^%^^ r,%.

IMAGE EVALUATION
TEST TARGET (MT-3)

5^*5^

1.0

I.I

^ Bi 12.2

^ 1^ 12.0

l^fe

11.25 1 1.4 11.6

►

'> J

)>^

^3^,^v

.-^

Photographic

Sciences
Corporation

23 WEST MAIN STREET

WEBSTER, N.Y. 14580

(716) 872-4503

:E.

CIHM/ICMH

Microficha

Series.

CIHM/ICMH
Collection de
microfiches.

Canadian Institute for Historical IVIicroreproductions / Institut Canadian de microreproductions historiquas

Technical and Bibliographic Notaa/Notcs tachniquaa at bibliographiquas

The Institute has attempted to obtain the best
original copy available for filming. Features of this
copy which may be bibllographically unique,
which may alter eny of the images in the
reproduction, or which may significantly change
the usual method of filming, are checked below.

□ Coloured covers/
Couverture de couleur

I I Covers damaged/

D
D
D
D

Couverture endommagie

Covers restored and/or laminated/
Couverture restaurAe et/ou pelliculAe

□ Cover title miasing/
Lc titre de couverture manque

I I Coloured maps/

Cartes giographiques en couleur

Coloured ink (i.e. other than blue or black)/
Encre de couleur (i.e. autre que bleue ou noire)

Coloured plates and/or illustrations/
Planches et/ou illustrations on couleur

Bound with other material/
Reli* avec d'autres documents

Tight binding may cause shadows or distortion
along interior margin/

La re liure serrie peut causer de I'ombre ou de la
diatorsion le long de la marge Int^ieure

Blank leaves added during restoration may
appear within the text. Whenever possible, these
have been omitted from filming/
II se peut que certainee pages blanches ajouties
lors d'une restauration apparaissent dans le texte.
male, lorsque cela Atait possible, ces pages n'ont
pas it6 filmAes.

L'Institut a microfilm* le meilleur exemplaire
qu'il lui a iti possible de se procurer. Les details
de cet exemplaire qui sunt peut-ttre uniques du
point de vue bibliographique. qui peuvent modifier
une image reproduite. ou qui peuvent exiger une
modification dans ia mithode normale de fiimage
sont indiquAs ci-dessous.

□ Coloured pages/
Pages de couleur

D
D

Pages damaged/
Pages endommegtos

Pages restored and/or laminated/
Pages restauries et/ou peiliculAes

Pages discoloured, stained or foxed/
Pages dtcoiorAes. tacheties ou piquies

Pages detached/
Pages ditachies

Showthrough/
Transparence

r~~\ Quality of print varies/

Qualiti inigaie de I'impression

Includes supplementary materiel/
Comprend du matiriei supplimentaire

Th<
toi

Th(
poi
of

nir

Ori

bei
th«
sic
ot»
fin
sio
or

Only edition available/
Seule Mition disponible

Pages wholly or partially obscured by errata
slips, tissues, etc., have been refilmed to
ensure the best possible image/
Lea peges totalement ou partiellement
obs^urcies par un feuillet d'errata. une peiure,
etc.. ont M filmtes t nouveeu de fa^on A
obtenir la meilleure image possible.

Th
shi
TIf
wl

Ml
dif
en
be
rig
rei
m«

'.'#'

Additional comments:/
Commentaires suppl4mentaires;

Various pagingt.

This item is filmed at the reduction ratio check '^ ^elow/
Ce document est film* au taux de rMuction indiqsiA ci-dei

10X

14X

18X

22X

26X

30X

12X

1«X

20X

28X

32X

■ilt

difiar

una

tage

Th« copy fllm«d hcrt has b««n rcproducad thank*
to tho gonorosity of:

DouglM Library
Quaan't Univarsity

Tha Imagaa appaaring hara ara tha baat quality
poaaibia conaidaring tha condition and iagibiiity
of tha original copy end in kaaping with tha
filming contract apaclflcationa.

L'axamplaira fllni4 fut raproduit grica A la
gAnAroaitA da:

Douglaa Library
Quaan'a Univaraity

Laa imagaa auh/antaa ont AtA raprodultaa avac la
plua grand aoln, compta tanu da la condition at
da la nattatA da l'axamplaira filmA, at an
conformltA avac laa condMona du contrat da
flimaga.

Original coplaa in printad papar covara ara filmad
baglnning with tha front covar and anding an
tha laat paga with a printad or iiluatratad impraa-
aion, or tha back covar whan approprlata. Ail
othar original coplaa ara filmad baglnning o.-^ tha
f irat paga with a printad or iiluatratad impraa*
aion, and anding on i^ha laat paga with a printad
or Iiluatratad impraaaion.

L«a axamplalraa orlginaux dont la couvartura on
papiar aat ImprimAa aont fllmAa an comman9ant
par la pramlar plat at an tarmlnant aoit par la
darnlAra paga qui comporta una ampralnta
d'Impraaaion ou d'iiiuatration, aoit par la aacond
plat, aaion la caa. Toua laa autraa axamplalraa
orlginaux aont fllmAa an commandant par la
pramiAra paga qui comporta una ampralnta
d'Impraaaion ou d'iiiuatration at an tarmlnant par
la darnlAra paga qui comporta una talla
ampralnta.

Tha laat racurdad frama on aach microficha
ahail contain tha aymbol — ^> (moaning "CON-
TINUED"), or tha aymbol y (ntaanlng "END"),
whichavar appiiaa.

Un daa aymbolaa auh/anta apparattra aur la
darnlAra imaga da chaqua microfiche, aalon la
caa: la aymbola — ► algnHIa "A SUiVRE ", la
aymbola ▼ aignlfia "FIN ".

Mapa, plataa, charts, ate, may ba filmad at
diffarant reduction ratloa. Thoaa too iarga to ba
antlraly included in ona axpoaura ara filmed
baglnning In the upper left hand corner, left to
right and top to bottom, aa many framea aa
required. The following diagrama iliuatrata the
method:

l»» cartea, planchea, tableaux, etc.. peuvent Atre
fiimAe A daa tavx da rAduction diff Arents.
Loraque la document eat trap grand pour Atre
reprodult en un aaul clichA. 11 eat filmA A partir
da Tangle aupArlaur gauche, de gauche A drolte.
et de haut en baa. an prenant la nombra
d'imagea nAcaaaalre. Lea diagrammea auivanta
illuatrant la mAthoda.

rrata
o

>alura.

32X

-.m-

•

:W^

JUDGMENT

IN THE

COURT OF ERROR AND APPEAL,

FOR UPPER CANADA,

.*f.'^l"5'

IN THE SUIT OF

THE GREAT WESTERN RAILWAY COMPANY

OF CANADA,

(APPELLANTS,)

AGAINST

THE COMMERCIAL BANK OF CANADA.

(RESPONDENTS.')

TORONTO:
ROWSELL & ELLIS, PRINTERS, KING STREET EAST.

1864.

^ s y

v-!< -,!£

^f-'.?

too,

•-9 O .O

1 s

■gig

r CO '^
^ «* t^

o Ja ^

Ti as

ra t?

c s

o 0) o

A -^

01 93

a B o) x>

e *J -^ 2

S S

^ .£ S

>. p. 5

«»:'

T5 ^

rj a)

« -s «a «

o rs

<D 0)

■2 -f ~.

-9 O

« .2

^ O "^ OS

C) X!

o. .2

■^ •»-< CO ♦^

^ fl a

^ 5 « -I

£§ « S g

eoj rt ►,

^ a O

O) -F^

tie e

£ 3 S

I 6

'5 ^ ^

« 2

--2 2

as S 93

fl ^

^ c-i *T

:3 93 «t-i

J| -i ja o

^ B w 3

«4H

fi «4-H

« § ? s

.2 o 3

^ OS «

pq S

.. a> o -"^

3 o

Is « "5

b as aj •■-■ O

9! a, .a a - s s. s

.2 S « ^ «

-< s p^ .-^

^ o

c3 S

^ S -^ ^

« -s

93 i? p, .^

9. a ^S

V 0)

K -^ -=

3) O

«3

r S &» « S -^

'"> i

i-< Sh 4J .^

•5 «

■s «

Q 93 o O

S -^

V .-B

U <

C p
o

(
O) »■

01 «*

& ■

s ^

9-. ^ ^

0>
0>

2 5

2 -B

a
s g

- M

fee c

c a
s o

! «

- c

3 0)

s be

08 (^

I °

Q en

o
c

m ^

'C
ai

i-
o
o

o
p

o -^

o
o
o

©'

p ©
a* «o

08 S

«8

a; ^

■«->

s
c

3
O

feJO

P .

c *^

5 -^

« ja

o t

p *

O CJ

•;3 ^

o* o

^ on

-M ^

08 9

fl O

H s

. «s

P A

it t

- Si ^

> C ■^

.sot*

£ '

fee S
5 ^

1^ ^ -(J

o 5t-

O M O

fc< "-•

fc rt 3

« -s. §

- * 1

o g S

fm o a;

IK 33 _

^^ -5

§ o

P CO

o* *

Cm fee

o s:

O «

o *

-^ ei

t5 +*

-3 ,£5
08

_: m

C*H

C
P

ti
C

Pi
04

« la

-^ 3^

^ 'S

p ^

•rt P
o O

§ -5

P p

ss .2

s
p
o

_ S

"^ *"

^. ^
p "3

CI
Oh -S

c S
2 o

fC s;

o a>

■5 08

■S S

■^■-■■'^

^ -3

«-k

^ -J

■^ ij

•»^

Hi^

v««

»•#

«■>.

■<

f""

n- "i

*■♦'

■^^

•n

.-,.

•^

*-♦■

s.^

•-1

-4-

\i ,<

f "»

hi. :r =

^ r a

'4. •■'

r-U >

— B« ^

3 i:

»«v»*i

>■

3, J?

■•^- "IT" -^

«♦ Jl

3^ -'5'

►»>~n

./ ..t^

i 3'

^ fc

;^" B

:i. o u. ^

A". ^^

5? W^

~t ».V"

o. a

I 4 11 I M . ,11.^-

►. ^ ^

4* ^^ 4*

discrim-
nasmuch
lot taken
Court of

1 11 H ■

C - ? U o :^

? 5 j= "^-^r: ••

€

O M

.S '". "^ «-

4 = ^ B ^ ^

1-:.

*- « q

^ pS "*

I. -3 S 5

1^ S ^ B

^ A

-§*"5|.i

iU ;e ^

o -5

a ^- ^' .2

4j es £ ^^ ^

5 s s « ^

§ « .2

« *-

« -r

53 S I-

t| i I §

C a; »

»M "-» a -4-1 ^

03 -^ e

« .5

K 'S

^ §

- -a -"^ X

^ an JS ^
^ ^ c 5

•5 ^'%&

r-c -=

5 «

•Si

C3 S<

A ^ o s .2 g
S I ^ « I 4

s a « •« & -o

S 2

>. c

08 fee ^ ** ^
& S "^ In S

^ 2

fcCS

o -C

.S e

•- JS

^ <

-t

-y

r .-.

f'i^

>' ."• ? ~r ^ -^ ~ *

- ■ i"

& I

y<M-*^

ilhi

I''

c -fi

,s s S g

s fe " s

2 g^^

a I >

-e *" .-s g

& Q <B (4

«S IS _a O

^ £ I -c

.S es eS

I
^

.2 2

+3 C

>. c

-1. i;. .3! T

-«. -M -■» "f

W "J? *^ '

.? » '"'• »

-»■ S TS •

S! •«; 5 »

c- — 7 .-»

"**

•«»

»^

*«H

-M"!

kMft

,^-"

■'» 1

•*.«,

-•

--«'

■^

"^^

-*(•

-.'•'

>«.-(

•V'

i«*.

-m^

7**

t"!

.^.t

r**

■■*

'^-

•M*

t«H

-■3

J— ^ ;; *•! ■.' V '-i.

■*

Si,

i—

\.<

f«'.

<»^.

h<«-*

^'/

CT*

•2

-•^

i£

t*"

-;,,

1... -

■•*-*■

■1

••«•

v.;

y,^

^-^

,-^^.

•■ 1

'--Jf

**1

»r-

»•,.

- '^

^^«

.- *

/■VT

^»-

'*-^

'* r"

•h^

, *!

»<M

'u-

■?••

'.,

.•I

~5 ■ JTh. 14- .••4, V- 4'
o -;* i" £• ST •*■•

m-f •*»

• 3? •■ ••1

*r ^^ •*-' '■ •; r

l^' ■*♦ ?• »< •*- ."

3 .^^ '^

■ «-* A*

C-- St

:.- X-:.

.-.-, ^

.:; .:; o -■«

"-< ^"l J> r

*n H X; IT*

■** J ■ i-' ■*" . • ..

i •- r- • i> «-! ■-»

? \t >:, ^.: c ;, ;:

■• ^ S § '■* •• S

^ ^.:;

r' ■• '"' \ '-J o

-^ " XV **■

-> f-^ •!; 3

i:. ^. ^'•

o -5 ^

;: 3

•-* .• *"•

5 -. s?

'1^ .Z "1: -^ "' 3 fi.

5 '^i i\ z: ir ~^' ^•

■--. 'v: ' ■' ~! •-! -3

!^- '..

« '-i "r'

i:^- a ii -•

^ -,■

m( *^ *rr ■■» *!

r^- ■:.' .-. •■■■

w f-.. ..

-.';. :> <w .

-3 r- '»^, 2 * "^

■• ^ .■.•>

i.i~ ..^ », c ^_ "•<

Ji -5 5 £>

-* **' ..'

V V. ;": -.
•^"' »•! "^ b.'i *"

•C "- ■*. •;' •* ■.

rs *, a ;; «

•» ■)>'

.v<

■■-M'"ll

-2 ■ "•*; ii ,•»*, ' V •

•^ I': 2' -2

^i- a

*3> ..■ ~

■*>

!v^

-■

"*'.

hi.

-Y

£^1

ft*

O-

•<

• •

, »^

U>'

<H»-

' if'

3, "^

;? -5 - .. •.

rs — . — ■•.■: •

:5 s; —• .; .•;

-^ •« -^ • r

w 3 . 0! -

>^ O .., S ,'

Si -3 J O ••

^ - 3 r

^ ^ :^ r,' I

•i *. — • ^J

■^ .

■V, w ^ .

^ =i,

t:, r-

■"■ ■•,-. 3 ■■■'

?^ ^.

S C3

-^ S" -• SS.

O ' - ti P S ■

rr=^:2 2 « a,B:

rt-'.-rti-- . O^
-^ ■ ■«-!.■ <1

..:r/3 o H ^ •"s'-» 'B, 2
■••>iE ►?•• i «— -.re ^ -Sj S3

-.•!«■ _ - ^in -sr'-fic ■**

OD 02 ■ -re ■ f5 ■

P • r^~-V

». Si- O

p..
'■'2 ''^

S.. "^ -

s £!:■ »—
.> "-.: o ■-.;

"J— I ' s""'"'' '

■2 -.-ss ;■
■*> ■ ps-sf-

rt 2

o s

eg B

2 r
i w

o B

C? o

B
GC B

-,—:.:© ^^

?a-o:

.o '-"Sij-P,

■ M;- .-Hi

''B-^2£--:r^5'

■B r^' O-.B
"B ■ B'-* P

-5 ■-B--cr

rRlSAT WESTERN RAILWAY COMPANY

v<.

THE COMMERCIAL BANK.

Vankoughnet, C. — The facts in this case, so far as
they are of any importance, are suflSciently set fortli in
the judgment delivered by my brother Hagarty in the
court below, and I need now mention only such of them
as will render plain the reasons for the decision at which
we have arrived. The appellants were incorporated as a
company to construct and maintain a railway in Canada.
The third section of the act 16 Victoria, chapter 3,
relating to the company, after reciting "for the avoid-
ance of doubt," declares and enacts, " that the company
have had and shall have power and authority to borrow
money from time to time for making and completing,
maintaining ai.! working, the railway as they might or
may think advisable, and to pledge the lands, tolls,
revenues, and other property of the company, for the
due payment thereof, and might and may make the
bonds or debentures issued by the company for securing
the payment of any sums so borrowed, or to be bor-
rowed convertible into stock of the company on the
terms and conditions expressed or to be expressed in
such bonds or debentures, or in the bv-laws of the com-
pany, and might and may insert in any bonds or
debentures issued, or to be issued by them, such terms
and conditions of any kind whatsoever as they might
or may think most for the advantage of the said
company." This, with the limitation prescribed by the
4th section of 22 Victoria, chapter 116, is the only
provision of law which I can find that authorises the
Great Western Railway Company to borrow money ;
and, as will be seen from it, such borrowing is for
the purposes proper of the company. The company

conceiving that the Detroit and Milwaukie Railway
running through the State of Michigan, and separated
by the Detroit River from the extreme western terminus
of the Great Western Railway would be an important
feeder to it, and a most important connection in its
business with the Western States, resolved upon advan-
cing money for the completion of that line of road and
its effective working ; and, accordingly, at a general
meeting of the proprietors of the Great Western Rail-
way Company, held in London, England, on the 1st of
October, 1857, and at a meeting held at the company's
office in Hamilton, Canada, on the 2nd of November,
1857, it was resolved, " That the directors be autho-
rised to advance to the Detroit and Milwaukie Railway
Company, such an amount not exceeding £150,000
sterling as may be necessary to ensure the completion
of the railway across Michigan in connection with the
Great Western Railway 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 Company."
That the Great Western Railway Company had, at the
time of the passing of this resolution, no right or power
to appropriate their funds to such a loan or to borrow
money to effect it, I think, no one will dispute. They
were not empoVfered by the legislature to appropriate
any portion of their capital and stock, or funds to sus-
tain a railway or any enterprise in a foreign country or
beyond the limits of their own road ; and, for the
purposes of their railway only, were they authorised to
borrow at all. I think also it cannot be doubted that
any one contracting with them to advance money to the
Detroit and Milwaukie Railway on the strength of
such a resolution, or of any guarantee or contract that
might have been made under it, could never have
held the Great Western Railvyay Company responsible
for such advance if made. Were the subject otherwise

bpen to doubt, I think the statute 22 Victoria, chapter
116, section 11, removes it : for there, all parties, as
also the legislature, seem to have considered that an
act of parliament was required to legalise the advance
which had been made under the resolution referred to.
That section is in the following words :

" And whereas the Great Western Railway Company,
in order to form connections with railways in the United
States of America, has to lay down its rails out of the
province of Canada., and to provide facilities at stations
and otherwise, for consolidating its traffic ; therefore the
Great Western Railway Company shall have full power
and authority to use its funds, by way of loan or other-
wise, in providing proper connections, and in promoting
its traffic with railways in the United States of North
America, provided that no such expenditure shall be
incurred unless sanctioned by a vote to that end of two
thirds of the shareholders voting in person or by proxy
at a general meeting of the shareholders specially called
for that purpose ; provided always, that the power
hereby granted shall not be construed so as to prevent
any other railway company from using its funds in pro-
viding the same connections, and promoting its traffic
with railways in the said United States ; and provided
also, that whenever any other railway company shall
desire to make such connections, the said Great Western
Railway Company shall be bound to assent to the same
on equitable and reasonable terms ; and provided further,
that the loan of seven hundred and fifty thousand dol-
lars already made by the said Company to the Detroit
and Milwaukie Railway Company is hereby declared to
be lawful."

It will be observed that while authority is thus given
to lend money, no authority is given to borrow money
for the purpose of lending or otherwise, and this is a
most important distinction in my view. It is one thing
to authorise a company to lend out of its own funds, but
it is quite another thing to enable it to go beyond these
and the amount of its authorised capital stock, and

incumber the undertaking with a load of deht which
may utterly paralyse it and render it worthless to the
stockholders and useless to the public, whose interests
in such enterprises have a large part in legislative
consideration. There are certain trading concerns,
incorporated or not incorporated, the nature of whose
business assumes, nay even requires, that they shall
become borrowers or holders of moneys from others, at
interest, or not, as may be agreed upon : and in such
cases authority in them to that end is implied. But
when a company is authorised to raise among subscribers
to its stock a certain sum of money and therewith to
build a road, I am not aware of, nor have we been
referred to, any authority which decides that they need
not by such subscription to stock procure the necessary
funds, but that, without any legislative sanction therefor,
they may borrow money for the purpose. If then the
company could not without express au«^hority, borrow
money to build it's own road, could it borrow money to
build a road for some one else ? The statement of the
proposition carries with it the answer. While we must,
I think, treat the first loan of £150,000 sterling, to be
the loan of $750,000 referred to in the statute of 22
Victoria, and ratified by it, it would not necessarily
follow that the borrowing of it from the respondents was
thereby justified. We cannot assume that the legislature
knew how the loan had been effected, or that it had been
obtained otherwise than out of the surplus funds of the
company. It has been argued that the powers to borrow
given to the company by the statute of 16 Victoria,
enable the company to borrow money with which to make
the loans authorised by the 11th section of 22 Victoria,
chapter 116. In my own opinion this is not so, though
1 believe some of the members of the court take the
contrary view. I think the company were authorised to
use only its own funds for these loans, and could not
create such funds by borrowing them. But, however

this may be, we think the fair way to deal with the
loans authorised under the resolution of the company
already mentioned, and also under the resolution in
England, of the 7th of October, 1858, by the proprietors
there, confirmed by the resolution in Canada of the 2nd
of November, 1858, to the effect " That the directors be
authorised to advance to the Detroit and Milwaukie
Railway 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 Direc-
tors," is to assume that the company had in England
properly provided or arranged for the funds, by an
increase of share capital or otherwise, to meet those
loans, and that the money was available there for that
purpose. There is nothing to the contrary shewn, and
I think we cannot infer that they contemplated or were
doing any thing illegal in furnishing or procuring the
money. I think also we should assume that these reso-
lutions were regularly passed, and by proper authority :
their legality has not been questioned before us.
Adopting then this position, we must, I think, hold
that the directors of the company as the authorised
agents of the shareholders were to arrange how this
money so agreed to be loaned was to bo advanced from
time to time, as well in regard to amounts and times of
advance, as to the method by which the money was to
be procured from England to be made available in
Canada, and in the locality where its expenditure was
to take place. The body of shareholders could not
discharge this ministerial duty, though it required the
exercise of some judgment. The directors themselves,
numerous as they were, could not collectively receive or
disburse the money ; and hence it became necessary
for them to select sub-agents through whose hands the
money should pass, and who should be authorised to
receive it. They did select for this purpose, Mr.
Brydges, the managing director of the company, and

Mr. Reynolds^ who had charge in Canada of its finances.
These gentlemen, for we may take it that they were
acting in concert throughout, in the month of December,
1857, proposed to Mr. jBoss, cashier of the bank of the
respondents, to advance to the Detroit and Milwaukio
Railway Company sufficient money for their requirements,
and exhibited to him the resolution of the Great Western
Railway proprietory, sanctioning the loan of £150,000
sterling. What passed at this interview, at which Mr.
ReynoldSf but not Mr. Bridges personally, was present,
is narrated by the parties thereat in statements most
opposing. This much, however, we can arrive at, that the
final arrangement between the parties was that an account
was to be opened in the name of the Detroit and Mil-
waukie Railway Company, with the term " account Great
Western Railway Company " superadded, and that any
balances overdue on the account after crediting traffic
receipts of the Detroit and Milwaukie road paid in were
to be covered by bills of exchange on England, at least to
the extent of the £150,000 sterling. An account in
accordance with this arrangement was opened by the
bank, and the moneys paid out upon it from time to
time were so paid upon cheques, by or on behalf of the
Detroit and Milwaukie Railway Company, and not the
Great Western Railway Company. It is admitted, if
not proved otherwise, that the bank had notice of the
two resolutions of the Great Western Railway Company
for the loans to the Detroit and Milwaukie Railway
company, and on the strength of the first resolution the
original arrangement was made. We are of opinion
that the bank are entitled to recover {he amount of the
loans authorised by these two resolutions, but no more.
I do not think that the proprietors in England, nor
perhaps the directors there or here contemplated the
effecting" any loan in Canada to meet these amounts.
Indeed we proceed on the assumption that they did not ;
and that they had, or had arranged to have, the money in

hand in England. The evident intention was, that when
there wete no surplus funds of the Great Western Railway
Company, in Canada, which could be applied upon the
loan authorised, bills should be drawn upon the company
at home to procure the required amount. But, as I have
already said, we must treat the directors as having
authority to arrange the mode in which this should be
done, and as having power to authorise, and as having
authorised, Messrs. Brydges and Reynolds^ as their
agents, to act here for them to that extent. These
gentlemen then seem to have procured immediately from
the respondents, and afterwards from time to time, as
was required, money to satisfy these loans, upon the
understanding and promise that any balance due to the
bank after crediting moneys deposited on account should
be re-paid or re-placed by exchange on England. Messrs.
Brydges and Reynolds, we think, had received authority
to draw bills of exchange to the amount of these loans,
and might have done so, and sold them to the bank.
Instead, however, of taking this course, they procured
the money from the bank on the faith of this exchange
being given. They in fact sold the bills with the promise
to deliver them, and the bank advanced the money
in anticipation of receiving them, and we think that
that promise and that anticipation should be fulfilled ;
and that for so much of the <£250,000 sterling named in
the resolutions referred to as has not been re-paid to the
bank, they, the respondents, should have a verdict, the
jury having found upon evidence properly submitted to
them, that the credit for the moneys so advanced was
given to the Great Western Railway Company, and not
to the Detroit and Milwaukie Railway Company, not-
withstanding the form of account adopted. I cannot,
however, part from this branch of the case without
stating that I have had great difficulty in concurring in
the right of the bank to receive any thing more than
the $750,000 of loan made legal by legislation, and I

have still doubt as to whether the authority given by
the statute of 22 Victoria authorised any such further
loan. It gives the company power to lay down rails
out of tlic province, and to provide facilities at stations,
and otherwise, for consolidating its traffic; but I think
it is open to very grave doubt whether they have
authority to make loans to independent companies to
complete their lino of road. If they have, I see nothing
to prevent them extending aid for constructing a rail-
way to the Pacific, whose traffic might pass over their
road, and bo thus of great advantage to them; and so
to any other roads, even to the building of them when
it could bo shewn that their existence would be of benefit
to the business of the Great Western Railway Company.
I do not think that the sanction of the previous loan
implies, and it certainly does not confer any authority to
make another such loan, but if any thing t.;3 contrary.
The legislature simply confirms what had been done,
but it docs not say "go and do likewise," though I admit
it is difficult to put any limitation on the loan of funds
which the act permits ; but considering how foreign such
application of the funds is to their use or destination,
as contemplated by the charter of the company, I think
this provision of law should receive as strict and limited
a construction as is consistent with its terms.

I do not see on what ground the sums advanced by the
respondents, for the Detroit and Milwaukie Railway Com-
pany, beyond the £250,000 sterling, can be recovered.
The respondents had not only notice that the moneys
they were advancing were to be expended for or by the
Detroit and Milwaukie Railway Company, but they
actually paid those moneys to the latter company, on
cheques drawn on its behalf, as expressed on the face
of them. They were bound to take notice of the act of
parliament which gave the Great VVostern Railway
Company authority to expend its funds out of the

province for the purposes referred to in the section of
the ttct already quoted, and which provided tluit such
expenditure could not be legally incurred unless sanc-
tioned by a vote of two-thirds of the ahnreholdcrs; they
knew that the shareholders had already passed two
resolutions, limiting the amount of tlie loan which
should be made by the one company to the other,
and they did not know, and could not know, of any
authority justifying a further advance, for none such
existed. What right, then, had they dealing alone
with two officers of the company, without ascertaining
their authority, to charge or seek to charge their
principals with such advances made for such a purpose ?
Ordinarily agreements by corporations should be under
their respective seals; exceptions being admitted in
regard to such transactions in the course of their every
. day business as would render such a formality incon-
venient and an obstruction. But can it be said that a
transaction of such magiiitiulc as took place here be-
tween the two or three corporations involved in it would
fall within any such exception ? When a party, dealing
with a corporation or rather with the officers of a cor-
poration in the irregular manner in which the respon-
dents here dealt, seek to charge that corporation with
responsibility for the acts of those officers, I think the
corporation may fairly be allowed to say, shew by what
authority those officers used our name and pledged our
credit ; have you any resolution by us authorising it, or
even any instrument under our seal, authenticated in
the usual way by our representative for that purpose,
sanctioning such dealing? This is not the case of
a party contracting with a corporation in a matter
within the scope of its objects and powers where every
thing appears to be regularly and formally done, but
there happens to be a non-compliance with some regu-
lation, rule, or provision which has been established for
the governance of the corporation or of its officers, and of

which tho party so contracting had no notice. Here wafl
'^ most irregular course of dealing on the part of the bank,
aim in a transaction not in, but out of the ordinary
course of business of tlio Great Western Railway Com-
pany, and one of a most special character, and only to
be permliUMl or justified under and in compliance with
a particular provisi( n for that purpose made by legis-
lative enactment, which tlie Bank were bound to know.
It is not the case of the Great Western Railway Com-
pany over-drawing its own account which may have
fluctuated from week to week or day to day, and sud-
denly stopping it with a balance against them. Disguibo
the matter as either party may, the advance in this suiQ
was not for the purposes proper of the Great Western
Railway Company, but to or for the Detroit and Mil-
waukie Railway Company ; and is not therefore the case
of a mere overdrawn account, but the case of a loan
directly and deliberately made, if not to, at least for, the
last named company, to bo covered by deposits or ex-
change. The truth. I think, is that both Mr. Ross the
President of the Bunk, and Brydgea and Reynoldi in-
dulged in the hope that the receipts of the Detroit and
Milwaukie Railway would, with the £250,000 sterling
loan, cover all the advances which the Bank would from
time to time make, and that in this faith the account was
carried on. Disappointed in this, the Bank seek to enforce
payment of the moneys they have lost from the company ;
and the officers of each corporation tro Ibrnd giving
most contradictory sLutements of wh'^f; o; . > betwc' .?
them, influenced doubtless by the vic^kb which they re-
spectively took at the time they embarked in the trans-
action, but which they, it seems, did not make sufficiently
dear the one to the other. It is said, however, that the
'. ■'•cat "Western Railway Company have got the benefit
of ttiib money., and that it was advanced at all events
with the knowledge of the directors, and that the share=
holders subsequently ratified its expenditure. I think

none of these jjositions sustained. The money was not
expended on the road of the Great Western Railuiy
Company, or o any of thoir works or property, and it
cannot therefore be snid that the company by such ex-
penditure havt iiO much more property. It was loaned
to a company in whose welfare the^^ doubtless j'ad or
thought they had an interest, as they had in all roads
which could in any way be brought into connection with
their own, or lead traffic to it, hut this was not an using
and enjoyment by them of money expended on their
own property. Thero is no evidence to shew that the
directors ever knew of the state or even of the existence
of the account opened with or on behalf of the Detroit
and Milwaukie Railway Company. (>n the contrary,
those of them who were examined a?' witnesses had
never heard of it ; and the account beiis;!; kept separate
from the Great Western Railway Corajany's account
proper, which was alone from time to t me submitted
to the Directors, the Bank enabled the oTicers of that
company with whom they dealt to keep the directors
in ignorance of these advances. The proprietors never
sanctioned the advances which were made, ai d for aught
that appears never knew of them till th.s suit was
instituted ; and it does S'3em a monstrous proposition that
the superintendent of a railway or any other company,
whose business is not the borrowing or lending Df money,
can involve the shareholders in any amount o ' liability
which he in his recklessness may chose thus to in ur. The
shareholders expressly limited the amount for w. ich they
were willing and intended to be liable, and the board in
England again and again forbado Mr. Brydges and Mr.
Reynolds going beyond it. Every precaution to prevent
any excess was taken, and yet in the face of all this wo
are asked to make the corporation responsible not merely
for the unauthoris d but for the forbidden acts of their

a. iiu ivpwi.v v& iiiii;; vtxxwbvio xu. Ulionci 1<J UCi*

tain charges of a committee of investigation, which was

relied upon as shewing knowle.^ge and acquiescence by
the shareholders, shews the contrary. In that report
they are expressly informed that the expenditure on the
Detroit and Milwaukie railway consisted of the .£250,000
sterling loan, and an additional sum produced from traflfic
receipts and moneys obtained in America, not by or on
the credit of the Great Western Railway Company, but
by the Detroit and Milwaukie Railway Company. We
think there was neither previous sanction nor knowledge
from time to time, nor subsequent ratification by the
shareholders, or even the directors, of the dealings be-
tween Messrs. Reynolds and Brydges and the Com-
mercial Bank in respect of this Detroit and Milwaukie
railway account ; and that therefore for any sum beyond
the d£250,000 the appellants are not liable.

As to the evidence objected to, we think that the entry
in the Commercial Bank books of the minute of the Board
of Directors in regard to the application made by Mr.
Reynolds to Mr. Ross to open this account was properly
received in evidence. It was an entry made at the time,
and initiated and authorised the transaction on the part
of the bank ; and as shewing what they had agreed to
do, and had authorised their own officers to do, Ave think
it admissible, being part of the resgestse.

The other two pieces of evidence objected to, viz. : the
monthly statement of the bank's transactions at the
Hamilton agency in which appears the balance of the
Great Western Railway account, and the first advance
of $10,000, stated there to be to the Detroit and Mil-
waukie railway, and the report made to the shareholders
already referred to, we think were unimportant, and if
they had any bearing at all in the case were rather in
favour of the appellants who object to them. The view
which we have taken of the rights and liabilities of the
parties was not presented to the court below, nor indeed

-r~-

was it prominently discussed before us. Each party
seem to have rested upon the extreme rights claimed by
them. The one to the full amount of the money ad-
vanced : the other to freedom from liability for any thing.
The court below thinking the plaintiifs entitled to judg-
ment for something, and without deciding what that was,
refused, and properly, a nonsuit, and also refused a new
trial, inasmuch as something w^is undoubtedly due to the
bank, and a nominal verdicc for it had been rendered,
subject to the award of a referee, who was to fix the
amount to be paid by the appellants, with power to report
special facts. We think, however, that the extent of
the liability of the appellants upon the evidence furnished
should have been declared by that court, as Ave now find
it, and that in this view there must be a new trial, unless
the parties, under the opinion now expressed by us, will
pay the amount for which we think the defendants can
be alone made liable, or choose to ascertain it by a
reference, or, in case any additionl facts likely to vary
the opinions we have expressed can be furnished, choose
to leave them to be ascertained or reported also by a
referee. Of course it is desirable that neither additional
expense nor delay should be incurred, but unless the par-
ties arrange otherwise, we have no alternative than to
grant a new trial, and without costs.

The following note of the judgment of tire Honourable
the President of the Court who, from indisposition, was
unable to attend at the time judgment was delivered,
was read by His Lordship, Mr. Justice Ilagarty.

McLean, Prest. — This case was tried before the late
Mr. Justice Burns, at Kingston, in May, 18G2, and was left
to the jury with certain questions in writing, to which
they were requested to give answers in writing.

1st. To which company was credit given by the bank,
to the Great Western or to the Detroit and Milwaukie ?

or was the credit given upon the responsibility of Messrs.
Brydges and Reynolds^ irrespective of either company ?

2nd. Had Messrs. Brydgea and Reynolds authority
from the Great Western Railway Company to make
financial arrangements for the Detroit and Milwaukie
Company to the extent of r£250,000 sterling, agreed to
be loaned by the former>to the latter company, and was
the account of the Commercial Bank opened and con-
ducted by them in pursuance of such authority ?

3rd. Had the Commercial Bank notice at any time
while the account was going on that Messrs. Brydgea
and Reynolds had exceeded their authority, or that more
than the two loans, amounting to ^£250,000 sterling, had
been expended ?

4th. Suppose the original credit was given by the
bank to the Great Western Company on the opening of
the account, was there any understood limitation between
the parties as to the question of liability at the time the
letter of the 16th of December, 1858, was given, either
to the extent of the second loan of X100,000 sterling or
otherwise, or was the account continued after that period
in the same manner as before by the parties.

5th. Did the Great Western Company by its dealings
with the Detroit and Milwaukie Company reap the
benefit of the expenditure made by the Commercial
Bank on the Detroit and Milwaukie account.

The jury gave answers in writing to these queries.

To the 1st. That the credit was given to the defendants.

2nd. That Brydges and Reynolds had authority to
open the account with plaintifl's, and that the account was

opened and conducted by them in pursuance of that
authority.

3rd. That the bank had no notice that Messrs.
BrydgeB and Reynolds exceeded their authority.

4th. That there was no limitation as to amount at
the time the letter of the 16th of December, 1858, was
given, and the account was continued in the same
manner as before the date of that letter.

6th. That the Great Western Company by its dealings
with the Detroit and Milwaukie Company did reap the
benefit of the expenditure made by plaintiffs on the
Detroit and Milwaukie account.

On the finding of the jury in favour of the 'plaintiffs
of the several points submitted to them, a verdict
was entered in their favour subject to be entered for
such amount as shall be ascertained upon a reference,
as agreed on. The agreement as to such reference is
endorsed on the record, as follows : " It is agreed by
the counsel for the parties in this cause that the amount
for which a verdict shall be entered, if the plaintiffs
shall be entitled to a verdict, shall be ascertained by
a referee, to be chosen by the parties respectively, in
term or otherwiae, and if the parties cannot agree upon
a person for that purpose, then it is agreed between the
parties that I shall nominate the referee as upon a
compulsory reference. The referee to have power at
the request of either party to report upon the different
classes of the account, such as amounts paid upon
coupons, upon cheques, upon promissory notes or other-
wise, and to draw up a statement of facts upon each,
for the opinion of the court."

In Easter Term last, a rule nisi was obtained calling
upon the plaintiffs to shew cause why the verdict should
C

ii'

not be 8ct aside and a nonsuit entered pursuant to leave
reserved at the trial on various grounds, (a)

The judgment of the court was delivered Mr. Justice
Hagarty^ Mr. Justice Burns, and McLean^ C. J., after
mature consideration, concurring therein. This appeal
is against that judgment, and the reasons for appeal and
the respondents' reasons against the appeal are fully set
out in the appeal book from p. 11 to p. 24, inclusive.

It appeared in evidence at the trial, and I believe is
undisputed, that in August, 1857, an account was opened
by the plaintiffs with the Great Western Railway Com-
pany, under the sanction of the Canada board of
directors, and this seemed to have been done in con-
sequence* of the Bank of Upper Canada, with which
the Great Western account had been previously kept,
refusing or declining to make further advances until the
amount of overdrafts were arranged. This was done
through the plaintiffs, who assumed on behalf of the
defendants the whole amount of such overdrafts. In the
month of December, 1857, the plaintiffs were informed
through their agent at Hamilton, that the financial
director of the defendants wished to make an arrange-
ment for drawing moneys voted by the shareholders in
England for the Detroit and Milwaukie Railway Com-
pany, in order that that company by the completion of
its road should be brought into connection with the Great
Western Railway Company. In consequence of that
communication, the plaintiffs' cashier came up from
Kingston to Toronto, where by appointment he met the
financial director of the railway, Mr. Reynolds, and the
agent of the bank at Hamilton. The cashier of the
bank and the agent at Hamilton give testimony as to
what the arrangement was with respect to the account

(a) See report of the case, 22 U. 0. Q. B. B. 236.

for the Detroit and Milwaukie Railway'Company, iil
which they perfectly agree, but Mr. Reynoldi gives a
totally diflferent version of the transaction, and states
positively that the name of the Great Western Eailway
was not mentioned in connection with the arrangement
respecting the moneys to bo advanced for the completion
of the Detroit and Milwaukie Railway from the loans
made for that purpose by the shareholders in England.
In the statement of Mr. Reynolda as to what took place
at the meeting between him and Mr. Ross at Toronto,
he says, (p. 67,) that at that meeting he saw Mr. Ross^
and took with him a statement and the resolutions of
the Great Western board relative to the loans which Mr.
Brydges and himself were instructed to employ in the
completion and equipment of the Detroit and Milwaukie
road. Mr. Reynolds may have inadvertently referred
to both loans and the resolutions by which the London
board decided upon their being made, but at the time of
the meeting, 29th December, 1857, only one of the
loans, for £150,000, had in fact been made ; that loan
was under a resolution of the English board of the 8th
of October, 1857, assented to at Hamilion by the
Canadian board on the 2nd of November, 1857, and at
the meeting at Toronto of the 29th of December, it could
not possibly have been known that a further loan for a
similar purpose would be made to the Detroit and Mil-
waukie Railway Company to be expended by the same
persons, the agents and servants of the Great Western
Railway Company.

When the loan of £150,000 was made, and Messrs.
Brydges and Reynolds appointed as agents for expend-
ing it, some mode must have been contemplated for
transferring the amount to Canada, where the agents
lived, who were entrusted with the expenditure, and it
is not unreasonable to suppose that the agents were
instructed to draw for the amount, as required, by bills

bf exchange. That they had authority to ^r&vf, is
evident from the minutes of the English board, of the
18th May, 1858, (appendix, page 30,) at which it is
stated that "a letter was written by the board to Mr.
Pollard^ manager London Joint Stock Bank, advising
him of the maturity on the 20th May, instant, of the
draft of Messrs. Bridges and Reynolds on Detroit and
Milwaukie loan account, accepted by the board for the
sum of £6,000," requesting him to enter the same to the
debit of the company. Again in the minutes of the same
board on the 12th April, 1 859, is a simH'ir minute in
reference to a draft of Messrs. Brydges and Reynolds^
for £20,000, accepted by the resolution of the board,
and falling due on the 17th April. The board, by
accepting the drafts of their agents, must be supposed to
have given them, as individuals, a right to control the
moneys which they wore authorised to expend, and if
the plaintiffs, knowing them to have such authority,
advanced from time to time, on their request, moneys to
be expended in carrying out the view: of the board in
making loans, I cannot think that the plaintiffs, as
bankers, were bound to ask what particular work, or for
what particular object the amount was to be applied.
That a large amount was advanced by the plaintiffs for
an object in which the defendants were deeply inter-
ested, is manifest, and if the defendants' agents have
exceeded their authority, the plaintiffs having no notice
of that fact, ought not to lose the amount of their
advances. The defendants were extremely anxious to
have the Detroit and Milwaukie Railway completed,
under a conviction that it would form a most valuable
connection with the Great Western, and when they
agreed to make the first loan of £150,000 sterling, it
was under the impression that that would be sufficient.
Subsequently a further loan of £100,000 was sanctioned,
for the purpose of equipping the road, and providing
stations. If, then, any portion of the latter loan was

in fact expended in completing the road, such expendi-
ture might be considered as contrary to the intention of
the shareholders and ultra vires, but the plaintiffs could
not, in advancing the moneys, be considered as parties
to the misapplication of the money, and on that account
not entitled to recover.

The jury have found, upon the trial, that Messrs.
Bridges and Reynolds had authority from the Great
Western Company to make financial arrangements for
the Detroit and Milwaukie Company, to the extent of
£250,000 sterling, agreed to be loaned by the former to
the latter company, and that the account with the plain-
tiffs was opened and conducted by them in pursuance
thereof. There was abundance of evidence before them
on that point, and I think the finding is correct.

In August, 1857, the company's account was trans-
ferred from the Bank of Upper Canada to the Com-
mercial Bank, and when, in December following, the
intelligence was received of the Great Western Road, in
London, making the loan of .£150,000, it was quite
natural that Messrs. Brydgea and Reynolds should
avail themselves of the company's bankers, for the pur-
pose of getting the money to be expended by them. On
the 29th December, the interview between Mr. Ross, the
cashier of the bank, and Mr. Reynolds, took place,
when the arrangement was effected respecting which the
witnesses differ so very materially. Judging from the
testimony, I cannot but think the testimony of Messrs.
Ross and Park entitled to prevail. Certainly it would
be extraordinary if Mr. Ross, on the very first occasion
of his meeting Mr. Reynolds, and without consulting
with the directors of his bank, and with the knowledge
that .£150,000 sterling was awaiting the drafts of Messrs.
Brydges and Reynolds, to be expended by them, should,
nevertheless, consent to advance on the credit of the

122

Detroit and Milwaukie Company any amount which
Brydges and Reynolds might require. It is much
more reasonahle to suppose that Mr. Ross should decline
such a responsibility, and that he should make the
proposition to place any amount of advances to the debit
of the Great Western Company. There can be no
doubt that the plaintiffs were entitled to a verdict for
something, and that the application for a new trial was
properly refused. The means of ascertaining how much
the verdict should be for, was agreed upon between the
parties, and is yet open ; if the referee has included
any objectionable items in his report, the court may
refer the matter back to him with their opinion, and he
will, no doubt, correct any error he may have made. 1
should be exceedingly averse to sending the case again
to a jury; the interests of both parties seem to forbid it.

I do not see any sufficient grounds for the appeal,
and therefore I am of opinion that it must be dismissed
with costs. Wliilo I am obliged to come to this conclu-
sion, I must acknowledge that the intimation given by
both parties that the case will be still further appealed,
aifords me much satisfaction. The amount in dispute is
very large, and the law, as to the liability of corpora-
tions, unsettled, and a decision from the highest court of
appeal will go far to establish the law in such cases.

Hagarty, J. — I was not present at the argument,
and therefore give no judgment ; but I think it right to
add to the judgment just delivered, that in the elaborate
argument of the appellants in the Queen's Bench no dis-
tinction whatever was pressed on the court between the
liability for the unpaid portions of the two loans and the
residue of the claim. Nor, as far as the papers shew,
was any such point made at the trial.

j-ue voluminous grounas ot nonsuit or l. , trial do not
suggest it. It is clear there could not have been a non-

me
the
sbit

Buit, and as to setting aside the verdict the plaintiffs vrero,
it seems, entitled to recover about <£100,C ; so that in
accordance with the views of the Court ot Appeal, the
judgment of the Queen's Bench was technically correct
in discharging the appellants'j^rule.

The difficulty is created by the fact of the verdict
being for a nominal sum, with a consent endorsed on
the record that the amount for which the verdict should
be entered was to be fixed by an arbitrator: '* The
referee to have power to report upon the different classes
of the account such as amounts paid upon coupons, upon
cheques, upon promissory notes or otherwise, and to
draw up a statement of facts upon each for the opinion
of the court."

In the view of the Court of Appeal the plaintiff can-
not recover beyond the unpaid portions of the two loans,
and unless some new facts can be given in evidence, if a
new trial take place the judge must so charge the jury.

If the referee find the facts as he is impowered to do,
the court can apply the law now declared to these facts,
and so a new trial be needless ; or perhaps if an award
be made it could be referred back to the referee with a
direction to find in accordance with the view of the law
now declared.

On hearing the judgment of the courf, the counsel for
the plaintiffs urged that there should be no new trial, but
that the referee already named, guided by the opinions
expressed by the court, should fix the amount due to
the plaintiffs, as both parties had at the trial by counsel
withdrawn the question of amount from the consideration
of the judge and jury, and had consented to a verdict

I I

'-•^

for one shilling, subject to be increased by the award of
an arbitrator, who it is admitted was appointed.

The court on consideration ruled that if the plaintiffs
desired a new trial it should be granted to them without
costs. That if the defendants (the appellants here)
desired a new trial it should be granted to them on pay-
ment of costs ; but that if both parties consented, the case
should be remitted to the arbitrator to ascertain the
amount due to the plaintiffs (the respondents here) in
accordance with the opinion of this court. That each
party should elect and give notice to the other before
the first day of April next, whether or not ;hey would
agree to the further reference ; that the party giving
such notitce should be bound thereby, and that if the
appellants, tho defendants below, did not give such
notice before that day then a new trial to be ordered
with costs to be paid by the appellants, tho defendants
in tho court below.

COMMERCIAL BANK V, QREAI Wl

m, w. «•.

d of 1

tifis m

lOUt fl

sre) 9

ajr- ■

lase S

the n

in n

nch H

ore 9

uld a

The Commercial Bank of Canada v. The Gblat
Western Railway Company.

Hagarty, J. — It may be convenient to notice in the fhlt
place the resolutions 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
October, 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, by way of loan or other-
wise, in providing proper connections, and in promoting its
traffic with railways in the United States," when sanctioned
by two thirds of the shareholders, &c.; and enacts "that the loan
of seven hundred and fifty thousand dollars already made by
the said company to the Detroit and Milwaukie Railway
Company is hereby declared to be lawful."

A large portion of 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 effoct sueh a purpose, and that the present
plaintiffs, when they advanced the sums now sought to
be recovered, had full notice of the alleged illegal destina-
tion of the money.

i queen's DEJTCn, MICHAELRTAS term, 20 VIC, 1862.

I think it well to dispose of this branch of the case first.

From August or September, ISf)?, down to the occurrence
of the present difficulty, the plaintiffs had been the bankers
of the defendants, and when the Detroit and Milwaukee
account was first opened the resolution for the jG150,000
was known to the plaintiffs.

The clause already cited of the act passed on the IGth of
August, 1858, removed all questions of the legality of the
first advance, and I presume 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
traffic 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 X100,000 advance to the Detroit and Milwaukee Com-
pany. It is simply spoken of as " a further sum of money,
to bo expended by and under the control of the Great Wes-
tern Uailway Board of Directors."

The bankers of the Great Western Railway Company may
bo assumed to know that the legislature had expressly sanc-
tioned averylargeloan tothe foreign rail way: 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 mac lue

second loan of .£100,000 was granted specifically to provide
rolling stock and station accommodation to the line of rail-
way opened by the aid of the former grant. There seems to be

COMMERCIAL BANK V, aREAX WE8Tiih:{ H. W. CO.

no ovuleiico of thia resolution, passotl five days aftor tlio vot-
ing of the socontl loan, boin;^ ma<lo known to the plainliflTs.

T have a strong opitiion that, independently of the express
Banction of the first loan, the application of the Groat West-
ern llaihvjiy Company's moneys actually to construct and
efj lip the Detroit and Milwaukee lino was not within the
plain meaning of this eleventh clause, and that any sh.vro-
holder applying within a reasonable time to a Court of Eijui'^^y
could have restrained sucli 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 tho 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 tho 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 tho 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. Having once agreed to make advances,
without notice of any intended illegality, and aware that
large sums might be required 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 thac 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 be
applied by them in retiring a certain number of coupons, the
foreign company in lieu thereof itself finding an equal

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 stock 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 shareholders 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. It 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 officers, and make
payments from day to day by 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
duch 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 Lancashire, &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' 8 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 dififerent 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 moneys.

I cannot consider the advance of money by the plaintiiTs
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 gambliag, 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-

J V.

Si. ?5il dX^ T«i5.^^ /s/?** l^/^rtl^ /\ 1

coverea oecaaso au or pare nas oeen expended on 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

ii! ■

111'

queen's bench, MICHAELMAS TERM, 26 VIC, 1862.

their bankers to lend them money, alleging that they
hove resolved to help the foreign road to the exteat
(»f <£loO,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 traflSc."
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, (6 Ex. T96,) 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 1853, 16 Vic,

vu. t/t/, oxi\j, u, ^ivco tiic tjvuipaiijr uunci bu uuiiuTT xiuuitiuio

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.

COMMET OIAL BANK V. GREAT WESTERN R. W. CO. 7

In the Bank of Australasia v. Breillat, (6 Moore P. 0. 0.
152, 195,) Lord Kingsdown^ in reference to the case of a
public company under a deed of settlement containing no ex-
press borrowing powers, says, "We have iJo 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. 88,) Lord Oamphell
cites this judgment with great approbation, and adds, " Al-
though mere shareholders in a 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 powers of partners in a common mer-
cantile partnership as are necessary for the carrying on the
business for which the company 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 dircctoro, (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 company. 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 large sums, pos-
sibly at the moment beyond their available funds in hand.
X think their directors must be held to possess all powers

■ill!:

■ r!!

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 legitimate purposes of the work : — or, in other
words, between the right 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 86,) and his co-director
Mr, Becher, (at page 78,) are explicit as to this. The resolu-
tion . of the English board, dated the iOth of xTovember,
1857, directs that the expenditure shall be wholly under the
control of Brydges and Reynolds. This at least is the
light in which the matter is placed by the defendants at the
trial.

'«»(.,

,u«.

. COMMERCIAL BANK V. GREAT WESTERN R. W. 00. 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 other of the Canadian
Great Western Railway board, Mr. Becher, leaving only
three American directors ; and some $2,500,000 of the De-
troit and Milwaukee stock was transferred to the English
Great Western Railway board.

On or about the 29th of December, 1857, the negotiation
took place between Mr. Reynolds and Messrs. Ross and
Park of the Commercial Bank, respecting which there is
such a diversity of statement between the first gentleman
and the other two, and on which I defer at present making
any remark.

Mr. Reynolds, then being financial director of the Great Wes-
tern Railway Company, informs the plaintiffs' cashier, Ross,
of the £150,000 loan, and that he and Mr. Brydges were to
superintend its expenditure. An account is proposed to be
opened with the plaintiffs ; and in Reynolds' own words (page
74,) " I asked him to allow us to open an account against which
we could draw." * * "I told him (page 67) that Mr. Brydges
2

10 queen's bench, MICHAELMAS TERM, 26 VIC, 1862.

and myself would like to draw to the extent of our requirements
in carrying out this undertaking of the Detroit and Mil-
waukee, and at the end of each month we would cover the
amount by bills of exchange on England."

The fact seems to be clear, that these gentlemen procured
an account to be opened : that they were to be allowed to
draw as they required, paying into the plaintiflfs' 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. 316, sec. 12, it is declared, 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 an office in London *' for the purpose
of regulating and carrying on the business of issuing and
transferring shares and bonds, and generally to do all mat-
ters and things necessary or desirable in regard to the trans-
ferring of or arrangements connected with the capital of the
company held out of Canada, and that all such acts and prO'
ceedings shall be considered precisely the same as if carried
on in the office of the company in Canada."

It may be well to bear this clause in mind in considering
the position taken by the defendants at the trial — that the
Canadian directors as a board (of course excepting Brydges

COMMERCIAL BANK V. GREAT WESTERN R. W. CO. 11

and Beynolds,) 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 67-8) that moneys were chequed out on
cheques signed by Brydges and Reynolds, without any addi-
tion to their names, till the end of 1858, 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 bal'X ice claimed by the plaintiffs. The first exchange
given on the defendants' London Board was on the 1st of
February, 1858, 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 86.)

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-
piny, 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. Becher, their co-director, as trustees : that a
new account was opened with the Great Western Railway
bankers, and large advances obtained on the agreement that
all receipts of the road were to be deposited with the bank*
ers, and the amount behind-hand covered from time to time
by sterling exchange drawn by the managing »nd f lancial
directors as such on the defendants' London 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 views of the parties as to

12 queen's BENOn, MICHAELMAS TERM, 26 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 plaintiffs' debtors. This
can best be considered under the assumption that the credit
"Was sought and accorded 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 railway 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
Renter v. The Electric Telegraph Company, (6 E. & B. 341.)
In the first-mentioned case Wightman, 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 not under seal." Sir William Erie,
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 expressed on this point, that I need
only refer to Pirn v. The Municipal Council of Ontario, (9
C. P. 304,) and Whitehead y. The Sufi"alo and Lake Huron
Railway Company, (8 Chancery Reports, U. C. 157,) in the
Court of Appeal for Upper Canada.

At the trial the only issue raised was never indebted, to a

OOMMEROIAL BANE V. QREAT WESTERN R. W. CO. 18

declaration on the common money counts. After reservation
of leave to move on the legal exceptions, certain questions
were, after mach discussion, submitted hj 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
Keynolds personally. The jury found this in favour of the
plaintiffs, that in fact credit was given and the money ad-
jranced or lent by the bank to the Great Western Railway
Company.

I do not see 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 thsir 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 16th of December, 1858, shortly after
the voting of the second loan, and signed by them officially
as managhg 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 BENOH, MICHAELMAS TERM, 26 VIO., 1862.

pany's account with the said bank. This 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,)4
says that when he wrote that letter ho 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 3um of the loan (or loans ?) re-
maining to be expended equal to the balance then due the
bank. Again, (at page 7.5,) 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, however, 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.)

OOMNBRGIAL SANK V. OREAT WESTERN R. W. CO. 15

iri

le
as

,)<

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 the
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 largo sums were
paid for coupons, old debts, &o., out of the loans, but he
would not admit as much as X100,000. The whole amount
of the loans was expended either in that way or in work on
the road.

Mr. Beynolds (at page 69) 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
oredit for sterling exchange, amounting to $48, 166*66. on
the 30th of December, 1858, after the granting of the
second loan ; and the account rapidly increa^'^s 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.

The 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
80 to do, and could not thereby bind the corporation.

This again raises the old question as to how a corpora-
tion can be bound. I have already expressed an opinion on
this point. This trading company must act through certain
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
officers of the lenders' company. Exchange has to be
drawn for it, and these officers are appointed to draw such
exchange. These olfioers inform the ordinary bankers of
the company of all these 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 QUBBN'C BBNOH, MIOHAELMAS term, 26 VIO., 1802.

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 sufficient reason for holding suoh
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 advanceSi
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 i.a 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
been actually expended on the company's business, it was
allowed to the lender. In re The Electric Telegraph Company
of Ire iad, Troup's Case, (T Jur. N. S. 901,) Hoare's casej
{lb.) Also, where a Life Assurance company entered into the
Marine Assurance business, although their so doing was

COMMERCIAL BANK V. ORB AT II? ASTERN R. W. CO. 17

ill
8t

held to bo ultra vires j TFoodf, V. C, decreed a return of
the moneys paid to them for premiums for the void marine
risks : lie 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 i
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 considerd this suggestion, and feel some hesitation
in speaking with b,ny 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 trupf b above named (who were plaintiffs) agreed with
Mr. A. Campbell, as trustee for the Commercial Bank, that
the plaititiffs 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 the
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, and take all proceedings
against all persons or corporations liable 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 98c is set down,
which I understand to be the then claim of the Commer-
cial Bank.
8

18 queen's bench, MICHAELMAS TERM, 26 VIC, 1862.

^l!

The road was sold, and bought in by the trustees, Brydges,
Beynolds, and Becher.

Mr. Campbell was inspector for the Commercial Bank.
Mr. Ross says that he (Campbell) took this course thinking
it best for the bank : that nothing was 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 these 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 ghren 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 the 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 Milw<aukee Company, to be expended by Brydges
and Reynolds, and of course such expenditure must be kept
distinct from their own proper accounts for their own stock-
holders with their bankers. So with the Dronosed manner
of meeting the bank's advances — namely, payment of the
Detroit and Milwaukee Company's receipts, and sterling

COMMERCIAL BANK V. GRtiAT WESTERN R. Vt. CO.

exchange on the London Board on account of the loan.
This arrangement, on which there is no controversy, neces-
sitated a distinct keeping of the accounts. '

The plaintiffs allege that to keep the defendants* liahility
in view the account was opened and continued in their books
as " Detroit and Milwaukee Railway Com'pany account —
(}reat 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

■1 r> f n

i\-..- -1

f?flfa V-.--1

JJecemoer looo, wiien me piamtitts uad pomteclly obtained
from Brydges and Reynolds the admission of the Great
Western Railway Company's liability.

20 queen's bench, MIOHAELMAS 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 14th 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 same •
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 opened, 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 January 11th 1858, signed
by them as managing and financial directors of the Great
Western Railway, asking the bank to guarantee certain bills,
which they say they had given to Rayner & 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

"^i

COMMERCIAL BkHK V. GREAT WESTERN R. W. CO.

Detroit, 8th December, 1857, signed by C. C. Trow-
bridge, treasurer of the Detroit and Milwaukee Company,
and accepted by us as managing and financial directors,
respectively, of the Great Western of Canada Company."

I quote this as illustrating the then understanding of the
parties, and suggestive of the question whether the bank,
having paid the bills at maturity, would on this letter have
naturally looked to the Great Western Railway Company
for repayment, or to the Detroit and Milwaukee Company, or
to Messrs. Reynold" and Brydges personally ?

Shortly after, o ihe 30th of March, 1858, the letter of
Brydges and Reynolds is written to Ross, requesting the
credit of $100,000, if required, " on our joint Detroit and
Milwaukee account here," stating that " the balance against
the Great Western Company is now so much reduced, (and
will continue steadily to decrease,) that we imagine you
will have no objection to the arrangement here proposed.

* * We desire to adhere as nearly as we can, in draw-
ing on our English colleagues, to the amount set down in
the schedule we prepared for the gradual completion of the
works on the Detroit and Milwaukee line ; and this proposed
credit would enable us to do so without the necessity of
postponing claims which could, if promptly settled, be
much more satisfactorily arranged ;" and they ask this to
be submitted to the bank board.

On the 1st of April, 1858, two days after, Mr. Hoss
answers this favourably, " under the impression that any
amount on the Detroit and Milwaukee account not covered by
bill at the end of each month, will be (practically) neutralised
by a corresponding reduction of general account, under the
limit of £50,000, * * that on the 1st of December next
the Detroit and Milwaukee account shall be covered in full
by exchange or cash. * * We assume that the aggregate
amount of the Detroit and Milwaukee account uncovered at
each month's end, and of the general account, will not
exceed $200,000 ; but in case of emergency we shall not
mind an excess of $25 to $40,000 for a thort time." This
is addressed to Brydges and Reynolds, directors of the
Great Western Railway. The latter answer this letter on
the 14th of April, agreeing to the conditions, except as to

22 queen's bench, MICHAELMAS term, 26 VIC, 1862.

■W-

the Ist of December limit : " We have every expectation
that within six months from this date the Great Western
account will be in a condition not to require the
open credit which it at present enjoys, and if this expecta-
tion should be realized we presume there would be no
objection on the part of the bank to carry the Detroit and
I ilwaukee credit on to the 31st of March next."

This correspondence, so shortly following 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 their respective positions.
It certainly is not without great weight towards supporting
the plaintiflfs' view, that they and Messrs. Brydges and
Reynolds then considered that the dealing was directly
between the Commercial Bank and the Great Western Rail-
way Company.

At a much later date, on the 25th and 28th of May,
1859, 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 referred to, the 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 the
notes to provide funds in lieu of the sterling exchange which
Messrs. Brydges and Reynolds could not then provide.

It is necessary here to notice the argument that Messrs.
Brydges and Reynolds personally were those to whom the
plaintiffs gave credit when the account was first opened.

I hardly understand the evidence of these gentlemen as
leading to that conclusion. Mr. Reynolds says (at page 73)
"We opened an account in our joint names as individuals:"
and in answer to the question. Was '<■. not for the Great
Western Railway ? " It was in pursuance of the instructions
to expend the money." * * '• It was an interim arrangement
for the purpose of aiding us in carrying out the instructions

COMMERCIAL BANK V. GREAT WESTERN R. W. CO.

;ion

,•/■■

■- 1;

the

3ta-

on account of the Detroit and Milwaukee Railway Company.
* * We opened the account and made the arrangements
with Mr. Ross purely on our own responsibility : we had
no instructions whatever to do so for the Great 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 the 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 the Great
Western Railway shareholders to incur liability on their ac-
count, (at page 86,) to the question, "How did you
look upon the matter yourself — that you were opening an
account on behalf of the Great Western, the Detroit and Mil-
waukee Company, or yourselves ?" Ansioers, " Certainly not
the Great Western.'' On this answer of Mr. Brydges, this
question suggests itself to me : — Could he carry out his
instructions to draw the amount of the loans from England
except by exchange, which he must negotiate with parties
here, receiving from them the cash proceeds ? His directors
do not argue that they could repudiate his exchange on them
drawn with their sanction. I hardly see, if so, how the
cash so given or advanced by bankers discounting the
drafts to the company's officers can be looked upon as
lent to those officers on their personal credit. It would
more naturally seem to be advanced on the credit of the
bills being duly honoured by the drawees.

I do not think that on the evidence it can fairly be con-
sidered that the credit was given to these gentlemen indi-
vidually, whatever might be their personal liability (as Mr.
Reynolds suggests) if their acts had been repudiated by
their principals.

The jury, on this question being left to them, negatived,
as I think justly, such a conclusion.

It is almost impossible to comment in full on all the evi-
dence and documents submitted. I must content myself
with noticing what seem to me to be the prominent features
of the case.

24 queen's bench, MICHAELMAS term, 26 VIC, 1862.

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 san 3
date, the Ist of April, 1858, with the plaintiffs' letter in
reply to the ap{)lication already noticed. The only material
difference between the minute and the letter is, that the
former 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 again " the
understanding being that the aggregate amount of the ac-
counts of the Great Western Railway 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 he was buying on account of G. and M. :
A. swears that he bought on his own account, and that he
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 enquire 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 be pro-
perly receivable as part of the res gestos, and the decision
has I think a strong bearing on this and also onHhe second
and fifth objections urged by defendants.

This fifth objection points to the allowance of the docu-
ment called a bank statement, sent by the plaintiffs' Hamilton
agent to the Head ofiice at Kingston, shewing how the
account was kept. I see no valid objection to this.

I feel more doubt on the second obiection. to the admis-
sion of the evidence of the bank directors of what their
cashier, Ross, had reported to them as to what had taken

OOMMSROIAL BANK V. GREAT WESTERN R. W. CO.

lOQ

place between him and Reynolds in Toronto when the ar-
rangement was made for opening the account.

In the case last sited Pollock, 0. B., 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 either sanction or repudiate his acts, and to whom
he would have to report his proceedings Tor 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 he supposed, the directors sanctioned a loan to
the Great Western Railway Company. Mr. A. J. Mac-
donell's evidence seems alono 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
return from Toronto, after the interview, he reported that
credit was to be 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 heard that such a thing had been asked. But,
on further examination, Mr. Macdonell evident*^' could not
remember any distinct report made 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-
but I have conversations with Mr. Ross on the affairs
of the bank almost daily ;'' and to the question, on cross-
4

H. queen's bench, MICHAELMAS TERM, 26 VIO., 13C2.

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 officer or cashier
of a public company in the course of his duty to his supe-
riors, with whom lay the power of approval or disapproval of
his acts. Mr. Macdonell'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 Company, or to any other but
the Great Western Railway Company, and it is a ste»^ 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 understanding would be fairly considered
as part of the res gestes.

In Ross's evidence, on cross-examination, (page 38), he is
isked thus : ^' ^t 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 witbjut a reference to your board?"
Answer— ^^ I was in the habit of referring matters of son-
sequence to the board, for the sake of advising with the direc-
tors upon them.'*

Again, at page 39, " Did you lay the schedule before the
board ?" Answer — " Not that I remember. * * I explained
the matter to the board, and in the minutes of the 31st of
December there is an allusion to it. * * j told Mr.
Reynolds I had no doubt that the arrangement would be
carried out."

It would thus appear that Ross would be by all parties
naturally intended to report all this to his board for approval,

COMMERCIAL BANK V. GREAT WESTERN R. W. 00.

to complete the transaction, and therefore I have come to
the conclusion — not however without some hesitation — that
as part of the res gestce, as " a declaration accompanying an
act," his report to his directors was admissible. See
Starkie on Evidence 52-8.

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 are 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 influenced 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 ofiicers 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 receipt of such documents
by the Canadian board, to be treated by them as official and
authoritative. I should be sorry that such a mode of proof
could be found to be objectionable.

The last objection to evidence requiring r'>tice is number
4, as to ihe admissibility of what was called the " Red Book,"
oi' 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 ividence of
Messrs. Muir and Stephens (at pages 47 and 48,) it is shewn
that these red books were sent out by the English Board to
the Canadian Board. Mr. Stephens, the defendants' secre-
tary, says they were circulated here when received among
the shareholders as the report of the company, and he points
to minutes of the Board here bearing on the subject of this

28 QUBEN'S bench, MIOHABLMAS term, 26 yiO.) 1862.

report. I think it was fairly receivable in evidence, as a
document adopted and circulated bj 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 any 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
past 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 following conclusions : —

That the first loan of .£150,000, sterling, to the Detroit
and Milwaukee Company, was sanctioned by the subsequent
aC. of parliament, and declared in express terms to be
valid : —

That as to the second loan, of X100,000, sterling, there
was nothing on the face of the resolution to shew that it was
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,

. 1^

'^WW

COMMERCIAL BANK V. GREAT WESTERN K. W. 00.

a
rd

en
ey
to

♦■i?1

the Commercial Bank agreed to open the account, which
they call " The Detroit and Milwaukee Railway account,
Great Western Railway : — that thoy, then and previously
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 the 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 X250,000, they in fact have only
received about $700,000, 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 plaintiflfs : —

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
powers 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 submitted to the jury by the learned judge were
substantially calculated to aid the jury in determining the
issue joined, and are not open to serious objection.

And as to the merits, I see no safe ground on which the
court can determine that the jury found for the plaintiffs,
either without sufficient evidence or against the weight of
evidence.

80 queen's bench, MIOnAELMAS TERM, 26 VIO., 1802.

Aa 1 understand, the question of amount was agreed to
be settled by a referee, who could state a case, if required,
to the court. I do not feel it necessary to do more than
express my view of the principles by which I consider the
case to be governed.

It is satisfactory to feel that in a case of this magnitude
^he opinion of a Court of Error can bo taken on the serious
questions involved.

MoLban, J. — concurred, and said that he had been
desired by Mr. Justice Burnt to state that he also fully
agreed in the judgment just delivered.

Bule discharged.

THE

SYSTEM OF LANDED CREDIT

LA BANaUE DE CREDIT FONCIER

' r