0%. o 7 IMAGE EVALUATION TEST TARGET (MT-3) 1.0 1.1 UIM |2.S Ut !&£ |2.2 US 140 IS IIP 1.4 1.6 Photographic Sciences Corporation m z % 33 WiST MAIN STRUT WIUTIR.N.Y. MSIO (714) ■73-4S03 ^ %^ CIHM/ICMH Microfiche Series. CIHIVI/ICMH Collection de microfiches. [ Canadian Institute for Historical Microreproductions / Institut Canadian da microraproductiont hittoriq uas Technical and Bibliographic Notes/Notes techniques et bibliographiques The Institute has attempted to obtain the best original copy available for filming. Features of this copy which may be bibliographicaiiy unique, which may alter any of the images in the reproduction, or which may significantly change the usual method of filming, are checked below. ryi Coloured covers/ UiJ Couverture de couleur I I Covers damaged/ D D D Couverture endommagte Covers restored and/or laminated/ Couverture restaurie et/ou pellicuMe □ Cover title missing/ Le titre de couverture manque I I Coloured maps/ Cartes g^ographiques en couleur Coloured inic (i.e. other than blue or black)/ Encre de couleur (i.e. autre que bieue ou noire) I I Coloured plates and/or illustrations/ Planches et/ou illustrations en couleur Bound with other material/ ReliA avec d'autres documents Tight binding may cause shadows or distortion along interior margin/ Lareliure serr^e peut causer de I'ombre ou de la distortion le long de la marge intirieure Blank leaves added during restoration may appear within the text. Whenever possible, these have been omitted from filming/ II se peut que certaines pages blanches ajouties lors d'une restauration apparaissent dans le texte. mais. lorsque cela Atait possible, ces pages n'ont pas AtA filmAes. L'Institut a microfilm* le meilleur exemplaire qu'il lui a M possible de se procurer. Les details de cet exemplaire qui sont peut-Atre uniques du point de vue bibliographique. qui peuvent modifier une image reproduite. ou qui peuvent exiger une modification dans la mAthode normaie de f iimage sont indiqute ci-dessous. n n V n n D Coloured pages/ Pages de couleur Pages damaged/ Pages endommagAes Pages restored and/or laminated/ Pages restauries et/ou pelliculAes Pages discoloured, stained or foxed/ Pages d^colories, tachet^es ou piquAes Pages detached/ Pages ditachies Showthrou^h/ Transparence Quality of print varies/ QuaiitA inigale de I'impression Includes supplementary material/ Comprend du materiel suppl^mentaire Only edition available/ Seule Edition disponible Pages wholly or partially obscured by errata slips, tissues, etc., have been refilmed to ensure the best possible image/ Les pages totalement ou partieitement obscurcies par un feuillet d'errata, une pelure, etc., ont ixi filmies A nouveau de fa^on it obtenir la meilleure image possible. T tc T P o fi O b( th si ot fii si( or Tl sh Ti w M di ani be rig ret mi D Additional comments:/ Commentaires supplAmantaires: This Item is filmed at the reduction ratio checked below/ Ce document esi film* au taux de reduction indiqu* ci-dessous. 10X 14X 18X 22X 26X y 12X 16X 20X 24X 28X 32X The copy filmed here hat been reproduced thank* to the generosity of: Library of the Pubiic Archives of Canada L'exemplaire film4 fut reproduit grAce A la gAnArositA de: La bibliothique des Archives publiques du Canada The images appearing here are the best quality possible considering the condition and legibility of the original copy and in keeping with the filming contract specifications. Original copies In printed peper covers are filmed beginning with the front cover and ending on the last page with a printed or illustrated Impres- sion, or the back cover when eppropriate. All other original copies are filmed beginning on the first psge with a printed or illustrated impres- sion, and ending on the last page with a printed or illustrated Impression. Les Images sulvantes ont 4tA reproduites svec le plus grand soln, compte tenu de la condition at de la nattet* de I'exemplaire film*, et en conformity avec les conditions du contrat de fiimage. Les exemplaires originaux dont la couverture en papier est imprlm4e sont film4s en commengant par le premier plat et en termlnant soit par la derniAre page qui comporte une emprelnte d'Impression ou d'illustration. soit par le second plat, salon le cas. Tous les autras exemplaires originaux sont filmte en commen9ant par la premiere page qui comporte une emprelnte d'Impression ou d'illustration et en termlnant par la dernlAre page qui comporte une telle emprelnte. The last recorded frame on each microfiche shall contain the symbol *^» (meaning "CON- TINUED"), or the symbol V (meaning "END"), whichever applies. Un des symboles suivants apparattra sur la dernlAre Image de cheque microfiche, selon le ces: le symbols — ► signifie "A SUIVRE", )e symbols V signifie "FIN". iVIaps, plates, charts, etc., mey be filmed at different reduction retios. Those too lerge to be entirely Included In one exposure ere filmed beginning in the upper left hand corner, left to right and top to bottom, as many frames as required. The following diegrams illustrate the method: Les csrtes, planches, tableaux, etc., peuvent Atre filmte i des taux de reduction diff^rents. Lorsque le document est trop grend pour Atre reprodul en un seul cllchi, il est fllmA A psrtir de Tangle » upArieur gauche, de gauche A droite, et de haut in laas. en prenent le nombre d'images n^cessaire. Les diegremmes suivants lllustrent la mithode. 1 2 3 1 2 3 4 8 6 THE COMMERCIAL BANK OF CANADA Vt=^. THE GREAT WESTERN RAILWAY COMPANY. JUDGMENT OF THE COURT OF QUEEN'S BENCH, Delivered Deci^mber 2Qtu, 1862. TORONTO : R(jWSELL & ELLIS, PRINTERS. 180-'. Ii COMMERCIAL BANK V. GREAT WESTERN R. "W. CO. V The CoMxMercial Bank of Canada v. The Great Western Railway Company. IIagarty, J. — It may bo convenient to notice in the first place the resolutic/ns of the court of proprietors of the Great Western Railway Company authorising the lending of money to the Detroit and Milwaukee Railway Company. The first is of the London date, 8th October, 1857, and Hamilton date of 2nd November, 1857, and sanctions an " advance to the Detroit and Milwaukee Company of such an amount, not exceeding £150,000 sterling, as may be neces- sary to ensure the completion of the railway across Michi- gan, in connection with the Great Western Railway Company of Canada ; such advance being made as a temporary loan, and on sufficient security, the expenditure of the same being subject to the control of the Great Western Railway Com- pany." The second resolution, dated, respectively, London, 7th Octobei', 1858, and Hamilton, 2nd November, 1858, autho- rises the board " to advance to the Detroit and Milwaukee Company a further sum of money, not exceeding £100,000 sterling, to be expended by and under the control of the Great Western Railway Board of Directors." The statute 22 Vic, ch. 116, sec. 11, allows the Great Western Railway " to use its funds, byway of loan or other- wise, in providing proper connections, and in promoting its traffic with railways in the United States," when sanctioned by two thirdsof the shareholders, &c.; andenacts "that the loan of seven hundred and fifty thousand dollars already made by the said company to the Detroit and Milwaukit Railway Company is hereby declared to be lawful." A large portion ot the argument for the defendants was directed against the legality of an employment of the means of the Great Western Railway Company in making or com- pleting this foreign road ; — and it was contended that in any event the defendants had no power to borrow money from third parties to eft'oct such a purpose, and that the present plaintifls, when they advanced the sums now sought to be recovered, liad full notice of the alleged illegal destina- tion of the money. 2 queen's bench, MICHAELMAS TERM, 26 VIC, 1862. v-nJr I think i; well to dispose of this hranch of the case first. From August or September, 1857, down to the occurrence of the present difl5culty, the plaintiffs had been the bankers of the defendants, and when the Detroit and Milwaukee account was first opened the resolution for the £150,000 was known to the plaintiffs. The clause already cited of the act passed on the 16th of August, 1858, removed all questions of the legality of the first advance, and I )resume is declaratory in its nature. It also prospectively gives full power to the Great Western Railway Company " to use its funds, by way of loan or other- wise, in providing proper connections, and in promoting its traflic with railways in the United States." On the face of the second resolution, passed shortly after this statute, there is nothing to shew the special purpose of the £100,000 advance to the Detroit and Milwaukee Com- . pany. It is simply spoken of as " a further sum of money, ^f to be expended by and under the control of the Great Wes- tern Kailway Board of Directors." The bankers of the Great Western Railway Company may be assumed to know that the legislature had expressly sanc- tioned a very large loan to the foreign railway : that it had been ■*:really intended to be used, and was used, not merely in mak- ing connections and promoting -traffic, but in constructing and equipping the line itself : that the road required further aid, and that parliament allowed such aid for certain speci- fied purposes : that the Great Western Railway Company had determined on a further advance of a lesser sum than that first loaned ; and that the lenders were to have the actual expenditure of the money. Such money might very well be applied strictly within the words of the statute, though it may be safely assumed, from looking over the items of ac- count, that large portions at least were applied in the gen- eral construction and equipment account, and in payment of debts due by the Detroit and Milwaukee Company. Among the exhibits in evidence I find a copy of a resolution of the English board of the 12th of October, 1858, stating that the second loan of £100,000 was granted specifically to provide rolling stock and station accommodation to the lino of rail- ■way opened by the aid of the former grant. There seems to be ^ COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 3 ■ » no evidence of this resolution, passed five days after the vot- ing of the second loan, being raa(?e known to the plaintiffs. I have a strong opinion that, independently of the express sanction of the first loan, the application of the Great West- ern Railway Company's moneys actually to construct and equip the Detroit and Milwaukee line was not within the plain meaning of this eleventh clause, and that any share- holder applying within a reasonable time to a Court of Equity could have restrained such a proceeding. The legislature never could have contemplated, under such words as " pro- viding proper connections, and in promoting its traffic with railways in the United States," that a Canadian company should apply its means towards the building of a road 187 miles long across the state of Michigan. But the end of the clause expressly legalises the loan already made, without any statement as to its object. It is quite true that after the bankers had agreed to make advances, and as the drawing of the money from them pro- ceeded, they might apprehend, from the nature of many of the payments made through them, that the money was being ap- plied to questionable purposes. For example, many charges occur in the account before us for coupons of the Detroit and Milwaukee Company paid through the bank. Such pay- ments might hardly come within the permissive words of the act, but we must consider the position of the parties, bankers and customers. Hiiving once agreed to make advances, without notice of '''7 intended illegality, and aware that large sums might be i quired for perfectly allowable objects, it seems hardly consistent with our ideas of the requirements of business that we should hold the bankers or their clerks bound to scrutinise every cheque presented or every account directed to be paid, with a view of ascertaining if it came within the lawful powers of the customers' charter. Being permitted to advance money to the foreign com- pany for lawful purposes, it might well be that by some ar- rangement between the companies some of the moneys con- tracted to be expended in making connections, &c., might be handed back to the Great Western Railway Company to bo applied by them in retiring a certain number of coupons, the foreign company in lieu thereof itself finding an equal ^ 4 queen's bench, MICHAELMAS TERM, 26 VIC, 1862. amount of funds to do the work first agreed to be done by the Great Western Railway Company. Or, in another aspect of the case, it may be well to con- sider whether, in consequence of previous arrangements or advances with which the plaintiffs had no concern, the De- troit and Milwaukee company had, as it were, fallen into the hands of the Great Western Railway company, and the latter had the alternative either of completing the road or losing altogether the large sums already spent upon it. The court of proprietors of «tock sanction a large advance to aid the foreign road : parliament, after some delay, expressly sanction this advance, which is expended in endeavouring to complete the road : the sharehcUlers consent to a further loan ; and the bankers through whom the first loan is ex- pended, are applied to to furnish funds from time to time on the faith of this new vote. li, seems to me that in such a case to decide against the bankers' right to be repaid their advances would be pushing the ultra vires doctrine further against third persons than it ever has been previously urged. Or, again, if a railway company without parliamentary sanction, and even if liable to be restrained by equity on ap- plication of its own stockholders, as a matter of fact under the authority of a vote of the shareholders take possession by arrangement of a wholly independent line, and work it with their own funds and under their own ofiicers, and make payments from day to dayby cheque on their ordinary bankers, with whom their own proper account is kept, I hardly see my way to agree that the bankers are bound to enquire into the purpose for which each cheque is drawn, or, even with knowledge of what was going on, to be debarred the right of recovering a general balance on an over-drawn account be- cause the moneys sought to be recovered went, in fact, to the maintenance of the other line. We have not, however, to consider the equity of share- holders to restrain the application of corporate funds to a purpose foreign to the objects of the joint adventure. In such a case they must apply for relief with reasonable promptness, as early as practicable, to prevent the creation of new rights and obligations ; and by unexplained delay they create, as has been said, a new equity against themselves COMMERCIAL BANK V. GREAT WESTERN R. W. CO. sufficient to bar their claim to relief. The law on this subject is well explained by Lord Cottenham in Graham v. The Bir- kenhead and Lancasliire, &c., Railway Company, (2 MacN. & G. 156, 6 Eng. L. & E. Rep. 132,) and was before our Court of Common Pleas, in Moore v. Chambers, (11 C. P. 453.) By lying by and knowingly permitting his directors to expend their own money and moneys borrowed from others on a purpose to which he objects, the Great Western shareholder may bring himself within Lord Cottenham' a words : " He has permitted things to get into that state which makes the injunction a proceeding not only not enforcing an equity, but calculated to inflict great hardship and injustice." If therefore the individual shareholders may have lost their right to dispute their directors' proceedings, the case seems far stronger against allowing the corporation as a body to repudiate its own acts on the ground of any alleged illegality. It might be very diflferent if they urged such an objection to a suit against them to compel them to perform, or for damages for not performing, an illegal or ultra vires contract. Here, having induced third persons to alter their position by advancing large moneys, they seek to urge it as a bar to their recovery, and to establish their own right to retain such nu)neys. I cannot consider the advance of money by the plaintiffs for the purpose of assisting the Detroit and Milwaukee Company as analogous to the well known class of cases where money is lent or given expressly for gambling, or stock jobbing, or other objects declared illegal by statute, or for an immoral or unlawful purpose, such as McKinnell v. Robinson, (3 M. & W. 434,) and cases there cited. Here the legislature had expressly sanctioned one loan to this foreign company, and had permitted loans of money to the same or any other United States road for certain purposes, and I cannot believe the law to be so rigid against parties actually advancing moneys to a company, that where the whole sum may be expended in a perfectly legal manner, it cannot be re- covered because all or part has been expcii'J.cd c^ objects not warranted by the legislature. On this branch of the case the facts may not be un- fairly stated thus : — The Great Western Railway ask • • (^ queen's bench, MICHAELMAS TERM, 26 VIO., 1862. their bankers to lend them money, alleging that they have resolved to help the foreign road to the extent of £100,000. The bankers look at the statute, and find them authorised so to do for certain purposes, such as " providing proper connections and promoting its traffic." If the diversion of any part of the Great Western Railway funds to aid a foreign road were unsanctioned by law, the de- fendants' objections would at once assume a more intelligible form. Desiring to preserve untouched the equity of share- holders to prevent any application of the common stock to purposes foreign to the common design, I think it would in- troduce infinite confusion and uncertainty in commercial dealings, and especially in the relations of banker and cus- tomer, to accept the defendants' view of the law in a case like the present. It is also objected that, although power is given to the defendants to " use its funds" in the foreign company, yet they cannot legally borrow money from the plaintiffs for such purpose. A case can readily be supposed of the directors of a company, having expended all their authorised capital, not being authorised to borrow further means to carry on their adventure. Burmester v. Norris, (tJ Ex. 796,) cited in the argument, is of that nature. Alderson, B., says " It would make a vast difference to the shareholders if the power con- tained in these words," (viz. that the directors should have sole control in managing the affairs and business of the company,) " were to be construed as imposing on them an unlimited responsibility beyond the capital which they supposed they would have to subscribe, and with which the concern was to be entirely carried on." Here the act authorising the loan permits an increase of stock to the extent of two millions of pounds, and the creation of a debenture stock, and speaks(sec.4)of the company's power to issue bonds for borrowed money *' whenever it may be by them deemed expedient to avail themselves of the power of borrowing money by such means." The act of 1863, 16 Vic, ch. 99, sec. 3, gives the company power to borrow from time to time, for making, completing, and working the railway, and to make the bonds, &c., issued for securing payment of money so borrowed convertible into stock, &c. **', COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 7 In the Bank of Australasia v. Breillat, (6 Moore P. C. C. 152, 195,) Lord Kingtdowny in reference to the case of a public company under a deed of settlement containing no ex- press borrowing powers, soys, "We have no doubt at all that in ordinary banking partnerships the power of borrowing exists, and the directors by the terms of their appointment had all the general powers, and among the rest the power of borrowing, unless such power is excluded by other pro- visions of the deed." In Maclae v. Sutherland, (3 E. & B. 38,) Lord Campbell cites this judgment with great approbation, and adds, " Al- though mere shareholders in u joint stock company have no authority to pledge the credit of the company, the directors appointed to carry on the business would have impliedly such of the ordinary po.vers of partners in a common mer- cantile partnership as are necessary for the carrying on the business for which the couijiany is formed ; and, where a joint stock banking company is established, the directors would be considered the agents of the shareholders to borrow money for the ordinary purposes of the business, and to give securities in the ordinary form for the money borrowed." He adds these suggestive words : — " The shareholders may have been very ill-used by the directors, (who are acquitted of any personal misappropriation of the funds of the com- pany,) although it is possible that they may, in common with themselves, have been under the delusive hope that enormous gains would be made from the speculations, * * and that, all concerned being enriched, the engagements of the company would all be honourably fulfilled. But, whether the directors have misconducted themselves towards the share- holders or not, the loss that has accrued cannot, according to our views of the case, be thrown upon the bond fide credi- tors of the company." I cannot doubt the applicability of this view of the law of joint stock banking companies to a railway compc-ny. The latter is also a great trading corporation, in daily receipt and disbursement of large monies, executing and maintain- ing costly works, often called on to disburse largt sums, pos- sibly at the moment beyond their available funds in hand. I think their directors must be held to possess all powers • i 8 queen's bench, MICHAELMAS TERM, 26 VIC, 1862. necessary to obtain advances for their business purposes, either on loan or over-drawn account, from their bankers, and that the corporate body which they represent must be as such bound to repay. I do not feel pressed by any difficulty suggested by defen- dants' counsel on this branch of the case. Assuming that the company had power to use its funds in aiding the Detroit and Milwaukee Company, I cannot draw any distinction be- tween advances made by their bankers for this or for the general and legitiinate purposes of the work : — or, in other words, between the riglit of bankers to insist on repayment of defendants' overdrawn account for moneys expended on the foreign road and on the Great Western road itself, or for payment of the officers or work-people on the line. The evidence does not present the case of a formal borrowing of a specific sum or sums by way of loan, but the common case of a bank account largely overdrawn, instead of being cov- ered by deposit of moneys or by proceeds of exchange. I cannot understand any difficulty existing against the right of the bankers of any mercantile or trading company to enforce payment of any balance due them on an over- drawn account, arising in the course of ordinary business, because no bond had been given or document executed, as is usual in the case of a formal borrowing of specified sums. We have now to consider the manner in which the evidence shews this heavy claim arose. When the Great Western Railway Company decided on making the first loan to the Detroit and Milwaukee Com- pany, it was expressly provided that the expenditure thereof should be subject to their own control. At this time Mr. Brydges vas their managing director, and Mr. Reynolds their financial director. It seems clear that these two gen- tlemen had the authority of those advancing the money — that is, the shareholders — to control its expenditure. Mr. Brydges in his statement, (at page 8G,) and his co-director Mr. Becher, (at page 78,) are explicit as to this. The resolu- tion of the English board, dated the 10th of November, IH.'jT, directs t'.iat the expenditure shall bo wholly under the control of Brydges and Reynolds. This at least is tho ]ight in which the matter is placed by the defendants at tho trial. COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 9 As already remarked, the plaintiffs had been acting as the defendants' bankers from August or September, 1857, and it was on the 2nd of November of that year that the resolu- tion for the first loan, having been passed in England, was adopted by the stockholders in Canada. Security was re- quired by the form of the resolution. After some negotiation, it appears 'that on the 1st of Janu- ary, 1858, a mortgage was executed by the Detroit and Mil- waukee Company, transferring to Messrs. Brydges, Reynolds, and Becher, as trustees, all the real and personal estate, vesting in them the control of the expenditure of the funds necessary to complete the line, and also the management of the railway and disposal of the net income, for assuring the repayment to the Great Western Railway Company of money advanced or to be advanced, with interest at ten per cent. On the 22nd of January, 1858, Mr. Brydges became Pre- sident and Mr. Reynolds Vice-President of the Detroit and Milwaukee Railway Company, retaining however their respec- tive official positions in the Great Western Railway Company ; and the Detroit and Milwaukee board of directors was re- modelled, by placing thereon two of the English board of the Great Western Railway, and one ntber of the Canadian Great Western Railway board, Mj". Becher, leaving only three American directors ; and seme $2,500,000 of the De- troit and Milwaukee stock was transferred to the English Great Western Railway board. On or about the 20th of December, 1857, the negotiation took place between Mr. Reynolds and Messrs. Ross and Park of the Commercial Bank, respecting which there is siich a diversity of statement between the first gentleman and the other two, and on which I defer at present making any remark. Mr. Reyjiolds, then being financial director of the Great Wes- tern Railway Company, informs the plaintiffs' cashier, Ross, of the cClAOjOOO loan, ami that he and Mr. Brydges were to superintend its oxpenditiiro. An account is proposed to bo opened with the phiintiffs ; and in Reynolds' own words (page 74,) " I asked him to allow us to open an account against which wc could draw." * ' "I told him (page (i7) that Mr. Brydges 2 '~^r 'i)»'- 10 queen's bench, MICHAELMAS TERM, 2G VIC, 18C2. and myself would like to draw to the extent of our requirements in carrying out this undertaking of the Detroit and Mii- iraukee, and at the end of each month wo would cover the amount by bills of exchange on England." The fact seems to be clear, lliat these gentlemen procured an account to bo opeuod : that tlioy were to be allowed to draw as they required, paying into the plaintiffs* hands the receipts of the road ; and agreed to cover the amount by monthly drafts on their English Great Western Railway Board. Their first draft, of £6000, under this arrangement is dated 2nd of February, 1858, and is payable to the order of the plaintiffs' manager (Park,) and is addressed to the Lon- don Board of Directors of the Great Western Railway of Canada Company, Old Broad Street, London, who are directed to place the amount to the account of the trustees of the Detroit and Milwaukee Company ; and the bill is signed C. J. Brydges, Managing Director; Thomas Reynolds, Financial Director. The transaction thus began ; the plaintiffs to be repaid their advances by deposit of the receipts of the Detroit and Milwaukee Company, of which the chief Canadian directors of the defendants were President and Vice-president, and by exchanges drawn on the defendants' London Board. It may be convenient to notice here, that by the act already cited, 22 Vic, ch. 116, sec. 12, it is declaiod, after reciting that the defendants had a section of their board of directors in England, that the company has had and shall have power to establish t.n office in London " for the purpose of regulating and carrying on tlie business of issuing and transferring shares and honds, and generally to do all mat- ters and things necessary or desirable in regard to the trans- ferring of or arrangements connected with the caj>it:d of the compani/ held out of Canada, and that all such acts and pro- ceedings shall be considered prcclsi'lg the same as If carried on in the office of the eompani/ in Canada." It may bo well to h-ar this clause in mind in considering the position taken by tho defoii'lants ut the trial — that t''0 Canadian directors as a board (of course excepting Brydges IS •4i- 1 I tu- 18C2. COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 11 quirements t and Mil- cover the n procured allowed to Jiands the amount by Railway goment is order of the Lon- ailway of who are 3 trustees is signed Reynolds, '0 repaid troit and directors > and by the act d, after oard of d shall lurposo iig and 11 niat- trans- ofthe d pro- itrricd lering t t''0 >'d<'C8 and Reynolds,) took no part in the expenditure of these loans to the Detroit and Milwaukee Company. The account being opened, it would seem from Mr. Rey- nolds' evidence, (page G7-8) that moneys were chequed out on cheques signed by Brydgcs and Reynolds, without any addi- tion to their names, till the end of 1^58, when printed cheques were used, and countersigned by the secretary and accountant of the Detroit and Milwaukee Company. A reference to the voluminous particulars will exhibit the progress of the acconnt and its ultimate result in the formi- dable balance claimed by the plaintiffs. The first exchange given on the defendants' London Board was on the 1st of February, ISHB, and the last apparently about the 30th of December, 1858. It would appear from defendants' evidence that the Great Western Railway Board in Hamilton (except Messrs. Reynolds and Brydges) took no part in this expenditure or dealing with the Detroit and Milwaukee Company, or in drawing the exchange on the London Board, except that when the drafts were accepted in England they came before the Canadian Board by way of return. (See Brydges' evidence, page 80.) It may be considered as established beyond controversy, that the Great Western Railway Company resolved to advance two large loans to the Detroit and Milwaukee Com- pany, on getting security, and on condition that their own managing and financial directors should wholly control the expenditure : that the required security was given, and the Detroit and Milwaukee Road and all its resources (subject to some prior claims) transferred to the two last named gentle- men and Mr. Bechcr, their co-director, as trustees : that a new account was opened with the Great Western Railway bankers, and large advances obtaineil on the .agreement that all receipts of the road were to bo depositetl with the bank- ers, and the amount behiiul-hand covered from time to time by sterling exchange drawn by the man;iging and financial directors as such on the defc.n-.nts' Loudon Board; and the final result is a very large balance in favour of the plaintiffs, for which this action is brought'. Before discussing the opposing Yic^Y3 of the parties as to 12 queen's bench, MICHAELMAS TERM, 2G VIC, 18 62 whom credit was given to in this newly opened account, I think it fitting to notice the objections of defendants' counsel as to the absence of any assent by defendants evidenced by their common seal to becoming the jilaintifTs' debtors. This can best be considered under the assumption that the credit "was sought and accofded as the plaintiffs' witnesses repre- sent it, and that the bankers understood they were trusting the Great Western Railway Company, and that the latter acted throughout the dealings as if they considered them- selves as responsible. My very strong impression is that in such a case a lia- bility may be contracted by the directors of a trading and commercial association like a rail\Yay company to their bankers, for the re-payment of advances, without the for- mality of a seal. The current of modern authority seems clearly to run in that direction, and I think this court would be adopting a retrograde course were it to hold otherwise, and "would be departing from the views of the law adopted by us in our own Court of Appeal, in the cases there decided, and of the English Queen's Bench in such cases as Henderson V. The Australian Navigation Company, (5 E. & B. 409,) and Reuter v. The Electric Telegraph Company, (6 E. & B. 341.) In the first-mentioned case Wijhtman, J., says, " The general result of the cases seems to be that, whenever the contract is made with relation to the purposes of the incorporation, it may, if the corporation be a trading one, be enforced, though net under seal" Sir William Urle, says, " I cannot think that the magnitude or the insignifi- cance of the contract is an element in deciding cases of this sort. * ^ I think myself that it is most inexpedient that corporations should be able to hold out to persons dealing with them the semblance of a contract, and then repudiate it because not under seal." — But it is not necessary to pursue this subject further. Our views have been so fre- quently and copiously exi)re3sed on this point, that I need only refer to Pim v. The Municipal Council of Ontario, (9 C. P. 804,) and Whitehead v. TLc Buffalo and Lake Huron Railway Company, (8 Chancery Fcports, U C. 157.) in the Court of Appeal for Upper Canada. , At the trial the only issue raised was never indebted, to a , I COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 13 declaration on the common money counts. After reservation of leave to move on the legal exceptions, certain questions were, after much discussion, submitted by the learned judge to the jury. The most important was the first, as to whom the credit was given to by the plaintiffs — to the defendants, or to the Detroit and Milwaukee Company, or to Messrs. Brydges and ■leynolds personally. The jury found this in favour of the plaintiffs, that in fact credit was given and the money ad- vanced or lent by the bank to the Great Western Railway Company. I do not sec that this leading point of the case could be disposed of except as a matter of fact for the jury on the evidence. I do not feel pressed with the exception taken to the form of the question, that it should have been " accepted" as well as given. In leaving such a common question to a jury, I understand the enquiry involves the whole circum- stances of the bargain ; and that in finding that credit was given to the Great Western Railway Company I must infer that the jury found such to be the true nature and effect of the dealing between the parties — namely, a pledging of credit and an agreement to accept such pledge, and to make ad- vances accordingly. Messrs. Park and Ross speak very decidedly as to their view of the agreement, and of their refusal to make advances on the credit of the Detroit and Milwaukee Company. Mr. Reynolds denies this view to be correct. Mr. Brydges adopts his col- league's version so far as his personal knowledge is con- cerned ; but I gather from a perusal of these gentlemen's evidence that their idea would seem to have been that to the extent of the loan or loans voted by the shareholders they were to see the bank repaid. The letter of the IGth of December, 1858, shortly after the voting of the second loan, and signed by them officially as managing and financial directors of the Great Western Railway Company, states expressly that the Great Western Railway Company *' holds itself liable to the Commercial Bank for all overdraft on the Detroit and Milwaukee Com- 14 queen's bench, MICHAELMAS TERM, 20 VIC, 1862. pany's account with the said bank. Thi> is quite under- stood by us ; but as you expressed a wish to have it placed on record we now do so by means of this letter." It is unnecessary to notice any of the arguments at the trial or in term, as to the insufficiency of this letter as " a guarantee." I only regard it as evidence of the parties' own view of the state of the case when it was written. I have no doubt whatever that in weighing the value of the opposing testimony it had much weight with the jury, when viewed in that light. Mr. Reynolds, (at page 71,) says that when he wrote that letter he supposed he was pledging the Great Western to the payment of the overdraft to the extent of the loan which he and Brydges were em- powered to expend on the Detroit and Milwaukee Railway^ and that at that date there was about §385,000 due to the bank, and there was a sum of the loan (or loans ?) re- maining to be expended equal to the balance then due the bank. Again, (at page 75,) he repeats this — that the letter was written to give Campbell (the bank inspector) an assur- ance " that he would get the balance from the Great West- ern Railway's unexpended portion of the loans." Mr. Brydges (at page 84) says the letter was never intended to make the Great Western Railway liable for an unlimited amount of advances ; it was to assure them (the plaintiffs) that they would get the balance of the loan ; and he adds that he thinks they did get as much as $358,000, {Qy. $385,000.) Again, he says, (at page 87,) " Why it did not occur to me to make this letter different from what it was, is that at the time the second loan was granted we made out a state- ment, which was sent to London, shewing that at the end of 1859'it was expected that the Detroit and Milwaukee account would be about balanced. We were, liowcver, disappointed in our expectations in regard to the traffic of the line. At the time the letter was written, it was supposed that the unex- pended portion of the £100,000 loan would suffice to balance the account." * * "We expected that the traffic of the line and the unexpended portion of the loan would make up the balance." (page 88.) ■~W; » COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 15 The account from this time kept on constantly increasing, and over $358,000 (the balance above mentioned) was after that paid, as Mr. Brydges states, into the bank as part of tho general account, but not on any particular arrangement on account of the overdraft existing at the date of the letter. Mr. Brydges also states (page 00) that large sums were paid for coupons, old debts, &o., out of the loans, but he would not admit as much as .£100,000. The whole amount of the loans was expended either in that way or in work on the road. Mr. Reynolds (at page G9) states from a memorandum that $709,850 of the two loans had been paid to the Com- mercial Bank. This in round numbers would seem to leave about .£100,000 of the loans unpaid to the bank. In the particulars of claim I only find one entry of credit for sterling exchange, amounting to §4:8,1G6'60. on the 30th of December, 1858, after tho granting of the second loan ; and the account rapidly increases in favour of the Bank from that time. If the question of credit and liability were properly submit- ted to the jury, I cannot say that they had not evidence before them to warrant their finding in favour of the plaintiffs. Tho defendants* counsel have argued with much force that, assuming Messrs. Brydges and Reynolds to have in fact pledged the credit of defendants, they had no right so to do, and could not thereby bind the corporation. This again raises the old question as to how a corpora- tion can be bound. 1 have already expressed an opinion on this point. This trading company must act through crta'n officers. They resolve to loan money to another company. That money has to be first obtained in England and then transmitted to Canada, to be there expended by certain oflScers of the lenders' company. Exchange has to be drawn for it, and these officers are appointed to draw such exchange. These olliccrs inform the ordinary bankers of tho company of all those facts, and propose and agree (as the jury have found) that if the bankers advance money to the company to be expended as aforesaid on the faith of this arrangement, they, the company's officers, will pay 16 queen's bench, MICHAELMAS TERM, 26 VIC, 1862. in all the earnings of the foreign company, and cover all deficiencies by exchange drawn by them on London against the loan. I am unable to see any suflScient reason for holding such an arrangement to be of no binding effect on the company. If the facts be as the jury found, is it more than the com- mon case of overdrawn accounts between bankers and cor- poration customers ? If the London board had sent their manager and financial director to their London bankers with the resolutions, and with the authority above noticed, and on the faith thereof the bankers had given these gentlemen large cash advances, which the latter applied, as their directors had resolved they should do, to the work on the Detroit and Milwaukee line — in such case, in the absence of any express agreement as to the object of credit, could not such advances be recovered from the Great Western Railway company ? Again, if Messrs. Brydges and Reynolds, after communi- cating to the Commercial Bank in this country all that is proved to have been communicated by them, had drawn ex- change on the London board, and obtained from the plain- tiffs the proceeds thereof, and applied such proceeds accord- ing to their instructions on the Detroit and Milwaukee road, and such exchange had been dishonored, would the Great Western Railway Company be responsible for tha cash ad- vanced as for money lent, apart from any formal liability on the bills of exchange as such ? We know that corporate bodies are held liable for money had and received to the use of another, without evidence un- der seal : that they have been held responsible in trover and false imprisonment, and even for libel, on the acts of their officers, without seal. We know that under the winding up acts, where money was shewn to have been borrowed by a com- pany's secretary without authority, but was proved to have en actually expended on the company's business, it was allowed to the lender. In re The Electric Telegraph Company of Ireland, Troup's Case, (7 Jur. N. S. 901,) Iloare's case, {lb.) Also, where a Life Assurance company entered into the Marine Assurance business, although their so doing was V* ill 1st ^* COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 17 held to bo ultra vires, Wood, V. C, decreed a return of the moneys paid to them for premiums for the void marine risks : Re Phoenix Life Assurance Company, Burgess and Stock's case. (7 Law Times Rep. N. S. 191.) He notices in his short judgment the paucity of direct authority on this subject. It was asked by defendants' counsel on the argument whether the Bank had or had not a claim for their advances against the Detroit and Milwaukee Company, or could the lat- ter, if sued therefor, have successfully contended that the credit was exclusively given to the present defendants. I have considcrd this suggestion, and feel some hesitation in speaking with any precise conclusion on the subject. In 1860 a sale took place under a Chancery decree of the United States Circuit Court for the state of Michigan. Mr. Gray, a Detroit solicitor, proved that he acted in foreclosing the mortgage held by Messrs. Brydges, Reynolds, and Becher, on the Detroit and Milwaukee road : that on the 6th of August, 1 860, an agreement, proved at the trial, was made, (see page 89,) reciting that defendants' (the Detroit and Mil- waukee company's) counsel had consented to a sale, and that the trustees above named (who were plaintiffs) agreed with Mr. A. Campbell, as trustee for the Commercial Bank, that the plaintiffs might bid in the property, and that a new cor- poration under the laws of Michigan should be formed, suc- ceeding to all the property and franchises of the old com- pany : that a seven per cent preferred stock in the new company should be issued to the amount of the debts men- tioned in a schedule annexed — the new corporation to pay such debts at periods named : that if the plaintiffs or thd new corporation should not pay as agreed the decree might be vacated and held for nought, and that the trustee might interpose and recover said debts, arl take all proceedings against all persons or corporations liabie as if the decree had not been entered; and declaring that such agreement or any proceedings thereon should not be considered as an election of the remedies of the bank for said debt, but as a means of payment and a proceeding solely collateral. In the schedule a debt of $1,039,203 98o is set down, which I understand to be the then claim of the Commer- cial Bank. 3 18 queen's bench, MICHAELMAS T^RM, 26 VIC, 18C2. t: i The road was sold, and bought in by the trustees, Brydges, Reynolds, and Becher. Mr. Campbell was inspector for tlie Commercial Bank. Mr. Ross says that he (Campbell) took this course thinking it best for the bank : that notliing Avas done by the board thereon then or since. Of course it can only be on the assumption that the Great Western Railway company were the principal (if not the only) debtors of the Bank for tlicsc advances that the latter can recover. Their position is incompatible with any idea of the defendants being only secondarily liable, or as sureties for the Detroit and Milwaukee company. I do not feel that because a claim could be succesfully urged, or a proof be allowed in bankruptcy, against the Detroit and Milwaukee company, we must necessarily conclude that the Great West- ern Railway company are not therefore the principal debtors. Embarrassing questions may be raised by such a suggestion, but I cannot find that any such can prevent its becoming properly a question of fact as to whom the credit was given to, and to whom was the plaintiffs' money actually lent, and by whom was it to be repaid. The plaintiffs' position is, that from the beginning the credit was given by them to the Great Western Railway Company : the latter insist that it was given to the Detroit and Milwaukee Company ; and the manner in which the ac- counts were kept is much discussed. It is quite clear that from the beginning it was understood and agreed on both sides that tlic new account should be kept distinct from that of the Great Western Railway proper. The reason for this was obvious, and does not of itself afford any clear argument for or against the present claim. The ground work of defendants' proposal to the plaintiffs for ad- vances, was the resolution to advance a specific sum to the Detroit and Milwaukee Company, to be expended by Brydges and Reynolds, and of course such expenditure must bo kept distinct from their own proper accounts for their own stock- holders with their bankers. So Avith the proposed manner of meeting the bank's advances — namely, payment of the Detroit and Milwaukee Company's receipts, and sterling COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 19 ^ank. fking Doard exchange on the London Board on account of the loan. Thi3 arrangement, on which there is no controversy, neces- sitated a distinct keeping of the accounts. The phiintiflFs allege that to keep the defendants' liability in view the account was opened and continued in their books as " Detroit and Milwaulcee Railway Company account — Cireat Western Railway." A vast mass of cheques, bills, notes, letters, and docu- ments of all kinds, is produced from the very extensive deal- ings of the parties, extending over two or three years. So long as no difficulty was apprehended between the parties there was little care apparently taken in adhering to any special or formal headings of documents, or additions to .official signatures. Once it was settled that the two accounts were to be distinctly kept, it is easy to produce any number of documents from which it could be readily gathered that the Detroit and Milwaukee Company were the debtors of the bank, and on which the actual liability of any other person or body would not appear. Each of the- litigants can produce numberless letters and papers to which signatures are attached simply in the indi- vidual names of the writers, or with such names followed by an official designation, just as each may desire to draw an argument from the absence or presence of such an addition. Thus notes were taken in large amounts from the Detroit and Milwaukee Company; bonds were given in certain finan- cial emergencies under the seal of the Great Western Rail- way Company ; in short, whatever document or obligation seemed best calculated to obtain credit or raise money was readily resorted to. A very careful perusal of all the mass of papers induces me to attach a far less degree of importance to these matters than they possibly have attained in the minds of the very able and zealous advocates of the parties. Some of the strongest of the letters relied on by the defendants are to be found under dates long subsequent to the often quoted letter of acknowledgment of the 16th of December 1858, when the plaintiffs had pointedly obtained from Brydges and Reynolds the admission of the Great Western Railway Company's liability. 20 queen's bench, MICHAELMAS term, 26 VIC, 1862. I may instance such letters as that of Sorley, the bank accountant, addressed to the Vice-President of the Detroit and Milwaukee Company, (Reynolds), asking him for a cer- tificate " of the balance duo this bank by your company on account as on the 10th instant." This is on the I4th of Octo- ber, 1859. Again, the letter of Mr. Park of the 10th of November, 1859, referring to the $200,000, " special loan by this bank to the Detroit and Milwaukee Railway Com- pany," and asking for renewals of the notes given therefor, "the bonds of the Great Western Railway for an equal amount being still held by us as collateral until the bill or bills are paid;" and a similar letter of the 15th of the sarno month. Something was said, and more was hinted, as to par- ties connected with the bank having had dealings, either per- sonally or for others, in the Detroit and Milwaukee Com- pany's securities, which were in the market at very heavy discount ; and possibly this may account for some of the very lively interest evinced by some of the writers of the letters in evidence, as to the standing, credit, and prospects of this company. I attach much higher importance to the communications between the parties at or about the time when the account was first op(.utid, and while the origin and true bearing of the agreement were most fresh in the recollection of all parties. The dealing commenced about the 29th of December, 1857, and depends, firstly, on the verbal testimony already noticed. Within a few days of this, Messrs. Brydges and Reynolds ■went to New York, to arrange with certain creditors of the Detroit and Milwaukee Company there. On their return they write a letter to Mr. Ross, dated Jjanutrjr 11 uh 1858, signed by them as mutiaging and finanr'ai air;:,;-, of the v.eat Western Railway, asking the bar. jj,uaraui:ee certain bills, which they say they had given to llayner & Clarke, for a claim on the Detroit and Milwaukee Company, which they had settled, they say, " by giving our acceptance of Mr. Trow- bridge's drafts on this company," (the Great Western Rail- way,) setting out the amounts, " each being dated from Ink toit jr- lon po- lof m COMMERCIAL BANK V. GREAT WESTERN R. \7. CO. lil Detroil 8th December, 1857, signed by C. C. Trow- bridf;e, treasurer of the Detroit and Milwaukee Company, and accepted hy m as managiiior and financial
  • rt time." This is addressed to Brydges and Reynolds, 'lirectors of the Great Western Railway. The latter answt r this lettoi" on the 14th of April, agreeing to the conditions, except as to 22 queen's bench, MICHAELMAS term, 26 VIC, 1862. til" 1st of December limit: "We have every expo Nation that within six months from this date the Great Western account will bo in a condition not to require the open credit which it at present enjoys, and if this expecta- tion should bo realized we presume there would be no objection on the part of the bank to carry the Detroit and Milwaukee credit on to the cJlst of .March next." This correspondence, so shortly I'ollowing the opening of the account, and before any difficulty seems to have been anticipated, is valuable for ascertaining what the parties themselves seemed to understand of tlioir respective positions. It certainly is not witliout great weight towards supporting the plaintiffs' view, that thoy and Messrs. Brydges and Reynolds then considered that tlic dealing was directly between the Commercial Bank and the Great Western Rail- way Company. At a much Inter date, on the -5th and 28th of May, 1.859, we find letters and statements written by Messrs. Brydges and Reynolds to the bank, which are impor- tant as shewing the manner in which the accounts of the two companies are refencd to, tho liabilities and the net receipts of each, excusing the not giving of sterling exchange, and in the last letter enclosing the notes of the Detroit and Milwaukee Company for large amounts, and Great Western Railway bonds, to be used by Ross in New York as collateral security in endeavouring to raise money on the Detroit and Milwaukee notes. The bank were to get the proceeds of tho notes to provide funds in lieu of the sterling exchange which Messrs. Brydges and Reynolds loiiM not then provide. It is necessary here to notice the argument that Messrs. Brydges and Reynolds personally Avere those to who^ the plaintiffs gave credit when tho account was first opened. I hardly understand the evideuee uf these gentlemen as leading to tiiat conclusion. Mr. Reynolds says (at page 73) "We opened an account in our joint names as individuals:" and in answer to tiie (luestion, W;i,s it not for the Great Western Railway ? " It was in pui Miance of the instructions to expend the money." * * " It wa-i an interim arrangement for the jiirposc of aiding us In earning out the instructions )n n le i- COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 23 on account of the Detroit and Milwaukoe Railway Company. * * We opened tlie account and nuido the arrangements with Mr. Ross purely on our own responsibility : we had no instructions whatever to do so for the Crreat Western Rail- way Company. To the question, <' But was it your own transaction, your own speculation ?" Answer, " Certainly not." To the question, "Was it the Great Western Rail- way's business ?" Answer, " It was tho Great Western Rail- way's business to find the money, but it was our business to spend it." Mr. Brydges, after denying any authority from tho Great Western Railway shareholders to inciu' liability on their ac- count, (at page 86,) to the question, " How did you look upon the matter yourself — that you were opening an accoxmt on behalf of the Great Wost(M-n, tho Detroit and Mil- waukee Company, or yourselves?" Answers, "Certainly not the Great Western.'' On tTiis answer of Mr. Brvdges, this question suggests itself to mo :— Could he carry out his instructions to draw tho amount of tho loans from England except by exchange, which he iiinst negotiate with parties here, receiving from them the c:)»h proceeds ? His directors do not argue that they could repudiate his exchange on tlicm drawn with their sanction. I hardly sec, if so, how the cash 80 given or advanced by bankers discounting the drafts to the company's offioors oan be looked upon as lent to those officers on their personal credit. It would more naturally seem to bo advanced on the credit of the bills being duly honoured by the drawees. I do not think that on the evidence it can fairly bo con- 8idered*that the credit was givoa ti^ tiiese gentlemen indi- vidually, whatever might bo their personal liability (as Mr. Reynolds suggests) if their acts liad been repudiated by their principals. Tho jury, on th;s question beir.,:^ M'l to them, negatived, as I think justly, such a oonelusioii. It is almost impossible to omiiH-nt in full on all the evi- dence and documents submitted. I must content myself with noticing what seem to mo to bo tho prominent features of the case. 24 queen's bench, MICUAELMAS term, 26 VIC, 18G2. I will now examine the objections taken to the admission of evidence : — First, in allowing the minutes of the plaintiffs' board of directors to be read on the application of Brydges and Rey- nolds for the $100,000 credit. This minute is of the same date, the Ist of April, 1858, witli the plaintiffs' letter in reply to the application already noticed. The only material difference between the minute and the letter is, that the forni'^r speaks of the " application from the Great Western Railway for a credit of §100,000 on their Detroit and Mil- waukee account as considered by the board ; and agnin " the understanding being that the atrjzregate amount of the ac- counts of the Great Western K;iil\vay Company will not exceed .£50,000 to £60,000 Cy." It appears to me that this minute was properly received in evidence as part of the transaction, and that the tendency of modern decisions is clearly in favour of admitting proof of all things done by parties at the time of entering into a con- tract, to prove their respective understandings of it. The case in the Exchequer of Milne v. Leisler, (5 L. T. Rep. N. S. 802,) strongly illustrates this. The point was this : — A. applies to B. to purchase goods, representing, as B. contends, that ho was buying on account of G. and M. : A. swears that he bought on his own account, and that ho intended to ship through G. and M., and would probably pay by their acceptance. The day after the bargain B. writes to his Liverpool agents to cni|uiro as to the standing of G. and M., and stating that A. was making a large pur- chase of goods for them. This letter was held to bo pro- perly receivable as part of the res gtstae, and the (fcoision has I think a stri^ig bearing on this and also on'tho second and fifth objections urged by dc'i'ei,d;uits. This lifth objection points to the allowance of tho docu- ment called a bunk .statement, sent by tho plaintiffs' Hamilton agent to the Head ollice at Kiiif:,'*ton, shewing how tho account was kept, I see no valid objection to this. I feel more doubt on the second olijeetion, to the admis- sion of the evidence of the hank directors of what their cashier, Ross, had reported to ihciu as to what had taken COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 25 place between him and Reynolds in Toronto when the ar- rangement was made for opening the account. In the case last cited Pollock^ Q. B.y says " It is certain that a mere statement, as when a person returns, for in- stance, from the Exchange to his counting-house, and says, * I have sold such and such things,' that would not be evi- dence of the fact." But in the present case we have to consider the position of the parties. A very serious contract is under discussion between Reynolds and the cashier, Ross. The latter was not dealing for himself, but, as all parties well knew, as the agent of a corporate body, with a board of directors who could cither sanction or repudiate his acts, and to whom he would have to report his proceedings for approval. On looking back to the evidence, it may be truly said that it amounts to very little, and can hardly have weighed seriously with the jury. Three directors were examined. Dr. Robertson's evi- dence is quite unimportant: he says nothing on the dis- puted point. Mr. Strange's testimony merely amounts to this, that, as ho supposed, the directors sanctioned a loan to the Great Western Railway Company. Mr. A. J. Mac- donell's evidence seems alone open to the objections urged. He states, in substance, that Mr. Ross usually reports all important matters to the board for approval, and that on his returi; from Toronto, after the interview, he reported that credit was to bo given to the Great Western Railway Com- pany; and that the board would never have consented to giving a credit to the Detroit and Milwaukee Company, and that he never lieard that such a thing had been asked. But, on further •examination, Mr. Macdonell evidently could not remember any distinct report nuulo to the board, or discus- sion of the matter on Ross's return, and the impression left on my mind from perusing his answer is, that it is uncertain whether he heard this from Ross in the form of a report to the board, or on one of the occasions of which he speaks : — " Sometimes (page 57) I am not present at the board meet- ings, but I liave conversations with INtr. Ross on the affairs of the bank almost daily ;'' and to the question, on cross- 26 queen's bench, MICHAELMAS term, 26 VIC, 1862. examination, " Have you any very distinct recollection of this matter being discussed when Mr. Ross returned?" he replies " There were so many things submitted that I cannot remember it very distinctly." I think this evidence cannot be upheld except on the principle of a report or return made by an oflScer or cashier of a public company in the co\iy?o of his duty to his supe- riors, with whom lay the power of approval or disapproval of his acts. Mr. MacdoncU's evidence very faintly, if at all, places it in this light. I presume he and his co-directors could be properly examined to prove that they as directors never sanctioned or heard of any proposition to lend money to the Detroit and Milwaukee Compauy, or to any other but the Great Western Railway Company, and it is a step very slightly in advance of this to state that from their cashier's report to them they understood the matter in that light. If at the time of the negotiation between Ross and Rey- nolds it was an understanding of the parties that the pro- posed credit (to whomsoever given) should be referred to the Commercial Bank board, it will naturally seem that Ross's carrying out such understaading would be fairly considered as part of the res gestae. In Ross's evidence, on cross-examination, (page 38), he is asked thus : " It seems to have been understood between these gentlemen that a reference of these matters to the board was necessary before any definite arrangement could be made. You could not of yourself grant a credit to Messrs. Brydges and Reynolds Avithout a reference to your board?" Answer — "I was in the habit of referring matters of con- sequence to the board, for the sake uf advising with the direc- tors upon them.'' Again, at page 39, " Did you lay the schedule before the board ?" Answer — " Not that 1 remember. * * I explained the matter to the board, and in the uiinutcs of tlic 3l8t of December there is an allusion to it. * ♦ x told Mr. Reynolds I had no doubt that the arrangement would bo carried out." It wo.ild thus appear tiiat Ross would bo by all parties naturally intended to report all this to his board for approval, COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 27 to complete the transaction, and therefore I have come to the conclusion — not however without some hesitation — that as part of the res r/cstw, as '"a declaration accompanying an act," his report to his directors was admissible. See Starkie on Evidence 52-3. I desire to adopt the most liberal construction of the rules of evidence. Infinite mischief has been done for generations by errors on the opposite side. I think that as the law is now administered we arc safe in adopting the less stringent rule. I repeat however that I attach but slight importance to the evidence now objected to, and can hardly believe that its re- ception in any way whatever infliicaced the result. The third objection to evidence is as to receiving the copies of the proceedings of the Great Western Railway London Board, without its appearing that such documents were in fact copies of the original proceedings : " the only evidence of there being copies, or that there ever were such documents, being that of defendants' secretary, that said copies were sent to this country by the officers of the company in Eng- land as such copies, but whether they were copies or not he did not know." I think the objection stated in the rule gives its own answer in the words above quoted. The secretary of the directors here proves the official rocei;;^t of such documents by the Canadian board, to be treated by them as official and authoritative. I should bo sorry that such a mode of proof could be found to bo objectionable. The last objection to evidence requiring notice is number 4, as to the admissibility of what was called the " Red Book," of charges against and answers by the directors of the Great Western Railway. In my view of the case I attach little or no importance whatever to this book or its contents. On the evidence of Messrs. Muii and Stcplicns (at pa;:o3 47 and 48,) it is shewn that these rod books were sent out by the English Board to the Canadian Board. Mr. Stephcius, the defendants' secre- tary, says they were circulated here wlicn received among the shareholders as the report of the company, and he points to minutes of the Board Jicre bearing on the subject of this 28 queen's bench, MICHAELMAS term, 26 VIC, 1862. report. I think it was fairly receivable in evidence, as a document adopted and circulated by the defendants' board here. I therefore think that there is no ground for a new trial for the reception of improper evidence. I have already stated my views as to the various legal exceptions taken against the maintenance of the action, and I think they apply to nearly all the voluminous objections in the rule to shew cause. Before summing up my views I should perhaps notice^the objection to one of the questions submitted to the jury : namely, as to the Great Western Company "reaping the benefit" of the expenditure of the plaintiffs' money on the Detroit and Milwaukee line. It is said that such a question was too vague and general. If the question were proper in ;iny shape, it is not easy to see how it could be framed in a less objectionable form. The decision at which I have arrived does not depend upon the finding of the jury on that point, and would be the same had such a question been omitted from those submitted to them. It is needless to premise, that in a matter so complicated as this has become, in the dealings between these companies, and in the rather unsettled state of the law for many years •^ j-st as to the rights and powers of corporations to contract otherwise than under seal, an opinion formed on the points submitted for our judgment can hardly be delivered without some hesitation. On the best consideration that I have been able to give to the case, I have arrived at the fullowing conclusions : — That the first loan of £150,000, sterling, to the Detroit and Milwaukee Company, was sanctioned by the subsequent act of parliament, and dechueil in express terms to be valid : — That as to the second loan, of .£100,000, sterling, there was nothing on the face of the resolution to shew that it Avas to be expended in a manner contrary to law ; — That on the faith of these resolutions, and of the arrange- ments made by the two managing directors of defendants, COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 29 I the Comraercial Bank agreed to open the account, which they call " The Detroit and Milwaukee Railway account, Groat "Western Railway : — that they, then and previoualy being the general bankers of the Great Western Railway, continued to advance large moneys on this account ; and the mode by which they were to be repaid such advances was by paying into them all the traffic receipts of the Detroit and Milwaukee Company, and covering tlie deficiency from time to time by drafts, in sterling exchange, drawn by the Great Western Railway officers here on the then English Board : — That of the two loans, of >£2.)0,000, they in fact have only received about §!T0O,O00, leaving about X100,000 sterling thereof which never reached them : — That the advances continued to be made for over two years, till a very large balance remains due to the plaintiffs: — That it was a question of fact to be decided by a jury, and not a legal matter for the court, as to whom and on whose credit the bank really advanced its money — whether to the Detroit and Milwaukee Company, to Messrs. Brydges and Reynolds individually, or to the Great Western Railway Company : — That there was evidence to go to the jury on this point, although the common seal of the Great Western Railway Company was not used to sanction the acts of its officers or directors, or to shew the assent of the corporation to the liability : — That for the reasons previously given there is no objec- tions to the bankers recovering the balance due on the ground that such an expenditure was beyond the statutable poAvcrs of their customers as a chartered company : — That there is no ground for nonsuit or for new trial for misdirection or admission of improper evidence : — -that the questions submitte