL' beinu an anent.
ll is submitted that the bank's title U> a warehfuise receiiU
(I) would be invali.l if the baiik had notice diat the a,L;ent
pled^iuL; had no power to pledge ;
(::) Would be valid if the bank had notice that the a^ent
lilcdging was an agent but had no notice that such agent.
was exceeding his powers as between him and his princij.al :
(3) Would be valid a fortiori if the bank had no notice
that the person pleilging was an a'^ent.
• ). [11 this scctioii tile ('\i)rcssioii •• ;i;i-eiit "
mcuiis ;iiiy piM.<()ii iiitiiisuMl with the [iDs.^essiDii
i>l -ooils. w.-iivs ;i!i(l inoivhaiiiliso. or to whom
tiu' same arc coiisiuiH'd. or who is possessed of
aiiv hill of lading, recunpt, order, or other (hieti-
tneiif ii<ed in th(> course of hiisiiioss as proof of
the iios.sessioii or coiitiol of u'oods, wares and
Ilrs(\is^ \Mi r..\M,K- oi iin. I'lWk
HIT
mi'i'cliimdisc. or aiit liDri/.iiiLi or |Mir|ioiiiii'^' tn
authorize, t/itlu'r l>y iiidoi'st'iiiriit oi" liv (leli\iMv.
tilt' poj^scf-sor dl' siii'li (IdciiiiK'ii t to traiist'tT di'
rc'ci'i \t' t ln' li'ooiIs. \vai<'S and iiu'ri'liaiidisc I licit'
l)V i'c|)»t'si'n!('d : and siicli piTsoii >liaU In- dci'iii-
I'd flic [)os.>-t's,sor ol' sticli ii'ocds, \\ai'<'s and iiici-
cliaiidisc. hill oi' ladiiiu'. rci'c;i;)t, oiv'd'. or oihcf
do(Miiiiciil as ;doi'cs;iid, as ^vcli il' the same mc
li(dd hv aiiv |)ci'soii toi- liiiii of siiiijcct to his
(jontrol as il'hc is in actual possession thefcol",
(i;.s.r.. cap. I 'JO. sec. •').■;,)
f i The hank nia\ lend uionc\ toan\' pei'-on i,.i,im>i<>
* ' . . • • • ' uli(.lr«al.'
eiiii'aiicd in husiness as a wholesale man niactii rev niMimi.i.iM,. i,
ol"ini\' Lioods. Wares ai.d nicrchandi>e. upon the
security ol' the lidods. wai'cs and ineK'handise
uninid'artnred \)y him or prociircd lor -ueh
MKUinlacture :
'J. The hank may also lend money t<t aiiyi,,,.,,,>ioc.'i-
, ' . . ' ■ tain wliMlcsali-
vvliolesale purcliasicr or sinpper o! iirouuct- ol imi.hMs.i- ..r
auriculture. the lorcst and mine, or the sea.
hikes and risers, or to ;iny wholesale purchaser
or shipper of live slock or di ad stock, and the
pruduets thereof, upon the svcurily ol such pi"-
ducts, or of si'ch li\e stock "V i\i':\i\ stecj<.,ii;d
the products thci'eol':
3. Su(di s(!cui'ity may he ui\e)i hy the owner Konn ..f
and niiiy he taken in the loiin set !orth in Sche-
dule C to this act. or to the like elleet ; and In
virtue ol" such security, the hank shall ac4nire
*
IDS
H\NK> \M» IIWKINCi
tlu' siiiiic ii;;lits iiiid poNNiM's in ri>|)cct to tlio
•xoods, wiii'L'.s iiml iiit'i('li!iii(lisi'. stock ni' j»nMliict>
t'ovdrd tliurL'l)V, iis il it li.id iii(iiiir»Ml tlu' Siiiii«r
Ity \ irhic dl' ;i w iirt'liniisc I't'cfipt (New. Siili-
stitiitcd lur II.S.C. call. I'JI). sec. •'>!.)
M \M \ M I I. KI.K,
'I'lu' \v(ii(l • \l.ii,iit',i( ;iiri.r ' i*' hy sec . j, ss, (f,) dLlmcd as
tbll(j\\> : " I'lic \v(ii(i " iiiamir.ictiiiLi " itK luiki mal^lcis, dis-
" ti!lciv, liiiwcrs, rc'liiur^ and luudiict. i>,()t' pilnilciiiii. t.iniKis,
" ( utci>, iia( kci^. < ariiKis lit' iiiL- II, iM.ik, ri>li. Iruit Df vcLict
" ahk's, and any pirM.n wlm lunduccs liy hand. ail. piiHcss
" iir niK lianu al mcaii^ an)' l;(|(hIs. wares nr nicn h. tidijic."
i;'>(i|i-, w AKl- wn Ml.kCIIANhl.sl,.
This Lxpixssitjn is by sec 2, .ss. (r, ) dcfMifd as follows :
'• The expression ' i^oods, wares and nierclianch'se ' inrludcs
" in addiliun lo ihelnings usually understood tlierehy, limber,
■■ deals, hoards, '•laves, sawlof^s and other li.niher, ]ietrolcuin.
'• crude oil, and .ill a^ric ullural |)rodu(\.' and other articles o|
" coininerce : "
The iMcvious iiank Acts contained a section, whi( h has
been omitted Irom liiis act, ^'ivinj.; ])ower to persons excrcis-
mii cjitain trades lo issue warehouse recei]»ts b) way of
security to a bank on their own tioods, wares and merchan-
ise stf)rcd in their own yards or warehouses.- (Sec R..S.(.".,
cap. I JO, sec. 54)
In lieu of this omilled section, the [iroent section has
been substiluled. It em])(jwevs a bank to lend money lo
wholesale manufacUirers (as above defined) upon the secur-
ity of goods, wares and merchandise manuficluretl b)' them
or procured for such manufacture. Il further empowers a
bank lo lend money to any wholesale purchaser or wholesale
shipper of certain products, and live and dead stoi k a^ men
tioned in sul)-sec.ti(Hi 2. of the above sei lion upon the
security ol such oroducts and \\\v and dead stuck.
\
Ill >IM>> Wli I'dWIU^ (i| nil r.WK
Id!)
SI ( IKI n i;v will '\l hi l!K i.l\ I.N.
Sub-section ;, piovitlcs that ihc scnirity hureumicr in.iy he
.'wen liy the owner — it seems to us that in most, if nut in .ill
eases, the sei iiiity must \)c f^iveii hy him. Ii -.ci'ins iiue-.ii( li-
able if it ran he i^iven hy an at;ent. .Action 7_^ seems to
imil the power (jf a^nts to the ^ivin;; of warehouse receipts
as thereby provided for. No pledge of goods to the bank is
valid imli'^-. .Mith.iri/ed by the act, (see -Jei . C>]), .\o express
aiuhiirity )■> :;iv(ii, by this or any other sccnun, to agents to
ple(l.;e nndir s..( tioii 71, and we (an tind no imi)lied author-
ity imle-.s i! i> coiil'erred by that part of sub <(.( lion 3, which
declares that the bank shall acfpiire the sam-' rights to the
goods covered by tlu' serurity as it' it had at 'piired the -ame
by virtue ot a warehouse ici t.ipt.
-!( fKll\', IN u II \ 1 1 1 ik\l.
'I'he security may bi.' taken ii. the lorm set loith in Sched
ule ('. to this Art, or to the like effect.
The torm given in Schedule ( '. is as tolh^v.-; : -
In consideration of an advance of dollars,
made by the (//irwr of I'lVik) to .A. l!., for which the said bank
hokls the following bills or notes {i/tscn'/'i' fully llu hilh or
notes, lh\ti, if (111 y), the goods, wares and inert h.mdise men-
tioned below are hereby assigned to the said bank as secmity
f )r the payment, on or l)efore the day ot
of the said advance, together with interest thereon at the rate
of per cent, per annum from the
day of (01% of the s.iid bills and notes, or rene.vals
thereof, or substitutions ilKnt'or. and interest thereon, oros
file Ciise may I'c).
'I'liis security is given under the provision^ of siction
sevenl\-lour of "The Hank .\rt," and is subject to all the
provisions of the said .Xct.
The said gocjds, wares and men handise are now wwiicd
'~iy and are now in possession, and are free from any
mortgaue, lien or charLre thereon, (or o^ /,), .,!>,■ i/uiv l>,), and
A
110
]j\.\K- AM) DWKI.^
u .\ I ;
arc in ( phuc or places where ^cuuh are), and arc the fullow-
iny : ( parlieiilar desenN/on (/ i^,i,>i/.< assii^neii ).
Dated at ,y
I'-iR \vii.\r i\iii.i:rij)\i.s.> c\.\ Till, ,>LcuKii\- i;k iakmn ^
'I'hc section itself provides that the l)ank may lend the
uiuney upon the security. The form, Scliedulc C, l)y the use
ot the word "advances," indicates that the bank may advance
the money upon the security-the 75th section, however,
imall\ determines the jjowers of the hank in this res])e(;t.
The security must be ij;iven (jr mu^t be promised in writiiy'
to bi' u'lven U) the bank cotemporaneously with the advai.ce.
I.ilTX r 01 IHI'. SIXUKnA- Wlll.N (;|\|;x. ANT) I'oWl KS;
Kiiwrrs, AM) ki;mi:i)|i> ok riii. i;ams riii:i;i-.i-M)i:R,
This is declared in sub-section ^5 :- 'i'lie bank shall possess
the same rights and powers, under the security over the goods
cjvered thereby as it W(.)uld possess under a warehouse
receipt, covering such goods, duly acquired under the other
se.aions ui the Act. .See sections 73, 75, 70, 77 and 78.
A doubt has l)een raised whether the se( urity i reated uii
der sec. 7.1 wouUl be valid in Ontario withcut registration, as
required by the Cliaitel Mortgage .\a. We think that no
regi tration of tlie sectirit\- is re(|Uisite to perserve its vabdit\-.
U'e think thai the rights of the bank to demand and take
"ossession of the gootls cove'ieil by the >ec uiiiy are the same
a:, if it held a waiehouse receipt covering such goods. See
ori thi^ jjoint notes to seclion 7-,.
If the debtor, al'ier the maturity of the debt, wilfully with-
holds from '.he bar.k possession of the goods upon demand.
he is liable to be pimished criminally. See sec. 75, ss. 4.
(;km;r\i, ri-makks.
'I'his section li.is not yet been the subject of iudicial deci-
sion, the general temlenry ot the courts, however. especialK-
in Ontario, has been to re->tri(T rather than enlar^e the Ian-
Lr>iM -- AMj ]'m\slk> or iiii. i;
ANk
111
Kuaue of the waiL-hnu.sc clauses of the liank Ad .Sonic of
the judi^es seem to entertain strong views ajzam^t tl:e (lolicy
ol these clauses and their decisions rellect then views. The
prohability is that this section will receive a pretty strict and
rigid construction when it is presented to the Courts for inter-
pretation. In view, therefore, of this tendeiK-y it would he
wise in drawing a security hereunder to give as lull a descrip-
tion of the goods and nt their locality as the nature vi the
case adiuits of. In 'I'ennant's case, 19 Aiij). R. i (1S9J)
referred to m the nc^tes tcj section 7,5, it was
intimated that logs lying in rivers and in transit
from the timber limits where they uv.c cut, to the mills
where they were to he sawn, could not he pledged under the
then Bank .\ct, because they could not be -aid to !)e in a place
or places kept by the person pledging tlie same. \Ve think
that logs so situated can be i-ledged under this section.
7.1. The i)imk ^^liall not ;u'(|iiiti,' nr hold any v.
warelioiise receipt or liiil of ladin^u or secMiritv >'■■
under tlie next precediim' sc-ctioii to .-eciiru the
piiynieiit (A' niiy bill, note oi' del.r. uule.ss siich
hill. )n)le or debt is m-Mot i;ite(l or eontr.icted ill
the time of ihe ;ic(|uisition theieof h\ the h;ink,
or npoii the w-^ten promise oi' agreement that
.-uch ^varell(ill,se reetdpt or hid of ladinLf or .sec-
urity would he ,uiven to the hank: hut .such
hill, note or deht may l)e I'eiiewed. or the time
tor the payment thereol" extended, wiihout
alVcctiu,!;' any .such sccurit v : (R.S.C. cau I'll
"'.,11 , , ' ^ ■'•■->
•l li .I nil
■Mi'ily limy
.i'|iiii-('(i;
sec. -J.'*, .ss, 1, changed.)
To negotiate is to transfer f.^r valuable consideration, per
Richards h in i'oster vs. P,owes. 2 Ont. P.R, 2^() (iS;-i
\Vhere a bank holds warehouse receii)ts to collaterally secure
the i»ayment of notes, and the notes become f)verdue, and an
extension of time is agreed on, the delivery u[M,f the receipts
112
Danks ami liwkixi;
I
and Mvcrdui' notes, hcinti ^ surrender of the hank's lien, is a
valuable consideration for and therefore a negotiation of the
ncw renewal notes, or else it is (jnly a substitution or continu-
atioi'i of the serurilies. Bank of Mamilton vs. Xoye. <j (). R.
6,:; 7 (18S5).
liiit u-heii there is a simple renewal of existing papi. r and
the taking of warehouse receiuts on such renewal — no new
advance l.)eing made and no valuable consideration uiven or
surrendered contemporaneously i)y the hank which might
re|)resent tiie inception of a new transaction or negotiation of
securities, lloyd, ("hancellor, held the warehouse receipts m-
vaiid — I )omiiiion Dank \s, ( )liver, 17 Ont. R. 40^ (iSSt)).
In some of the former statutes the word •• understandmg '
was used. It was afterwards changed to the wonl •• proun-;e."'
This a<;t makes a further change ami requires t!iat there
must he a ''written promise or agreement."
'I'his section prohibits the hank froui acijuiring a ware-
Ixnise receipt or bill of lading or security under section 74
to secure the payment of any bill, note or deljt unless.
(i) Such hill or n:)te is negotiated or deiit contracted at the
time of the ac(iiiisition of such warehouse receipt or bill of
lading or security by the bank.
(2) Or unless such hill or note is negotiated or debt con-
tracted upon the written promise or agreement that such
warehouse receipt or hill of lading or security will afterwards
be given or transferred to the bank.
Conseciuemly, in I'he Ro)al (."anadian Hank ss, Ross, 40
V.C.i) V>.. 466 (1S77), it was hel.l,
KiKsriA :— that the corresponding sections in 34 \';c. c. z,,
sees. 46 and 47. ])ermit the transfer to a bank of a bill o
lading or warehouse receijit to secure an antei-edent debt
where the " |)romise "' at the tini« of coinracting such debt
was that the bill of lading or w.irehouse recLipt should there-
after he transferred as collateral security theretor :
Sf.coniiLV ; — that an agreement made at the lime the debt
was incurred to the bank, to give warehouse receipts on good-
which the person at the time of the makm..; 1 )f the aureement i--
U US I. NESS AND Powers of Ti.. Bank
113
not possessed of, if followed by the subsequent giving of such
warehouse receipt, in pursuance of such agreement, gives to
the bank a valid charge thereon under this section (see
specially p.p. 467, 475 and 476). About the same time a
similar decision was reached by the Court of Chancery in
Ontario, reported as Suler vs. The Merchants Bank of
Canada, 24 Or. 374, (1877).
See also McCrae vs. Molson's Bank, 35 Or. 519, (1878).
Bank of Hamilton vs. Noye, 9 Ont. R. 630 (1885).
Cockburn vs. Sylvester, i Ont. A. R. 471 (1877), over-
ruling in re Coleman, 36, U.C.Q. B. 564, (1875J.
It was held in the case of Cockburn vs. Sylvester, just re-
ferred to, that there is no " debt " contracted, within the
meanmg of this section, by a drawer to an accommodation
acceptor, at the time of the giving of such accommodation
acceptance so as to support a concurrent endorsement, by
such drawer to such accommodation acceptor, of a ware-
house receipt, although it is quite possible that a debt may
arise by reason of the acceptor being subsequently com-
pelled to pay the acceptance.
As to the meaning of the words " debts contracted " see
notes to section 68.
If the warehouse receipt, bill of lading or security is validly
aciiuired, the debt or bill or note representing same, may be
renewed, from time to time, without affecting the security.
2. The bank may, on .shipment of any goods,
wares and merchandise for which it holds a ^vXUn^l'v,-
. . . . . , <>'il't 1'"' li'll
warehouse receipt, or securitv as aloresaid, "" i''i"- »!"»
^ ' " ' (■((•( mail.
surrender such receipt or security and receive
a bill of lading in exchange therefor, or, on the
receipt of any goods, wares and merchandise
for which it holds a bill of lading or security,
as aforesaid, it may surrender such bill of lading
or security, store such goods, wares and merchan-
dise, and take a warehouse receipt therefor, or
114
Banks ani' P.ankim
- :|
Pi'iialtv tor
niakiii.ir false
statement.
I'ciiniiy tnr
alii'iiat'in;.'
:j(iiicIs so scc'lir
may ship tlieiii. or \k\v{ of tlu'in. iiiul take
another hill of ladiiiLr therefor :
This subsection was first added to the Bank Act in iSSo.
It declares that the goods covered I)y the warehouse receipt
or security under Sec. 74, may l)e transported from one
place to another without destroying the lien of the bank
thereon. Tt thus facilitates the marketing of the goods.
It would seem to us that without the aid of this section
t^e bank, so soon as it had ac(]uired a valid title to a ware-
house reccii)t under the act, could demand delivery of the
goods according to the tenor of the warehouseman's under-
taking and having acquired possession of the goods, could
ship them or store them as it pleased. It will be observed
that the powers expressly given by this section, are extended
to goods assigned to the bank as security under the nev
section 74 as well as to goods secured by warehouse receipts.
o. Everyone is ^u'uilty of a mhsdemeinor and
liahle to imprisonment for a term not exceedinii'
two years, who wilfully makes any false state-
ment in any warehouse receipt, hill of lading ov
security, as aforesaid. (R.S.C. cap. 120, sec. Oo.
ss. 7.)
4. Every one is iruilty of a misdemeanor and
liahle to imprisonment for a term not exceeding
two years, Avho, having possession or control of
any goods, wares and merchandise covered l)y
any warehouse receipt, hill of lading or secur-
ity as aforesaid, and having knowledge of such
receipt, hill of lading or security, and without
consent oi' the hank, in writint!; and hefore the
advance, hill, note or debt thereby secured has
been fully paid, wilfully alienates or parts with
any such goods, wares, or merchandise, or wil-
mff
I>i;siNi>s ANii IViwi.Ks (>v riii; 1')\nk
115
full V withholds iVoni the bunk possL'ssiuii tlu-rc-
of upon (leniiind aftoi- default in j):iyuient of
such advance, hill, note or debt. (New.)
See turther as to criminal offences in connection with
wareliouse recei|)ts and as to the jiunishinent theref(jr, sec-
tions 376, 377 and 37S of the (Criminal C'ode of 1892,
which comes into force on the first day of July 1S93.
The above sections will be found heroin printed after the
Bank Act.
70. If goods, wares and merchandise are
manufactured or produced from the goods, wares 'j;
and merchandise, or any of them, included in or '''
covered bv any warehouse recei[)t, or security
given under section seventy-four of this Act,
while so covered, the bank holding such ware-
house receipt or security shall hold or continue to
hold such goods, wares and merchandise, during
the process and alter the completion of such
manufacture or production, v/ith the same right
and title and for the same })urposes and upon
the same conditions as it held or could have
held the original goods, wares and merchan-
dise. (R.S.C. ca}). 120, sec. "»('). changed so as
to bri}igall clashes of goods within itsoperation )
It was said ir. the case of Mason vs. (Ireat \\'estern Ry.
Co., 31 U.'".(J.r.. 73 (1S71), that where wheat is delivered
to a miller and an ei[uivalent ijuatility of ll )iir delivered in
exchange, the llour shtjuld be considered the produce of the
wheat by the custom of trade. .See also on this same point
Coffee vs. The (Quebec IJank, 20 L'.C'.C.P. iio (1869) and
555 (187c); ///;■•• Coleman 36 L'.CC^.IJ. 559 (1875); Dank
of Hamilton vs. Noye, 9 Ont. R. 63 (1SS5).
iiiiit'i turi'd
II .'irtic'lt'S
in;
Banks and ]5anking
Prior claim oi
the bunk over
77. All advances made on the security of
IIIC DilDK ovur .
uni.iii,i V. iHior j^^j^y jjljl ^^,f lading or warehouse receipt, or
security given under section seventy-four of
this Act, shall give to the bank making such
advances a claim for the repayment of such
advances on the goods, wares and merchandise
therein mentioned, or into which they have
been converted, prior to and by preference over
the claim of any unpaid vendor ; but such pre-
ference shall not be given over the claim of any
unpaid vendor who had a lien upon such goods,
wares and merchandise at the time of the
acquisition by the bank of such warehouse
receipt, bill of lading, or security, unless the
same was acquired without knowledge on the
part of the bank of such lien. (R.S.C. cap. 120,
sec. 57, slightly changed.)
" OR INTO WHICH THEY HAVE P.EEN CONVERTED.
Where goods covered by a warehouse receipt are manu-
factured or converted into something else, this clause recog-
nises the right of the holder of the warehouse receipt or
security under sec. 7 ; to a lien on such new product : — see
also the preceding section.
It would seem to us that the lien holder would have been
entitled to follow the products of the goods covered by this
warehouse receipt so long as he could have identified them
([uite apart from any special legislation on the subject.
" AND I!V l'Ri:i-ERENCE OVER THE CLAIM OF ANY UNPAID
VENDOR."
These words probably have reference to the privilege of
the unpaid vendor under sections 1998 to 2000 of the
Civil Code of Lower Canada.
«w
IJL.-INI..^.-^ AND PC'Wl.KS dl' IHI. ll.WK
II'
7H. Ill the event of the iM)ii-i);ivinent at ma- >^ 'i' "' -^oi'^
I •• nil Hull pay-
turitv of aiiv debt secured hv a warehouse ve- """" "''''*'h'-
ceipt or l)ill ol" ladinji', or security given under
secvion seventy-fourof this Act, the bank may sell
tli«' uoods, wares and merchandise mentioned
therein, or so much thereof as will sullice to pay
such debt with interest and expenses, returning
the over])lus, if any, to the j)erson froni whom
such warehouse receipt, or bill of lading, or se-
curity, or the goods, wares and merchandise
mentioned therein, as the case mav be. were ac-
quired; but such power of siile shall l)e subject
to the following provisions, namely : — (R.S.C.,
cap. 120, sec. 55, slightly changed.)
2. No sale without the consent in writing of
Nntii-o t'l lie
the owner of any timber, boards, deals, staves, fu'llf 'j^ol^'is
saw logs or other lumber, shall be made under'""'"'
this Act until notice of the time and phice of
such sale has been given by a registered letter,
mailed in the post office to the last known ad-
dress of the pledger thereof, at least thirty days
prior to the sale thereof; and no goods, wares
and merchandise, other tlian timber, boards,
deals, staves, saw logs or otlier lumber, shall be
sold by the bank under this Act without the
consent of the owner, until notice of the time
and place ot sale has l)een given by a registered
letter, mailed in the post ollice to the last known
address of the pledger thereof, at least ten (hiys
prior to the sale thereof : (R.S.C., cap. I'JO, sec
78, ss. 2.)
118
IjANKS and 1] NKIM
Sale
tidii
tice.
Iiy iiuc-
II Iter no-
'■\. Every Hiich sale of any article nientioned
in this section, without the consent of tlie owner,
shall he made hy puhlic auction, alter a notice
thereof h_\ advertisement, stating the time and
[)lace thereof, in at least two newspapers pnl)-
lished in or nearest to the place where the sale
is to he made; and if such sale is in the Pro-
vince of (^lehec, then at least one of such news-
l)apers shall he a news[)aper puhlishcd in the
English languiige, and one other such newspajjcr
shall he a newspaper puhlishcd in the French
language. (R.S.C., cap. J2M, sec. 78, ss. 3.)
Section 78 and its sul>scctions confer on a bank, on de-
fault in payment of its debt, power to sell the goods, wares
and merchandise pledged to it under a bill of lading, a ware-
house receipt, or a security taken under section 74 of this
Act, but such power of sale is made subject to certain con-
ditions.
In the first place. —Without the written consent of the
vendor no sale shall be made until the bank has given to the
pledger in the manner prescribed, thirty days notice at least
in the case of timber, boards, deals, staves, saw logs or other
'umber, and ten days notice at least in the case of other
goods, wares and merchandise of the time and place of such
sale. (See sub-section 2.)
In I'HK NEXT PLACE. — The sale must be by public auction
and must be advertised as prescribed in sub-section 3.
Suppose the bank disregarded the provisions of sub-
sections 2 and 3, would the sale be void, so as to give no
title to a h>/i(7 fide i)urchaser of the goods from the bank, or
would the sale be good, and the bank liable to an action at
the suit of the pledger of the goods? In other words are
the provisions directory or imperative.
Now section 78, sub-section i, which gives the power to
sell, declares that such power shall be subject to the follow-
^■P'
Ili:>INESS AND I'OWKRS OK THK li.Wk
11!)
ing provisions; and sub- section 2 declares that no sale shall
be made unless notice thereof is ,<^iven as thereby ijrescribed.
It would r,cem to us, theref(jre, that the ijivinL; uf this notice
in the manner prescribed is imperative, and that the power
to sell only arises after this re'|iiirement has been duly ful-
filled.
It would follow therefore that unless the notices were
t'iven as i)rescribed by the Act the :sal>^ v.uuM bv_ ii,.ali.!.
The requirements of sub-section 3 are couched in affirma-
tive lauL^uage only. They are requirements regulating the
conduct of the sale after the power of sale has arisen and. we
are inclined to think, are directory only — consequently, the
failure to observe them would not make the sale invalid, so as
to enable the owner of the goods to follow them into the hands
of a purchasei. Ihe owner liokvevi_i, noulu not be wuIiohl
a remedy as the bank would be liable to him for any
damages caused by the non-observance of the statutory re-
(|uirements.
7«K Every l);ink whicli violatos any provi.sion
coutuiued in any of the sections nninbered .sixty- .'muav.iit'lon.
four to seventy-uiuiit (both inehisive) .shnll
incur for each viohition thereof a penalty not
exceedinii: five hundred doUars. iR.S.C. c. 12 K
SPC
ss.
•15, ss. '2.)
Under the rei)ealed Act penalties were only imposed for
breaches of some of the sections which correspond to
sections 64 to 78 of this Act.
According to the Bank of Toronto vs. Perkins, 8 S.C.R.
603, (1S83), discussed in the notes to section 64, the above
penalties are cumulative.
cSO. The l)ank shall not be liable to incur any ■>■" i»'i'iity
•^ t'lr usury.
penaltv or forfeitiu'e for usury, and uiav sti])u-
late for, take, reserve or exact anv rate of
interest or discount not exceeding seven per \vi,,ui,it.ivt.t
1 • 1 i I • "I'ly 'ji' ai low-
cent, per annum, and may receive and take in .i.
121)
liANkS ANMi H.WKtNO
sidvaiu'c jiiiy such rntt', hut no liii^lun- rate oi'
interest shall hr re(;<)venihle hy the hank : and
the hank may allow any rate ol interest what-
evei ii])on nioiusy deposited with it. (H.S.C.
n\\). 1"J(). see. 01.)
The cicncral cfTcct of this and the succeeding section is to
except contracts of a bank from the operation of the laws
relating to usury that may be in force in any o( the provinces
so that the hank is thereby not only relieved from the
pecuniary jjenalty (if any) mentioned in such laws but the
contract and security given for the moneys loaiv.d is saved
from forfeiture thereunder. Commercial Bank vs. Cotton,
17, U.C.C.P. 214 and 447, (1867). It would aj.pear that a
bank on making a loan may stipulate for any rate of interest
or discount without invalidating the contract— but if com-
pelled to sue can only recover from the borrower interest at
a rate agreed ujjon not l)eing more than 7 per cent. ]oer
annum, and the collection and agency fees, if any, allowed
by sections 82 and 83 ; but in the absence of any agreement
for the payment of such interest, the bank if compelled to
sue can only recover the interest allowed by the general law
on the debt sued on. Royal Canadian Bank vs. Shaw, 21
U.C.C.P. 455, (187 i), also C.S.C. cap. 127 sec. 2,
It would appear also that if a bank is actually paid interest
in excess of seven per cent, such excess cannot be recovered
back by the person who paid the same. See Quinlan vs.
Gordon 20 Or. App. i, (1861), and Hutton vs. Federal
Bank, 9 Ont. Pr. R. 5 68 (18S3).
No instmni.Mit «!. No proniissory note, hill of exchanue or
to be voiil on ,1 , • 1 1 • , T -, , ' .
mound or other negotiahle securitA" discounted hv or m-
dorsed or otherwise assigned t(; the hank,
shall he held to l)e void, usui-ious or tainted
by usur}-. as reg^irds such hank, or any maker,
drawer, acceptor, indorser. or indorsee thereof
r.I>INI.-S \Nli TiiUKKS (II I HI. I'lANK
rji
or other party tlicrc'to, or A"//-' ,/''^'' lioUk-r tlu-ri--
()!'. iiov shall any party thoroto he suhject to any
[)uiialty or rorfeitiirc hy reason of any rat^- of
intoroHt taken, sti[)nlate(l or received hy siu-h
hank, on or with res[)ect to such [)roniissory nite.
hill of exchange, or other neoutiahle secmity,
or paid or allowed hy any party thereto to
another in compensation lor. or in consideralii>n
of the rate of interest taken or to he taken
thereon hy such hank ; hut no party thereto,
other than the hank, shall he entitled to re-
cover or liahle to pay more than the lawful rate
of interest in the Province where the suit is
hrought, nor shall the hank he entitled to re-
cover a higher rate than seven per cent. i)er
annum ; and no innocent holder of or psn'ty to ^ ^ ^^^^^^^.^^^^
any promissory note, hill of exchange or other ''■'''''^^"*'
nesiotiahle securitv, shall, in anv case, he de-
prived of any remedy against any part\' there-
to, or liahle to any penalty or forfeiture, hy
reason of any usury or oilence against the laws
of any such Province, respecting interest, com-
mitted in respect of such note, hill or negotiable
security, without the complicity or consent of
such innocent holder or party. (R.S.C. cap. 120
sec. 02.)
See notes to [jreccding secliun.
StJ. 'i^he hank may. in discouiUing at any oiV
its places of business, branches, age-ncies or ol-
fices of discount and deposit, any note, bill or
other negotiable security or paper p:iyable at
1.-I10II
VJ'2
liAXKs ANI) liWKIN*;
(iny otluT of its own places or scuts of business,
l»niii('lius, iigoiicics ())• oHictis of (lisc(uiiit iiiul de-
posit ill CiUi;i(I;i. reccisc or retain, in addition to
tlu; (Jisconnt. anv amount not oxcoodinu' the fol-
1 • '
iowinn' i-ates per cent accordinii' to the time it
iias to rnn. on tiie amount of such note, hill or
other neiiotiiihh' sreinatv or [)ai»er. todefruN- th<;
expenses attendin-' tiie collection theicof, that
is to ,siv : nniK-r tliirty daj's, une-ci,i:lith of one
l»er cent ; thirty days or over, hut under sixty
days, one-foui'th of one percent ; sixtv days and
over, hut umh'r ninety d;iys. three-ei-hths of
<>'••' T"!' '"'Mt ; niiiety <lays ;iiid ox'ei-, oiH;dndf
of one per cent. (IJ.S.C. c:ip. 12(1, sec. ():;).
This section aulhorizcs a l)ank when discounling paper at
any of its hrant hes to thar^'c a coilccticMi fee at the rate prc-
scritjcd herein in addition to the discount, for collet tinj,' such
pajKT when payable at any other of the branches of such
bank.
The ne.\t section authorizes a bank, when discounting
paper, to cliari^e a similar collection or agency (ec at the rate
prescribed therein for roUcciing such paper when payable at
places other than one of its own branches and other than the
l)lace of discount.
Aj,'(n.y r,.,.s. s;i. The haids; nniv, in discountinii' anv note,
bill or other negotiable security (jr paper h'u/r
Ihh payable at any place in Canada diileront
from that at which it is di.'scounted, and other
than one of its own [)laces oi- scnits of business,
branches, agencies or ollices of discount and de-
posit in Canada, receive and retain, in addition
to the discount thereon, a sum not exceeding
'f
111 >1M.>.> AM) iViWEKS ill nil. l!\NI<
r.'ij
oiK'-lialf of Miic piM' ct-Mit <)i) flic iun;)Uiit tlKTcof.
to dt'lViiy till' cspt'iicfs ul' iii:t'iiry nnd cliiU'^os in
collecting the Siinic. (ll.S,C. (•;![.. 120. src f, |).
See notes (jii piLccdiivj: clause
SI Tln' l);iiik liiiiV receive (lo|)osit,-> tVoli) ;ui\
_' "^ DilxmiH limy
pel'.-^oll \vll(illlSOCVcr. wllilleVt'l- Ills ilJ^'C. ■'^tiit''"^ ^>1' Ivi,!',V',\!).s',',,^
I • . • • 1 ■ 1' I I.I I ... I ilii.l'ilr In full-
coiiditioii III hie., . Hill wlietliei' siieli person is hm,.!
(lUiililied by liiw to fiitei" into ordiiiiiry coiiiracts'
or not ; anil, IVoin tiine to time, may rep:iy any
{)V all of the principal thereof, and may pay the
whole oi' any [tart of the interest thereon to
.snch ])ers()n, without the authority, aid. assist-
ance or intervention of any person orollicial be-
ing re([iiired, unless before such repay nnuit the
money so deposited in and re^iaid by tlu; baidv
is liiwlnlly claimed as the property of some
other person, in which case it nniy be [)ai(l to
the depositor with ihe consent of the claimant,
or to the claimant with the consent of the de-
positor : Provided always, that if the iterson ,, .
making any such de[)osit could not, under the ;!,'|""""' "'"''■
hiw of the Province where the de[)osit is made,
deposit and withdraw money in and from a
liank without this section, the total amount to
lie received from such ])er,son on deposit shall
not, at anv time, exceed the sum of live bun-
dred dollars. ( R S.(J. cap, 1 lln, sec. G-V).
Sec also ss. 45, 58, 60 and Schedule 1)., ss 5 ; and see
also the Bills of l-Lxchange .Act, sec. 8, ss. 4.
In /-('Central IJank— Morton and lilocks claims 17 Ont.
R. ^74(1889), boyd, Chancellor (overruling the master) held
that under the ilank Act, a bank had power to issue deposit
124
Banks and liANKiNf.
!cCLij)ts in the fullowin^^ form : — " Received from
the sum of $
" v.hith this l)ank will repay to the said
" ur order, with interest at 4 per cent, per annum on receiv-
" inn 15 d^iys' notice. No interest will he allowed unless the
" iiKjney remains with this bank six months. This receipt
" to be given u|) to the bank when jiaymeiit of either | rinci-
" pal 01 interest is required. Si;i;ncd, for the Central Bank
" of Canada, A. H. Allen, Cashier." He also stated that he
had a very strong opinion that such deposit receipts were
negotiable instruments under which the holders were entitled
to recover as on a promissory note, but that even if they did
not possess all the incidents of promissory notes yet being
meant to be transferred by endorsement, they were so far
negotiable as to pass a good title to a bona fide purchaser for
value, taking without notice of any infirmity of title.
It will be observed that the deposit receipts above referred
to were expressed "which this bank will repay to X or order."
Sometimes the expressions used in such receipts are " which
will be accounted for by thi'; bank to X," or " which this
bank will account for to X." It seems to us that when the
question is fairly iiresented for decision, such receipts e>:-
pressed in such language will be held to be ])romissory
notes ; and it may be that though they are made payable to
X simply, and not expressly " to X or order," they may be
still held to be negotiable by virtue of the Bills of Exchange
Act, sec. rf, ss. 4, which is as follows : — " A bill is payable to
" order which is expressed to be so payable or which is ex-
" pressed to be payable to a particular person, and does not
" contain words prohibiting transfer or indicating an inten-
" tion that it should not be transferable ; " so that if it is
desired to make deposit receipts " non-negotiable," it is ad-
visable to change the present wording of them, so as to indi-
cate more clearly the intention that they shall not be trans-
ferable. See also Richer v. Voyer L. R. 5 B.C. 461, (1S74)
but see also Sibree v. Trijip, 15 M. i\: W., 23 (1S46) and
Ho]ikins v. Abbott, L. R. 19 Ecp 222 (1875 )
In Sader(}uist v. Ontario Bank, 14 Ont. R. 586, (1875) 15
A. R. 609,(1889) it was held that when A left his deposit re-
i^
Business and Powers ok ihi; 1!ank
125
Hank not
lionml Id soo
ceipt with B for safe keeping and B forged A's name thereto
and got the money from the bank and delivered up the
receipt, the bank was still liable to A for the amount of the
receipt and interest. The bank may allow any rate of
interest on deposits. See sec. So.
2. The Ijiiiik sliall not be bound to see to the
execution of any trust, whether expressed, im- lot"•usN'hi''n■■
phed or constructive, to which any deposit made ,i..|K,sits
under the authority of this section is subject ;
and except only in the case of a hiwful chum,
by some other person before repayment, the
receipt of the person in whose name any such
deposit stands, or if it stands in the name of
two persons the receipt of one, or if in the
names of more than two persons the receipt of
a majority of such persons, shall be a sufficient
discharge to all concerned for the payment of
an\ money payable in respect of such deposit,
notwithstanding any trust to which such de-
posit is then subject, and whether or not the
bank sought to be charged with such trust (and
with whom the deposit has been made) had
notice thereof ; and the bank shall not be bound
to see to the application of the money paid upon
such receipt, i R.S.C. cap. 1 20 sec. 65 ss. 2.)
The law relating to trusts to which shares may be subject
is contained in sections 43 and 4.^.
This sub-section deals with the ^question of trusts to which
deposits made under the authority of this section, may be
subject and appears to confer very extraordinary powers on
joint depositors, enabling as it does one joint depositor to
draw out of the bank money deposited to the credit of him-
self and a co-depositor. In England it has been held that
12(5
r.ANKS AN'l) li.WKlNT.
if:
sir
;
when money is iiaid into a bank to the joint account of
several persons nominatini, it cannot be drawn out by one
of them alone, and although generally the rule is that ])ay-
ment of a d"bt to one of several joint creditors is a good
payment to all, it is otherwise under the Law Merchant in
cases arising between a banker and his customers making
joint deposits with him, Innes vs. Stephenson, i M iv Rob.
145, (1831) Husband vs. Davis, 10 C.li. 645.(1851) beyond
this the sutvsection does not seem to carry the law further than
thecar.es in England have carried it. Thus it has been decided
that the relation between a banker and his customer is that
of debtor and creditor with the obligation superadded that
the banker is bound to rei)ay his de!)t when called upon so
to do by the draft of his customer, l'"oley vs. Hill, 2 H.L.C.
28, (1848) Goodwin vs. Robarts L.R. 10, Ex. 337, (1875) and
money i)aid into an account in a man's own name \^ prima
facie his money and a loan by him to the banker which the
banker is bound to repay him. When a man opens an account
in his own name with the words " Police account " or " Ex-
ecutor of Jones " superadded thereto, this is notice to the
banker that the moneys standing to the credit of that account
are moneys on which persons other than the customer may
have ei|uitable claims. {Ex parte Kingston, L.R. 6 Ch, Ap]).
632 ( 1 87 1 ) and Bailey vs. Finch L.R. 7 Q.I]. 34.) ( 1871) Still,
notwithstanding this notice, it is the duty of the banker to
honor the cheque of the customer drawn on such an account,
even though the banker suspects, or even knows that the
customer intends to commit a breach of trust, and it is only
when the banker makes himself a ])arty to the breach of tru^t
c. ^. by designedly reaping some bLuefit from the same, that he
renders himse'flial)le to make rcsiiiution. Lord (Jairns inCiroy
\z. Johnson L.R. 3 E. iS: L .App. i, (1868) thus sums U[) the
law, — " In ortler to hold a banker justified in refusing to pay
a demand of his customer, the customer being an executor,
and drawing a cheque as an executor, there must, ii. 'he first
place, be some misapjilication, honie lireach of trust, intended
by the executor, and \.\\>c\- must in the second place, as was
said i)y Sir John Leach, in the well known case of Keane vs.
Robarts 4 Madd. 357, (1819) be proof that the bankers are
^
l!isixi;.-;s AND I'owkrs or thf. Dank
121
privy to the intent to make this misapplication of the trust
fnnds. And to that I think I may safely add, that if it heshewn
that any personal benefit to the bankers themselves is de-
signed or stijiulated for, that circumstance, above all others,
will most readily establisii fhe fact that the bankers are in
privity with the breach of trust which is about to be com-
mitted." And Lord Westbury in the same case says:
" Supposing, therefore, that the banker becomes incidentally
aware that the customer, being in a fiduciary or a reiire-
sentative capacity, meditates a breach of trust, and draws a
cheque for that puri)ose, the banker, not lieing interested in
the transaction, has no right to refuse payment of the chccpie,
for if he did so he would be making himsclt a party to an
incjuiry as between his customer and a third person. He
would be setting up a supposed y>/.v /(////as a reason why he
should not ])erforn-i his own distinct obligation to his
customer. But then it has been very well settled that if an
executor or a trustee who is indebted to a banker, or to
another person, having the legal custody of the assets of a
trust estate, applies a i)ortion of them in the payment ol his
own debt to the individual having that custody, the indi-
vidual receiving the debt has at once not only abundant
[iroof of the breach of trust, but [)ariicipates in it for his own
[)ersonal benefit."
See als(j. Clench vs. Consolidated liank, ^^i U.C.C.P.
1C9 (18S0), and Molson's Bank vs. Corporation (jf Brock-
ville, 31 U.C.C.l'. 174 (iSSo).
RETURNS \\\ TIIH BANK
H*i. Muiitliiy returns shall ])u made by the .m.^hiIv i-o-
biink to the Minister ol" Finanee and Receiver '""""'t.
General in the Ibrni set Ibrtli in Schedule L)
t(j this Act. and shall be nyade up and sent in
within the iirst hfteen davs of each month, and
128
Banks and 15anki\(;
shall exhibit the condition of the bank on the
last jnri(]ical day of the mon^Ji next preceding ;
and such monthly returns shall be signed by
the chief accountant and by the president, or
vice president, or the director or principal part-
ner then acting as president, and by the man-
ag!!r, cashier or other principal officer of the
bank at its chief place of business: (R.S.C. (^ap.
120, sec, GG, slightly changed.)
Penalty fur 2. Evcry bank which neglects to make up
iKit makiiiir up , , ". ,. . , , , ,
monthly n- and Send m, as atoresaid, any monthly return
turns in due _ ' ^ _ . . .
time. required by this section within the time here-
by limited, shall incur a penalty of fifty dollars
for each and every day after the expiration of
such time during which the bank neglects so to
make up and send in such return ; and the
date upon which it appears by the post office
stamp or mark upon the envelope or wrapper
enclosinii: such return for transmission to the
Minister of Finance and Receiver General, that
the same was deposited in the post office, shall
be taken in-iind fucie, for the purposes of this sec-
tion, to be the date upon which such return was
made up and sent in. (R.S.C. cap. 120, sec. 66,
slightly changed.)
for
Hti. The Minister of Finance and Receiver
siKciai returns General may also call for siiecial returns from
nmy ]k< called '^ ...
any bank, whenever, in his judgment, they are
necessary to allbrd a full and complete know-
ledge of its condition : (R.S.C. cap. 120, sec. 67.)
2. Such special returns shall be made and
Returns i^.v ■nii: liwK
1J!I
signed in the miiniier and by the persons speci
lied in tiie next preceding section, and every ,7,,'.'
bank wliich neirlects to make and send in anv
siicli special return within thirty days from the
date of tlie demand then^for by the Minister of
Finance and Receiver General shall incur ;i [)eii-
alty of five hundred dollars lor eacli and every
day such neglect continues; and the provisions
contained in the last preceding section as to tlie
prhiKi /inle evidence of the date upon wliich re-
turns are made up and sent in tiiereunder, shall
apply to returns made under this section : Pro-
vided always, that the Minister of Finance and
Receiver General may extend the time for send-
ing in such special returns for such further per-
iod, not exceeding thirty days, as he thiidcs
expedient. (New.)
.ST. The bank shall, within twenty days after
the close of each calendar year, transmit or de-
liver to the Minister of Finance and Receive!
General, to be by him laid before Parliament, a
certified list showing the names of the sl.'au-
holders of the bank on the last day of such cal-
endar year, Avitli tlieii ;ulditious ami residences,
the number of shares then held by them re-
spectively, and the value at par of such shares :
(R.S.C. cap. 120, sec. (iS, slightly eliangcd.i
I'liiuliv inr
ii'ii iiiiikiiiLi-
1 return in
tiiiii'
1 r.uisimssifni
ii' (.'iTtiiieil
I -IS oi' sliarc-
Iiulil,.|-S to
Minister iif
FiMilllce.
2. Such list shall be delivered at the Depart
meiit of Finance, or shall be sent i)y registered
letter posted at such time that, in the ordinary
course of post, it may be delivered at. tlic said
M'"l ■ traii.s-
nil--iipii
l'('ii:ilty fur
lK'L;lc<-t to
traii~iiiit siicli
lists
130
Banks and Banking
Dopartment within the time above limited :
(R.S.C. cap. 120, sec. 68.)
3. Every bank which neglects to transmit
such list in manner aforesaid within the time
aforesaid shall incur a penalty of fift}^ dollars
for each and every day durini>- which such neii-
lect continues. (R.S.C cap. 120, sec 68, ss. 2.)
Annual stnt
nicni; oi'divi
flcni'.s vciniiin
SS. ' ' bank shall, within twenty days after
the ci. )' oacli calendar vear, transmit or de-
in- iini)niii.\:.v liycr to thc Miuistcr of Finance and Receiver-
Geneial, i^^ be lyv" him laid before Parliament, a
return of all (livide'.ds which have remained
unpaid for more than five years, and also of all
amounts or balances in respect to which no
transactions have taken place or upon which no
interest has been paid during the five years
prior to the date of such return : Provided
always, that in case of moneys deposited for a
fixed peiiod, the period of five years above re-
ferred to shall be reckoned from the date of the
termination of such fixed period : (New.)
Proviso
Potails of
1- tiini
Fiiftluir (ie-
tnils.
2. Such return shall be signed in the manner
required lor the monthly returns under section
eighty-five of this Act. and shall set forth the
name of each shareholder or creditor, his last
known address, the amount due, the agency of
the bank at which the last transaction took
])lace, and the date thereof; and if such share-
holder or creditor is known to the bank to be
dead, such return shall show the names and ad-
w^n
Bktl'rns i;v iHi; Bank
131
dresses of his legal representiitives, so far as
known to the bank : (New.)
o
r.'t'irn
Every bank which neglects to transmit or
deliver to the Minister of Finance and Receiver i''ii'".yi'"r'i'M
in.'iKiiii: aiiiMi.il
General the retnrn above referred to, within
the time hereinbefore limited, shall incur a pen-
alty of fifty dollars for each and every day dur-
ing which such neglect continues : (New.)
lof
4, If, in the event of the winding up of the
business of the bank in insolvency, or under mlcia'hnwi
any general winding-up Act, or otherwise, any
moneys payable by the liquidator, either to
shareholders or depositors, remain unclaimed
for the period of three yenrs from the date ol"
suspension of payment by Uie bank, or from the
commencement of the winding-up of such busi-
ness, or until the final winding-up of such busi-
ness if such takes place before the expiration of
the said thrcii years, such moneys and all inter-
e.^t thereon shall, notwithstanding any statute
of limitations or other A(!t relating to prescrip-
tion, be paid to the Minister of Finance and
Receiver General, to be held by him subject to
all rightful claims on behalf of any person other
tlian the batdv ; and in case a claim to any
moneys so paid as aforesaid is thereafter estab-
lished to the satisfaction of the Treasurv Board
the Governor in Council shall, on the report of
the Treasury Board, direct payment thereof to
be made to the person entitled thereto, to-
gether with interest on the principal sum there-
132
15.\NKs AND IJankini;
I'riivisi).
l'i-()Vi~.i
Ifciliiircmciits
IS to cmtstiiiiil
illL' llntl'S ill
,Msc ol' iiisol-
vciii-y.
of at the rate of three per cent per annum for a
period not exceeding six years from the date of
payment thereof to the said Minister of Fin nice
and Receiver General as aforesaid : Proviih.nl
however, that no such interest shall he pnid or
payable on sucli principal sum, unhss interest
thereon wa.s payable by the bank paying the
same to the snid Minister of Finance and
Receiver General : Provided also, that on pay-
ment to the Minister of Finance and Receiver
General as herein provided, the bank and its
assets shall be held to be discharged from fur-
ther liability for the amounts so paid. (New.)
5. Upon the winding-up of a bank in insol-
vency or under any general winding up Act, or
otherwise, the assignees, liquidators, directors
or other officials in charge of such winding-up,
shall, before the final distribution of the assets,
or within three years from the commencement
of the suspension of payment by the b:ink,
whichever shall first happen, pay over to the
Minister of Finance and Receiver General a
sum out of the assets of the bank equal to the
amount then outstanding of the notes intended
for circulation issued by the bank ; and, upon
such payment being made, the bank and its
assets shall he relieved from all further liability
in respect of such outstanding notes. The sum
so paid shall be held by the Minister of Finance
and Receiver General and applied for the pur-
pose of redeeming, whenever presented, such
outstanding notes, without interest. (New.)
0^1
RiiTURNs iiv TiiK Bank
l.V.
This section is entirely new. It provides for giving notice
to the pubHc, through the ParUanicntary lilue Books, of un-
claimed dividends and unclaimed deposits lying in hanks.
It also provides, in the case of a winding-uj) of a hank, for
the disposition of the unclaimed moneys held l)y it and for
the redemption of its outstanding circulation.
IXS()I.Vi;XCV.
Sii. Til the event of the property iind assets
of the bank being insullicient to pay its (U'bts
and liabilities, each shareholder of the bank
shall be liable for the deticieiicy to an amount
equal to the par value of the shares held by
him, in addition to any amount not paid up on
such shares. (R.S.C. cap. 120, sec. 70, slightly
changed in language.)
This is known as the double liability clause and renders
every shareholder in a bank liable, not only for the amount
unpaid upon his shares, but also for a further amount etjual
to the nominal value of his shares. To ascertain who are
the shareholders thus liable see sees. 30 and 96.
As to the eftect of irregularities in the acquisition of shares
see notes to section 35.
A bill will lie in ef[uity to enforce the double liability
of the shareholders of an insolvent bank. l!ut such bill must
be on behalf of all the creditors, lirook vs. Bank of Upper
Canada, 6 Chy. 249 (1869) ; 17 Chy. 301 (1S70).
It was decided in Lower Canada that a savings bank, hold-
ing bank shares as pledgee, is not the owner thereof within
the meaning of this section, and therefore not subject to the
double liability. A bank whose shares are transferred to a
savings bank is presumed to know that they are held by the
latter as collateral security, inasmuch as under 34 V., c. 7, s.
iliility iif
n-i'liiililcru
r;isi' lit' iii-
tliCMCIH'V of
134
Banks and 1>ankin(;
iS, n savings bank cannot acquire bank shares or hold them
except as pledgee. The Exchange I'lank of Canada vs, The
Montreal City and District Savings Bank, 2 Mont. Kep 5
(.885).
See also in re Central Bank, Home and Savings ("o. Case
18 Ont. A[)|). R, 491 (1891) (where the Moine \: Savings
Co, having advanced money on the security of shares of the
Central Bank, which were transferred to and accei)ted by it
in the ordinary absolute form, were held liable as contribu-
tories) and notes to section 35.
As to the priorities given by this act on the assets of the
bank see section 53.
AS 10 sicr-ori' v,\ con 1 kii;L-ioKiLS.
A contributory of an insolvent company, who is also a
creditor, cannot set off the debt due him by the comj^any
against calls made in the course of winding-up proceedings
in respect of the double liability imposed by the Bank Act.
The obvious reasons for such a conclusion being, as stated
by Strong, J. in the Maritime 15ank vs. Troop, 16 S.(^.R.
456 (1889), at i)age 458, of his judgment, "that the fund
" thus constituted being formed exjiressly to pay debts and
" liabilities, it would be in law a fund which the directors
" would hold in trust for the creditors of the bank, and there-
" fore that mutuality between the cross demands, which is
" an essential requisite in all cases of set off, would be want-
" ing. The money which the shareholder would be called
" on to pay would, in this case, be payable into the hands of
" the bank or its directors, but it would be so ])aid to them
" as trustees for distribution amongst persons who were
" under no cross liability whatever lo the sJK.r'-holders,
" namely, the body of creditors of the insolvent bank. . .
"As I have already shown the debt due by the shareholders
" in respect of a call under the double liability clause is, in
" equity and in substance, a debt due, not to the bank. l)ut
" to the creditors of the bank — whilst the debt which the
" shareholder seeks to set-off is a debt due, not from the
'' creditors of the bank — but from the banking corporation
Insoi.vkncv
i;;.j
"itself; consequently they are not in any sense " nuitual
" deljts " ".
The court in the above rase held that there is nothin.i^ in
the Winding-up Art, R.S.C, rap. 129, which derogates from
the principle re(iuiring mutuality between the cross demands
in order that they may be the subject of set off. As to set-
off generally in winding up proceedings see the Winding-up
Act, K.S.C, cap. IJ9, sec. 57,
«0. As a condition of the rigiits and [)rivi- i-mvisiona- 1..
leges conierred by tins Act or by any Act in 1. 1. stnua.^ t-
amendment thereof, the following provision
shall have efll'ct : — The litdjility of the bank
tuider any law, custom, or agreement to repay
moneys deposited with it and iiiterest (if any)
and to pay dividends declared and payable on
its capital stock, shall continue notwithstanding
any statute of limitations or any enactment or
law relating to pre?^cri[)tion :
2. This section a))plies to moneys heretofore urtiouc
or hereafter deposited, and to dividends hereto-
fore or hereafter declared. (New).
During the course of the pissing of this .Vet, and the dis-
cussion that to(;k place as to the policy of compelling the
banks to imblish, ])eriodical!_v, a list of unclaimed dividends,
and of unclaimed balances (see section 88), it became
generally known that by the laws of most of the Provinces,
alter the expiration of a certain prescribed period, a bank
could set u}) the statutes of liniiialioii m answer to a demand
for payment of a dividend by a shareholder, or of a deposit
balance by a custrjmer. 'I'his state of the law was thought
to be unfair to the public and the above section was inserted
in the Act whereby in effect the banks deprive themselves of
the right to avail themselves of the law of limitation in such
cases.
tlO.l.
i;^(;
Banks anh Hankim;
Sl|S|M'llS|llli
l"l l:l.V.-< III (
.stiliilf insol
valley.
111. Any HUHpoiision \>y the bank of pnyiiicnt
,,',',;' 'tl' any of its liiibilitics an tliuy accriit', in specie
or Dominion notes, .shall, if it continues for
nini^ty dayH, consecutively, or at intervals
within twelve consecutive months, constitute
the bank insolvent and operate a forfeiture of
its chartei' or Act of iii('or[)oration, so far as re-
gards all further banking o[)erations ; and the
charter or Act of incorporation shall remain in
force only lor the ])urpose of eiudiliug the
directors or other lawlul authority to make and
enforce the calls mentioned in the next follow-
ing sections of this Act and to wind up its
business. (R.S.C, cap. 1 20, sec, 71, changed).
Ca(l> III Hiiili
!i
112. If any suspension of payment in full in
specie or Dominion notes of all or any of the
notes or other liabilities o( the l)aidv continues
for three months after the expiration of the
time whic^. under the preceding section, would
constitute the bank insolvent, and if no pro-
ceedings are taken under any general or special
Act for the winding up of the bank, the
directors shall make calls on the shareholders
thereof, to the amount they deem necessary to
pay all the debts and liabilities of the bank,
without waiting for the collection of any debts
due to it or the sale of any of its assets or
property : (R.S.C, cap, 120, sec. 72, slightly
changed).
The time during wh ,ch the suspension of payment con-
tinues, is shoitened to three months instead of six months.
Insoi.vi.ncn
l;;-
-. Such falls sluill 1)0 iiuitli' at intervals of
thirty days, and upon ni)tict' to he given thirty ^{;;,\'|
day.s at least i)ri()r to the day on which siu-h
call shall he i)!ival)le. ami aiiv nuuiher <>t'
such calls may he made hv one resolution :
any such call shall not exceed twenty per cent
on each share; and payment ol' such calls may
he enforci'd in like uiaiiuer as payment of calls
on \ni])aid stock may Ix' cnlorced; and the first
of such calls may he luade within ten days after
the expiration of the said three numths ;
'I'he words "and any number of svich calls may I)l' made
by one resolution " were added b)' the Parliament, iry Coni-
mitlee when the revision was going through I'lilianient. As
to necessity for these words, sec Robertson v. I?an([ue
d'Hochelaga, 4 L. N. 314 (1S81) and notes to section 31.
A bill will lie in equity at the suit of a creditor to enforce
the double liability of the shareholderN of an insolvent bank.
But such bill must be on behalf of all the creditors. Brooke
V. ]5ank of Upper Canada, 16 Chy. 249 (icSTk;) ; 17 Clhy. 301
(1870).
III iii'iit,
■nl'iin 111.
Ix'iliiHal to
3. Every director who refuses to make or en-
force, or to conctu' in uiakinii' or enforciim' any l'';'!'^':';'',';
call under this section, is guilty ol a niisde- Lu'im.!'.''"*'''
meanor, and liahle to imprisonment tor tmy term
not exceeding two vetirs, and siudl ftirther he
personally- responsihle for any damages suffered
by such default (R S.C. cap. 1 20, sec. 72, ss. o.)
«>3. In the event of proceedings being taken
under any general or special winding-iip Act, [;';,',',|i||!;'.',',|;
in conse({uence of the insolvency of the bank, '^"
the said calls shait ue made in the manner })re
_. ,.4JUUi.«r.us:ji;p..UX-ULWU
133
Uanks an'd Ijam-vI.nc;
IHPli-p.iyiii.iir.
scribed for the lUiikiiig of such calls in such
genenil or special winding-up Act.
Sec "The Windinmip Act'' R.S.C, cap. uy, sees. 48
and 49, as to niakini; of calls, and sections 42 to 55, thereof
inclusive, as to riyhts and liabilities of contributories. See
also R.S.C, chapter [29, sections 97 to 104 inclusive, hem-
the sections of said Act relating to banks only.
«U. Any failure on the part of ;iny share-
holder liable to any such call to ptiy the same
when due, shall oi)erate a forfeiture by such
shareholder of all claim m or to any pait of the
assets of the bank, — such call and any further
ciill thereafter being nevertheles;:, recoverable
from him as if no such forieiiure had been in-
curred.
Linliiliry of
iliiTi'tfirs nut
(linniiislicil
It
Lialiiliiv
sliarf'lii'l U:ra
wild llii\r
tninst'i iTi'il
tli.'ir.'^:<..-k.
«5. Nothing in tlie six sections next pre-
ceeding contained shall l)e construed to alter or
dimiiii.<h the addilional lial)ilities of the direc-
tors as hereinbeiore uientioiied uud declared.
As u> the additional
97 and 99.
liabilities of directors see sees. 4S, 52,
«M5. Persons who. having been sli.iieholders
of the bank, have only transferred their shares,
or an\ of them, to others, or registeretl the
transfer thereof within >ixty days before the
commencement of the suspension of [lavineiit bv
the biuik, and persons whose siib.scriptions to
the stock of the bank have been cancelled in
mtiuner hereinbetbre provided within the said
period of sixty days before the commencement
Insoi.vi;ncv
];;!)
of the suspension of payment by the bank, shall
])e liable to all calls on the shares held or sub-
scribed for by them, as if they held such shares
at the time of such suspension of payment, sav-
ing their recourse against those by whom sucb
shares were then actually held. (R.SC. cap.
120, sec, DO.)
This section deals with the liability of past shai-chokkrs.
(See also sections 30 and 89.)
This section has been changed so as to harmonize with
the changed language of section 30. The only other inijjor-
tant change in the section is that which makes shareholders
liable, who have transferred their shares within sixty days
(instead of one calendar month) before the commencement
of the suspension of the bank. If A transfers shares to B,
and B transfers to (], and C transfers to I) — all the above
transfers being made within sixty cays ])rior to the suspen-
sion — A, 15, C and I) must all be put on the list of contril)u-
tories. In re Central I'.ank — liaire's C'ase, 16 Out. R., 293
(188S) ; 16 Ont. App, R. 237 (1SS9; : Heiidersnn^s Case. 17
Ont, R. 110 (18S9).
oitt:.\cf.s ax 1 1 pi-XA!.'i]i:s.
to
.■iliK
L'tlilty 111' :i
s(li:iMi>:in'ii-.
t>7. K\ery(>no is -iiilty of a misdcmeaiioi^
and liable t(j iniprisonnienl for a term not rx- rn-siii.ni -to
L:i\ iii^ imiliic
ceediu'..:' two years who, IndiiLf the ijresidcut. i""'''''''",.''"
'- 'I ' ', 1 ;ll|y Ci.-lllldr.
vice-president, director, principal partner en <-<>iii- i;,'|
iiiiiit(lit(\ manager, cashier or other oHicer of the
bank, wilfully gives or concurs in gi\ing any
creditor of the bank any fi'audulent, undue or
unfair preference over other creditors, by giving
140
]].\N"KS AND Il.WKlNG
.is
If . " ti
security to such creditor or by cliunging the
nature of his claim or otherwise howsoever, and
shall further be responsible for all damages sus-
tained by any person in consequence of such
preference. (R.S.C. cap. 120. sec. 80.)
1 lie dL'tfiulanl was a director and also a creditor of the
Exclianue Bank to the extent of about $13,000. After a
resokition to susi)end paynv^nt had been passed, the defend
ant withdrew $10,000 from the bank, with the concurrence
of the president thereof. It was held that he had conspired
with the president to and had thereby obtained an undue
preference over the other creditors. Regina vs. Buntin, 7
L. N. 2 28, 395 (1S84).
(lis|)Or<;ll or
liriialtit;.^
US. The amount of all pemilties imposed
upon a bank for any violatiou of this Act shall
be recoverable and enforceable with costs, at
the suit of Her Majesty, instituted by the
Attorney General of Canada, or the Minister of
Finance and Receiver General, and such penal-
ties shall belong to the Crown lor the public
uses of Canada; but the Governor in Council, on
the report of the Treasury Board, mav direct
that any portion of any pentilty be remitted or
paid to any person, or applied in any manner
deemed best adapted to attain the objects of
this Act and to secure the due administration
thereof. (New).
Mulviiifj: I'alsc
.•^liUiiiieiit ill
rotiiriis, &i'.. ;i
inisilfiuoiviior.
««. The making of any wilfully false or de-
ceptive statement in any account, statement,
return, report or other document respecting the
affairs of the Ijank is, unless it amounts to a
^m
OllENCKS AND Pl.XAI.Tl F:S
Ul
higher offence, a iiiisdemeiinor punishable hy
iiiiprisonmeiit for a term not exceeding live
years ; and every president, vice-president,
director, principal partner en. ('ommcc^dife, audi-
tor, tnannger, cashier or other *)iTicer of the
bank, who prepares, signs, approves or concurs
in such statement, return, repcn't or document,
or uses tlie same with intent to deceive or mis-
lead any person, shall 1)e held to have will'ully
made such false statement, and sludl further l)e
responsible for all damages sustained by any
person in consequence thereof. (R.S.C. cap.
120, sec. 81..)
An information under this section may be sworn by a
non-shareholder, and even by a citizen, who is a debtor of
the bank. See MoUeur vs. Loupret, 8 L.N. 305 (1885.)
The instruction to the jury " that wilful intent to make
a false return may be inferred by the jury from all the cir-
cumstances of the case proved to their satisfaction," was held
to be correct in Regina vs. Hincks, 2 L.N. 422, 24 L.C.J.,
116 (1879).
As to destroying or falsifying books, iSjc, by directors and
otticers of a corporation.— See the Criminal Code, 1892, sees.
364 and 365.
As to stealing by officers of a bank. —See the Criminal
Code, 1S92, sees. 305 and 319.
As to fraudulent breaches of trust.— See the Criminal
Code, 1S92, sec. 363.
100. Every person assuming or using the
title of "bank," "' Ijanking companv," " bank- '""^^"'','.7;''''''i
7 O L */ -' ll-^r ( )I I lite
ins house," '' bankinu' association," or '* bankin:: "'"'' •''"•
institution," without being authorized so to do
by this Act, or l)y some other A(*t in force in
142
I'an'KS and BwKixr;
rtiiialty f'oi'
olTciicc aLraiiisI
til is Act.
that Ijelialf, is guilty of an offence against this
Act. (R.S.C. cap. 120, sec, 82, changed.)
This clause was passed to prevent persons doing business
as bankers from carrying on such business so as to lead the
public to believe them an incorporated bank.
lOI. Every person, committing an offence
(lechire'l to be an oil\3nce against this Act, shall
be liable to a line not exceeding one thousand
dollars, or to injprisonment lor a term not ex-
ceeding five \'ears, or to both, '" the discretion
of the court belbre which the conviction is had.
(New.)
See [Jicceding section.
PUbLIC NOTICES.
IO*2. The several puljlic notices by this Act
How noli,,. s required to be given shall, unless otherwise speci-
lied, be given by advertisement in one or more
newspapers pul)Iished at the place where the
head ollice of the Ijank is situate, and in the
CaiKuhi G(i::dte. (R.S.C., cap 120, sec. 84,
slightly changed).
hOMINlOX (iUNERXMl'N r CHK(jUKS.
IO:$. The bank shall not charire anv disconnt
Oovcniincnt . . ,. , . ^^ • i*' i
cii,>^iiRs to 1.0 (,i> commission lor cashing any oihcial che(iue ot
IKiid at {» r. o ./ 1
tlie Gt)vernment of Canada, or of any depart-
ment thereof, whether drawn on itself or on
another ])ank. (ISew).
"^^
COMMFACI-.MKXT Oi' AcT AND RkI'I.AI.
143
C0M^^ENCE^[KN^' oi' ac r and repeal.
lOI. Tliifs Act shall come into force on the '^" •""";'■
III. Ill III iiii^
iirst day of July, in the year one thou.^and eight '""'"■
Imndred and ninety-one ; and from that day
chapter one hundred and twenty of the Revi.sed
Statutes of Canada, intituled "^1;/ x\ri Jle.y)('rt-}i''^''\\!!^^\^,
iiiij B<ii,]:.s (1 11(1 B(i,'l-'ni<i," the Act passed in the ^i-^A^. c" w! '
fifty-first year ol' Her Majesty's reign, chapter
twenty-seven, in amendment thereof, the Act
passed in the se.^sicm held in the thirty-third
year of Her Majesty's reign, c)iaj)ter twelve.
intituled ^' All Actio reinorp ci'itidn n stricfions
irifli respect io ihe i-^siic of Ixiiil' note^ in Novo
iScotio,'' the Act passed in the session held in
tlie lit'tiLdh and lift\ -first years of Her Maiestx's
reign, cha])ter forty -seven, intituled ".1// Act
rcsp>rfi/Hf the (IrfnciiHj of coiniti rfcit notes, (Unl
tlie use o/ iutitfffioiis of /ote--^,'" and chapter our
hundred and twenty of* the Revised Statutes of
New Brunswick. " 0/ Jhthl'i/nj." nn.d tlie Act
passed ))y the Legislature of tlie Pro\'iiice of
New^ Brunswick in tlie nineteenth year of Her
Majesty's reign, (•liai)tei' forty-seven, intituled
'• Av Act to e.r/>t<i!ii chiipter 12U, litlr XXXI..
of tlie Revised Stainlcs. 'Of linnkiiiiiy shall l,e ^^'^'"- '■'"'^''■
repealed, except as to rights theretofoie
acquired or liahilities incurred in regard to anv
matter or thing done or contract or agreement
made or entered into or offences commit' ed
under the said chapters or Acts, and nothing in
144
r.ANKS ANM) BaXKINC,
tliis Act s
hall eifect any action or proceedings
tlieii poiK
ling under the said chapter or xVcts
then repe
aled, but the same shall be decided as
if wucli c
aapters and Acts had not been re-
pealed.
sell EDULK .\.
HANKS WKOSI-; ch.\ri'i;k,s are c:oxi'iNri d i ', mis act. 1
1.
The Bank of Mcjnlreal.
2.
The Quebec Hank.
->
La Ban(jue du Peuple.
4-
The Molsons Bank.
5-
The Bank of Toronto.
6.
The Ontario Bank.
7-
The Eastern Townships liank.
8.
La Banque Nationale.
9-
La Bancjue Jacques Cartier.
lO.
The Merchants' Bank of Canada.
1 1.
'I'he Union Bank of Canada.
12.
The Canadian Bank of Commerce.
'3-
The Dominion Bank,
14.
The Merchants' Bank of Halifax.
15-
The Bank of Nova Scotia.
i6.
'I'he Bank of Yarmouth.
17-
La Banc^ue Ville Marie.
18.
The Standard Bank of Canada.
IQ.
The Bank of Hamilton.
20.
The Halifax Banking' Company.
21.
La Banque d'Hochelaga.
2 2.
The Imi)erial Bank of Canada.
■> 1
-J'
La Bancjue de St. Hyacinthe.
24.
The Bank of Ottawa. — ,
-\5-
M1ie ]5ank of New lirunswick.
26.
The ExchauL^e Bank of Varmomh.
rORM>
145
- / ■
2S.
29.
35-
3(>-
The Union Bank of Halifax.
The People's Bank of Halifax.
La Pniniiue de St. Jean.
The Commercial ]]ank of Windsor.
The Western Bank of Canada.
The Commercial Bank of Manitoba.
The Traders' Bank of Canada.
The People's Bank of New Brunswick.
The St. Stephen's Bank.
The Summerside liank.
SCHi:i)LT.E B.
[■OR.M or ACl OF l.\C»3RP0R.\ IIOX OK MOW HANKS.
An Act to incorporate the Bank.
Whereas the persons hereinafter named have, by their
petition, prayed that an .Act be passed for the puriiose of
establishing a bank in , and it is expedient to
grant the prayer of the said petition :
Therefore Her Majesty, by and with the advice and con-
sent of the Senate and Hcjuse of Commons of Canada, enacts
as follows : —
1, The persons hereinafter named, together with such
others as beconu shareholders in the corporation b)- this
Act created, are hereby cftnstituted a corijoration by the
name of . hereinafter called " the P.ank."
.^. 'i'he capital stock of tb.e bank shall be
dollars.
3. The cliicf office of the bank shall be at
4. s'-.jll beihe ])rovisinnaI
directors of the bank.
5. 'i'his Act shall, subject to the provisions of section six-
teen of " The Dank Act,'' remain in force until the fir^-t day
of Inly, in the year one thousand nine hundred r.ud one.
"Tm' ■'■--''
14(!
ii\MN> AMI l!.\NKI.\i;
sciii-.Dn.i': c,
I xikM i)\ >n:v\<i\\ rxm.K >i-.c iihn >i-.\i.\in iouk.
In consideration of iin advan'f nf dollars,
made by the (luniu cj haiik) to A. I!., tor which the ^aid
hank holds the following Ijills or notes {Jrsfr/I'c fiilix llw N.'/s
or /lotus luid if any), the goods, wares and merchandise men-
tioned below arc hereby assigned to the said hank as s.cnr-
it)' for the payment, on or before the day ol
of the said advance, together with interest ihereon at tlie
rate of per cent per annum from the
da) of {or. of the said bills and noi^s, or renewals
thereof, or substitutions therefor, and interest thereon, ^r as
tlic case may iu . i
This security is given under the provisions of seciiun
seventy-four of "The Hank Act." and is ^ul)jecl tn .di the
provisions of the said Act.
The said goods, wares and merchandise are now owned
by and are now in possession, and are hee from aii)
mortgage, lien or charge thereon, {or as //u caM' may /v;, and
are in (/i/c/iv or places 'tolicrc y:;(Uiih arc), and are the f )lloui)jg,
{parlicnUjr (lcscriplii<u (^f '^ootls assi;e;ncd).
Dated at jS
Hi
sfiii-:i)L'Li; 1).
Return of the liabililie- and assets of the bank
on the da> nf , A.i).
Capital au'dv"i/t-(! ^
('apital subscribed . . . $
("apital paid up $
Amount of rest (jr reserve fund $
Rate per ( ent of last dividend declared. ]'er i cnt.
i.iAr.ii.ii'ii;s.
1 , Ni'tes in ciiculation ....?>
2. I'-a'ance due to l)o'nin:on ('.oxern-
ii^
I'CikM>
14
•K
inciil, alter dcdiictinL; adviiu'ts
("(.)!■ cix-dils. pay lists, iVc
,V Dalanctj diu; lo I'roxincial (Invcrn-
uiL-nts
4- Dt'ijosits tiy the public, jiayablc on
demand .
5. Deposits 1)\- the public, payable alter
notice or on a lixed day
6. Loans from other bank-, m C'anada,
secured
7 Deposits, payable on demand or
alter notice or on a lived d,i\-,
made by other bank-, in (Canada,
•S. Halances due to otlur banks in
Canada in daily exchanges
[). balances due to agencies of the
bank, or to othtr hank> or agen-
cies in lorcign countries
10. Ualances ihn: to agencies of the
bank, or to other banks or agen-
cies in the L'nited Kingdom ....
11. i,ial)ilities not included under fore-
goiiiL: heads
$
ASsl.l.-.
1. Specie , .-i
:.. 1 )(Hninion notes
^:;. Dei)osits with Dominion (Wjvern-
nient for security of note circula-
tion
4. Notes and che(iues on other banks . .
S Loans to other banks in (Canada.
secured
0. Deposits payable on demand cjr
after notice or on a fixed da\-.
made with c>ther bank-- ir, Canada.
lO.
1 1
1 t8 liANKS AM) I!\NKIN(;
7. Balances due from other banks in
Canada in daily exchange-^
8. Balancec; due from agencies of the
bank, or from other banks or
agencies in foreign countries . . .
9. Balances due from agencies of the
bank, or from other banks or
agencies in the United Kingdom.
Dominion Government debentures
or stocks
Canadian munici[)al securities, and
British, Provincial, or foreign, or
colonial public securities, (other
than Dominion)
i2. Canadian, British and other rail-
way securities
13. Call loans on bonds and stocks
14. Current loans
1 5. Loans to the Government of Canada
16. Loans to Provincial Governments. . .
17. Overdue debts
1 8. Real estate, the properly of the bank
(other than the bank premises). . .
19. Mortgages on real estate sold by the
bank
20. Bank premises
21. Other assets not included under the
foregoing heads
$
il|:i
Aggregate amount of loans to directors, and firms of which
they are partners, $
Average amount of specie held during the month, $
Average amount of Dominion Notes held durmg the
month, $
Grcaiest amount of notes in circulation at any time during
the month, $
*i lip
FORM.>
149
I dcrlaiX' ihal llic above return has Ijeeii iireparcd ui.dcr
my direction and is correct according to the l)0(;ks of the
bank.
i:, I'..
Cliiif AiU'iiii/itiit.
W'e declare that the foreiroinL; return is made up from the
b(joks of the bai.k, and thai ti- the Iji.^1 of our kno\vk(i,^e and
l)elief it is correct, and shows truly and clearly the financial
position of the bank ; and we further derlare that the bank
has never, at any time durini: the period to whi( h the said
return relates, held less than '"orty per cent of it> ca^h
reserves in Dominion notes.
(/'W<) this dav of
A. B., Presidait.
C. I>., Genenil Manager.
l.').!
!1.\NK> AMI llWKIMi
IXIKACIS KKdVl "KIK (:kimi\,\|, (,,1,1.; , ,1- 1892" Willi II
C().Ml;S IN Id \ > iK( 1. ( IN
r//c 1st /)'(v Kj Jii/y, /Ay,',
AMI Willi II .\\<V. (il Sl'i;(l\l, IMI'()Rr\N(l Id i:\NKS \Nli
i;\Nki.ks.
An ,\( I l\i:si'i;(:riN(; nil. Ckiminai, Law.
Short ti:li
C'i;iiiiic'Ui'i
11 cut Ml' A(
Kxiilaiinii'
till III-*
HI
I'REI.IMIXARY.
I. This Act may he cited ti^r all inirpuscs as " The
Oiminal ('ode of 1892."
J. This Art shall come into force on the first day of
' July, 1893.
,, ,,,. 3. In this Act the followinii; expressions have the mean
inij;s assigned to them in this section unless the context
rec|uires otherwise.
(i\) The exjjression "Hanker" includes any director of
any incorporated h.ink or liankiuLi; company ; R,S.C., c.
iC'l, H. 2 (V).
(,;■.) The expression " Dcjcument of title togoods" includes
any bill of lading, India warrant, dock warrant, warehouse-
keeper's certificate, warrant or orilcr for the delivery or
transfer of any goods or valualile thing, bought and sold note,
or any oilier docunieiu used in the ordinary course of busi-
ness as prouf of thL possession or control of goods,
auth(M-izing or |)urporting to authorize, cither by indorseniei
or by delivery, the ])ossessor of such document to transfer 1
rei'eive any goods thereby reoresenieii or therein mentioned
or referred to ; K.S.C, c. 164, s. 2. [ti).
(/'/'.) The expression '"trustee" means a trustee on some
express trust created by some deed, will or instrument in
writing, or by parol, or otherwise, and includes the heir or
personal representative of any such trustee, and every other
I'
V.S I k \i IS I KO\i ( 'kimin \i, Ci .i.K
i:»i
person upon or to wlioin the duly ot surh trust has cicvolvcd
or roiiK', wht'lher hy apiiointincnt of n court or othorwisf,
.111(1 ;>No an cxcrutor and administrator, and an otVicial
manager, assignci', li(|iii(lal<>r or otiicr like ofticcr acting
under any Act relating to joint stock companies, bankruptcy
or insolvency, and any person who is, by the law of the
Province of (Quebec, an "' (uiiiiiiustiiitair" or '' fiJfouih
hiisMiiti " . anil the expression " trust ' iiv hides whatever
is by thai law an '' <niiiiiiiisf/\tti(>i/'" o\''Ji(iL-(>iii>itissioi:.
R.S.C, c. lO.;, s. J (().
((V.) The exjjression "valuable security" includes any order,
exchetjucr aciiuillance or other se( urity entitling or evi-
dencing the title of any person to any share or interest
in any ]iublic stock or lund, whether of Canada or of any
Province thereof, or of the United Kingdom, or of dreat
15ritain or Ireland, or any British colony or possession, or of
any foreign stale, or in any fund of any !)ody cor[iorate,
coni|)any or society, whether within (Canada or the L'nited
Kingdom, or any P)ritish colony or possession, or in any
foreign state or country, or to any deposit in any savings'
bank or other bank, and also includes any debenture, deed,
[)ond, bill, note, warrant, order or other security for money
or for ]jayinent of money, whether of Canada or of any
Province thereof, or of the United Kingdom or of an)
Hritish colony or possession, or ot any foreign state, and
any docunienl of title to land:; or goods as hereinbefore de-
llned wheresoever such lands or goods are situate, and any
stamp or writing which secures or evidences title lo or
interest in any chattel personal, (jr an)' release, receipt, dis-
charge or other instrument, evidenciriLi payment of money,
or the delivery of any chattel |)eisonal : and every such
valuable security shall, where value is material, be tleemcd
to be of value eipiai to that of such imsatisfied money.
chattel personal, share, mterest or deposit, for the securing
or payment of which, or delivery or transfer or sale of which,
for the entitling or evidencing title to which, such valu-
able security is ajjplicable, (jr to that of such money or
chattel personal, the ])ayment or delivery of which is evi-
denced by such valuable security ; 53 V., c. 37, s. 20.
152
Banks ami 1)\nkin(
f.ll-"' Ileus.
rfiiiiiiiiL: ill
!-tock-i ■iiifl
iiicrcliiiiiilis
I 26. Every one is guilty of an indictable offence and liable
to one year's imprisonment who wilfully and knowingly
Ijuijlishes any false news or tale wherebv injury or mischief
is or is likely to be occasioned to any jaiblic interest.
201. livery one is .guilty of an indictable offence and
liable to five years' imprisonment, and to a fine of live hun-
dred dollars, who, with the intent to make uain or prcjfit by
the rise or fall in price of any stock of any incorporated or
unincorporated company- or undertaking, either in C Canada or
elsewhere, or of any goods, wares or merchniidise, —
((/.) Without the /io//(7 fiJc intention of ac{iuiring any such
shares, goods, wares or merchandise, or of selling the same,
as the case may be, makes or signs, or authv. vises to be made
or signed, any contract or agreement, oral or written, pur-
porting to be for the sale or [)urchase of any such shares of
stock, goods, wares or merchandise ; or
(/'.) makes or signs, or authorizes to be made or 'igned,
any contract or agreement, oral or written, purporting to be
for the sale or purchase of any such shares of stock, goods,
wares or merchandise in respect of which no delivery of the
thing sold or purchased is made or received, and without
the botia fide intention to make or receive such delivery.
2. But it is not an offence if the broker of the purchaser
receives delivery, on his behalf, of the article sold, notwith-
standing that such broker retains or pledges the same as
security for the advance of t^-e purchase money or any part
thereof.
3. Every office or place of business wherein is carried on
the business of making or signing, cr procuring to be made
or signed, or negotiating or bargaining for the making or
signing of such contracts of sale or j)urchase as are prohibit-
ed in this section is a common gaming house, and every one
who as princi])al or agent occujiies, uses, manages or main-
tains the >ame is the keei)er of a comnidn gaming house.
51 \'., c. 42, ss. [ eV- 3.
Tlu'Ci ,k'iino.l. 305' ''"'i'-''^ <-'!■ stealuig is the art ot fraudulently and with-
out coli:)ur of right taking, or fraudulently and without colour
l',\ IKAC
iv I ROM Ckiminai. CCiDI.
153
v)f right ctjnveitmg lo ihc use of any person, anything call-
able of l)fing stolen, with intent —
(d) to deprive the owner, or any person having any special
pruiierty vr interest therein, temporarily or absolutely of such
thing or of such propeity or interest ; or
(/') to i)letlge the same or dei)osit it as security : or
((■; to pan with it iirder a ( ondition as to its return which
the person jiarting with it may be unable to jiertorm ; or
(,/) to deal with it in such a manner that it cannot be re-
stored in the c mdition in which it was at the time ot such
taking and conversion.
2. The taking or conversion maybe fraudulent, although
etTected wiiliout secrecy (jr attempt at concealment.
;,. It is immaterial whether the thing converted was taken
for the pur|)0se of ccjiiversion, or whether it was, at the time
of the conversion, in the lawful possession of the person
convertine.
4. Theft is committed when the offender moves the thing
or causes it to move or to be moved, or begins to cause it to
become moveable, with intent to steal it.
5. Provided, that no factor or agent shall be guilty of
theft by pledging or giving a lien on any goods or docu-
ment of title to goods intrusted to him for the purpose of
>;ale or otherwise, for any sum of money not greaf^r than the
amount due to him from his principal at the time of pledg-
ing or giving a lien on the same, together with the amount
of any bill of exchange accepted by him for or on account of
his ])rinciiial.
6. Provided, that if any servant, contrary lo the orders of
his master, tak.es from his i)ossession any food for the pur-
pose of giving the same or having ihi,' same given to any
horse or other animal belonging to or in the possession of
his master, the servant so offending shall not. by reason
tiereof, be guilty of theft. R S.T., c. 164, s. 63.
509. Kvery one commits theft who, being entrusted, either .j ,^ ,., |^^.|,^,,,
s ilely or jointly with any other i)erson, with any power uf |';'^'J;;;|;'^^^
af.orney for the sale, mortgage, ])ledge or other disposition "•>•
jf any propertv. real or [)ersona!, whether capable of l)eing
or
i:»[
n\NK> \NI) li.WKINf;
ThcK
aiiiin.]
iiiidiT
tioii.
irialiiiir
(lii- (•■
sroltn or not, ("raud'.ilently sells, niort^ancs, pledges or utlier-
wi->e disposes of the same or any part thereof, i.r t'raudulently
r inverts the proceeds of any sale, mortga'iO, I'leds^e or other
dispositii)n of surh projierty, or any part (;f sue'n prurecds,
to some purpose oilier than thai for which he was intniMed
wi;h such p:)wcr of attorni;y. R.S.('., c. 164, s. 62.
310. i'A-ery (Jiie commits theft wl'io, having receiveil, either
s:.)lely or jointly with any other jierson. any UKjney or valu-
able security or any power (jf attorney for the sale of ni'.)
property, real or jjersonal, >vith a direction that such money,
or any j^art thereof, or the proceeds, or any jiart of the ])ro-
ceeds of such security, or such property, shall he applied tc>
any purjjose or paid to any person specified in such direction,
in vi(jlation of good faith and contrary to such direction,
fraudulently apj^lies to any other i)urpose or i)ays to any
other person such money or proceeds, or any jjart thereof.
2. Provided, that where the jjerson receiving such money,
security or i)ower of attorney, and the person from whom he
receives it, deal with each other on such terms that all
money paid to the former would, in the absence of any such
direction, he i)ro|>erlv treated as an item in a debtor and
creditor account between them, this section shall not ajiply
unless such tlirection is in wriiiiiLr.
cloi-k- luil
servMits
_^ 19. I'-vcry one is guilty of an indit'table oflence and liable
li) touneen years' 'inprisoiiment who,
(a.) being a clerk or servant, or being employed for the
purpose i)r in the capacity of a clerk or servant, steals any-
thing belonging to or in the possession of his master or em-
l)l<jyer ; or
(/'. ) being a ca-,!iier, assistant (fishier, manager, oftuev,
clerk 'ir -ervant '>( any bank, or savings bank, steals any
bond, obligation, bill obligatoiv or of credit, or other bill m
note, or any security for money, or any money or effeci-> of
such bank or lodged or deposited with any such bank :
(,•. ) bein^ emplovcd in the service of Her Majestv. or of
the Ci )vcrnnieni of Canada or tlie (Government of any pro-
vince of ('anada, or of any municipalitv, steals amihiim ir.
]-A TKACIS FROM C'KIMIXAI (lomZ
1 .").')
his i)osscssi(.)ii hv virluc of his civiploynu'iu. R.S.C'.c. \(>[.
ss. 51, 52, 53. 54 and 59.
;2o. I'lvery one is ^[^\\\.y of an indidahlr offence and liahle
to foiu'teen years' iniprisonnienl who steals anyiliinu liy an;, aiMi-nrys.
act or oniissirin aniountinL^ to theft under the i^rov -ions ot
sections 308, 509 and 310.
T,C)7,. Every one is yiiilty of an iinlietahie ol'feiue and ,,,.|,,,j„.,,
liable to seven years' nnprisonment wlio, i)eini; a trustee o: ii.-.M.-iinrtnist.
any i)roperly for the use or henefil, eitlier in wl.wie or in
part, of some other perscjn, or for any ].til)li(- or eharilahle
purpose, with intent to defraud, and in violation ot his trust,
converts anythin,^ of which he is trustee to any use not
authorized tiy the trust.
547 No i)roceeding or ijrosecalion ULjainst a trustee for a .,,^.^^^|,.^, ,.|.,,,„,.
criminal breach of trust, as defined in section 363, shall be !;;'^';^|>,J;,^|;;:-;'-
commenced without the sanction f)f the Attorney General.
R.S.C. , c. 164, s. 65.
364. I'A-ery one is t;uilty of an indictable offence and liabU'
i':il-.- ari'oiuil-
ilij hv iiHii'i.'ll.
to seven years' imprisonment who, being a director, nianagei
public ot'ficer or member of any liody corporate or public
company, with intent to defraud —
{(J.) destrovs alters, nunilates or taUifies any book, i>ai)er,
writing or valuable secuiity belonging !o the boily cor]H,rate
or publir company : or
(/'.) makes, or concurs in making, any false entry, or omits
or concurs in omitting to enter any nialeriai parti* iiiar, in
any book of account or other doctmicnt, K.S.C. c. 164, s.
68.
^6; i'verv one is uuiliv of an iiKhctable ol'fence and lialil-^
Ci J' ■ -- ^ j- i|„. sl;i|c
to five vears' unpiisonmeiu who, iieing a jiromoter, director, uicin ii\ .>iiiri,ii
l)ublic officer or manager of any body cori>orate or jaiblic
company, either existinu or intended to be tonned, makes,
circulates or publisl-.e->, or concurs in in.ikirg, circulating or
publishing, any prospectus, s'.atem nt or account which he
knows to be I'aNe in any material particular, with intent to
induce persons (whether ascertained (^r not) to become
shareholders or partners, or with intent to de<-eivc or detraud
the memliers, shareholders or creditors, or any of them
I. !l
15(J
Banks anh liANKixc
Falhc aep( r
iii.u' hy <■!, rk.
Warcliiiiisc
IIICII, ('(('.,
kliO" illi;Iv
nsiiiK- lilt '
same.
(whcthtT ascertained or not) of such body cori-oralc or
I'ublic company, or with intent to induce any person to
entrust or advance any jjroperty to such body corporate or
pubhc company, or to enter into any security for the benefit
llii.reof. R.S.C., c. 164, s. ((j.
:/)6. Every one is j^uilty of an indictable offence and liable
10 seven years' imprisonment who, being or acting in the
capacity of an oflker, clerk or servant, with intent to
defraud —
(tr.) destroys, alters, mutilates or falsifies any book, paper
writmg, valuable security or document which belongs to or
IS in the possession of his em|)loyer, or has been received by
hnn tor or on behalf of his employer, or concurs in so doing ;
Ol'
(/' ) makes, or concurs in making, any false entry in, or
omits or alters, or concurs in omitting or altering, any mate-
rial particular from, any such book, paper writing, valuable
security or document.
376 Every one is guilty of an indictable offence and liable
to three years' im[)risonment who,—
{</.) being the keeper of any warehouse, or a forwarder,
miller, master of a vessel, wharfinger, keeper of a cove, yard,
harbour or other place for storing timber, deals, staves, boards,
or lumber, curer or packer of pork, or dealer in wood, carrier,
factor, agent or other person, or a clerk or other person in
his employ, knowingly and wilfully gives to any person a
writing purporting to be a receipt for, or an acknowledge-
ment of, any goods or other property as having been recei\X'd
into his warehouse, vessel, cove, wharf, or other place, or in
any such place about which he is employed, or in any other
manner re< eived by him, or by the person in or about whose
business he is employed before the goods or other proi)erty
named in such receiin, acknowledgment or writing have
been actually delivered to or received by him as aforesaid,
with intent to mislead, deceive, injure or defraud any person,'
although such person is then unkiu)wn to him ; or
(/' ) knowingly and wiltully ac< epts. tran-^mits or uses any
l-AlKAtlS FROM Ckl.MlXAI. (JdDL:
• )|
such false receipt or acknowledgment or writing. R.S.T'., c.
,i77. Every one is guilty of an indictable offence and linhU'
to three years' imprisonment, who — 'in"r!'ii u'n'iis.'
f/r.) having, in his name, shipped or delivered to the kee,)ei t^?. ','■', Tir'eoii
of any \> ..rehouse, or to any other factor, agent or carrier, to 'i,'|','.]i''N'\vmi" '
be shipped or carried, any merchandise upon which the con '„'i'/;^'|^.',v',','^
signee has advanced any money or given any valuable secu I',''"''' "''^■•'""''
rity afterwards, with intent to deceive, defraud or injure such
consignee, in violation of good faith, and without the consent
of such consignee, makes any disposition of such merchan-
dise different from and inconsistent with the agreement made
in that behalf l)etweL'n him and such consignee at the lime
of or before such money was so advanced ur such negotiable
security so given ; or
{/>.) knowingly and wilfully aids and assists in making
such dis]josition for the purpose of deceiving, defrauding or
injuring such consignee.
2. No person comn;its an offence under this section who,
before making such dis|)osition of such merchandise, |)ays or
tenders to the consignee the full amount of an\ advance
made thereon. R.S.C, c. 164, s. 74
37S. lA'cry jjcrson is guilty of an indictable offence an('
liahU' to three vears' imiirisonment who, — M.ikin- luh.'
' ^LiliMllrlltS II
(a.) wilfully makijs any false statement in any leceiiit. ''''''''i''-"*'';''
' ■' ^ - ' |ini|irrty tli il
certificate or acknowledgment for j,rain, limber or other '-n' '"' i"i^';'i
iiiHlc-r " 1 111'
yoods or property which can be used for anv of the puri)oses '■•"'i'^ ^''^ '• "
> ' I J - 1 I riMiiiliili'inlv
mentioned in T/w l->tvik Act : or d. niinu- uiih
|irii|,.'i'i V |.j
(/' ) havmg given, or after atn' clerk or person in his em 'viii. h ^udi
liloy has, to liis knowledge, given, as having i)een receivec-
by him in any n;ill, warehouse, vessel, cove or othei place^
any such receipt, certillcate or acknowledgment for any such
grain, timber or other goods or property, — or having oljtained
any such receipt, certificate or acknowledgment, and after
having endorsed or assigned it to any bank or person, alter
wards, and wiiliout the cr,nsenl of the holder 01
endorsee in writing, or the prodmtion and delivery of the
receipt, certilicate or acknowledLiiieiil, will'ully alienates
or
158
li.Wk- AM) liANKIXC
Imiiiciiil
li;irlnn>.
1(1 lii'lVaii.l.
IKirth wiLli, 111- (ioe.s nnl dulivt-r icsuili li(;ldcr oi' owner of
sucli recciiJl, cxTtificatc or acknowlcd-niL-nt, tlie i^'rain, timber,
Ciouds or other property therein nienti( ined. R.S.C, c. 164,
^- 75'
,57y. Il all)- oireiue nienlioried in an)- (jf the three se(-tions
next j)reie(hn!4 is counnittet! \>y the doin,i^ of anythinu in the
name ol any tlrm. comijai-;)- or co-partnership of persons the
person h\- wiiom sncli thin- is actual!)- done, or who con-
nives at the doin- thereof, is miih)- of the (jffence, aiul not
an\- other person. K.S.C., c. 164. s. 76.
,i9-h l'Aer\- one is miilt)- of an indietalile offence and.
iial)le to -.even years' imprisonment wh'.- co.'ispires with any
other ]ierson. I))- tleceit or falsehootl or other fraudulent
means, lo delraud the public or any person ascertaiixd or
unascertained, or to aflect the public market price of stocks,
shares, merchandise or anvt'mn- else publicly sold, whether
such deieit or f.d-^ehood or other fraudulent means would 01-
would not amount to a false pretence as hereinbefore
delnied.
I (ikOllKN',
Diicuiilrll!
ilrlillcii.
•■ liilllk ll'il'
.-(liil " ■■\rll,'
iiurr liill
a.iiiM'ii.
419, .\ document means in this part an\ paper, paril'i-
ment, or other material used U>v writin- or printin-, marked
with matter caiiable of being read, but does not include
trade marks on articles of comiiierce, or inscripjtions on stone
or irietal or oilier like material.
420. "lianknote" includes all negotiable instruments issued
b)- or on behalf of an\- pie. son. body corporate, or compau)-
carr\ingon the busines-> ot liankiriL; in any part of the world
or issued by the autliority of the Parliament of Canada or of
.m\- loieign prince, or state, m- government, or any governcjr
or other authority kiwfu'l)- authorized theret(j in any n( Hci
Majesty's dominions, and intended to be used as equivalent
to money, eillier immediatel)- upon their issue or at some
time subseijuent thereto, and all bank bills and bank post
bills :
{<n " I'lxchequer bill" includes Ivxchecpier bonds, r.i^tes, dt
I'ArWACrs l-KdM CklMINAI, CciH,
loy
Ix-iuuiX'S and other securities issued under the aullii.rilv nt"
the I'arlianient of Caiiatla, or under the authority of an\
Legislature ( f any Province forinin- part (4" Canada, whether
bclore or alter ^U(:h Province so became a part of C 'anada,
4:!i. Tile expres-^ion '" false document " mean> —
itf) a document the whole or sfjmc material part (;f wliich K,.1m. ,...,(i
, * n\r]\[ ■U'lilii'l
purports to he !iiade hy or on behalf of any person who did
not make or authorize the making therciit. (T whi( h, th.ouuli
made by. or by the authority ..f, the person who purport^ t..
make it is fal>el_\' dated as to time (.r phu e o( making, where
either is mateiial : or
(/') a document the whole or SMme material \,:\n of which
purports to he made l)y or (^n behalf of t.ome person wh •
did not in I'act exist : or
ic) a docaniient wliich i> iiuuie iii tlie nauie of an exi^tinj,
person, eitiier b\- that ]jerson or by his ;uithorit)-, with th.e
fraudulent intenti(jn thai the document should p^ass as being
m:\ilc by some person, real or fictiti(jus, either than the
l>erson wh(; makes or authorizes it.
-. It is not necessary that the fraudulent intention should
a[)pear un the lace of the docuineiU. but it ma) be jjroveu
by external e\ idence.
4JJ. forgery is the n.aking (.f a false document, knowing
it to be false, with the intention tliat it .-hail m an\- way be t 'I-j't.v
used or acted upon as genuine, to the ])rejudi<-e of an\- one "
whether within Canada or vja, or that some ijerson sh.ould
be indured. liy the belief that it is genuine, to do or refraii.
iVom doing anything, whether within Canada or not.
2. .Making a talse document ini:liides altering a uenuine
document in any material part, ami makinii ar.} materi.il
addition to it or adding to it any false date. attestati<m, seal
or other iliui- which is material, or hy making an\ materia!
alteration in it. either hy erasure, obliteration, removal (^r
otherwise.
;.;. l-'orgery is complete as soon as the document is maoe
with such knowledge and intent a- alorcsaid, though th.e
offender may not have intended that any paiticular per-on.
shiTild use or act uj)on it as genuin.e. or lie induced. b\- the
hJO
Hanks and Hwkinc
rinii'lDiii'iii
(II I'lH'rcrv.
belief that it is genuine, to do or refrain from doing an\-
thing.
4. I'orgery is complete although the false document ma>
l)e incomplete, or may not i)urport to be such a document as
would be binding in law, if it be so made as, and is such as
to indicate that it was intended, to be acted on as genuine.
423. I'A-ery one who co nmits forgery of the documents
hereinafter mentioned is guilty of an indictable offence and
liable to the following punishment : —
I.I.) to im])risonment for life if the document forged pur-
ports to be, or was intended by the offender to be; under'-t(K)(,l
to be or to be used as —
(/>.) any entry in any t)ook or register, or any CLrtiricalc.
coupon, share, warrant or other document which by ;m\- law
or any recognized jiractice is evidence of the title of any
person to any such stock, interest or share, or to any divi-
dend or interest jiayable in respect thereof : R.S.C., c. 165,
s. 1 1 ; or
{/■) any !)ank note or bill of exchange, promissory note or
cheque, or any acce|)lance, endorsement or assigiimcnt
thereof; R.S.C., c. 165, ss. 18, .'5 and 28 ; (jr
(//.) an)' 'leed, bond, debenture, or writing obligatory, or
any warrant, onltr, or other security for money or payment
(jf money, whether neuotiable or not, or endorsement or as-
signment thereof; R..S.C., c, 165, ss. j6 and 32 : (jr
(/-'.) any accountable receipt or acknowlcdement of the
deposit, receipt, or delivery of nioney or goods, or endorse-
ment or assignment thereof; R.S.C"., c. 165, s. 29 : or
(,\'. ) any bill of lading, charter-party, i)(jlicy of insurance,
or any shipping document accompanying a bill of lading, Of
any endorsement or assignment thereof ; or
(A-. ) any warehouse receipt, dock warrant, dock-keeper's
certificate, delivery order, or warrant tor the delivery f>f
goods, or of any valuable thing, or an\- endorsement < r
assignment thereof ; or
(j.) any other document used in tlie ordinary cotirse of
lousiness as proof of the possession or control of goods, or as
authorizing, either on endorsement or delivery, the possessor
of such document to transfer or receive any g<Jods.
F.NIUArr^ IKiiM rKIMINAI rriiif;
If) I
iliiriniii'iii .
42 \. Iv.ciy DiiL' i^ nuilly ut" .111 iiuliclaMc (iHlih i \\\\>,
kiiiiwiii;; a (locuinciU to he forced, ii^cs, deals willi, m aiis |'
upon il, or atleinpls to use. ile^il witli, or ai 1 U|ioii il, or
causes or alloinpts to cause any person to u^e, deal witli, or
act upon it, as if it were i^enuine, and is liable to tlie same
punishiii"nl as if he had forL;ed llie chxunieiu.
2. It is inunatorial where the document was torL;ed.
-pS. I'lvery one is t^uilty ot an indi( table ofl'ence who,
with intent to defraud, causes or procures any leleuram to ^' '"'"'V '''!' ,
he sent or delivered as hein.n sent by the autiiority of any " ""'•^■
person, knowi/ig that it is not sent by such authority, willi
intent that such teleii,rain should be acted on as beini; sent
i)y that person's authority, and is liai)le, upon conviction
thereof, tcj the same punishment as if he had forced a docu-
ment to llie same effect as that ot the leleuram.
429. Iwery one is L^uiliy of an indictable offence and liable sni.iiML! \A\>r
to two yeats' imprisonment who, with intent to injure (,|- ''i' -imih.-.
alarm any jjcrson, sends, causes, (;r procures to tje sent, .my
telegram or letter or other niessa^'e conlamin^ matter which
he knows to be false.
430. ICvery one is guilty of an indictable (jffence and liable
to fourteen years' imprisonient who, without lawful alhority ro'i'iivinl'mk
or excuse (the proof whereof shall lie on him), purchases or ""'"'
receives from any person, or has in his custody or possession,
any forged bank note, or forged blank bank note, whether
complete or not, knowing it to l)e forged. R.S.C., c. 165, s.
19.
431. Every one is guilty of an indictable offence who, with
intent to defraud and without lawful authority or excuse, iti-.iwiiiLj iiocn
makes or executes, draws, signs, accepts or indorses, in the iiiii'i'iiii"ii\.""'
name or on the account of another person, l)y procuration
or otherwise, any document, or makes use ot or utters any
such document knowing it to be so made, executed, signed,
accepted or endorsed, and is liable to the same punishment
as if he had fcjrged such document. R.S.C, c. 165, s. 30,
434. KAery one is guilty of an indictable offence and liable
... , . , , - , , • rii.slniiiiiiil.s
to fourteen years imiirisonment who, without lawful authority "f fViriicrv.
or excuse (the |)roof whereof shall lie on him) -
m
l(J2
Hanks \ni> Hwkinc.
Milking \'i
entries in
liook.s rcl
topnlilic I
list:
atini
(ti) makes, begins to iiiakt.', uses or knowini'Jy has in liis
posscssicjii, any machinery or inslnimciit or material for
making l-Acliequer hill paper, revenue paper or paper m-
tended to resemhle tlu: hill paper of any firm or iiody cor])('-
rate, oi person carrying on the hu'-incss ol hanking ; R.S.C.,
c. 165, ss. 14, 16, 20 iS; 24 ; or
{/>) engraves or makes upon any plate or material any-
thing pur|)orting tf) he, or apparently intended to resemhle,
the whole or any part of any Iv\che(|Uer l)ill or hank note ;
iv.S.C, <•. 165, ss. 20, 22 iV 24 ; or
(.) uses any such ])late or material fnr printing any part
of any such JAcheiiuer hill or hank note ; R.S.C., c. 165,
ss, 22 (.V 23 ; or
(d) knowingly has in his possession any sucli plate or
material as aforesaid ; K.S.C., c 165, ss. 22 (S: 23 ; or
((■) makes, uses or knowingly has in his possession any
Kxchefiuer hill i)aper, revenue paper, or any paper in-
tended to resemhle any bill pajjer of any firm, body corpo-
rate, company, or person, carrying on the business of bank-
ing, or any [jajjer upcji; which is written or printed the whole
or any part of an FAchecpier mil, or of any bank note ; R.
S.C, c. 165, ss 15, 16, 20 i\: 24 ; or
(/) engraves or makes upon any ]jlate or material any-
thing intended to resemble the whole or any distinguishing
part of any bond or undertaking for the payment of money
used by any dominion, colony or possession of Her Majesty,
or by any foreign prince or state, or by any body i t)ri)orate,
or other body of the like nature, whether within Her
Majesty's dominions or without ; R.S.C., c. 165, s. 25 ; or
(,{,>•) uses any such plate or other material for printing the
whole or any part of such bond or undertaking ; R.S.C., c.
165, s 25 ;or
(//) knowingly ofiers, disposes of or has in his possession
any pajier upon which such bond or undertaking, or any
])art thereof, has been printed. R.S.C, c. 165, s. 25.
440. I'Aery one is guilty of an indictable offence and
, liable to fourteen years' imprisomnenl who, with intent to
'""'■^ defraud,-
Extracts fuom ("kiminai. Coin
Hi/,
((f.) makes an iintru'.- ciilry or any alteration in an) hook
of arcoiinl kept l)y the (lovernnieni of ("amda, nr of an)
Province of (lanada, or by any l)ank for any siirh (lovern
nient, in whicli hooks are kvpl the arrnunls of the owners of
any stork, annuity or other puhhr fund transferable for the
time heini; in any surh hooks, nr who, in any matter, wilfully
(alsifics any of the >ai(l nooks ; or
(A) makes any transfer of any share or interest of or in
any stock, annuity or piihlic fund, transferable for the time
bein.f,' at any of the said hanks, in the name f)f any jicrson
other than the r)wni'r of such share or interest. R S.C!., c,
165, S. II.
441. I'Aery one is L^uilty of .m indictable offence and
liable to seven years' inii)risonment who, beinu in the em- < icrks u<uiur
, r 1 ' ^• r;lls,. (livillrM.I
ploymenl of the (/overnment of f!anada, ot of any Province ".uimiiis.
of Canada, or of any bank in which any books of account
mentioned in the last preceding' section are kept, with intent
to defraud, makes out or delivers any dividend warrant, or
any warrant for the i>ayment of any annuity, interest or
money payable at any of the said banks, tor an amount
i^rcater or less than thai to which the person on whose
account sucli warrant is made out is entitled. R.S.C;., c.
165, s. 12.
442. Fu'ery one is guilty of an offence and liable, on siun-
I ,. ' , , ^ I'riiiliiii;' I'ir-
mary conviction before two justices of the peace, to a fine f)t ciilurs vur. in
one hundred dollars or three months' imprisonment, or both, n'oV.'-l' """^ "
who designs, engraves, prints or in any manner makes,
executes, utters, issues, distributes, circulates or uses anj
business or professional card, notice, ])lacai-d, circular, hand-
bill or advertisement in the likeness or similitude of an)
bank note, or any obligation or security of any (loiernmcnt
or any bank. 50 and 31 V'., c. 47, s. 2, ; 53 \'., r. 31, s. 3.
458. F.very one is L;uilty of an indictable offence and
. . I'lTSilll.UiMIl uf
liable to fourteen years imiirisonment who lalselv and de- ''''i^ii" l»r
ceitfuUv personates —
(a.) any owner of any share or interest of or in any stock,
annuity, or other i)uhlic fund transferable in any book of
account ke])t by the Government of Canada or of any Pro-
KM
l!\\K- \N|i 11 AN KIM,
I* '
I)-
vincc llaivol, or hy ,iny bank lor any such Covtrnniciit ; or
(A) any owner of any shan.' or inliU'st of or in tlu' dchtof
any pulilu hod), ur ot or ni tlir (khi or caintal ■.lock ot An\
l)o(ly c(ir|ioralL-, c()in|iany, or society : or
ic.} any owner ot any dividend, i oii|io!i, i (.ruiKali or mo
ncy payal.le \n res|)e(t ol any siicli share or nitt'rest as afore-
said : or
{(/.) any owner of an) share or niieresi \n an) clann lor a
urant ot land from ;he (aown, or tor any scrip or other jiay
meni or allowance ni hen ol' such ^rant ni land : or
(-.) an) person dulv authorised by any power of altorney
to transfer any such share, or interest, or to re( eive any <Hvi-
den(k <()Upon, certilicate or nioiu)', on behalf ot the person
entitled iluaeto
and ihereb) tr.insfers or endeavours lo ir.msler an)' share or
intuesl belonging to such ownei', or thereb)- olitains or
endeavours to ol)iam. as if he \v<re the true and lawful owner
or were the person so authorized by such power of atlorne),
any money due to an)' such own.er or ])ayai)le lo the person
so aulhori/.ed, or any certilicate, coupon, or share warrant,
uraiit of l;ind, or scrip, or allowance in lieu ihereol, or other
document winch, by an) law in lorce, or an) usage e.\istin,L;
at the lime, is deliveral)le to I lie owner of any such stock or
fund, or to the person authon/ed by any such power of
altorney. R.S.C., c. 165, s. y.
«
I 3Sr D JiJ X..
■ ,1
• 7
7. '15
• • '43
A( IS RKlM.AIJili I 1^
Aci- Ki.si'ixiiNo Hanks —
Application dI
Act of Incorporation, whal to loiilain .........
i'"orni of
Coinnicnccmciil of
.\l>-MI\ISI'KA roK —
iVhcn mA pcr.sonally liabic as a shaiL-hoklcr ^4, 45
When so liable ^4
.\(.I.\CV I'KKS 123
.Aci-N I- -
i-fleci of notice tluil per>on [iledL^int; is an 106
Who is an, under llank .\cl loj toio;
Ai,i,crr.\ii-;Ni- of Stock 24
Annual MiiniNo —
Date of, when determined S
Statement to be laid f)ehjre j:^
What il nuiHl show IS, K)
.Vn.nl'AI, Si-.\rL..Mi.\ I to be prepared
.Assists —
i )ebts due to Donunion, second charue on
1 >ebts due to Provinces, ihirel cliari^e on
Notes, a fust ch.i!;.^!; mi
I'enalties, not a ( Iiarj^e in case of insolvemy until
(Jliier liabilities |>aid 54
b A 1.1.0 r —
Voting lu be by _2 j
Danks —
Advances by, for IjuiKlmg shi[i.s ,j^
.-\L;ency *"ees may be charL^ed by 132
Agencies may be opened by (,^
lienefit of a security accrues to 8^
53
- -»
53
li ilik:. ■ ( 'iHltllltti d.
I'liils (;t ladiii:.' may l)L' l.ik^. H li\ , ii.'i ciill.iiri.il mi ni iI\. ()^, ijfi
' 'laiin uii(Kr, \'\')\ in iiti|)ai(l WmkIui i i A
lidW l;i)U(1s hliMiilii lie ilcscnhcd in i i i
May lie cNcliaiincd t'-r warcliDU^u ilixi|iI i i .,
Iluiuls of, hy wliDiii to lie siLincd 6i
i low assi^nal)lc 6 1
( XficiTs may he denuiLcl lo ;-ii^n (\:
lliai idles may lie opened by 6;;
llii.iness oT, delnied 65
Certain, not to he transacted liy 65
Charters of certain, continued 1 1
( 'ollatera! security, hill of ladini; as, 92, 9C1
I) minion, iVc.. and r)reiL:;n puhiic sectnities,
stock, lionds rnul di'lientures as 65 t(j (i~,
1 low, may he dealt with, hy ;;
MoilL;;;L;es as yi;
Waiver of rights as to, hy 78
W'aiebouse receipt as yj, ^y\ to i)U
Collection lees, may he cliainc'd hy 121
Comiitions previous to commencement of husincss
hy new . 9
Deposits, mti. rest allowah.le on 120
J'linl 125, 127
Not hound to see to trusts as to 1 25
l\.ecei\al)le from persons nnahle lo contract 1 23
And payable lo such de])osit(jrs 12^^
i'roviso as to amoniv to h'' received h-om such
depositors 12,^
Ki^lit to repa\'meiu ot, not liarred l)y prescription. . 135
Deposit liy, Willi Mmisier ot finance 54, 55
Amount 1 it, iiow delermmed 54, 55
huidends of, iiMi to impair paid uji capital 47
fffecl oil. It hu--iness powers e.Meeded by. 71
Insolvency ot, wliat couslilules 136
I 'alls m such, case 1 36
I )ispo .al of unci am led iii' iiieys on 131
Inlerost at not more ;ban 7 per cent. ma\ be
|cC'i\eled h) I H;
India.
Iti
1 1
I'nnks —G'// //;///,•,/.
On deposit-^ 1 20
Ijcii iif, iiiigoiiils Ccivciim' by wairlMusc ic{'ei|<t, wIrmi
prinr t.) t!;at >)t unpaid vendor 116
On shares and unpaid divitlcnds, tor drills and
''■■'''''''■^-•'^ ;.4. 35- 36, 75
I, nans 11(11 til hr mack' !))■, on S!cuiit\ of thrir own
stix k '^r tliat of other l).,nks 66.70
Mortg,ii;us may he taken hy, as additional security
lor debts comractcd -i)
Loans to wholesale lu.inutacliirers 107
l,oaiis to wholesale pur(diasers or shi|)pers 107
I'orm ol security ni such case . 107. 10c;, 1 |6
J^ffecl ot '-v.cw ity I 10 to I 1^
I'.ffect of lonversion 11^
Notes as collateral security, ohlija'ions resjiectini,' . . . .H:;
\()ie> for circuLition, to be iss'.ed only !jy () ^
Payable at jiir 60, (.1
Penalty on, lor exciedini; bu-iness |)owers 71
HoldiuL; land longer than se\-en year>, S7 toQi
I'owers 0} 5-
I.inutations or. 03 O.S to 74
Personal tiroptaty. riL^iits over when inortgaged to .S.j
keil estate may b.; held by. tor acind ocr n],i,'i;'on ....-](.)
It mortgaged to, may be acquired absolutely .. S7 to yi
May only be held ! >r 7 years unless in actual
•H-cup.ilion S7. (ji
May Ijc sm1(! by, inider power of sale 91
.Mortgaged to, ]uncha-eable under e.xecuiioii, iVc . . ,86
I'le turns to ( lover ntiient 1 J7, i j(), 1 ^o
I' ""11 of y 2-,, I p, 146 to 149
Penalty for not making ij8, 1 :;i
Special nui)- lie ri.!j'iired 128
Rights of, over good> tnaniil.uaured from articles
]iledgiil 115
Sale of goods by, on non payment of debt 116
Notice to be L;iven 116
Ships, iSrc, advaii<.\ s by, fa' building 92
: c.s
\XK^- \Mi I.WKINi,
I):nikN--- Coil till inul.
Slock, not In Il'IkI o\ (lisc(juiu on •.t'ciiiity ot' llirit
own or llial of ollici lianks 66, 70
Not to deal in their own (jr otiier liai'.ks' 66. 70
lixccpt when necesscUy to rcali/.c for advuncis ... 76
lyien on for debts and liabilities for debts. .34, ,^5, ,^6
Trusts, not bound t(; sec to |2, 4_^, 1 25
Unauthorized use of title a nnsdeineanor 141
Usury, not liable ',. petuilty for . 1 h^
Warehouse receipt may be taken bv, as roliaieral
securny 'y-. ')7
C'laini under, prior to unpaid vendoi 116
May be exrhan^ed for bill of ladinj^ 11^
How j^ood.. should be described in in
Warranty whether liable on 6(;
Hank Circulaikjn Rkdkmim idn 1'"ijni> 54 to 60
Notes not redeemed on insolvency to be payal)le out of 5S
Payment fron), to be made without re,L;ar(i to amount
contributed .... 58
Repayment of amount coniribuled <jn uisoKency . . . . 5<>
Kules n)ay l)e made by Treasury IJoard as tc; payment
out of 60
To bear interest 56
Sums due by bank to, ma) be collected by action . . 60
Hank. o\ IIrimsii Commijh —
I 'hief ]ilace ol business of 6
Sections ajiplicable to 5
liA.NK Ol- BkiriSlI XORTH A.Ml.KICA —
(Jhief place ci business of 6
N(jle issiic ot :^o
Sections applicable to 5
HaN(ju1'. 1)l' 1'kupi.k —
Note issue (jf 50
Seiuions applicable to 5
SectKMis not ajiplicable lo 13
Hank Notes —
.Amount and denomination of 30
Average circulation ot, how determined 57
t
I»
h
t
l\ hi \.
Il;iilk N'olcs i'fiitiuH'tl.
("ountrrk'it
I >t.-l.i< iii.l:, j'c'ialtv for.
!■ list (hill Lit' on ;issctN
"1
5.1
.1 -
Howai.u hy whom to hl ^1:.;ik <i
Ill ra-i' uf insolvL'ticN . lo li^-.n mii rcsi m CLrlaiii <aM
until rc(lc(;iiufl
W hen ^iich iiilLTijst to cca.sc
.M.i\ l)c signed hv machinery
Not III (.'Vired unimpairfd i„])itai 50
\o. for Ic^.s ih.in $5.00 to Ik- is-^iird (;r rc-isMued ;o
< >ML' signature at least to he written U\
i'avahic at par Oo, ') 1
I'cnait)' it" i^sue e.\(:ee(!i unimpaired < apitai 51
i'enalt\' for Linautliori/ed l-,sue of 6.;
I'enahx' t(ir picdi^in^ ;_'
i'en iltv toi' iin])roper issue, vVr , ^j
i'leil;.:inL; ot". prohihited . . ^ 1
•
I'ower to siyn may be deputed 6j
Kedt'wiptioi! of i,\
L'ncler $5.00 ;o he < alleiJ in . ■ ■ S'
What shall he deemed n<jtes . . 0^
W'lieie i)ayahie 61
HcNH-, l'i(ivisi()n> tur sale oi. held as collateral .security
for ndvanci's . ;;
l:>i:.\Ni liKs ina\ he opened . . . 65
t'.v Laws
('enain continued in force . Lv '•'^
Matters that may he re.Liulated iiy . . . 1 1 . 1 .•
.\hay he made hy sharehcjlders m
May he made hy direi:tors 17
("aij.s —
.\niount and intervals of .... .... ^(j
Mow enforced hy action i'- .11
By forfeiture ; 1
i'nrfeiture may be remitted ;i
In case 01 insolvency
\\o\s made and enforced
' ,^/'
I V
'#;
no
l.-ANKs AMI 1;a.nkin(;
(]alls -CcufiiiiirJ.
Refusal lo make, a misdemeanor 1,^7
Under winding u|) act '37
Who (lualified to make 3°
Cai'Iiai. Siock —
Allotment of 24
Amount of 7
How increased -,i
Ht)vv reduced 24, 25
Conditions to be complied with it legislation
sought for reduction 26
Limit of reduction 26
Reduction not to affect liability of shareholders .... 26
If any lost, calls to be made 47
Loss of, t(; be mentioned in next return 47
Profits to be applied to make good loss of 48
Must he taken up within a certain lime 24
What amount t(; be paid up <S
CEKTIFCArK —
Treasury Board must grant, before con".mencing
business 9
('nAikA4A\ to have casting vote '7, 21
CllAkrEKS —
Certain continued [
Lapse of . . 10
CiRCULAlION —
Penalty for excessive . . , 51
Redemption of 61
COLLAl'Kl^AL SkCUKII V —
Bills of lading as 92,9^'
I^ominion, iS:c and foreign securities; stock, bunds
and debentures as 65, 67
How may be dealt with 77
Mortgages as 79
Waiver of rights as to 78
Warchotise receipts as 92, 94 to 96
CoiJ.KcnoN 1'"1':k.s ..121
k,
In I U.K.
171
ii
Dkiimtions —
" Agent" 102 to I
" liank "
" iJaiikcr" I
'' Hank note" i
'• 1!:11 (if kuling" ^,
" Culkucral "
" I )t*lits coiuracicd " ^S,
" Discount "
" DocuMicnl <it litlu to goods"
" I)o< unicnt "
" Exchequer hill "
" False (iocuuient '...., ' '
" Forgery " •
" Goods, wares and nierclKUidise '' 2
" Manutac'.urer " 3,
" Negotiate "
"Then"
" Treasury Board ''
"Trustee"
" \'alual)le security ''
•' Warehouse receipt " 2
Df.I'osi IS —
How and to whom joint payable 125 to
Interest allowable on
Not bound to see to trusts as to
Receivable from persons unable to contract
And payable to such depositors
Pr(.)viso as to amount receiveable from such
depositors
Right to repayment ot, not barretl by prc'^criplion . . . .
DiKKcroRS Provision Ai
Number of
May open stock iiooks
WhwU i)owers cease
] )iKi:c'roRs —
Annual election of
Hoard ot
07
I
50
5«
96
97
97
67
50
59
59
96
08
1 I
5^
. 2
50
5'
94
27
20
-5
1 ;
- ,1
.>5
'4
14
'<
IT2
II WK- .\\|i I; WKI \i.
I )irc'(t()rs — t'ontiiiiiiii.
Nacancies in, how lillcd iC
(.IhainiKui nt mccliii^s of 17
o have ca^iinL! ndIc
Disfounis lo II
I'llection of, by haliot 21
N'oiic L- ot I :^
I'rcjvision in cisu of failure in clectiun of 17
lv|iiaHt)' of votes tor lO
When and where lo lake place cS, 15
( leneial p iwcrs o|" 1 4. 1 7
To appoiiu officers, clerks, tvc is
'I'o call spe( lal geiieial lnel■tint^.■^ of shareliolder-^ . . . . 1 1;
I'o close transfer hook.^ 47
'I'o declare dividends 47
'1 o declare stfick forfeited for non-payment o; calls . },\
■|'o elect president and vice-president 16
'I'o enlorce calls hv action p
To inspect liook'^, iVm 46
To make hv laws . 1 -
■ ' i
To make calls 20
To res^iil.Ue affairs of hank 1 -
I'o rci|iiire se( iirit\- from cashiers, \-c. |S
(iiviiig undue prefereni e, guilty t;f mixlemoanor 1 ?,(^
i.ialiility of, for hreaches ol' truNl hv co directors i.|
Loans to II
.\lakitiu ial'f siatemetUs in returns, ^uiiltv of misde
meanor | ^^o
Notii'e of holdiim of election of' 1 -
Number of S, 11
I'resident and vice-president, when to he elected by. , id
runishmetu of, tor makiiiL; lal-^e statemetU in returns. 1 pj
< Jualilicaiioii of I _j
Mu>t he natural horn or naturalized sulijects iq
.\lii->t continue 1 ^
(^)uoruin of II
Relii^m^ to make (alls on insoKency, guiltv of nnsde
meanor 1 <-
\
IVIil' \.
it;;
f
I )i recti )is Cent III Ui'd.
RfiDoviiig and rcphiciiiti, at m)C( ial j;eiietal nietiii^i; . . . zo
Remuneration of 1 1
Vacancies m fxiard how lilled 16
Who shall he 15
Divini-NMs —
Declared l,\ directors 47
I Jen on toi any debt or liabihly tor ah\' debt 75
Notice of \i
Not to in)|)air paid iiji capital ^7
(\lapital lost by, to be made ii|> by call-, nn iirip.iid
stock 17
Net profits to be a|)plied to niai<t i;ood siuji l(,ss.., 48
Not to exceed S p. c, unless a certain reserve tund
exists 4S
May be made payable in L'niled i\in,L;doin . 37
DoMIN ION (IhkQUKS —
To be cashed at i>ar 1 4^
Dominion Notes —
Arrangements for supplying 49
Payments in 1
Election -See Directors.
I'-XKctt'oK- See Administrator.
Kalsk Statements in returns
.A misdemeanor 1 4.>
FOKMS —
Act of incorporation 7, ' 45
Security under section 74 107, 199, 146
Return.s 1J7, 1 J50, 146 to 1 41;
Guarantee Fund —
May be estaljlished 1^:5
Guardian—
When not personally liable as a sliaicholder 44, 45
When so liable 4.1
Insolvency —
Calls on 1 36
How made 137
171 liANiss AND Banking
Inscjlvciicy —Conliniiai.
If not paid, toilciuirc incurred i.^'i
Rclusal to Iraki.', a nn->(lL'nn.'aiu)r 137
Disposal of ui claimed numcys on 1^1
Notes to bear interest until redeemed in ( ertam cases , .57
When such interest ceases 132
I'cnaltics in case ot 54
Sliareholders hahility on 133
If shares transferred within sixty days of 3O, 138
What cfjustitntcs 136
In ii:Ki,.^f
When taken by hanks hunted to 7 per cent ..119
If m.ie paid, excess not rei;overahlc \ 10
Loans—
On bank slock ])rohibitcd 66, 70
IV'nah\ in resjiect > f 119
To directors 11
MEEiiNds -annual. See Annu:d Meetings
Not II e ot, vvha'. should c:onti;in 20
i^roxics may vote ai 22
Renewal ot 22
Who may hold .22
Special general, how called 19
Vuting at, to be l>y ballot 21
If an equality ot votes 16, 2 1
Mi;KcHANrs Hani^ oi I'. H.I. —
Provisions ot .Act extended to 6
Deposit by, with .Minister of I''inance ^^
.•\'nount of h iw ditcrmnied 55
MoRi'GAi-.i:s —
.\s additional sfcurity for debts ((aitrarted 23
.A.S continuing security 83
Norks —
.Advertisements not to be issued in form of 65
(Chartered banks onl\- to issue 63
Counterreit 64
May be signed by machinery. . . 62
C)ne signature at least to be written 63
I
i
1m)| X.
1
i J
Notes — Con till iit-d.
Penally lur un iiitlu)ri/i;d I'^suo ol Gt,
To he |Ki\,il)U' .il pai 60, (j I
NoTlCKS Ikmv to l)c L'jve.-n 142
Offkn'Ces against Hank .\( t 9, 37, 141
How i)iiiii->!ial)if 142
OfKKNCKS LJnDKK IHK ("kIMINAI. ( \i1)B; —
" lianker " delincil 15H
" liank note" liefmed 158
Conspiracy to detVaud, how puni-ilied 158
("lerks issuing false dividend wiir.int>, how |Jiinished. 163
Crinnnal hreach of trust, how lamished 155
I'rocedure in such cise 15:;
" Document ' defined 15S
" Document of title to goods ' delined 15S
Drawing document without authority 161
" Hxche(juer hill '' defined 158
False accounting hy official, how |;unislu(i 155
False accounting by clerk, how punished 156
■' False document " defined 159
False statement by official, how punished .... 155
'• Forgery " defineti i :^y
lUinishment for ... 1 60
Gaming in stocks and merchandise, how punished. . . 152
Innocent partners not liable for offences committed
in liame of firm i -s
Instruments of forgery, making, [lossessing or using,
how punished , 1 1
Making false statements in receijjts for property that
can be dealt with under 'Fhe Bank .Act,
how punished j-y
Fraudulently dealing with projierty to which such
receipts refer, hf)w punished 157
Making false entries in books relating to public funds . 162
Owners of merchandize disijosing thereof contrary to
agreements with consignees who have made
advances thereoii; how punished 157
Personation of t ertain persons 163
IMAGE EVALUATION
TEST TARGET (MT-3)
1.0
I.I
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;:'3 2
36
122
12.0
1.8
1.25 1.4
1.6
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23 WES? MAIN STREET
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(716) 872-4503
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I'lANKS \N|. j'WklNC
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C)frcnrt's undtT ttic Criminal ('.u(\k: -Continued.
PossesMPt; forfitd hank notes i6i
I'rinting ( intilars in likeness of notes. 16-5
Sending telegrams in false names 161
Sending talsc telegrams 161
Spreading false news, how punished 132
"'Ihelt delincd" 152
'['heft hy agent and attorney, how |)unished 155
'I'hff hy a iieison holding a power of attorney 15,^
Thelt l>y clerks and servants, how |iunished 154
Theft by misappropriating proceeds held under a
. re,;ion i 54
" Trust^-e " defined is-"^
I'.ijiiri fiV'-.'-'j documents 161
" ^'cii-aM'" . iiy ' defined : 59
\V.'reho'i5i;e;..c.r , i^-<., giving false receipts, how
punished 1 5f>
Knowingly using the same 156
OlFICERS —
Appointed V)y directors 1 S
Certain, must give security i<S
l-lffect of alteration of duties ot, on liability of surety. . . ig
(living undue preference, guilty of a misdemeanor. . . 1,59
Making false statements in returns, guilty of a mis-
demeanor 140
Pension funds may be established 13
PKNAi.nas 49. 51- 52. ^.^1 ^4. 65, 114. 1J9. i^^. '29,
130, 131. 124
How recovered 1 4°
President—
Election of ' ^
Hew removed at special general meeting 20
How replaced ' ^'
Presumption in favor of validity of transaction 83
PROC KUURE —
To efTetl forfeiture of slock -3'
Sale of lumber, goods, Ike , held in pledge 117
Sale of stock for debt of owner ~(>
i
I *
India. ^"^
I'kOKITS —
To be a|)|iliccl in luakin;^ good loss of capital 4'"^
l^kOXIES —
Renewal of 2*
Who may vote on 22
QUORUM of directors ' *
Rkai, Rsiatf. —
Kor actual occupation 79
Moitgaced to bank may be ai (juiicd absohilrh .. S;, 91
May be purchased if sold under execution 8<)
May only be held for 7 years, unless in actual oc ( upation XS
May be sold under |)o\ver of sale 91
Rf.CKII'IS — False s;atcnienls m, a misdeiueanor 114
Rksf.rvi-.s— part o(, to be in Doinnuon notes 49
Reiurns—
Annual, to be made to Mini-ler of Finance i-'9. 1 ."^o
Form of ' 3°
Penalty for not making 1 ;, 1
Monthly, to be made to the Minister of Finance 1 27
I'onn of ' -7
Penalty for not making \ 2>^
Special, may be called for t)y the Minister of Finance. 1 2S
S.M.E OF (loous —
On nonpayment of debt ^ <<'
Notice of, to be given 1 '()
Effect of want of notice 117
Without owner's consent, must be by publu au< tion 1 10
Sale of Stock for debts and liabilities tnr debts 76
Skci.'RITIF.s— Bank may hold certain as collateral 65
Sale of 7 7
Shares- Amount of 7
.\mount payable on, in ,^0 days from subs( ription .'9
Are personal estate ■^7
Books of subscription for, may be opened in the
United Kingdom and elsewhere ^7
Calls on 30
Dividends on, may be made payable in United
Kingdom and elsewhere. 27
p.'
IS >
H i
I!- I
178
Hanks anh Hankinc;
Shares — Continued.
Forfeiture of, for non payment of calls
How and when paid 28.
I.ien on for debts and Hahilities for debts to the
''''I'lk 34, 35. 3('.
Sale of, to enfnrce ben
List of tran^fers of, to fje made up daily
'i'o be open to sharelioklers
No fractional part of, iranskrable
Sale of, on exei iilion i8.
Who t<j transfer
Sale of, on forfeiture for non-payment oi calls
How transferred in such case
Surrender of certificate of, on irans/er
'rr.ifticking in, effect of on liability of shareholders . . . .
'I'r.insferable at will of holder
Transfer of, when valid 34,
Can only be made l)y registered owner
In case cif sale by bank for debts or liabilities for
debts
Transmission of, othe-iwise than by transfer
How proved
How authenticated it ni;i(ie out of ( 'anacla
On marriage of female sharelvjlder 39,
On death of shareholder
Further provisions in sue h case
Votes on
Sharkhoi,I)k:rs —
All calls on, to he paid before voting
General powers of 1 1,
May authorize establishment of guarantee antl
pension funds
May call sjjccial general meetings
May remove president for mal-administration
May increase cajjital stock
May reduce capital stock
Infant, may repudiate
Liability of, on insolvency. ...
32
29
75
76
36
36
34
37
37
32
74
27
3^>
36
76
3«
3«
.S9
40
40
4«
21
13
'9
20
20
24
35
35
i^
Imh x.
179
I I
Shareholders— 6>'w//«w<v/.
Calls to meet such liability 13^
Forfeiture for non-i.ayineni ot snch rails i .vS
Who h:ne traiisfcrrcd stock within siuty days
hefcjre insolvency 3^'. '.^^
List of, to he transmitted yearly to Mmistur "f iMtiam e. i 2y
Penally lor oniissicn '3°
May regulate certain luattfr^ 1)> hy law 1 1
Vote hy proxy -^
Not allowed to inspect hook>, iVc 46
To vote hy ballot • • • ■ 21
Ships — Advances for building; 9^
Stai KM r.NT- Annual to hi prepared 45
What it must show ;,S. 46
False in returns, a inisdi'nieanor 14°
Stock— See capital stock—-
'I'ransi F.K Hook, closing of 47
Treasiry I'iOAki), defined . • 2
Certificate of, to be obtained ')
Rules mav be made by, as to jjaynicnt of money out
of redemption fund 60
Tkustee —
When not liable as a shareholder 44- -45
When so liable 44
Tri'sts — Hank not bound to see to \2, 4,5, i 25
Usi'in' —
Hank not liable to penalty for 119
Instruments not void on a< count of 120
Not to render innocent party liable to penally for. .121
Not to render innocent j)arty liable to loss of remedy. 121
Provisions as to 1 1 9 to 121
Vendor Unpaid —
Has no lien over bank in cerU;in cases 116
Vessel— see ships.
Vice-President —
Election of 16
How removed and replaced at special general meeting. 20
IKO
Hanks ^\l. I'i\nki.\(;
U- \
. 2 I
. 21
it .1 tu-. ( li.iiiiiKiti I'l have rastii'Li vu\v f\(cpt .i! i-lor
II'tM (>l (llIC'( lots 3 1
M.ij'itity .)(, Id (k'tcriniiu' (iiiislion . n
( M jiiiiit lii)l(icrs t)f charts , ^i
< III ^ll.lU'S
I'll l)( l)\ 'lalloi
\\ Ms-UK. 1^1 Kl.iiii'i ( "i Misi'.s, ( DiislitiitionaiiUdt . ^ •
\\ \Ki Hni ^1 ki.ciaiM a'. (DllaiiTai -.t( imi\ .;2, (^ ( I'-.yO, 1)7
1 ImW L;i((i.is ^ll(lulcl he (k'Sf ril)f(i III 100
Ale -iul»tiluk"(l jv""'"^ tdvcrc'd hy . . (oo
I'.flc t ot ( t.'iivi'rsiun iqq i i c
I'.fKi I ot a((|iiisiii(ji) thereof yn, 102
Meaniiii; uf j
I'uiah) U,v inakiii.L; f.iKe sla'.iiieiil 111 114
Mil) he c.\( lian^eil !ui hill i.f l.uimi; 1 i ',
Transiei of", hy aj;eiit ot (Avner 102
\\ lio may /wx ,^X
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