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Las diagramnes suivants illustrent la mAthode. trreta to peiure. n« □ 32X 1 2 3 1 2 3 4 5 6 ■V c (/ A HANDY BOOK OF COMMERCIAL LAW, FOR UPPER CANADA, m ROBERT SULLIVAN, M.A., ■—r irWMM "I llnliliw III [■■Irtniimn^ BABBISTEBrAI-LAW, , _, Mercantile Law Lecturer in Day's Cohmssoiai. Coixioii, Toronto^ Aim CHARLES MOSS, BltII>lHI-AI<-I.AW. TORONTO: W. 0. CHBWETT & CO., PUBLISHERS, KING STEEET EAST. 1866. Entered according to Act of the ProTinclal Legislature, in the year of otir Lord one thousand eight hundred and sixty-slz, by Robert Sulutan and Obabus Moss, In the Office of the Registrar of the Province of Canada. -*••. I zo THE HON. P. M. VANKOUGHNET, D.C.L. m OHANOBLLOR OF UPPER CANADA THIS BOOK II If" BT PIBUI88I0N m RESPECTFULLY DEDICATED BY THE AUTHORS. PREFACE Much inconvenience has been felt by Canadian readers of English books on Mercantile Law on two accounts : because the Common Law has been varied for England by statutes which are not in force here, and secondly, because it has been varied for Canada by statutes which have no counterpart in English legislation. The present workTis an attempt to obviate this inconvenience. The arrangement of Smith's Compendium of Mercan- til J Law has, as will be apparent, been pretty closely followed, and the language of that author has in many cases been used. But the authors have departed from their model in several ways; some of the subjects have been entirely re-written in order to adapt the matter more directly and easily to the state of the Law in Upper Canada, and many portions have been omitted as treating of customs or statutes not having force here. For the purpose of making the work more elementary, and in order to bring out more prominently the peculi- arities of the Law of Upper Canada, many of the illus- trations and many of the discussions on doubtful points ■ ' ft PREFACE. contained in Mr. Smith's work have been omitted, but the authors have spared no pains to avoid overlooking any special features of our Mercantile Law. The great variety of subjects touched upon in the following pages may have caused many inadvertent omissions, but the authors nevertheless hope that their labours may not be without use to the student and the practitioner, as well as to the non-professional reader. l\ 'IF \l ...ii T^iil/-t;.,.'«.-- itK !-' J»7"6'.:j|U-, TABLE OF CONTENTS. - ♦ CHAPTER I. PAGE Introduction 9 Laws in force in Upper Canada 10 Collection of Debts by Suit 14 Acts respecting Fraudulent Preferences 81 Married Woman's Act S4 Bankruptcy 40 Proceedings against Representatives 69 CHAPTER II. Meboantilb Pbofektt. GoodWiU 11 Shipping 79 CHAPTER HI. Meroantilb Persons. Sole Traders 88 Partners 89 Corporations and Joint Stock Companies 108 Principal and Agent 108 CHAPTER IV. Mercantile Contracts. Bills of Exchange and Promissory Notes 128 Guaranty and Suretyship 166 Contracts with Common Carriers 176 ■hi 't> -'.l V ,' I VIU CONTENTS. FAOE. Contracts of AfFreightmont 178 Bottomry and Respondentia 184 Insurance 186 Contracts of Apprenticeship and of Hiring and Service 208 Contracts of Salo 211 CHAPTER V. MlROANTILB ReHIDIBS. Stoppage in Transitu 280 Lien 282 \ ■ i I ■ CHAPTER I. In this chapter we have thrown together several I topics, which from their peculiar character it would have heen difficult to discuss elsewhere. In the first place, we haye endeavoured to explain briefly the relations of the Common Law and Statute Law of England to the laws and statutes of this Province, to shew how far and in what oases, and subject to [what exceptions, the law of England is the law of [Upper Canada, and from what source is derived the [authority of our Legislature to make new laws in matters relating to civil rights and the enjoyment [of property. In the next place we have given an outline, which lit is hoped may be of practical use, of those proceed- ings which must be taken by persons either in Upper Canada, or any other part of the world, having occa- sion to seek legal remedies against debtors who have in any way become subject to the jurisdiction of Upper Canadian courts. We have also alluded to such of the statutes of Upper Canada as regulate the process, or a£feot the rights or remedies of such creditors, in the course of collecting the amounts due [to them by such debtors. j^^ . 2 :i1 10 LAWS IN FOUCIS IN UPPKR CANADA. ' I 1. — Of the Laws in force in Upper Canada. By the treaty of Paris in 1763, Canada was ceded by the French to the British Government. The King imniediaiely introduced by proclamation both the civil and criminal law of England. This created dissatisfaction among the French population, and in 1774 the British Statute, 14 Geo. III., c. 83, which is to be found in the beginning of the Consolidated Statutes of Canada, was passed, by which it was provided, that in all matters of contro- versy relating to civil right* and the enjoyment of property, and customs and usages, (except certain matters enumerated in the provisoes of the Act,) resort should be had to the laws of Canada, that is to say, to the French laws in force before the cession of Canada; subject, however, to such changes as might be introduced by the Governor and Legislative Council, to be appointed under the Act. It would occupy too much space, in a work of this description, to enumerate and explain the various stages through which the country now called the Province of Upper Canada passed before the last change which united it in 1840 to the Province of Lower Canada. It will, for our present purposes, we hope, be sufficient to say, that since that year the two Provinces have been ruled by one Governor General as the representative of the Queen of Great Britain, and one legislature has made laws for both. It may be stated, that, beyond this amalgamation, except in a few particulars, some of which will hereafter be noticed, the two Provinces are, so far as the present LAWS IN FOUCE IN UPPER CANADA. 11 treatise is concerned, to be considered as distinct and separate colonies of Great Britain. There have been various statutes passed declaring how far the laws tf Great Britain shall be applica- ble to Upper Canada. Chapter 9 of the Con. Stat. U. C, however, being a consolidation of two earlier statutes of the Parliament of Upper Canada, contains a sufficiently explicit declaration on this point, to enable us to dispense with the recital of any other act. liy section 1 it is enacted that in all matters of controversy relative to property o A civil rights, resort shall continue to be had to the laws of Eng- land as they stood on the 15th day of October, 1792, as the rule for the decision of the same ; and al 1 matters relutive to testimony and legal proof in the investigation of fact and the forms thereof, in the several Courts of law and equity in Upper Canada, shall continue to be regulated by the rules of evi- dence established in England as they existed on that day and year, except so far as the said laws and rules have been since repesfled, altered, varied, modified or afiected, by any act of the Imperial Parliament still having force of law in Upper Canada, or by any act of the late Province of Upper Canada, or of the Pro- vince of Canada, still having force of law, or by the Consolidated Statutes relating to the Province of Canada or to Upper Canada exclusively ; and, by sec- tion 2, that the statutes of Jeofails, of limitations, and for the amendment of the law, excepting those of mere local expediency, which, previous to the 17th day of January, 1822, had been enacted respecting the law of England and then continued in force, i K'l il m irtf i j i I— oiaj g 12 LAWS IN FORCE IN UPPER CANADA. shall be valid and effectual for the same purposes in Upper Canada, excepting so far as the same have since the said 17th of January 1822 been repealed or altered or affected in the manner mentioned in the first section of the Act. The effect of this Act is, 1st. That all principles of the Common Law of England, as declared by the Courts of Common Law or Equity in England on the 15th day of October, 1792, or since then declared by those courts, are expressly and authori- tatively applicable to Upper Canada. The decisions subsequent to the date apparently limited by the Act have authority here, because they are considered not to introduce new law, but to declare what the old law has always been. Any case, therefore, which decides any principle of the common law relating to Mercantile Law for England decides it for us. 2nd. That all the statutes (excepting those of mere local application, such as those relating to the main- tenance of the poor, or respecting bankrupts,) which were in force in England on that date, are in force here, just as if they had been passed by the Legis- lature of Canada. 3rd. That the Statutes of Limi- tations which were in force in England prior to the 17th day of Januarv. 1822, are similarly in force in Upper Canada. 4th. That since the 15th day of October, 1792, statutes passed by the Legislature of Great Britain may be in force here, if by their express terms they have au- thority here, or if their subject matter is of such general import, that it must naturally be inferr€\d they were intended to regulate or modify our Pro- LAWS IN FORCE IN UPPER CANADA. 13 vincial laws. 5th. That we must also take into account any alterations in the laws of England thus, introduced, made since either of the above dates by any of the statutes passed by the separate Legislature of the late Province of Upper Canada, or by the Legislature of the Province of Canada. In that part of our Province called Lower Canada, the principles of commercial law are derived from sources entirely diflferent from those to which the laws of Upper Canada are to be traced. The prin- ciples and customs of the mercantile law of Lower Canada are, subject to the exceptions hereafter to be noticed, derived from the laws of France, which were in force in Canada at the time it was ceded to the British Government. By cap. 57 Con. Stat. Can., certain provisions have been enacted, which render the law of Lower Canada respecting promissory notes and bills of exchange in some respects uniform with that of Upper Canada. Tltere have been a large number of statutes passed by the Legislature of Canada, which introduce the same provisions for one section as for the other, and so help to bring tho laws of both into a certain degree of uniformity. In most respects, however, Lower Canada is to be considered as a separate colony, and indeed as a foreign country. Thus the attorneys and solicitors of Upper Canada have no authority to institute pro- ceedings in Lower Canada, and any claim which is to be preferred in the Lower Canadian courts must be placed in the hands of Lower Canadian lawyers. If a judgment is recovered even in the superior courts of Upper Canada, before execution can bo had upon I V: f i if ih i [if 14 COLLECTION OF DEBTS BV SUIT. it in Lower Canada the judgment oiust be sued upon , in the Lower Canadian courts, and execution issued upon the judgment thus obtained, just as one would proceed in order to have resort against a party living in Great Britain, or in the United States, or any other foreign country, against whom a judgment has been recovered here. Again, the judges in Lower Canada do not judicially recognize or know the common law of Upper Canada in civil cases, and that law must be proved when it is necessary to bring it before the Lower Canadian courts, just as the law of the United States or of France would have to be proved in our courts. In the same way the law of Lower Canada must he proved in the courts of Upper Canada. It is provided, ^however, by cap. 79 Con. Stat. Can., that our supirior courts may issue subpoenas to be served upon persons being or residing in Lower Canada, and the Tjower Canadian courts may issue sub- poenas to be served upon persons being or residing in Upper Canada; disobedience to which will be pun- ished by the courts in which the person disobeying such subpoena resides, upon receiving from the court from which the subpoena issued a certificate of default in obeying it. , , 2. — Collection of debts hy suit. If a creditor living in this Province has a claim r.giiinst a debtor residing here, he can sue him at law in one of tliree classes of courts. If his claim be on an account or for a breach" of contract or covenant, ■m COLLECTION OF J)EBTS BY SUIT. 15 and does not exceed one hundred dollars, he may recover the whole amount in a Division Court. If his claim exceed that sum, he can recover judgment for one hundred dollars in a Division Court, on con- dition of abandoning all his claim to the excess. If the amount of a debt be over one hundred dollars, and do not exceed two hundred dollars, it should bo sued in one of the County Courts, and even where it amounts to four hundred dollars, the whole of it can be recovered in the County Courts, if the claim relate "to debt, covenant, or contract," and be liquidated, or ascertained in any way by the acts of the parties, or by the signature of the defendant; e. g.j if the defendant has struck a balance with the plaintiff, and admitted a certain sum to be due, or if the defendant has given his 1. 0. U., or his promis- sory note for the amount. If the amount be over two hundred dollars, and be not ascertained in this way, or in any event if it exceed four hundred dollars, the action must be brought in one of the Superior Courts. In suits in the Division Courts, no costs are allowed to either party, save the disbursements for the fees allowed to the Division Court clerks, and the expenses of witnesses. In the County Courts and Superior Courts, the successful party is in general entitled to recover from the unsuccessful party the amount of his attorney's and counsel's costs as taxed by the proper oiScers in each court. The creditor who desires to sue in a Division Court is restricted in his choice of a court by regulations, the eiFect of which, may be stated as follows : i If; I'- m 16 COLLECTION OF^ DEBTS BY SUIT. The plaintiff may bring his action •* in the court holden for the division in which the cause of action arose, or in which the defendant, or any one of seve- ral defendants resides or carries on business at the time the action is brought.'' So that the plaintiff, if a promissory note or I. 0. U. is given him, or a debt is contracted, in a certain division, may always bring his action there, and if he finds that the defendant, or one of the defendants, is residing in any other division, he is at liberty to make choice of the latter. Moreover, besides the court holden for the divi- sion in which any defendant, or any one of several defendants resides, the creditor may bring his suit in the Court of any adjoining division, in case such defendant or one of several defendants reside8 nearer to the place at which the court for the adjoin- ing division is held, than to the place of the court for the division in which he resides. The judges of the County Courts are in certain cases allowed to modify these rules by special order for the convenience of parties. In the County Courts and Superior Courts no such restrictions are placed upon the choice of the place in which the action, if defended, is to be tried. All actions for the recovery of mercantile accounts and claims, or damages for breach of mercantile contracts, have been held Lo be transitory actions, and as such are not restricted to the courts having jurisdiction in any particular district, such as the County Court of any particular county, nor required, in the case of the suit being brought in a Superior I ' COLLECTION OF DEBTS BY SUIT. 17 Court, to be tried at the assizes to be held for any particular county. The defendant in a contested suit in a Superior Court may sometimes, on the ground that the weight of convenience is in favour of a trial in a county other than that chosen by the plaintiflF, have the venue changed as it is called, that is to say, have the trial come off in that other county. In any such action, moreover, the defendant may apply to have the venue changed to another county on the ground that the cause of action arose therein, but may be met by evidence on the part of the plaintiff that the weight of conve- nience is in favour of a trial in the county in which the venue has been originally laid. The rules of evidence in these three classes of courts are strictly speaking the same, except that the important rule, that a party to a suit cannot be called as a witness in his own behalf, has been modi- fied in \\,B application to certain cases in the Division Courts. Thus, in cases where the plaintiff's claim does not exceed eight dollars, and the plaintiff has given evidence sufficient to satisfy the judge that the defendant has become indebted to such plaintiff, but has not evidence to establish the particular amount, the court may, in its discretion, examine the plaintiff on his oath or affirmation touching the items of such account, and give judgment thereon accordingly. The judge may similarly call the de- fendant to give evidence as to any payments or con- tra account or set-off not exceeding eight dollars. The judge may also receive the plaintiff's books as testimony, on being satisfied of their general correct- m fil iff I w 18 COLLECTION OP DEBTS BY SUIT. i' 'I; ness, in cases where the demand docs not exceed twenty dollars. He may also in similar circumstances receive the defendants books as testimony of a payment, or a set-ofF, not exceeding twenty dollars. A power is given to the Judges of the Division Courts which is not possessed by those of other courts, of calling at their discretion whenever they consider it conducive to the ends of justice upon the defendant or the plaintiff for his evidence. And the judge may receive as testimony the affidavit or affirmation of any witness residing without the limits of the county in which he is acting as judge. In the Division Courts, the summons by which the action is commenced must be served at least ten days before the Court day, if the defendant live within the division. If ho reside without the divi- sion a greater number of days is allowed. The judge has power to order immediate execution, but generally orders payment in from seven to thirty days. Thus it will take from seventeen to forty days to obtain execution, even when the Court day happens to occur conveniently. In thinly populated divisions the Courts are held only once in six weeks or two months, but more frequently in the cities, so that considerable delay may be occasioned by the suitor being late for a court. If the defendant gives a con- fession in order to save costs, the plaintiff must never- theless wait till the court day in order to get the judgment of the court in pursuance of the confession, and the direction of the judge as to the execution. The sittings of the County Courts are held in every county four times in every year, commencing COLLECTION OF DEBTS BY SUIT. 19 on the second Tuesday in March, June, September and December in every year. The sittings of tiie County Court for the CV(y of Toronto^ commence on the jirst Tuesday in March, June, September and December, in every year. The assizes or sittings of the Superior Courts for the United Counties of York and Peel are held three times in every year, com- mencing on the Thursday next after the municipal elections in January, on the second Monday in April, and on the second Monday in October. The assizes for the city of Toronto are also held three times in every year, commencing a few days before, or immedi- ately after the assizes for the United Counties of York and Peel. The assizes for the other counties are held twice in the year, once in the vacation between Hilary and Easter terms, that is, some time between the second Saturday after the first Monday in Feb- ruary and the third Monday in May ; and once in the vacation between Trinity and Michaelmas terms, that is, some time between the second Saturday fol- lowing the Monday next after the twenty-first day of August and the third Monday in November. The time occupied in the collection of debts in the County Courts and Superior Courts may best be explained by a statement of two or three points of practice. Where a defendant resides within the jurisdiction of the court, final judgment may be entered on default of appearance, on the tenth day after service of a specially endorsed writ of summons. The writ of summons in actions on merchants' accounts and negotiable instruments, or bonds or covenants for the payment of money, can almost ;:i If' m f m m ife M = l ■I I [ ; I* il 20 COLLECTION OF DEBTS BT SUIT. always be specially endorsccl. Execution can bo issued on tho ninth day after the last day for enter- ing an appearance, or on the eighth day after tho day on which the plaintiff has a right to enter judg- ment, reckoning in the day on which he first has that right. Thus, if a specially endorsed writ be served on a defendant within the jurisdiction on the /irst day of the month, execution may be obtained by the plaintiff on a judgment by default at ten o'clock on the morning of the nineteenth, and immediately placed in the sheriff's hands. It may often happen, however, that the defendant, in order to gain time, even in a case where he has no real defence, puts in an appearance to the writ, and a plea to the plaintiff's declaration. This proceeding has the effect of delaying the plain- tiff's judgment, at the least until some day of the next assizes to which he can bring his case down to trial. If the next assizes commence so soon as the twenty-sixth day after the writ is served, the plaintiff will be liable to be delayed till the assizes following the next, if the defendant does not take any steps in his defence earlier than he is obliged to do. If the writ is served on the first of the month, it is possible to force the defendant to trial at the assizes com- mencing on the twenty-seventh, if no delay be caused by Sundays or holidays occurring in such a manner as to give the defendant an extra day to put in an appearance or to plead. The same reckoning will stand good for the County Courts. The inconvenience and risk to which a creditor could thus be exposed by the defendant appearing COLLECTION OF DEBTS UT SUIT. 91 to the writ and pleading for the purpose of delay merely — a delay whioh in many cases had the eficct of totally defeating the plaintiflF's chance of collecting his claim by execution, by giving the defendant time to make away with his property — has been partially remedied as to suits in the Superior Courts, by a statute passed in the year 1860. The effect of that statute is, that in any suit brought in either of the Superior Courts, if it shall appear to the court or a judge that the action is brought to recover a claim liquidated or ascertained by the acts of the parties or the signature of the defendant, and that no difficult question of law or fact will arise upon the trial, the court or judge may order the case to be tried before he judge of the County Court of the county in which the proceedings are carried on, at the sittings thereof next after such order. The sittings of the County Courts being held four times a year, a plaintiff by obtaining such an order is often enabled to get judgment and issue execution three or four months sooner than if he had to wait until the next assizes. In actions on promissory notes or accounts, at the trial of which the defendant does not appear, or does not make any substantial defence, and out of which it seems that no questions of law can be raised to disturb the plaintiff's verdict, the judge of the assize or of the County Court may, and generally does, grant an order for immediate execution. The effect of this order in the County Courts, is to enable the plaintiff to enter judgment at once, and issue execution upon the judgment. In the Superior ,,VUl:l I ;>^J 99 COLLECTION OP DEBTS BY SUIT. Us A ! Courts, the order for iinmcdiDto execution only enables the plaintiff to enter judgment and issue execution thereon, on the sixth day after the verdict has been obtained. In cases of urgency, however, the judge, upon being satisfied that there is danger of the amount of the verdict being lost by delay, will make an order for execution to issue forthwith. If no order be granted, the plaintiff cannot enter judg- ment till the fifth day of the following term in actions brought in the Superior Courts, and the third day of the following term in actions brought in the County Courts. The term sittings of the Superior Courts are held four times in every year, and on each occasion last for two weeks. The County Court terras are also held four tiiti^s in the year, and each sitting lasts for one week. If during the time thus allowed him, the defoudani moves against the ver- dict, and his motion is entertained, the contest will usually be decided during the term in which the application is made, and if the decision is in favour of the plaintiff, he will be permitted to enter judg. rnent as soon as the decision is pronounced, which will be in general within three weeks at the lutest after the end of term. The first step to be taken after enterinr: juHlfAii 'il is the issuing of execution. This must in liie first place be against the defendant's goods and chattels. 'J he execution binds the goods from the time that the .THit is placed in the Sheriff's hands. The fol- !' wi'jg uiticles and chattels, however, cannot be eo'viqO it sold by the Sheriff, as they are expressly exempted by statute from seizure or sale, under any COLLKCTION OF DKHTS BY SUIT. writ issued out of any court whatever in this I'ro- vinoo, namely : 1. The bed, bedding, ai.d bodstonds in ordinary use by the debtor and his family, li. The nrco?»"ary and ordinary wearing apparel of tho doV^r • 'ji) his family. 3. One stove and pipes, and une ci'aii J nd its appendages, and one pair of and- iror- one set of cooking utensils, one pair of tongs and shovel, one table, six chairs, six knives, six forks, six plates, six teacups, six saucers, one sugar basin, one milk jug, one teapot, six spoons, all spin- nint< wheels and weaving looms in domestic use, and ten volumes of books; one axe, one saw, one gun, six traps, and such fishing nets and seines as are in common use. 4. All necessary fuel, moat, fish, flour and vegetables actually provided for family use, and not more than sufficient for the ordinary con- sumption of the debtor and his family for thirty days, and not exceeding in value the sum of forty dollars. 5. One cow, four sheep, two hogs, and food therefor for thirty days. 6. Tools or implements of, or chattels ordinarily used in the debtor's occupation to tho value of sixty dollars. Among the obstacles that may be met, besides prior executions, is the claim of the landlord of tbt premises on which the goods are situated, for one year's arrears of rent which he may claim as against the Ji. fa., even although he has made no attempt to distrain before the delivery of the writ to the Sheriff. This claim for rent, however, caa never be for more than one year's arrears. There may, perhaps, be a chattel mortgage on the goods. If the plaintiff thinks it possible to dispute the vali- . • i m I ■ I m fellF' I I mm ' i iij ! ■::,! lii! 24 COLLECTION OF DEBTS BY SUIT. ditj of this chattel mortgage he can do so on grounds that will be discussed below. If he does not dispute the validity of the incumbrance, he is not obliged to wait till the mortgagee sells, but can direct the Sheriff to sell subject to the mortgage. In the absence of any dispute as to the priority of the execution or the ownership of the goods, the Sheriff in eight days after seizing the goods may sell them. After the sale he deducts his own fees from the proceeds, and pays to the plaintiff's attorney the amount of the ex- ecution, or so much thereof as may have been realized. If the proceeds of the sale are insufficient to pay off the judgment, or if no goods belonging to the defen- dant can be found, the Sheiiff returns the writ in accordance with the fact, and the plaintiff can then issue a writ against the lands of the defendant which will bind them from the date of its delivery to the Sheriff. No sale, however, can take place under the writ until one year from its receipt by the Sheriff. Before the lands can be sold they must be advertised for sale in the Canada Gazette for six weeks, and in some local paper, or by notice posted up in the Sheriff's office, or on the door of the Court House of the county in which the lands lie, for a period of three months before the sale. The lands may be advertised during the period of one year above mentioned so long as the sale is not to take place within the year. If there is a mortgage on the defendant's property the land can be sold subject to the mortgage. If the defendant happens to hold a mortgage on the property of somebody eluc, his interest cannot be seized and sold If be COLLECTION 07 DEBTS BY SUIT. 25 ns hind; but the mortgage itself can be seized under an execution against goods, and the interest and principal, when it becomes due, collected by the sheriff, and applied in payment of the judgment. If the dsfendant is joint owner of land with another, his interest can be sold. Any estate, right, title or interest in land of the defendant which can be con- veyed or assigned by him, may be seized and sold under an execution. If the plaintiff chooses, after the Sheriff has been unable to find any goods, to proceed to attach debts due to the defendant, he can do so in the following manner : Having ascertained, by examining the defendant on oath or by any other means, what debtH are owing and accruing due to him, he can obtain an order attaching those debts. This order, when served upon the defendant's debtor, who thereafter ia called the garnishee, prevents the payment of the debts to the defendant. If the gar- nishee does not dispute the debt, an order can be obtained directing him to pay over the amount to the plaintiff. This order can be enforced by execution. If the garnishee disputes his liability, an order will be made allowing the judgment creditor to proceed against the garnishee, according to the piactice pre- scribed by the Common Law Procedure Act ; and in case the liability of the garnishee is established, tlie judgment creditor will have the usual remedies by execution against him. If the plaintiff thinks that the defendant has fraudulently made away with any of his property, he can examine him " touching his estate and effects, and as to the property and means he had when the debt or liability which was the sub- i;t n ■ ,1 . ' . ■•' ■ '. . •,f %■■'.'• . -' *■ ■■*, O o US' flM ■'■! ■I y uH; liji! ! id ill 11! iin nil 26 COLLECTION OF DEBTS BY SUIT. ject of the action in which judgment was obtained against him was incurred, and as to the property and means he still has of discharging the said judgment, and as to the disposal he may have made of any pro- perty since contracting such debt or incurring such liability. ' In case it appeais from such examination that the debtor has concealed or made away with his property in order to defeat or defraud his creditors, the debtor may be committed to the common gaol for a period not exceeding twelve months. It is only in a very clear case, however, that this punishment will be inflicted. And in case the debtor, upon such examination, refuses to disclose his property, or his transactions respecting the same, or does not make satisfactory answers respecting the same, this would be considered such misconduct as would subject him to committal. These are the steps to be taken in ordinary cases where the debtor resides within the jurisdiction of the courts of Upper Canada. But where tlie debtor resides out of the jurisdiction of our courts the ques- tion is, how we are to get at him. If the, cause of action arose in Upper Canada, or in respect of the breach of a contract made therein, the defendant can be sued in our courts and judgment obtained against him according to the practice prescribed by the Common Law Procedure Act. And this can be done whether the defendant be a British subject or not. The proceediugs are to be commenced against the British subject by service (or an attempt at service) upon the defendant of a writ of summons in a particular form given by the Act. When such COLLECTION OP DEBTS BY SUIT. 27 service has been made, or attempted to be made, upon the court or judge being satisfied that there is a cause of action which arose in Upper Canada, or ill respect of the breach of a contract made therein, and that the writ has been personally served upon the defendant, or that reasonable efforts have been made to efloct personal service thereof upon the defendant, and that it came to his knowledge, and either that the defendant wilfully neglects to appear to such writ, or that he is living out of Upper Canada in order to defeat or delay his creditors, such court or judge may facilitate the plaintiff's proceedings by dispensing with some of the formalities required iu ordinary cases, and prescribing such more easy means of notifying the defendant of the proceedings against him, such as by mailing copies of the proceedings to the defendant, or posting such copies in the office of the court in which the proceedings are being car- ried on, as the court or judge may think proper. The plaintiff is obliged, however, to prove his claim in the action either before a jury or by a reference to the master of the court to compute the amount, before he can obtain final judgment and issue execu- tion thereon. When the plaintiff has obtained his judgment against the defendant he has the ordinary remedies by execution against all the property of the defendant which may be found in Upper Canada. The mode of proceeding against a defendant residing abroad who is Tiot a British subject is the same as that just described, except that a noiice of the issuing of the writ instead of a copy of the writ is to be served or reasonable efforts at sorvioe shewn. I'll iM ■fkt i I i' ii 28 COLLECTION OF DEBTS BT SUIT. If a debtor, who has been resident in Upper Canada, departs therefrom with intent to defraud his creditors, and shall at the time of his departure be possessed to his own use and benefit of any real or personal property, credits or eflfecta in Upper Canada, a remedy is given to his creditors in the shape of a writ of attachment, by virtue of which the sheriff to whom any such writ is directed, is enabled to take possession of all such property and effects, and divide the proceeds thereof rateably amongst all the creditors who shall within six months from the date of the first writ of attachment, place writs of attachment in his hands, and obtain judg- ment for their claims against the absconding debtor. But it is presumed that this remedy will be resorted to less frequently than formerly, in consequence of the provisions of the recent Insolvency Acts, of which mention will be made hereafter. A debtor departing I'rom the country, under the circumstances above mentioned, commits an act of insolvency, and ren- ders his estate liable to what is termed in those statutes, compulsory liquidation. And unless it happens that the absconding debtor has only one or two creditors — a case of very rare occurrence — pro- ceedings are more likely to be taken against his estate under the Insolvency Acts than by the old writ of attachment. To do more than draw atten- tion to the existence of that remedy, is, therefore, scarcely necessary. It is sufficient to say that the proceedings, after issue of the attachment, are very similar in their nature to those against a person residing out of the jurisdiction, except that in the COLLECTION OP DEBTS BY SUIT. 29 distribution of the proceeds of the estate, the attach- ing creditors share ratably without any priority or preference. If a creditor has good reason to believe that his debtor is about to leave the country, with the intent and design to defraud him, upon making an aflfidavit as to the amount and nature of the debt, and also of his belief that the debtor is about to abscond, he can obtain a writ of capias, under which the debtor may be arrested and retained in custody until he gives bail. The bail must be by two sufficient freeholders or housekeepers, who bind themselves that if the defendant is condemned in the action at the suit of the plaintiff, he will satisfy the costs and the con- demnation money, (i. e. the amount of the judgment,) or render himself to the custody of the sheriff of the county in which the action is brought, or that the bail shall do so for the defendant. When such bail has been put in and approved of, the plaintiff proceeds in his action in the same manner as in the ordinary suit commenced by writ of summons. When he has obtained judgment, he may either proceed by execution against the goou.i and lands of the defen- dant, or he may cause hiai to be arrested and con- fined until the judgment is paid. A debtor confined under this process, may obtain a discharge from custody upon application to a judge of the court from which the writ issued, under the provisions of cap. 26 Con. Stat. U. 0., upon shewing that he is not worth twenty dollars, exclusive of his necessary wearing apparel, &c., but such a discharge does not operate as a satisfaction of the j\ ' ..'■V .::\--x •..>/* O" 80 COLLECTION OF DEBTS BY SUIT. W ! iii deprive the plaintiff of his remedies against the debtor's goods or lands. If the plaintiff, after recovering judgment in any of the courts, and in any of the ways above men- tioned, ascertains that the defendant has property in Lower Canada, or in England, Ireland, Scotland, Wales, or any of the British Provinces, he may have recourse against such property by suing in the pre per courts of any of these countries upon the judgment obtained here. This, in ordinary cases, is not very difficult or expensive, as it is only necessary, in the first instance, to prove the judgment of the court here in the technical manner prescribed by the rules of evidence of these countries, as reguJiated by Impe- perial statute 14 & 15 Vic. cap. 99; that is to say, by producing a copy of the judgment obtained in Canada, certified by the seal of the court, or the signature of the judge thereof if the court has no seal, in which case the judge must attach a state- ment to his signature that the court whereof he is judge has no seal, but no further proof i« required of the seal or signature. In the United States, the same remedies are afibrded, and the mode of proof of the judgment is almost the same. It very seldom occurs that the plaintiff is obliged to go into the merits of his case again, uudei%ny form of defence that may be raised. When a creditor who has obtained a judgment abroad, desires to enforce it here, he must bring an action on the judgment here. The proof of^ foreign judgaieuts ia our courts i« much facilitated by Con. Stat. Can. cap. 80, sec. 1, as also the proof in Lower Canada of the judgments ill! FRAUDULENT PREFERENCES. 81 of our Courts of Record by sec. 4 of the same act. The manner of proving a judgment under this statute is much the same as that under the Impe- rial statute of which we have just spoken. The remedies of creditors under the laws of this Province are influenced very much by certain statutes peculiar to this Province ; and modified and compli- cated by the recent Insolvent Acts, passed in 18G4 and 1865. 3. — Ads respecting Fraudulent Preferences. An Act respecting mortgages and sales of personal property : Con. Stat. U. C. cap. 45. An Act res- pecting the relief of Insolvent Debtors : Con. Stat. U. C. cap. 26, ss. 17 & 18. These are some of the enactments which, prior to the Insolvent Acts, have affected the rights of creditors most seriously, liefore any of these acts were passed, the law may be said to have stood as follows : A man in difficul- ties with his creditors might dispose of his land by giving a deed of it to a' creditor, in satisfaction of a debt ; or incumber it, by mortgaging it to one credi- tor to the amount of his debt, to the prejudice of the rest of his creditors; and if the transaction were roasouable and fair as between the two, the other creditors could not object. He could also liand over his goods and chattels, or a portion of them, to any creditor, in satisfaction of a debt, or mortgage them to hiiu as security for a debt, to the exclusion of other creditors. Except so far as the recent Insolvent Acts are concerned, the law as^ to the disposal of real estate m ■ .*''■''!' ,1 .■ " ft; ^. ■ ^ .■'■■'■Ir ' 0^':,i Lrf ■- ; k.^ * •»;■'' ■■"'^21 82 FRAUDULENT PUEFBKENCES. : ! I i remains the same; but preferential transfers of goods and chattels are restrained by sec. 18 of the Act for the relief of Insolvent Debtors above mentioned. Many disputes have arisen about the application of the provisions of this section to individual cases ; so that all that we can say in general words on the sub- ject is, that this section renders assignments of per- sonal property made by a person in diflficulties, with intent to defeat or delay creditors, or to prefer one creditor over another, void as against the creditors of such person. It was formerly not unusual for a man to make a secret transfer of his goods and chattels by Bill of Sale, or privately to encumber them by way of mort- gage to their full value, and to retail* possession of them and obtain the commercial credit likely to be given to him on account of his being supposed to own them, to the great disappointment of creditors who might be dispbsed to resort to them for satisfac- tion of their claims. However, the Act respecting mortgages and sales of personal property has effectu- ally put a stop to such clandestine transactions, by requiring that " every mortgage or conveyance in- tended to operate as a mortgage of goods and chattels made in Upper Canada, which is not accompanied by an immediate delivery and an actual and continued change of possession of the things mortgaged," and " every sale of goods and chattels not accompanied by an immediate delivery and followed by an actual and continued change of possession of the goods and chattels sold," be recorded within five days after the execution of the in.strument in the office of the 'H:' FUAUDULUNT PIIKFEUENCES. 33 clerk of the County Court of the couuty or union of counties in which the mortgagor or bargainor resides at the time of the execution thereof, or if he be not resident in Upper Canada, then of the county or union of counties in which the goods are situated at that time. ]3esides an affidavit of the execution of the instrument, an affidavit is required from the person to whom the goods are mortgaged or sqM, of the bona fides of the transaction. In order to pre- serve the validity of the instrument for a longer period than one year it is necessary to renew it by recording a true copy of the first instrument, together with a statement shewing the interest the person to whom it is made still has in the property comprised in it, and a full statement of the principal and inte' . est due thereon, and an affidavit verifying these stat( . ments and asserting the bona fides of the transaction, in the office of the County Court where the original is recorded. And this must be done once in every year during which it is intended to keep the instru- ment on foot, within the last thirty days of the year. The 17th section of the Act respecting the relief of insolvent debtors provides, that "in case any person being at the time in insolvent circumstances, or unable to pay his debts in full, or knowing himself to be on the eve of insolvency, voluntarily or by collusion with a creditor, gives a confession of judg- ment, cognovit actionem^ or warrant of attorney to confess judgment, with intent to defeat or delay his creditors wholly or in part, or with intent thereby to give one or more of the creditors of such person a preference over his other creditors, or over any one i->. .■r i^ < I 4 M I *; •>-v m m 84 MAKUIED WOMEN'8 ACT. or more of such creditors, every such confession, cngnimt actionem^ or warrant of attorney to confess judgment, shall bo deemed and taken to be null and void as against the creditors of the party giving the same, and shall bo invalid and ineffectual to support any judgment or writ of execution." This enactment has checked the practice of giving con- fessions of judgments for fraudulent purposes ; but it has been decided that if a man is sued by two oreditorg, and chooses to let one obtain judgment by default of appearance, while he defends the action brought by tho other, the latter cannot impeach tho judgment obtained by the former, on the ground of fraudulent preference, if it has been obtained bond fidBf and tho writ of execution issued thereon deliv- ered to the sheriff to he executed, and not merely for the fraudulent purpose of protecting the debtor against subsequent executions. Tho advantage to bo derived from a preferential judgment is now very trifling, as it is always in tho power of the other creditors to put tho debtor's es- tate into bankruptcy under the recent Insolvent Acts, and thus put themselves upon the same footing with the creditor who has obtained the judgment. 4 — Married Womens^ Act. An Act respecting certain separate rights of pro- perty of Married Women, Con. Stat. U. C, cap. 73. IJy section 1, it is enacted that every woman who has married since the 4th day of May, 1869, shall . '.ti MAHUIED WOMEN S ACT. 35 iind may notwithstandinp; her oovorturc, have, hold and enjoy all her real and personal property whether bclonrijinf;; to her before marriage, or nerjuired by hor by inheritance, deviHe, bequest or j^ift, or as next of kin to an intestate, or in any other way, after mar- riage, free from the debts and oblifi;ations of her hus- band, and from his control or disposition without her consent, in as full and ample a manner as if she con- tinued sole and unmarried, any law, usage or custom to the contrary notwithstanding ; but this clause shall not extend to any property received by a mar- ried woman from her husband during coverture. IJy section 2, that every woman who on or before the 4th day of May, 1859, married without any mar- riage contract or settlement, shall and may, from and after the said 4th day of May, 1859, notwithstand- ing her coverture, have, hold and enjoy all her real estate not then taken possession of by hor husband, and all her personal property not then reduced into the possession of her husband, whether belonging to her before marriage or in any way acquired by her after marriage, free from his debts and obligations contracted after the said 4th day of May, 1859, and from his control and disposition without her consent in as full and ample a manner as if she were sole and unmarried. In order to explain the effect of those and other provisions of this Act, it may be better to state short- ly what were, formerly, the relations of husband and wife with respect to the wife's property. If a man married a woman who was entitled, in her own right, to any freehold estate in a lot of land, the husband I f. it f/.» ,,,;.. ■-'M :**-1 80 MAHRIKD WOMEN S ACT. tl 111 S"i! !; at once obtained the right to collect the rents of the liuid, or such Hhnro of thorn ns she was entitled to collect during her life at least, though ho could not dispose of the land itself without getting her to join in the conveyanct If her estate in the land were an estate in fue simple, and she died without having given birth to a child, the land, and all right to its rents, passed away from her husband to her heirs. If she bure him a child, he became entitled, whether the child aurvived its mother or not, to enjoy the rents and profits of the land during his life, becoming what is called the tenant by the curtesy. With regard to peraonal property in the wife's ac- tual possession, that is, goods, chattels or money, the husband had a light to appropriate it all as soon as he was married to her, or as soon as it came into her possession if she received it after marriage, if his right was not restricted by any settlement or convey- ance to her separate use. lie might dispose of it in his lifetime or by his will. It was subject to his debts, and if he died intestate, the wife had no better claim to it than to any other of his effeots. With regard to such of the wife's personal pro- perty as consisted of choses in action that is, debts and effects, which could only be got into possession by an action at law, the husband's rights were some- what different, and varied according as the pro* ceedings against the persons liable to be sued were to be taken in the courts of law or in the Court of Chancery. If the property was of such a nature that it could be recovered by a suit in the courts of niw, such as money due ou promissory notes, bills iir MAURIRD WOMEN'S ACT. 37 of oxohan^o or boihJf, the husband had a right dur- ing the lifetime of his wife, to recover it by action and appropriate it to his own use. Ho could also ne- potiato and endorse over in his own name any notes, cheques or bills payable to his wife's order. If he failed to sue and recover judgment for it, or should not have received the money in his lifetime, the wife was on his decease entitled to the chose in action, in the same manner as she was before marriage. But if she died before her husband had appropriated, or reduced the chose in action into his possession, it was necessary for him, before ho could proceed to recover it, to take out letters of administration to his wife's estate, though as soon as he had done so, and recovered the property, it belonged absolutely to himself, subject however to his wife's debts. If the property was of such a nature that it could not be recovered without resorting to the Court of Chancery, (of which kind legacies are an example,) and it became necessary to sue there for it, the hus- band's right to it was qualified by a rule of equity that the Court of Chancery would not assist, nor, if the wife Bhould object, would allow the husband to recover or receive any property of the wife recovera- ble only in that Court,' without his settling a due proportion of such property on his wife and children. The right which the court thus conferred on the wife was called her equity for a settlement. If the husband could get possession of any property, or receive payment of any moneys of this sort, without resorting to the court, he was entitled to it absolutely, but the wife might at any time after the money was IWT, ■t .\: '■ % v\ • t ■■■''■ # sasstm AH 88 MAKRIED W03IEN S ACT. payable, and before it was actually paid over to the husband, file a bill insisting upon her equity for a settlement, and the court would compel him to settle a suitable proportion upon her and her children. The usual terms which the Court of Chancery im- posed were the settlement of one-half of the property on the wife j and in some cases even more has been so settled by the decree of the court. Now this state of the law is modified by the Act under discussion in several important particulars. First of all with regard to real estate where the mar- riage has taken place after the 4th May, 1859, the husband has no right to receive the rents and profits of any of it. Where the marriage has taken place before that date, the husband has no right to collect the rents and profits of any real estate which was not at that date taken possession of by him, or which has been given to the wife since that date. The husband's right to the tenancy by the curtesy above mentioned is however expressly reserved by this Act. With regard to personal property the eflFect of the Act is, that the husband cannot appropriate his wife's personal property or dispose of it, unless she consents to such disposal. By section 16 of the Act the married woman is enabled to dispose of her real or personal property by will, whether such property was acquired before or after marriage, to, or among her child or children, issue of any marriage, and failing there being any issue, then to her husband or as she may see fit. The husband's right to the tenancy by the curtesy is however reserved. There must be two or more Ifl MARRIED WOMEN S ACT. ;VJ witnesses to the will, neither of whom is the woman's husband. Formerly the creditors of the husband hud a right to seize whatever property of the wife the husband had a right to appropriate himself j and the creditors of the wife could look to the husband for payment of her debts. But the Act under consideration alters the law very materially. As to the liability of the wife's property for her husband's debts, the law, as altered by the first and second sections of the Married Woman's Act, is, that the property of the wife is no longer liable for the debts of the husband, in case the marriage took place after the 4th May, 1859, or in case it took place be- fore that date, for debts since contracted, unless such property had been then reduced into his possession. Sections 1 and 2 of the Act are to be read in connection with section 19. The Act is intended to, and does only, affect property which has not been settled on the wife by any ante-nuptial settlement or contract; and where part only of the wife's property has been settled upon her on her marriage, the remainder of it, and all she may acquire after mar- riage, will be protected by the Act. The husband is only liable for his wife's debts contracted before marriage, in case he takes an interest in his wife's separate property under a marriage settlement, and then only to the extent of that interest. This act, though containing many important provi- sions, has omitted to give the wife any power to ren- der herself legally liable on a contract made by her during her coverture. Even before the Act, how- a :fl "ill M Ml m r fj IP li; 40 RANKRUPTCV. ever, the married woman's separate property would be held liable in equifi/ to satisfy a bond for the payment of money or a promissory note signed by her alone during her coverture. As there is nothing in the Act to aifect this liability, she would still be liable to answer such a claim out of her property. As the wife would still, in order to avail herself of the protection afforded by the Act against the acts of her husband, be obliged to resort to the aid of the Court of Chancery, it seems that that court would retain its former jurisdiction for the purpose of enforcing contracts made by her during coverture. As to the wife's equity for a settlement, the act under discussion has rendered the doctrine obsolete in Upper Canada by securing to her the whole of her property instead of that proportion which the Court of Chancery allowed to her. 5. — Bankruptcy . Insolvent Acts of 1864 and 1865, 27 & 28 Vic. cap. 17 : 29 Vic. cap. 18. The means which the Bankrupt laws afford, and in many cases practically dictate, to the creditor, of seeking payment of his claim, are widely different from, and sometimes conflict with, those remedies by action, the nature and process of which we have endeavoured to explain. \ The Bankrupt laws endeavour to secure an equal division of assets among creditors, while the ordinary process of actions at law merely enables creditors to compote in a general scramble for the property of ihe TJANKRUPTCY. 41 debtor. The effect of the introduction of these laws into Upper Canada will be, that the common reme- dies of a creditor by action will only be pursued, either where there is a real dispute between him and his debtor as to the liability of the latter, or where there are no creditors to compete with the one who sues. The way in which the Bankrupt Acts effect their object is by withdrawing the property of the debtor, not only from the possession or control of the debtor himself, but also from the power and out of the reach of his creditors, so far as the ordinary process of execution is concerned ; by giving all the creditors an opportunity to come in and prove their debts ; by winding up the affiiirs of the debtor's estate, and distributing ratably among all of the creditors the assets thus collected and realized. If more than suf- ficient is found to pay all the creditors in full, the sur- plus is returned to the debtor. But even where there is not enough to pay all the creditors in full, the debtor can usually obtain his discharge under the provisions of these acts; and he is not necessarily obliged to wait till his estate is completely wound up before applying for such discharge. In order to accomplish these objects, it is necessary that the estate of the debtor be transferred to the hands of some person willing to undertake the duties of adjusting and dis- tributing it. This can be done by the voluntary act of the debtor, or be brought about by his creditors. The debtor may voluntarily make an assignment of his property, which will give all creditors a fair chance of sharing equally in it. Under the act of :m K' '■■■ . k^ : •t> 'L: -nil mi lli- ^ ill, 41 'I I- I 42 BANKRUPTCY. 1864, the creditor, before he could make a valid assignment of his property, was obliged to call a meeting by advertisement, in a prescribed form, giving at least two weeks' notice of his intention, and there being thus in every case a delay of a fort- night at least, a creditor who had commenced a suit might within that time obtain execution. If the creditors' Jl. fa. was placed in the sheriff's hands any time, however short, before the execution of a deed of assignment, it would, under the provisions of that act, have a preference over the claims of creditors under the deed of assignment. The act of 1865 has, however, mended this matter in two impor- tant particulars. In the first place, the debtor can without giving any notice whatever to his creditors, or any one else, and without any preliminary formali- ties, make an assignment to any official assignee appointed under the act of 1864. In the second place it enacts, " that no lien or privilege upon either the personal or real estate of the insolvent shall be created for the amount of any judgment debt, or of the interest thereon, by the issue or delivery to the sheriff of any writ of execution, or by levying upon or seizing under such writ the effecta or estate of the insolvent, unless such writ of exocution shall have issued, and been delivered to the sheriff at least thirty days before the exf cution of a deed of assignment," or the issue of ri writ of attachment in bankruptcy. This provision will enable a debtor, by making an assignment to an " ofl&cial assignee," to secure an equal distribution of his assets in every case in which he takes it into his head to do ,!:, iV BANKRUPTCY. 43 SO, before execution has actually issued against him. If the creditor does not wish to avail himself of the opportunity of making an immediate assignment, he fchould call his creditors together by the advertise- ments and notices prescribed by the Act ; and when the creditors are met together in pursuance of the notice, exhibit to them a schedule or list of his lia- bilities in the form prescribed by the act. This list must be sworn to by the insolvent. He must also give a statement of the amount and nature of his property ; and he must produce all his books of account, and all other documents and vouchers, if required to do so by any creditor. At such meeting the creditors may name an assignee, who need not be an oificial assignee under the act. If a vote of the creditors is taken upon this step, each creditor repre- sents in such voie only the amount of direct liabili- ties of the insolvent to him, and the amount of indi- rect liabilities of the insolvent to him, then actually overdue. Thus the choice of the assignee will depend on the creditors present, and the duly authorized agents of absent creditors, representing the majority in value of his liabilities (of the nature just mentioned). The insolvent then makes an assignment to the assignee thus chosen, by a deed, in a simple and con- cise form, given by the Act. The effect of the assignment is " to convey and vest in the assignee the books of acoount of the insolvent, all vouchers, accounts, letters and other papers and documents relating to his business, all moneys and negotiable paper, stocks, bonds and other securities^ us well as all the real estate of the insol- m ■*% )r.\ ■■. ■■' \ ,*' ^'■• . "tj m V ' • t " ;*• i*M ■.-'■''1 ■'►ij:!! I'JI in; I Il|!i! 44 BANKRUPTCY. vent, and all his interest therein, whether in fee or otherwise, and also all his personal estate and movable and immovable property, debts, assets and eflFects which he has or may become entitled to at any time before his discharge is effected, except only such as are exempt from seizure and sale under exe- cution, by virtue of the several statutes in such case made and provided." It will be observed that property acquired since the assignment, and before the discharge, passes by the assignment. Having traced the debtor's property into the hands of the assignee under a voluntary assignment, we will briefly describe the process of the compulsory liquidation under the Acts. These Actb declare what acts or omissions on the part of a debtor shall render his estate subject to compulsory liquidation : (a) If he absconds, or is immediately about to abscond, from the Province with intent to defraud, or defeat, or delay the remedy of, any creditor, or to avoid being arrested or served with legal process, or if being oi-t of the Province he so remains with like intent, or if he conceals himself within the Province with like intent ; or if, being a trader, he permits any execution issued against him under which any of his chattels, lands or property are seized, levied upon, or taken in execution, to remain unsatisfied till within forty-eight hours of the time fixed by thp SheriflF, or other officer, for the sale thereof; (h) Or if he secretes, or is immediately about to secrete, any part of his estate and eflFects with intent BANKUUPTCy. 45 to defraud his creditors, or defeat or delay their demands, or any of them ; (c) Or if ho assigns, removes, or disposes of, or is about, or attempts to assign, remove, or dispose of any of his property with intent to defraud, defeat or delay liis creditors, or any of them ; (d) Or if with such intent he has procured his mon€y, goods, chattels, lands, or property, to be seized, levied on, or taken, under or by any process or execution, having operation where the debtor resides or has property, founded upon a demand prov- able under the Act, and for a sum exceeding $200, and if such process is in force and not discharged by payment, or in any manner provided for by law ; (e) Or if he has been actually imprisoned, or upon the gaol limits for more than thirty days, in a civil action founded on contract for the sum of $200 or upwards, and still is so imprisoned or on the limits ; or if, in case of such imprisonment, he has escaped from prison, or from custody, or from the limits ; (/) Or if he wilfully neglects or refuses to appear on any rule or order requiring his appearance, to be examined as to his debts, under any statute or law in that behalf; (:v. iilll 46 BANKBUPTCY. assignment of bis property for the benefit of bis creditors, otbcrwise tban in tbe manner prescribed by the Acts. In any of these cases be is deemed to have com- mitted an act of Bankruptcy. It is to be observed that, with one exception, the acts and omissions above enumerated apply to debtors generally. The exception is introduced by the recent Act to amend the Act of 1884, the third sec- tion of which declares it an act of bankruptcy on the part of a ." •.:^i Rignmcnt under tho Acts to un uflfioial assi^nioo, who may, upon such asKignmorft, apply fur and obtain from tho judj^o, an ordor ht;iyin^ tho proceedinga under the attachment, tho costs of tho nttauliment oouiing out of the estate, and forming a first ohargo thereon. Or the debtor may petition tho judge to smpend further proceedings against him, and upon the debtor complying with certain specilied requirements and obtaining tho consent of tho majority in number and three-fourths in value of the creditors for sums above $100, present at a meeting called by tho judge to consider the petition, proceedings will be suspended for a period of three months. Should the insolvent not take any of the above steps to relieve himself from the attachment, within the limited time, or, if having done so, his application is dismissed, tho next proceeding by tho creditors is the appointment of an assignee. For this purpose the judge, upon tho application of the plaintiff in the attachment, or of any other creditor to whom the further prosecution of the proceodings has been entrusted, orders a meeting of the creditors to be held before him or any other judge, which meeting is called by advertisements and notices published and sent in the same manner as in the case of a vol- untary assignment. The creditors present at such meeting, and the duly authorised representatives of absent credituis, then propose some person as assignee, and, if they are unanimous in their choice, the judge appoints FIANKHUI'TCT. 51 tho person so chosen to bo tho ofl'ujial ii.s^ij^iieo. If tliey iiro not unaniuiouH, the jud^o luiiy iippoint either Olio ol'tho persona propdied by the creditors, or ono of tho odieial assii^nocs uppoiiited un(h!r tho Acts. Upon tl»o appointment of tho ussij^nco tho guar- dian delivers to him tho estate and elFocts attacdiod and lianJed over to him by tho SheiilF. Tho ellect of his appointment is to vest in tho assigneo " tho whole ol' tho estate and elFocls of tho insolvent as existing at tho date of tho issue of tho writ, and which may accrue to him by any title whatsoever up to tho time of his discharge under tho Act, and whether seized or not seized under the writ of attach- ment, in tho samo manner and to tho same extent, and with tho samo exceptions, as if a voluntary as- signment of tho estate of tho insolvent had been at that date executed in his favour by the insolvent; " and by sectijn 12 of tho \ct of 18G5, tho operation of the appointment is oxtonded " to all tho assets of tho insolvent of every km 1 and description, although they are actually under seizure under any ordinary writ of attachment, or under any writ of execution, so long as they are not actually sold by the SheriiF or Sheriff's officer under such writ." The effect of section 12 is to deprive tho Sheriff of tho cus- tody of the goods in his possession if they have n<«t been actually sold at thctimeof theappuinttuentof tl e assignee, but not to deprive the execution or attaching creditor of any lien he would have independently of this section. The other important changes in the law with respect to prior writs of execution, both in cases f H \ . t V • ■ 1 ■, A is \ ^Mi ' ^i0i ,m\ (11 II m m US.'Mi 62 BANKUtPTCY. of voluntary assignment and of compulsory liquida- tion, eiFected by the Act of 1865, have already been noticed in speaking of voluittary assignments, and we have seen that " no lion or privilege upon either the real or personal estate of the insolvent shall be created for the amount of any judgment debt or of the interest thereon, by the issue or delivery to the SheriflFof any writ of execution, or by levying upon or seizing under such writ, the eflFects or estate of the insolvent, unless such writ of execution shall have issued and been delivered to the SheriflF, at least thirty days before the execution of a deed of assign- ment, or the issue of a writ of attachment under the Act." 13y these equitable provisions, one great induce- ment on the part of the more pressing creditors to secure a judgment against the debtor is swept away, all the creditors are put upon the same footing, and one great design of the Acts, namely, that all the creditors of a person who is unable to pay his debts in full, should share his estate equally, more nearly effectuated. •We have now brought the subject of compulsory liquidation up to the point at which we left that of voluntary assignments, namely, the appointment of the assignee and the vesting in him of the insol- vent's estate and effects. The proceedings from this point down to the discharge of the debtor are nearly similar in each case. The succeeding remarks therefore will be understood to apply generally to an estate in process of winding up under either of the modes prescribed by the Acts. nil or O suits, attht insert of th apart co-par action the mil the di« avail I B.VNKUtJI»TCV. 53 tn order to make the assignee's title as complete as possible, the Act provides, in the case of an insol- vent possessed of real estate, for the registration, in the Registry Office of the County in which the lands lie, of the deed of assignment or the order appointing the assignee, as the case may be. We have thus seen in what manner the estate and effects of an insolvent come to the hands of his as- signee, and also the title thereto which the assignee acquires by force of his appointment. We next proceed to speak of the assignee's rights and duties. An assignee has, as before shown, vested in him the property and rights of the insolvent as existing at the date of the execution of the deed of assign- ment, or the issue of a writ of attachment, as the case may be. Hence the powers and rights which he acquires are of a very extensive character. He may, in his own name, as such assignee, sue for the irecovery of all debts due the insolvent, and may take all pro- ceedings, with respect to the estate, in regard to prosecuting or defending suits, which the insolvent might have taken, and may carry on or defend all suits, by or against the insolvent, which are pending at the time of his appoint uiuut, and have his name inserted in the proceedings in such suits, in the place of that of the insolvent. And, if the insolvent is a partner in an unincorporated trading company or co-partnership, the assignee has all the rights of action and remedies against the other partners, which the insolvent could have exercised against them after the dissolution of the firm, and he may immediately avail himself of these rights and remedies as if the I' . , ■' ; ..:! V:'"''' ■ . \ ,; r : .*■'.' ■ r. ^^'^'^'1 t. "'•'[] ,;■ %y-n 1 ,*■,'' ■■',*'■" ■^- i;,v.r-'' l* ' *f • ■ i- ■• M 'it ■■■ [■/ ft*/:v ■','■''''■ ■p..* ■: l\ if'' '' ■ '■■;' -■- t 4 ^e ' 1 1^ K-%. 1 ', ■ ; ' 't )■ tv , ' .^* j: ■ t ■i . 54 BANKUUPTCY. m iM « ■ co-partnership or company had in fact expired by efflux of time. Moreover, it is provided that " all powers vested in the insolvent, which he might legally execute for his own benefit, shall vest in and be executed by the assignee, in like manner and with the like clrect, as they were vested in the insolvent and might have been executed by hiin." The benefit of such powers, when executed by the assignee, accrues to the estate, just as if the power had been executed by the insol- vent for his own benefit, immediately before the assignment. But, as the assignee only represents the insolvent so far as the insolvent's own property is concerned, and not in matters of trust or confidence reposed in him for the benefit of others exclusively, no power vested in the insolvent, or property or effects held by hiiu, as trustee or otherwise, for the benefit of others, vests in the assignee. So far, then, as the above rights are concerned, the assignee may be said to stand in the insolvent's shoes. To such an extent, indeed, is he treated a-, standing in the same position as the insolvent did with regard to the estate, that, when suing for the recovery of debts due to the insolvent, he may be met with any defence which would have been available against the insolvent; and the Act of 1805 now carries this principle of representation to the length of allowing a person in- debted to the insolvent, but having a counter claim agiiiiist him, to .sot off his cliiiiu against that of the assignee when sued by him, as he could if he had been sued by the insolvent. Until the Act of 18(55 came into operation, he could not have done this; iit •;.«' BANKRUPTCY. 55 but he could have been compelled to pay the assignee the whole amount he owed the insolvent, and ilien ho was only entitled to his distributive share of the insolvent's estate in payment of his claim against him. The principal duties of the assignee are to wind up the estate and divide the proceeds equally amongst the creditors, taking the advice of the cred- itors, at any time he thinks proper to call them together for the purpose of obtaining it, upon any matter relating to these or any other objects con- nected wi* K the estate, upon which he may deem it necessary nsult them. In prOv.o..'umg to wind up the estate, the assignee, besides being authorized to collect the debts and perform the other acts which we have mentioned, is also empowered to sell the bank and other stocks, and all movables belonging to the insolvent. But when about to dispose of the movables or simple per- sonal property, the assignee, in case the insolvent held under a lease, may be met by a claim to which the Act gives a privilege beyond that of other claims. This is the landlord's lien for the rent of the premi- ses upon which the goods are. Until recently, the landlord wns permitted to claim as many as six years rent, and to distrain for the full amount if so much was due. By the Act of 1865, however, his pvivi- logcd claim is restricted to one year's rent ; so that ho is only entitled to have that amount paid hiiu in full, and, if more is due for arrears, he onlv ranks upon the estate with the other creditors for the residue. . '> ,. .■sl^ r : ,« '■'.•' An ir ::'"*t: 56 BANKRUPTCY. Wboij part of tlie insolvent's estate consists of lease' .id property, the value of wliich is greater than the amount of rent paid for it, the assignee, upon making a report to the judge shewing his estimate of its value in excess of the rent, may obtain an order from the judge, under which he may sell the rights of the insolvent therein, subject to such conditions as may be imposed by the judge, and subject also to all the covenants contained in the lease. If the lease of the property is for a longer period than the jear cur- rent at the time of the insolvency, and the property is not of greater value than the rent paid for i*, the creditors may, within a certain time before the end of that year, authorize the assignee to retain the property for the use of the estate, or give directions for ren- dering it up and cancelling the lease at the end of the year, is they may think most expedient. In the latter case, however, the lessor of the premises is •ntitled to claim damages, if he sustains any, by such termination of the lease ; and if damages are awarded him, he ranks for the amount upon the estate as an ordinary creditor. The assignee may also sell the real estate of the insolvent, after due compliance with certain requi- sites as to advertising, and using other proper precau- tions to prevent the property from being sacrificed. Upon a sale of the lands being effected by him, the assignee is further authorized, if the creditors consent, to grant such terms of jredit as he may deem proper for any part of the purchase money; and, if there is no prior incumbrance, to take back a mortgage from the purchaser for the pnyment thereof It may BAHKRUPTCV. 57 happen, that at the time the assignee comes into possession, the whole or part of the lands of the insolvent are under seizure or in process of sale under an execution against them. In such a case th" assignee may either permit the sale to proceed — in which event the proceeds are to be paid over to him iuimediately after the sale is effected, for distribution according to the rank and priority of the claimants thereon — or he may apply to the judge for an order staying proceedings under the execution, and take the disposal of the lands into his own hands. The purchaser from the assignee acquires the same title to the lands which the insolvent had at the date of the execution of the deed of assignment or issue of the writ ot attachment, as the case may be. So that, if there are mortgages upon it prior to that date, it can of course only be sold subject to them. If, how- ever, the prior incumbrances consist only of execu- tions against the lands of the insolvent in the hands of the sheriff at the date of the assignment or issue of the writ of attachment, and the assignee has properly taken the disposal of the lands into bis owu hand:", the purchaser from him will acquire the same title which he would if the sale were made by the sheriff, and the purchaser had bought from him. If, having done his beijt to collect all the debts due the insolventj the assignee finds that there yet remains uncollected a number of doV 3, the collection of which would be more expensive than protitable to the estate, he may with the consent of the jrediiors get an order from the judge permitting him to sell these debts by public auction in lots or separately according to their G m m. j»-.- f ■■'.l' ^ ST.. ^,' m 68 BANKUUrXCY. If,.^,i^ lit'. i'' jj • fii : mi 1 i h:-, ■ amount. The purchaser at such sale of any such debts ib powered to sue for them in his own name, the only . atliority required to enable him to exercise such right being a bill of sale signed and delivered to him by the assignee. In order to obtain a full disco- very of the insolvent's estate, the Act provides for his examination under oath as to his assets and liabilities, by the creditors or the assignee, at a meeting called for the purpose. While the assignee is thus engaged in disposing of the property and realizing the assets of the insolvent, he is also ascertaining the number of his creditors, the nature and amount of their claims, the manner in which they are secured, if at all, and the nature and amount of such security. The creditors are called upon by advertisement and mailed circulars to produce their claims within a period of two months from the date of the assign, ment or the appointment of the assignee. Within this time, each creditor must present a statement of his claim, shewing the nature and particulars thereof, and specifying what security, if any, he holds, and its value ; all which must be verrfied by the affi. davit of the creditor himself, or that of his agent or clerk, wlio has a knowledge of the matter. And provision has been made for the proof of as many as possible of the demands which form a charge upon the insolvent's estate. Not only all debts due and payable by the insolvent at the date of the execution of the assignment or issue of the writ of attachment, but also all debts due (sic in the Act), but not then actually payable, subject, however, to a rebate of i nterest, have the right to rank upon the estate. DANKKUPTCV. 59 And any person then being, as surety or ollierwise, liable for a debt of the insolvent, is entitled, if lie is subsequently obliged .to pay the debi., to stand in the place of the creditor whom ho has paid, if the credi- tor has proved the claim against the estate; and if tiie creditor has not proved, then the surety has the right to prove the claim, and rank upon the estate for the amount, as if he were the original creditor. Other provisions are introduced for the protiiction of persons whose claims depend upon any condition or contingency which does not happen previous to the declaration of a dividend. Clerks and others in the insolvent's employ in and abo'-' is business, to whom arrears arc due, are entitled to receive three months* salary or wages in full. Costs of suits against the insolvent, if incurred previously to the assignment, are to be added to the original debts, to recover which the suits were brought, and rank upon the estate in the same manner; but no costs incurred j'fter due notice of assignment, or issue of attach- ment, are allowed. A creditor who holds a security from the insolvent or from his estate, is required to put a value upon ifc upon oath, and the assignee may, with the authority of the other creditors or in case they give him no directions regarding it, at his own discretion, allow the creditor to retain the security at his own valua- tion ; or he may get an assignment of it from the creditor, at an advance of ton per cent upon tlio cre- ditor's valuation, to be paid out of the estate so soom as the assignee realizes the socui'ity. In eltliot mistj the creditor still ranks upon the estate fur tlio . ' ^i-t "m m , SI s^s'fs ' •■#'': ■ ■ f 't';I ■■'it?J "; :• >■■■•■■>, ■(■.' GO BANKKUPTCY. difference bot\vccn the value at which the security is retained or assigned by him and the amount of his whole claim. Section 19, of the Act of 1865, seems to contemplate the case of a creditor, holding a security in the shape of a mortgage upon real estate or ships or shipping, taking from the as- signee an assignment of the equity of redemption in discharge of his claim, in which case it is made a condition of the assignment that the property mort- gaged shall only be assigned and delivered to the creditor subject to all previous mortgages, hi/potM- ques and liens thereon holding rank and priority be- fore his claim, and upon his assuming and binding himself to pay all such previous mortgages, hypothh- qu€8, and liens, and upon his securing such previous charges upon the property mortgaged in the same manner and to the same extent as the same were pre- viously .secured thereon ; and thereafter the holders of such previous mortgages, hypothlques and liens, shall have no further recourse to or claim upon the es- tate of the insolvent The effect of this enactment is to render a creditor who retains his security and takes an assignment of the equity of redemption un- der this section, personally liable for any deficiency in the payment of the prior encumbrances which may arise upon the sale of the property or otherwise, while at the same time it relieves the estate from any liability under such circiimstances. The holders of the prior encumbrances are debarred from all remedy against the estate for any deficiency, and forced to look for payment to the creditor who has assumed the liability. An important change in the DANKRUPTCY, 01 rights of sucb prior encumbrancers may thus bo ciFcctod, apparently without any consent on their part, or giving them any voice in the matter. Having thus got in, sold and converted into money the estate and effects of the insolvent, and having also ascertained and fixed the amount of the claims thereon, the assignee next proceeds to divide the proceeds rateably amongst the creditors. A dividend sheet is from time to time prepared by him, and if no objection is made thereto within a certain time after notice given, the dividends so declared are paid over, and this process is continued until the estate i^ exhausted. After declaring a final dividend, the assignee pre- pares and exhibits his final account; and then, after paying into a bank any unclaimed dividends, and producing a bank certificate of such deposit, may petition for and obtain his discharge from the oflSce of assignee. If there is any surplus remaining after paying all claims in full with interest, the insolvent is entitled to have it paid over to him, by order of the judge upon petition to him, after due notice to all concerned. The next step in the regular course of proceedings to be described, is the discharge of the insolvent, the main object contemplated by the Acts. It is not to bo supposed, however, that a discharge cannot be ob- tained until all tlvit has been heretofore described has been accomplished. The insolvent is not obliged to wait until the estate in the hands of the assignee has been finally wound up, and a last dividend de- clared and paid, before he can apply for a discharge i - i' '• ■f-. ■M ,* ■,•"> . *W' ,T-. rt I 62 nANKllUPTCY. i from all or the greater part of the liabilities ho had contractcJ before his itisolvcncy. On the contrary> in ordor that he may not bo forced to wait until that period, before he can bo put in a position to begin the world anew, the provisions of the act are such, that in no event need he delay longer than one year from the date of the assignment or issue of the attach" nicnt before applying for, and, if his conduct has been proper, obtaining his discharge, while under certain circumstances, to be presently alluded to, he may obtain it long before that time. There are three modes of discharge provided by the Acts, viz., deed of composition and discharge, consent to discharge, and discharge by order of the judge. The distinction between the first and second modes does not appear very clearly from the Acts. The chief differences would hvmwx to bo that the firnt may be entered into at any time, cither before, pond- ing, or after proceedings under the Acts, and that it evidently contemplates some payment or dividend to the creditors ; while the second cannot be obtained until after a voluntary asfugnment, or the commence- ment of proceedings for compulsory liquidation,* and is generally given in cases where, after an assign- ment or issue of attachment, the creditors arc satis- fied that the debtor has no property or effects, and that it Avoulj be Uttlo.]!: to pi'oloug the pioceedings, tliough there appears to be no reason, other than tho peculiar wording of the Acts, why it should not be * See, however, jucl;^ment of Jones, Co. J., in re William Pen-y, U. C. L. J., Vol. 2, N.S. p. 75. u, pen( the ad vol comi the its t provi oonfi A iiANKUi rrry. 03 led tin be Ham given in a case where there are assets. The proceed- ings to obtain oonlirniation are the Htuno in cither case. If a debtor, possossod of property wliieh will pay somethini^ to the creditors, is desirous of having his estate wound up and himself discharged from his present liabilities, he resorts to tho first mode, namely, by deed of composition and discharge. A deed by which an arrangement is made for the pay- ment of some composition or dividend to tlie credi- tors is made by tho insolvent, and when it has been assented to by the majority in number of his credi- tors, whose cliiims amount to one hundred dollars or upwards, and who represent at least three-fourths of his liabilities, and has been confirmed by the judge, the discharge agreed to has the same effect as the ordinary discharge to be hereafter spoken of, and is as binding upon the remainder of the creditors as if they also had executed it. As before mentioned, " such a deed may be validly made cither hefore, pending, or after proceedings upon an assignment, or for the compulsory liquidation of tho estate of the insolvent." The only diflFcrence seems to be, that if made pending such procccdin<^s it must be deposited with the assignee, who gives notice of such deposit by advertisement. If no opposition is made to the composition and discharge within a stated period, the assignee then acts upon the deed according to its terms; but if opposilion is made in the form provided, he cannot act upon it until it has been confirmed by the judge. A consent to discharge has to be in writing and ■■■| U r ■ II 04 HANK1HTTCV. I i ':!;('■- 'M, :.,H signed by the same proportion of creditors ns is iicccHMiiry to render vulid u deed of composition und di^cllar•:,^'. A coMHcnt Ho executed after a voluntary astti^n- luent or the issue of a writ of attachment, " abso- lutely frees and diseharj^es the debtor from all liabili- ties whatsoever (except such as arc hereinafter spe- cially excepted) existing against him and provable against his estate, which are mentioned or set forth in the statement of his affairs annexed to the deed of assignment, or which are shewn by any supplemen- tary list of creditors furnished by the insolvent pre- vious to such discharge, and in time to permit the creditors therein mentioned obtaining the same divi- dend as other creditors upon hia estate, or which appear by any claim subsequently furnished to the assignee, whether such debts be exigible or not at the time of his insolvency and whether direct or in- direct ; and if the holder of any negotiable paper is unknown to the insolvent, the insertion of the par- ticulars of such paper in such statement of affairs, with the declaration that the holder thereof is un- known to him shall bring the debt represented by such paper and the holder thereof within the opera- tion of this section." An unknown holder of a pro- missory note or a bill of exchange made or accepted by the insolvent is thus us completely bound by such a consent us if he were known, and had assented thereto. When the insolvent has obtained a consent to his discharge or a deed of composition and discharge from the requisite proportion of his creditors, he the eith( sive the t'on disc! Ifo, not pens fulfi] insoi porti fl riANKiM rrcY. on bis should, in order to bind (Ik; remainder to it.s elTect, file the consent or uisehnrjic in tlio Court, and, after pKipcr liotico given, aj>|>l^ upon ]tclitiuii to tlu; judi;^ 'or its confirmutiun. Upon this applicution any creditor may appear and oppose the eonlirmation, upon the j^round of fraud or fraudulent preference, or of fraud or evil practice in procurin<^ the consent of the creditors, or of prevarication or fiilso swcarinp; on the part of the insolvent upon the examination as to his estate and effects, or upon other grounds stated in sub-section G of section 9 of the Art of 18G4. Moreover if the insolvent do not within two months after obtaining such consent or deed apply to have the same confirmed, any creditor for two hundred dollars or over, may take proceedings to annul it on the same grounds as those upon which he could oppose its confirmation, and, if certain prescribed steps are not immediately taken by the insolvent, it will be annulled accordingly. Upon hearing a petition cither to confirm or annul the discharge, the judge has power to make an order cither confirming the discharge absolutely, suspon- sively, or conditionally, or annulling it altogether. li the discharge is confirmed absolutely, such confirma- tion, if not reversed on appeal, " shall rcnuur tho discharge thereby coufiruied, final and rouciusive.'^ If only confirmed suspensively or conditionally, it is not final and conclusive until the period of sus- pension has expired, or the condition imposed is fulfilled. If the discharge is annulled altogether, the insolvent must obtain the consent of the proper pro- portion of creditors to a new discharge, or their sig- ill 4 M n ■,m plrl CO nANKUUrTCY. :-',;«« natures to a new deed of composition, or have recourse to the third method of obtaining his discharge pre- sciibcd by the Acts. When the insolvent has been unable, in the course of one year from the date of assignment or issue of the attachment, to obtain from the required propor- tion of creditors their consent to his discharge, or the execution of a deed of composition and discharge, he can then resort to the third mode of obtaining a discharge, provided by the Acts. After the expira- tion of the year, he may apply to the judge, upon petition (after duo notice to all concerned), to grant him his discharge. Upon this application, also, any creditor may ap- pear and oppose the granting of the discharge upon any ground upon which he might oppose the confir- mation of a discharge ; and the judge, upon hearing the petition and all parties interested, may make an order either granting the discharge absolutely, sus- pensive'/, or conditionally, or refusing it absolutely, and the order so made is attended with the same results and has the same effect as an order confirm- ing or annulling a deed of composition and discharge, or a consent to discharge. In order to prevent the insolvent from making any bargain with any creditor by which the creditor is to receive any benefit to himself, or obtain any preferential advantage over other creditors as an inducement to sign a consent or execute a deed of composition and discharge, it is enacted that every discharge or composition obtained by any such means shall be null and void. And for the purpose J 'ig BANKRUPTCY. 07 of deterring creditors from entering info any such arrangement or giving their consent in pursuance of any such agreement, a very stringent clause has been introduced into the late Act. Any creditor who takes or receives any sum or the promise of any sum of money as an inducement to sign a consent or execute a deed of composition and discharge, renders himself liable to a penalty of treble the sum so taken, received or promised, which may be recovered by the assignee for the benefit of the estate, by suit in any court. The ciFect of a di.scharge obtained by any one of tlie three modes is to free the debtor from all liabilities whatsoever existing against him at the date of his insolvency of which he rendered any statement, or which otherwise became known to tho assignee and the other creditors, with a few excep- tions mentioned in the Act. But it does not discharge any other person who is secondarily liable as drawer or endorser of negotiable paper, surety or otherwise, for any debts of the insol- vent, from his obligation to pay them. Nor does it alFcct any mortgage, lien or collateral security held by any creditor as security for any debt. The relic^ given to a surety who pays the debt of the insolvent has been before spoken of. The principal liabilities from which an insolvent is not freed by his discliargc (unless ho obtains tho express consent of the creditor to such debts being discharged by it) are, any debt for enforcing pay- ment of which imprisonment is permitted by the Acts, any debts due as damages for personal wrongs % i 'f^:-. *■.■■ ^1 I :t 'M ■ *:\i' m 08 RANNRUPTCY. hi 'W ■ or as a penalty for any offence of which he has been convicted, and any debts due as a balance of account duo by him as assignee, tutor, curator, trustee, executor or public officer. And the holder of any debt due as a balance of account by the insolvent as incumbent of any of the positions of trust above men- tioned, may take dividends thereon from the estate without being affected by any discharge obtained by the insolvent. Enough has now been said to inform the general reader of the nature and intent of the Insolvent Act of 1864 and the Act amending it, and to point out to him the course of proceedings to be adopted under them, when it becomes necessary to call their provisions into action, both in the case where the debtor is willing to submit himself and his estate to these provisions, and where the creditors of a refrac- tory or dishonest debtor are obliged to put them into operation against him. Some of their provisions, such as the right of appeal in certain oases, from the decision of the judge or assignee, the security to be given by the assignee and the remuneration to be received by hi in, the rights of the creditors and the assignee in cases of fraudulent sales or gifts by, or payments to the insolvent either before or after the assignment or act of insolvency, and a few others, have not been noticed or only slightly touched upon. Our aim has has been to sketch a brief and gen- eral outline of the Acts, and to draw attention to their most important features. What has been said will, it is trusted, sufficiently accomplish this object. *fl PROCEEDINGS AGAINST UEPBESENTATIVES. 69 For further particulars we refer the reader to the Bankruptcy Acta themselves, and the excellent com- mentary on them by Mr. J. D. Edgar, of Toronto, 13arrister-at-Law. ■fi in to or Iccn ren- te said lect. 7. — Proceedings against representatives of deceased debtors. Another obstacle by which a creditor seeking to recover his claim is sometimes met, is the decease of the debtor. After the occurrence of this event no proceedings can be commenced, nor can proceedings already commenced be continued, until after the appoint- ment of a personal representative or representatives of the deceased, that is, some person or persons who will undertake the management of his estate. If, however, the proceedings in the suit have gone so far before the debtor's decease, that execution against his goods or lands has been placed in the sheriff's hands, the sheriff can proceed to sell the property of the deceased debtor under the writ, with- out waiting until such appointment is made. If the deceased has left a will appointing an executor or executors, some or all of them usually obtain probate of the will ; and as soon as this has been done, the creditor can proceed for the amount of his claim against the estate of the deceased in the hands of his executors. If the debtor dies, leaving no will, or if, having left a will his executors decline to act, his next of kin, or some near relative, is appointed administrator of his estate, in which ■m 'm 70 PROCEEDINGS AGAINST REPKHSENTATIVES. mil m »l oasc tlic remedies of the creditor against the estate in his hands are the ame as against the executors where a will has betu left and probate thereof obtained. Should the next of kin and relatives of the de- ceased intestate all decline to administer, any creditor may be appointed administrator, with the same rights and 'powers to administer the estate as if he were next of kin. It will at once be seen that in any of these cases, except where execution is in the Sheriff's hands as above mentioned, some delay must necessarily occur before the creditor can be put in a position to assert hi 3 claim against the estate of the deceased. If no pro. ceedings have been taken up to the time of the de- cease, none can be had until after a reasonable timr has elapsed, in order to give time to the executor, if the debtor has left a will, to obtain probate. If no will has been left, the commencement of proceedings is stayed until an administrator has been appointed. As soon, however, as the executor has obtained probate or an administrator has been appointed, the remedies of the creditor can be pursued in nearly the same shape as they could have been against the deceased. Judgment can be obtained against the executor or administrator for the amount of the debt and costs to be levied upon the estate of the deceased in the hands of the representative to be administered. And should the executor or adminis- trator put in pleas to the suit which are found by a jury to be false, if the estate is iosuffieient to p;iy the amount of the judgment, the executor or admin- PliOCEEDINGS AGAINST REPRESENTATIVES. 71 "?i! I ed. ined the early St the Bt the debt f the to be miiiis- 1 by a to p!>y dtnin- istrator so pleading is personally liable for the costs of the suit. When the creditor obtains judgment for his debt and costs against the executor or administrator at such only, he can issue execution thereon against the goods and chattels of the deceased, under which they CaA be seized and sold as in ordinary actions. If the estate comprises no goods or chattels, or if they are insufficient to pay off the judgment, execution can then be issued against the lands of the deceased, although distributed and given away by his will to third parties, and they may be sold by the Sheriff as if they still formed part of the undisposed of estate of the deceased, unless they have been sold by the heirs or devisees to purchasers for value before the delivery of the execution against the lands to the Sheriff. When the decease of the debtor takes place during the progress of a suit and before execution is placed in the Sheriff's handS; it must be revived against the personal representative, when one is appointed. This is done by entering among the records of the proceedings in the suit a suggestion of the death of the debtor and the appointment of the executor or administrator, and then serving him witL a copy of the proceedings and suggestion, with a notice to the effect that unless he appears and makes defence judgment may be obtained against him. The effect c this proceeding is to make the executor or admin- istrator (after due servira upon him) a party to the suit in the place of the deceased, and all further proceedings are taken against him as if the suit had m;*v:. - f\\r ':''-' -m i2 PKOCEEDlNliS AOAINSV IlEI'ItKSENTATIVES. [I: m if been originally comiuiinced against him. Judgiucnt must be obtained in this manner, when the pro- ceedings have not reached jud^imetit beiure th ; do- cease. If the judgment has beoi. obtained prior to the decease, it may be revived against the executor or administrator either bj suggestion or by issue of a writ of revivor, and executiou can then bo issued in the same mauner as when the proceedings are originally t^jmmenced after the decease, and against the exec'ttor or ndmini:;irator. Formerlv In cajs the assets in the hands of the executor or acii linistrator were insufficient to pay all the debt.-j in full, debts due by the deceased were paid according to their relative rank, each class being regarded according to the degree of importance attached to it by the law. Thus, debts due to the Crown stood before all others in priority, then came debts due by the deceased to his executor or adminis- trator, who was permitted to retain the amount thereof out of the estate before paying any other except Crown debts, next came debts secured by judgments prior to the decease of the debtor, next debts secured by bonds or other sealed instruments, and lastly, the simple contract debts of the deceased, usually by far the most numerous class. These last consist of promissory notes, bills of exchange, debts for goods sold and delivered, and others of the same nature. A judgment debt would thus stand a much better chance of being paid, in case of a deficiency, than would the bond or simple contract debts. An Act passed during tbc last session of Parliament (29 PKOCEEDINOS AOAINST UEPKESENTATIVES. 73 ents, ased, last lebts same iiucli incy, All It (29 Vic. cap. 28, sec. 28) has, however, made au impor- tant alteration with respect to this rule. Henceforth, when a deGcienoy of assets occurs, the former preference of one debt or class of debts over others is not allowed, but the debts, of whatever nature, of a person dying on or after the 18th day of September, 1865, being the day on which the Act was passed, are all reduced to the same level. In such a case, each creditor receives his fair dis- tributive share, according to the amount of his dobt, without regard to the fact of other creditors having judgments against the deceased, or being secured by bond or other scaled instruuiciit, and the executor or administrator, and even the Crown itself, is put upon the same footing with respect to claims against the estate. Upon a proper application being made to it, either by a creditor, or the executor or administrator, or a legatee of the deceased, the Court of Chancery may, and often does, take upon itself the administration of the estates of deceased debtors. When it does assume the administration, a diflFerent mode from those above pointed out, of obtaining payment of his claim, is to be pursued by the creditor. After a decree or order for the adninistration of the estate of a deceased debtor has been pronounced by the court, no subse- quent judgment at law is of any avail, but other means of proving and realizing the claim are pro- vided. All claims upon the estate of the deceased have to be proved before the Master or other officer of the Court, the estate and effects of the deceased 7 Iv. : KV ■4 M 'M i ■ h M S >• ! ■■'':<< >i ■ "IB m 74 PUOCEEDINiJS AOAINST KEl'llESENTATlVES. v ' ■■;'■' r i'5 ; '111" If':;' aro got in, sold and converted into money; and if there aro sufficient assets for the purpose, all the claims are paid in full. In case of deBciency of assets of any person dying on or after the 18th day of September, 1865, all claims arc abated in proportion, and all creditors are paid ratably without any preference or priority of debts of one rank or nature over those of another. 15ut in ad- ministering the estate of a person who died before that day, the Court makes a distinction between what aro called legal and what are called equitable assets. All property to which the executor or ad- ministrator is entitled by virtue of his office as such, and all property made liable by statute to the pay- ment of debts, belong to the former class, and if there is a deficiency, the debts of the deceased are payable out of these assets according to the prefer- ential rank and priority before mentioned. Equitable assets consist of such property of the deceased as does not belong to the executor or admin- ministrator, by virtue of his office merely. Thus, lands devised to an executor in trust for the payment of debts aro not legal but equitable assets, notwith- standing that they arc in the hands of the executor, for he holds them, not in his capacity of executor, but as devisee in trust. Creditors of every sort were always entitled, in case of dciiciency, to share ratably without preference in assets of this description. » The fact of there being a deficiency of assets, how- ever, does not affect the position of a mortgagee of lands of the deceased, nor that of the holder of any lien which existed during the lifetime of the debtor. f 'ho debtor. And ;.„;:,':; f ""« ""' '"•"'-■e f- i'.3ta„ce, a creditor Cit tl ,!"^ ™"'^ '''""' »». - i-.d», during the lifctiro rf r; If ""■^' S^-i^ <»>eJ to enforce t„e lien tl "° .'! ''''"»'•' "'V pro- wore still ali.e. "' "'""°'' »« 'f 'ho debtor T 1 *;■>■, i'-i; M <»•• ' /jit'- ■,^ii:l !crii(jii(d. TliL ibrmer, in itn popular sense, moans l;ind and i:iny tiling belonging to or connected with land; and the Idttor, nil property whicli is not land uv connected with land. A circuuistancc which makes the distinction between those two classes im- portant is, that, when the owner dies without hav- ing made a will, real property descends to the heirs, and personal property goes to the next of kin. In Kngland, as formerly in Upper Canada, the lands of one who dies without making a will descend to the oldest son. In England, as well as in Upper Canada, the personal property of an intestate is distributed in certain proportions between his wife and children. At present, in Upper Canada, real estate is distri- buted amongst the representatives of the deceased intestate, nearly in the same proportion and among the samo persons as person 1 property was and is ritill divided. As it is still important, for many reasons, to pre- serve the distinction between real and |)ersonal pro- perty, it may be well to remark that, though land, rccou enoe, If' OODWILL. T7 ten. Itvi- iscd ind, and liouses uiid buildin^» upun land arc real pro- perty, a man may havo an interest in land that will not iovni p;irl of his real ci.state. Thus if a m:ui havo a lease of land for 91)!), or any qivcn nundier of, years, this valuable interest in laud is personal property, nnil, if ho die inte.state, will j^o to hi:< next of kin. Pcrsoinl property is divided into two classes, de- pending on the eircumstanccs of possession. If you havo a chattel such as a horse, or a piece of furni- ture, or a quantity of goods, in your actual posses- sion, you have what is called a chose in possessions that is, a thing (from the French word c/iosc, a thing) in possession. But if you havo lent the horse, the piece of furniture, or the money, or if any of them have by any means got into the hands of another man, you have no chose in possession j you havo only a right of action against the party in pos- session. This right of action is called, in legal phraseology, a chose in action. Mercantile law has chiefly to do with personal j-roperty, but there are two classes of personal pro- perty with which merchants especially are concerned. These are goodwill and shipping, each of which will now be considered in its turn. 1. — Gooihoill. The gont^will of a busiues;:i has not been long recognized l.iy tlio Courts as having an actual exist- eneo, as a valuable inercantilc property. A sort of prestige is attached to a well-known store or hotel, almost independently of the personal qualities of those ' At ■•i ■■■•III ^'! 1 ■-4*-.,i ? . fi';l I 78 (JOODWILL. H ■ -j \, 5; •' \W-^ 1 f- 1 "^ 'n 'j ^ • ' ,' 1^!^ wlio have occupied it ns n pluc <>f' l)usinefc;.s, and boconics valuable on account of tlio usual tendency of cuHtonici'H to resort to the " o'd plnco." IJut tho dilVifulty of uscertainiiip; how far tin attractions of tho j)laeo wore itulupendeiit of fho character of the oecupier, prevented for a long time any distinct decision being arrived at by the (JourtM as toit.s exist- once as a species of property. It came up for adjudication in tho Court of Chancery in a suit in which tho accounts of a partnership, one of whoso members was dead, were being taken. Tho ques- tion there was whether tho survivors could con- tinue the business, as a matter of course, deriving full benefit from the reputation or goodwill of the partnership without rendering any account of it, or whether they ought to pay a reasonable price to the representatives of the deceased for that part of the goodwill which had formerly been a source of profit to all the partners, but was then being used for the benefit of the survivors alone. The question was decided in favour of tho claim of the representatives of the deceased partner. The (/ourts of Law and Equity have not recognized goodiciU as a distinct species of propert" in connection with a professional practice or business, as so much depends on the personal qualities and reputation of the practitioner, that the prealiae, which on his withdrawal rcuiain?i attached to his place of business, is coniparativoly iuiiignificant. SIIIPPINO. 7U the [oncv, Lively 2. — Shipj^i'vjj. Tho liiw of tills JVovincc nlTccting tlic owncrHhip and tranafor of tlmt species of lueroantile property called shippiiitj; is regulated by Con. Stat. Can. cup. 41. Thi.s Htatutc is, in many respects, substantially the same as tho Kni^lish statutes on this subje(!t. Tho object of the Jlln^lish statutes was tho encour- agement of IJritish shipbuilders and tho employment of British sailois as much as possible, in those routes of traffic over which tho British Government had any control. The object of our statute seems principally to be the convenience and security of persons owning or purchasing vessels. The English Act requires a vessel to be navigated by a certain proportion of British seamen, but ours imposes no such condition. Tho Canadian statute imposes no penalty for neglect to register a vessel which ought to be registered thereunder, nor does it deny to such vessels, when not so registered, the privilege of freely navigating the inland waters of the Pro- vince, or withhold from their owners protection by the British (Jovernment of their rights as such owners. 'I'he object of cap. 41 Con. Stat. Can., already rotorred to, is expressed in the preamble to be " tlio butter securing tho right of property in eoloninl ves- sels navigating the inland waters of this l^rovincc, and not roijisterod as British vessels, under any ;ict of the Imperial Parliament in that behalf, and in order to facilitate transfers of vessels, and to prevent the fraudulent assignment of the property of such t.i ■■ii m Vf ■:': »: 4 *'!' 'I ' -.k 'J'i«| 60 snipriNTr. ] •}'■■■ i vessels." Ihe privilege of registration under the Act is conferred only on vessels wholly built in Canada, and which wholly belong and continue wholly to belong to Her Majesty's subjects, and which are over fifteen tons burthen. Ijvory ship must be registered at the port to which she boiongf. A ship is said to belong to sonic port at or near which some one or mora of the owners (who shall make and subscribe the declaration re- quired, previous to registry) resides. The collector of Ilcr Majesty's customs, at any port in Canada, may make such registry. In order to obtain registry, a declaration must be made to the collector of custonas, to whoin applica- tion is made to grant a certificate of ownership, by the owner, if there is only one; or, if there aie two joint owners, by both of such joint owners, if both are resident within twenty miles of the place where such registry is required, or by one of such owners, if one or both be resident at a greater distance from such port or place ; or if the number of such owners exceeds two, then by the greater part of the number of such owners, if the greater number of them be resident within twenty miles of such port or place (not in any case exceeding three of such owners unless a greater number be desirous to join in making and subscribing the declaration) ; o^ by one of such owners, if all or all except one be resident at a greater distance. The declaration contains the ship's name (which must not afterwards be changed, and must be painted on her stern, together with the port to which she i :?• '»lj SHIPPING. 81 /hich linted sbe belongs, ia white or yellow letters four inches long, on a black ground, and not afterwards obliterated or concealed) ; her port, master, and description ; the names, descriptions and residences of the owners, with other circumstances tending to prove them subjects of Her Majesty ; and denies that any foreigner is interested in the ship. If the vessel belong to a corporation, the declara- tion is made by the secretary, or any director or manager j and if to a limited partnership, by any one of the general partners. The applicant for registry must also produce an account under the builder's hand, and which the builder is required to give, of the ship's time and place of building, denomination and tonnage, together with the name of the fir-st purchaser ; he must aloo make declaration of her identity ; but where, by reason of the death of the builder or other unavoidable cause, the builder's certificate can- not be produced, it may be dispensed with by the Governor of the Province, on application made to him. The above requisites being complied with the ship is registered and a certificate of registry given to the applicant. This certificate contains the name, occupation and residence of every owner; the name of the ship; the place to which she belongs; her tonnage; the name of the master; the time and place of the building; the name and employment of the surveying ofiicer; the number of decks and masts; the height, breadth, and depth between decks, if more than one, or depth of the Ijold if only 8 ! .r. }> 'I w ■ it '-, •' - ' *-,L I I ml 82 SRIPPINQ. one deck ; the dimensions and tonnage of engine room, if anyj whether rigged with a standing or running bowsprit j the description of her stern j her build, whether carvel or cUnker built; and kind of head, if any; and on the back are indorsed the names of the owners who cannot be more than thirty-two, with the number of sixty-fourth sharea held by each. All the above particulars are entered in a book which the registering officers are required to keep ; every registry is numbered in succession, beginning from the commencement of each year, and an exact copy thereof transmitted forthwith to the Minister of Finance, or such other person as the Governor may appo' '■ for that purpose. If at any period the master be changed, the certi- ficate must be delivered to the person authorized to register at the port where the change takes place, who is endorse the change on the certificate, and transmit notice of it to the proper oflScer of the port where the vessel received its certificate of ownership. If any vessel after receiving certificate of owner- ship is in any manner altered so as not to correspond with all the particulars contained in such certificate, the owner of such vessel shall return the certificate to the collector of the port where it was granted, and the collector shall grant a certificate of ownership de novo. A penalty of eighty dollars is imposed upon the owner for neglecting to register de novo in this case. Registration de novo will be allowed (though it is not re(]^uired by the Act) in the case of the certificate hj |p SHIPPING. 83 being lost, or in case, upon any change of property in the vessel, the owner desires to have a certificate of ownership de novo. The transfer of a vessel from one person to another is effected by a bill of sale or other instrument in writing, which must recite the certificate or principal contents thereof, otherwise the transfer is invalid. But no bill of sale or transfer is valid for any pur- pose even against the vendor or transferor, until pro- duced to the collector of the port where the vessel is registered, or about to be registered de novo, who is to enter in her last book of registry in the one case, or in the book of registry de novo, after all requisites for such registry de novo have been com- plied with, in the other case, the name, description and residence of the vendor and vendee, mortgagor and mortgagee, or each, if more than one, the nu -t- ber of shares transferred, and the date of ihe instru- ment and of the production of it ; and is, except in case of registration de novo, when a new certificate is granted, and the old one given up to, to indorse on the ship's certificate of registry, when produced to him, the aforesaid particulars in a prescribed form, and give notice thereof to the Minister of Finance. When the entry in the book of registry has been made, the bill of sale or other instrument becomes effectual to pass the property intended to be trans- ferred, as against all persons whatever, except against such subsequent purchasers and mortgagees who shall first procure the indorsement to be made on the certificate of registry in manner hereinafter men- tioned. For, where the same property has been m '*■■■' ■;l'' ;t % *i,i ■■■',• i-'r Mi m: ii|H 3ii^;v:?: :i'',i , Ji. ., ; 84 snippiNo. transferred Inore than otice, the several vendees and mortgagees take priority, not according to the time of entering their respective instruments in the book of registry, but according to the time when the indorsement is made on the certificate. Thus, if the owner of a vessel fraudulently execute two bills of sale thereof to two different persons, and both cause their conveyances to be entered in the book of registry, but the second get into possession of the certificate and procure the indorsement to be made upon it, he and not the first vendee will have the legal title to the vessel. But it is further pro- vided that, when any instrument of transfer has been entered in the book of registry, there must be a lapse of thirty days, or (if the vessel were absent from her port at the time of such entry) then thirty days from her arrival thereat, before any instrument purporting to be a transfer of the same ship or share from the same vendor or mortgagor to any other per- son can be entered ; so, if a second instrument has been entered, a like period must elapse between its entry and that of a third ; and wherever more than one have been entered, the officer is to endorse on the certificate the particulars of that one under which the person claims, who shall produce the certificate for that purpose within thirty days, after the entry of his instrument in the booK, or of the ship's return to port, if she were absent at the time of such entry ; and if no person produce the certificate within that time, then the officer is to endorse the particulars of that person's instrument who shall first produce the pertificate for that purpose. IS ves A. ste ex| his siiippixn. 85 It is however provided that if the certificate be lost, mislaid, or detained, on proof of this by a vendee or raortf2;agee time may be granted either for its recovery, or for registry de novo, during which additional time no other transfei' can' be entered in the book of registry. Thus it appears that in case of successive sales of the same property by the same person, each of the rival vendees has thirty days from the entry of his instrument, or next subsequent return of the ship to port, during which no one but himself can obtain a perfect title. But if he let that space of time go by, he will be in danger of having his claim defeated by an indorsement of the particulars of some other vendee's instrument on the certificate, unless indeed further time has been granted to him in the manner above pointed out. To put an example. Suppose the owner of a share in a vessel absent from ihe port at which she is regis- tered, fraudulently executes one bill of sale to A,, and another to B. ; A. causes his bill of sale to be entered in the book of registry at that port ; his title is now perfect against the vendor, and against every one else except B. j and B. himself cannot procure his bill of sale to be even entered in the book of registry, the time not having elapsed which is given as we have shown to A., exclusively. The vessel returns to port, say on the first of October, A. allows that month to elapse without taking any step, on the thirty-first of O-itober A.'s thirty days expire; and on the first of November B. procures his instrument to be entered in the book of rc; ■I! ' ;*: ' : ■,-•;:;!>.. ^1 '■ -'4'. i '11 r ■ _;■,< ;■;:,/ ,. - ■♦ ■ •■■ 1 glS- 86 SHiri'INO. try, but neglects to adopt any. further means to secure his purchase. A. now obtains the certifi- cate of registry from the master of the vessel, but cannot perfect his title by having the particulars of his bill of sale endorsed on it, until the second of December shall have arrived, the law appropriating the intermediate days to the exclusive use of B. On the second of December, however, A. produces the certificate to the Collector at the ship's port, has the endorsement made and his title then becomes perfect against all the world. It is further provided, that if, after any bill of sale has been recorded at the port to which the vessel belongs, it be produced, with a notification upon it of such record, and along with it the certificate of regis- try, to the collector of any other port, the collector, if required, is to indorse on the certificate the trans- fer mentioned in the bill of sale, and give notice of his having done so to the collector of the port to wliieh the vessel belongs, who will record it there as if he had made the indorsement himself, but men- tioning the facts. However, before the collector of the other port can make the indorsement, ha is to give notice of the requisition made to him to the collector of the port to which t^'e vessel belongs, and ascertain from him whether any and r/hat bills of sale have been entered in the book of registry j after which he is to proceed to indorse the certificate as if his port were that to which the vessel belonged. Thus the person who would be entitled to have the iiydorsement made on the certificate, immediately the return of an absent vcpsoI to her port. on snippiNO. 87 of to as of is to the and of ifter IS if may have it made by anticipation during her ab- sence. The above consitlerations are applicable to every instance in which property in shipping is transferred, but there are one or two regulations peculiar to cases of mortgage. When a transfer is mn.de by way of mortgage, or to a trustee for the purpose of sale for the payment of debts, the nature of the transfer is to be expressed in the entry in the book, and indorsement on the certificate of registry, and the transferee is not deemed to have become, or the transferor to have ceased to be, the owner of the property transferred, except so far as maybe necessary to make it available by sale or otherwise, for the payment of the debt it was transferred to secure. As the entire property does not pass to the mortgagee, there, of course, remains a portion in the mortgagor, which he can transfer to a second purchaser or mortgagee, in the manner prescribed by the Act. In case a vessel is not registered, the wording of the statute seems to leave, in Upper Canada at least^ the law of Upper Canada relating to the transfer of personal property therein, xo apply to her as to any other personal property, which is the subject of sale, transfer or mortgage. ' ' i'.i ■MS ,f n< ! ■1-. ;» ;! •f the ^tely )ort, CriAP'i'ER til. liifc^ ili|H.:« % il^: t ill to.jti 'IS -)V £'.1 MERCANTILE PERSONS. 1. — Sole 2Vaders. f Mercantile persons may be sole ti-aders, partners, or corporations ; and any of these may stand to the others in the relation of principal to agent. Various persons, however, are afiFected by particu- lar disqualifications, which incapacitate them from engaging in commercial pursuits. 1. An alien, i. e., a subject of a foreign power, was, and is still in Great Britain, subject to various disa- bilities in his control of property and right to carry on trade, even when his country was at peace with the latter. In the Province of Canada an alien is allowed to have full control over any property he may acquire, whether it be real or personal, and to make contracts and carry on business as freely as a British subject. 2. An infant is not allowed to bind himself by any ordinary mercantile contract, though he may enforce contracts made with him by .' uilts. Though he may not bind himself he may, however, as agent, bind his principal. lie may bind himself, when he comes of age, by ratifying contracts made during ii 18 ring I'AKTNKKS. 81> infancy — if such ratificatijn be evidenced by writing signed by hini. 3. A married woman is subject to the same disa- bilities as an inf';iat, with this further one, that she cannot ratify after the death of her husband contracts made during his life, any contract made by her being absolutely void and incapable of ratification. A married woman may, however, as has been already explained, if she possesses property of her own, be held bound in equity to the amount or value of that property upon any contract made by her dur- ing coverture. Subject to these exceptions, every person may assume the character and functions of a trader. 2. — Partners. A partnership is an association of two or more persons in a common undertaking for the purpose of obtaining a common profit. The communiti/ of profit is the test which shows the relation of partnership. If A. and B. contribute capital to the purchase of goods %ith the intention merely of dividing the goods so purchased, there is no partnership, but if they go further and resell the goods for the purpose of dividing the proceeds, they arc partners, for they are not mere joint owners of the goods, but they share the profits of their labour and capital between them. Partnerships, no matter how extensive, may be formed by a mere verbal contract. Articles or deeds of partnership are frequently signed bet«?een persons ■■ , v'. ■ ;.r . i*. ' ••:l. »:■■': ..: i 90 PARTNKIIR. ('^>'l-- ■ I ! '!;'*:;■•. fit' m I': '■'"yV*" ''1 r l§f,^ ■<. intending to becomo partners, but if by a tacit con- sent, shewn by the acts of the partners, sonic of the provisions of the formal instrument have been disregarded, these acts will, even as between the partners themselves, have the preference given to them, as shewing the mutual footing on which the partners have agreed to stand. Partnerships may be formed for carrying on any lawful business, or any number of branches of busi- ness, and they may contain any number of partners. As between partners themselves, the liability of any partner may be limited in any special manner agreed upon. Except, however, in tiie case of partnerships formed ru'lnr the Limited Partnership Act, to be hereaf? -i" noticed, each partner is considered liable to third p urticfi for the whole of the partnership debts ; lind so fav f the execution debtor, to have an account taken, and the amount of the share ascertained. There are scvernl ways in which a person ni.iy be connected with ordinary partnerships. If ho is in- terested in the profits of the firm, and his conn tion with it is avowed, he is what is called an active partner, and is liable for all the 'Engagements of the firm. He may lend his name to the firm without deriving any profit from it, or embarking any capital in it; ho is then called a nom.nal partner, and is liable to the same extent as an active partner. A liability may also be incurred by a participation in the profits, although the circumstance of such parti- cipation may be unknown to the creditors Thus, if a person place money in a partnership not formed under the Limited Partnership Act above mentioned, or leave it there on retiring, with a stipulation to have a compensation for it under whatever name, subject to abatement or enlargement as the profits fluctuate, he is then a dormant partner, and as long as he remains m •i\ II *'f'- PI '' m ' »" 0' 1 ^1 ' n; .... 1 •' ''''=! iiiiil IMAGE EVALUATION TEST TARGET (MT-3) "% ^"^J" .V 1.0 I.I ^ ■M |2.5 1^ IIIII2.2 ^ us, lit 11.25 i 1.4 Photographic Sciences Corporation 2.0 1.6 "1 '•^ 23 WEST MAIN STREET WEBSTER, N.Y. 14580 (716) •72-4503 '%*' i 92 PAKTNERS. unknown escapes all liability. But when any credi- tor becomes aware of the connection, he can charge him equally with the others, even though at the time of his contracting with the firm he did not know of it. If, however, a person leaves no money in the concern, but is to receive a compensation for his ser- vices or otherwise, a rice distinction is then drawn between taking a share of the profits as such, and taking a percentage upon, or a salary varying with, the profits. He who takes a share of the profits as such, is liable as a partner; but he who takes an equivalent in the shape of percentage or salary, though varying with the profits, escapes the liability. What is called the partnership stock, that is the body of the commodities belonging to the firm as partners, and such sums of money ns may be duo to the partnership, does not necessarily belong to the partners in the proportion according to which each can claim participation in the profits. One partner may have a right to half the profits of a bifsiness, while he has no right whatever to the partnership stock. Participation in the profits therefore does not neces- sarily involve a property in the partnership stock. Partnership is considered to place men in so con- fidential a relation that the utmost good faith wjU be required to be observed in the dealings of partners with each other. Thus if one partner acting on behalf of the firm stipulates with third parties for, and obtains, any private profit for himself, over And above what he has obtained for the firm, he will be con- sidered: to have earned it for his co-partners, and will be obliged to account to them for their proper share. PARTNERS. 98 rge ime J of tbe ser- ■awn and urith, its as J8 an alary, \ )ility. ls the rm as iao to to tbe cbcan may while stock, neces- ck. con- wjll ttners g on [es for, r iind e con- dwUl share. Baring tbe continuance of tbe partnership, one partner can very seldom bring an action at law against another, for any matter arising out of tbe partnership. Tbe usual remedy is to be found in tbe Court of Chancery, which will decree a dissolution of the firm and a sale of tbe partnership stock, realize the partnership assets, take the accounts between the partners; and divide the proceeds in the proportion to which it considers each partner entitled. But when one partner before tbe establishment of tbe partnership has advanced money to another, or has done work for him, an action bt law may be maintained even though tbe advance may have been made, or the work done, for tbe purpose of forward- ing tbe formation of tbe partnership. So also, if an account has been stated and a balance struck between them. Tbe Court of Chancery will, as we have before observed, wben^t takes the affairs of a firm into its hands, decree a dissolution of tbe firm, and a sale of tbe partnership effects, and order the proceeds to be divided among tbe partners, in tbe proporion to which they are entitled by the terms of the partner- ship contract. This proportion will be ascertained, not only from tbe balance on all those transactions which were complete at tbe time of tbe dissolution, but also from that found due on all those which have since been wound up. Thus, if any profits are made, or losses incurred, on any partnership transac- tion since tbe dissolution, they are taken into account as if they had been made or incurred at tbe time of the dissolution. Moreover, if tbe partnership is dis- '-M 4 »l,V-liJ-v» Mm H PABTMKB8. •olved by the death of a partner, and the remaining partners continue to trade with the joint stock, the representatives of that partner, though not being members of the firm, which after the death neces- sarily ceased to exist, will, on the winding up of the partnership affairs, be entitled, not to the mere inter- est in the stock which has not yet been disengaged from the stock of the former business, but to a pro- portionate share of the profits for the time that the capital of the deceased has been exposed to the same risk of bankruptcy and insolvency as the stock of the remaining partners. It has been doubted whether the Court of Chan- cery will order an account to be taken between partners, at the request of a partner who does not wish to have the partnership dissolved, but merely to have a division of the profits. But there is no doubt that it will often iyterfere to put a stop to fraudulent behaviour; for insta^ if one partner excludes his co-partners from aci . to the books of the firm and refuses to give an account, with a view of forcing them to ask for a dissdution, the court will grant an injunction to compel the delinquent to re- linquish his hold on the books, and will itself tak^ an account so fiur as is necessary for the immediate pur- pose of carrying on the business of the firm. 1^ When the relation of partners has been established between two or more persons, each incurs liability for the acts of the other, in the ordinary course of busi- ness. One partner may buy, sell, or pledge goods, draw, accept, or indorse bills of exchange or promis- sory notes, give guarantee, receive moneys^ '^nd PARTMBRS. 95 LlUhed fety for If bnsl- goodS) release or compound debts in the name, or on tbe acoount, of the firm in the ordinary course of busi- ness. Each partner is also liable for the fraud of his co-partner in any matter relating to the business of the co-partnership. Any agreement between the partners, by which any one of them may be restrained from doing any act to pledge the credit of the firm, though binding as between themselves/ will not be binding on any creditor who may not have notice of it. In fact the only restrictions upon the power of a partner to render his firm liable for his acts and dealings on their account are the following: — 1. The transaction by which the firm is to be bound must be within the ordinary scope of the partner- ship business. Thus, if one of the partners of a firm carrying on business as grocers merely, were to con- tract to. supply to any third party, a quantity of dry goods, the firm would not be held bound to carry out the contract without proof of express authority havifig been given to the contracting partner to enter into it, such transaction not being within the ordinary scope of a grocery business. 2. The partjT dealing with the firm must not, at the time the obligation is contracted, be aware that the contracting partner is acting in bad faith. If he is directly aware of this, or if it can be proved that he had knowledge of circumsti.nces that ought to have put him on his guard, then the firm will not be bound, but only that partner who made the contract. The co-partners may, however, after discovering the fraud, enforce the contract against the third party, for the ^ 'i. 96 PARTNERS. rule is, that fraud in a contract releases only the party against whom it has been practised. 3. One partner cannot bind the firm by executing a deed on their behalf, unless he have express author- ity by deed for that purpose, not even though the contract of partnership were under seal, if it do not contain a specific power to that effects, nor though the others afterwards acknowledge his authority, and if he execute such instruments he will himself be bound though they will not. This rule, however, applies only where the deed is in the nature of a grant, for there may be cases in which the deed may bind the interest of the firm as a writing. It would seem also that one partner can execute a valid re- lease by deed in the name of the firm« 4. In the case of a business strictly mercantile, the authority to each partner to circulate negotiable instruments on behalf of the firm will be implied from the nature of the business. In other cases this authority will not be implied unless it is proved that tha constitution and particular purposes of the firm are such as to render it necessary in their indi- vidual case, or that, though not necessary, it is in other similar cases usual. Thus a iarmer or a i^lici- tor carrying on business in partnership with another would not be liable on a bill of exchange or promis- sory note drawn or made by his partner in the name of the partnership, for bill transactions form ^o part of the ordinary business of farmers or solicitors. A partnership maybe dissolved at anj/ time by the mutual consent of all the partners } also at any time by the voluntary withdrawal of od« or more ef the \ PARTNERS. df partners, but the seceding partner will become liable to the rest for any damage done by his withdrawal, if he withdraws in violation of his contract. A partnership may also be dissolved by the expir- ation of the time agreed upon in the partnership contract for the duration of the partnership ; by com- pletion of the particular transaction, for the sake of which the partnership was entered into ; by insol- vency of the partnership and sale of its effects ; by insolvency of one of the partners, and sale under . execution of his interest in the partnership stock ; by the death of any one partner; or, if an unmarried woman is a partner, by her marriage. If there has been no express limit assigned to the continuance of the partnership, and none can be implied from the nature of the partnership business^ any partner may retire from the business whenever he chooses, the partnership being a partnership at will. Courts of equity, moreover, will interfere to dissolve a partnership when the conduct of one partner is so grossly improper, fraudulent, or vicious, as to inter- fere directly and materially with the business of the firm. But they will only interfere in a clear and strong case, and where an injury to the partnerthip business is proved. No dissolation can take place without the partner- ship being dissohed ad to all^ the members. If the death of Q.f oi any other cause, removes him from the firm of " A., B. & C.,'' A. and B. are released from all obligation to remain in partnership, unless there was originally an express 'contract, that on the removal of one partner, the remaining partners should PAhfSZM. U til carry on the business together ; and if A. and B. wish to continue together in business, they must form a new partnership. After the dissolution of the firm, each partner has power to collect outstanding debts and give receipts therefor in thv^ name of the firm, but cannot of course bind the firm by entering into any new contracts in its behalf. When partners can, after a dissolution, agree upon any amicable arrangement by which, for instance, one takes the whole stock at a valuation, and agrees to become responsible for all the debts of the firm, and continue the former business in his own name, there will of course bo no difficulty, as far as the partners themselves are concerned, in winding up the affairs of the firm. Or if, in the original articles of agreement, there was provision made for this or some other mode of settlement in case of dissolution, the mode of winding up will be ready for the emer^ gency, and will be binding upon all the parties. If an arbitration is the mode fixed upon for the settlement of difficulties, and the arbitrators are actually named in ^e articles of partnership, there will be no difficulty ia enforcing the agreement to refer to arbitration. However, even if no arbitrator is named in the agree- ment, and one of the partners refuses to name an arbitrator, sees. 168, 169> and 170 of Uie Common Law Procedure Act of Upper Canada make provif sion for the appointment of an arbitrator, whose award will be as binding on all parties as if the appoint- ment had been made by consent. In the absence of auy such provisions for settling disputes, and in case PABTNSBS. 99 the partners cannot come to terms, then the only way to wind up the partnei'ship in to sell out stock, and credits, and goodwill tu the highest bidder. When the dissolution is caused by the death of one oif the partners, the case is not more difficult than when all the partners of a dissolved firm are alive. The personal representatives of the deceased have the same rights on behalf of the deceased partner, as he could have had oa his own behalf^ and, to the extent of the property they hold in their hands as. such represeatatives, whether partnership property or the separate estate of the deceased, they are liable for his debts of every dctpoription. It seems, however, that the separate creditors of the deceased partner will first be paid in full out of his separate estate before its application to any of the debts of the partnership. The surviving partners are the proper persons to sue for credits due to the partnership) and will be trustees of the shure of the deceased partner for his executors or adminis'' traton. It must not be inferred, however, from wha;< hsM been said above about one partner undertaking to pay debts of a dissolved firm, that any such arrange-^ ment between the partners will prevent creditors from holding the other partners liable. Its only effect will be to render the partner so contracting to assume the debts, liable to reimburse the ot^er part* ners to the extent of any sum they may have been compeflled to pay on account of the pitftnership, by his failure to perform his promise : in other words, no arrangement between the partners themselvas can "'1 4 . i — Ut loo PARTKBRS. compel creditors to exchange the security of a firm for that of a single partner. When a partner, on withdrawing from a firm, wishes to avoid liability for future acts of his co-pait* ners, he should give notice of his withdrawal to the publio in general by advertising in the Canada Gazette and one of the advertising newspapers of the place where the partnership business has been car- ried on ; and to those who have actually dealt with the firm, he should send circulars announcing the withdrawal. These precautionary measures are not absolutely necessary, as it will do to prove knowledge of the withdrawal of the partner by circumstantial evidence, but the sending of circulars is the surest way of notifying customers, and the advertising in the papers saves the trouble of proving actual know- ledge on the part of the public, aj on proof of the advertisement the public will be presumed to have read it. But even after notice thus carefully given, if the retiring partner allow his name to remain in the partnership title, he will continue to be liable. Dissolution by death of a partner, however, need not be advertised, as the death of the partner is supposed to be notice to the public. Br -\p. 60 Con. Stat. Can. intituled an Act respect- ing Limited Pf rtnerships, provision is made for the formation of partnerships, consisting of one or more persons who are to be called General Partners, and of one or more persons wh& contribute in actual cash payments a Specific sum as capital to the common stock, who are to be called Special Partners. The general partners are to be liable as partners in t>AKTMERS. lOi ordinniy partnerships, but, special partners are not to be liable fur any debts of the partnership beyond the amount contributed by them to the capital. The general partners only, are to transact the business of and sign for the firm, though the special partners have a right to examine into, and advise as to, the management of the business. The business of the firm is to be conducted under a name or firm in which the names of the general partners only, or some or one of them, shall be used ; and if the name of any special partner is used in the firm, with his knowledge, he is to be deemed a general partner. The persons desirous of forming the partnership are to make and severally sign a certificate, which shall contain the name or firm under which the partnership is to be conducted ; the general nature of the business intended to be transacted ; the names of all the general and special partners interested therein, distinguishing which are general and which are special partners, and their usual places of residence ; the amount of capital stock which each special partner has contributed ; the period at which the partnership has commenced, and the period at which it will terminate. Thi; certificate, when signed by all partners and certified by a Notary Public is, in Upper Canada, to be filed in the office of the Clerk of the County Court of the County in which the principal place of business of the partnership is situate. Any false statement in this certificate will render all the persons interested in the partnership liable as gen- eral partners. Every renewal or continuance of such a partner- Ill 102 fAllTNftHS. ship, beyond the time origioally fixed for itR duration, must be certified, filed and recorded, in the manner required for its original formation ; and every part- nership, otherwise renewed or continued, is to be deemed a general partnership. The failure to register any alteration of the parti- ottlars contained in the original certificate will have the effect of making all the partners liable as general partners. It will thus appear that the liability of the special partner may be increased in & variety of ways. la retarn for this liability and for the cash contribatioQ reqaired to be made by the Act, he ia entitled to receive annually lawful interest on the sum so oontri« buted by him, if the payment of such interest doei not reduce the ori^nal amount of tho eapital ; and if, afler the payment of such interest, any pvofita remain to be divided, be may also reeeive his portion of such profits. But if it appears, that by the pay* ment of interest or profits to any special partner, tho original capital has been reduced, die partner receiv- ing the same is bound to restore the amount neees* any to make good his sharo of the deficient capital, with interest. In case of the insolvency or bankruptcy of the partnership, no special partner shall under any cir- oumstanoes be allowed to claim as a creditor, until the daima^ of all the other creditors of the partner- ship have been satisfied. The general partners are liable to account, both in law and in equity, to each other, and to the special partners, for their management of the concern, in like manner as other partners. COHPORATIOtrs, AC. 108 peoial ro, in 8. Corporationt and Joint Stock Companiet. A corporation aggregate consists of a certain num< ber of persons who, bj the sanction of a charter from tho Crown, or of an act of Parliament, are allowed to transact business and hold property as if they formed but one person. The great peculiarity of corporations is, that the successive deaths of all the original members of the corporation will not a£fect its existence, as long as new members are added in sufficient numbers to keep up the number required by its charter, or the act of Parliament under which it was formed, if any num- ber is thereby prescribed. Corporations haye the priTilege of suing and being sued by their corporate name. They signify their assent to a contract by means of their common seaL Formerly the doctrine prevailed that a contract was not binding on a corporation unless it was under the seal of the corporation. This doctrine, however, has been modified to a considerable extent by the decisions of the courts. It has been held that vari- ous frequent and trifling contracts, such as the hiring of servants, might be entered into by a corporation^ so as to bind the corporation, even although the corporate seal were not affixed to the contract. And it has been further decided that where a contract with a corporation has been so far performed that the corporation has got the benefit of the consideration of its promise, then the corporation will be held bound, even at law, to its promise, although that promise be not under seal. 'l>.' t3* ■ : ■'■'''■ m 104 CORPORATIONS, AC. Again, it mu8t be remembered that althougb the common seal is the most usual and the most essential requisite in binding contracts made by corporations, the presence of the corporate seal is not generally all that is required to bind a corporation. The charters of corporations, or the general acts passed for the purpose of regulating the affairs of corporations form- ed under their provisions, or the by-laws of corpora- tions, prescribe the manner in whic.. stock is to be transferred, and the business managed, and specify the officers by whom the contracts of the corporation are to be signed; and any one transacting business with a corporation should take care that the proper per- sons sign any documents by which the corporation is to be bound. Joint stock companies are, at common law, but partnerships on a large scale. Unless specially assisted by an act of Parliament, therefore, one member of such a company could not sue or be sued at law by the company; and every member of the company was liable individually for the whole of the debts of the company, just as an ordinary partner. Yarions statutes have been passed in this Province, in some respects similar to certain Imperial statutes, which greatly facilitate the incorporation of joint stock companies for various purposes. These statutes dis- pense with the necessity of a special act of Parlia- ment, by supplying a constitution, framed in general terms, under which companies can be incorporated on complying with certain prescribed forms. For instance, cap. 63 of Con. Stat. Can., provides that " Any five or more persons who desire to form a CORPORATIONS, AC. 105 [nous I some ^hiich Istioek Ib dis- farlia- ^neral Irated For that krm a company for carrying on any kind of manufacturing, ship-building, mining, mechanical or ohemieal busi- ness, or for the erection of any building or buildings to be used in whole or in part for a mechanics' insti- tute, or for a public reading or lecture room, or for agricultural or horticultural fairs or exhibitions, or for educational, library or religious purposes, or for a public hotel, or for baths and bath-houses, or for the opening or using of salt or mineral springs, or for carrying on any fisher^ or fisheries in this Province, or in the Gulf of St. Lawrence, and for the building and equipping of any vessels required for such fishery or fisheries, shall, on making and signing a certain statement Oi' declaration in writing, setting forth the corporate name, object, amount of capital stock of the company, and other particulars, and registering the same with the formalities required by the act, become a corporate company." The corporate company thus formed may in their corporate name purchase, hold and convey any real or personal e^^tate, or movable or immovable proper- ty necessary to enable the company to carry on its operations but must not mortgage the same. The Act regulates the constitution of the company in certain fundamental particulars, and gives power to the trustees of the company to make by-laws. It provides that the company shall have power to enforce payment of calls by action. As to the lia- bility of stockholders, it enacts that they (except in the case of fishery companies) shall be jointly and severally liable for all debts and contracts made by the company until the whole amount of the capita) 10 ?,!f ' L, T 100 CORPORATIONS, AC. stock of the company has been paid in, and a certifi- cate to that effect registered in a prescribed manner; after which no stockholder is liable beyond the amount of his share or shares in the capital stock of the company, for anything except for debts due to the labourers, servants and apprentices of the com- pany. No suit, however, is to be brought against any stockholder, unless commenced within Iwo years after he shall have ceased to be a stockholder, nor until an execution against the company has been returned unsatisfied in whole or in part. The trustees of the company are made liable per- sonally in certain cases for the debts of the company. The above enactment is, by 29 Yic. <5ap. 21, made applicable to companies established for boring and working petroleum wells. lu order to uuderstand the meaning of this and simiiur enactments, it must be borue in mind that as soon as any company is incorporated under any one of them., the company is at once in a position to sue and be sued by its corporate name, and may so sue and be sued by any of its members; and moreover, that, except so far as the act under which the com- pany is incorporated alters the position of the mem- bers of the company, none of the members are per- sonally liable for its debts. It is true that, without any special provision in the Act, a creditor pf the company might, indirectly, through a receiver, or by garnishing process, get at any money due by a mem- ber to the company for the balance unpaid on his ghar^; but beyond this thq creditors of th« coiq- CORPOIIATIONS, AC. lOT rtifi- ner; the ikof ae to com- ; any after til an arned e per- jpany. made ig and pany would have no recourse against individual members. In order to ascertain how far a member of any joint stock company is liable for the debts of the company, the first thing to be considered is whether it has been incorporated. If it is a corpora- tion, then, in order to fix any liability on its members beyond that of paying up what remains due on stock, that liability must be imposed by express enactment. The formation of joint stock companies, and the liabilities of their members, are regulated for Great Britain and Ireland by Imperial Statute, 25 & 26 Vic, cap. 89, repealing and consolidating all the former statutes upon this subject. The liability of the members of a company formed under this Act, may, according to the memorandum of association, be limited either to the amount, if any, unpaid on the shares respectively held by them, or to such amount as the members may respectively undertake by the memorandum of association, to contribute to the assets of the company, in the event of its being wound up. In the former case the company is said to be limited by shares, and in the latter by guarantee, But no banking company, claiming to issue notes in the United Kingdom, shall be entitled to limited liability in respect of such issue. 1 % m ^.m •*■■". ■'■m ■ ■■ '■% : !l k if 108 PRINCIPAL AND AOENT, 4. — Principal and Agent. An agent is one authorised to do some act or acts on behalf of another, who is called his principal. He who has power to do any particular act may in almost all cases appoint another person to do it for him. No one, however, who is not capable of doing an act of himself can give authority to another to do it for him. But the converse of this limitation is by no means true, for many persons who cannot act for themselves can transact business for others, and make contracts which will bind their principals. For instance, infants and married women, though subject to all the disabilities mentioned in a previous section, can act as agents for other persons and bind them by their contracts made as agents. An agency may be created by verbal authority for all ordinary mercantile purposes. Letters of attor- ney, and sealed powers of attorney, are often used, but they are not necessary to constitute the agency, and are merely convenient as an evidence of autho- rity, to satisfy the minds of those dealing with the agent. There is one case, however, in which a formal instrument is required, not merely to prove, but for the purpose of granting authority. An agent cannot bind his principal by a deed under seal unless he is authorised to do so by an instrument under seal, and as the only way in which land can be conveyed is by a sealed deed, an agent who is required to convey land must be appointed by a power of attorney form- ally sealed. In some cases also, which will be men- tioned in th^ section qq contracts of 8(ile, the Statute PRiilClPAL AND AOEMT. 109 of Frauds has required that where a man makes certain contraots for another, he must have a written authority from the latter to do so. Not only will it be sufficient in all ordinary mer- cantile transactions not affected by the Statute of Frauds to prove that a mere verbal authority was given to the agent, but in certain cases this authority will be implied from the behaviour of the principal If, for instance, any one knows that another person is holding himself out as his agent, and does not interfere with him, but allows him to go on transact- ing business in his name, he will not be allowed to dispute the agency and say that no express authority was given. The authority will here be implied from the acts of the principal. If one person sano- tions and ratifies contracts entered into by another for him, the law will imply an authority to go on making such contracts, and the agency will be pre- sumed to continue until the principal gives notice that he intends to withdraw his authority. Thus, if an agent buy goods fur his principal on credit, and the principal pay the amount so charged against him without objection, the creditor will be justified in supposing that the agent has a general authority to buy on credit, and will be safe in supplying further goods to the agent on the credit of the principal, since the circumstance of the previous ratification of the agent's conduct is an evidence of authority to the agent so to bind his principal. Agencies may be classified in several ways. An agency is called general when tire agent is employed to act for his principal in all the transactions of a ■*?v •■■■■i;! ■ V'i^'i M 110 I^BtNCIPAL AND AGfiKT. particular line of business. But where the agent is authorised to act as such in somo particular transac- tion only, the agency is called particular. The authority of the agent may be limited by certain instructions as to the conduct he is to pursue, or unlimited, i. «., leaving his conduct to his own discretion. But this discretion should not be exer- cised at random, for, in the absence of specific instruc- tions, it is his duty to pursue the accustomed course of that business in which he is employed, or, if prevented by some unforeseen obstruction, at all events to give due notice to his principal. The difference between a factor and a IroJeer is, that the former has both the authority to sell, and the possession of the goods he is employed to sell, whereas the broker has only the bare authority to sell, and, as a broker, never has the custody of the goods. When we wish to ascertain the full extent of an agent's authority, we may first look at any acts of his principal which seemed to confer a general authority to act for that principal. If the conduct of the principal has been such as clearly to lead to the belief that his agent has authority to act for him as a general agent, then we may be sate, with- out asking for further evidence, in concluding that the agent has such authority, as the principal will be precluded by his conduct from disputing the fact. But if we have no such evidence as this, and are compelled to resort to such formal evidences of authority as the agent may have in his possession, we must examine them carefully, as the courts will PRraCIPAL AND AOENT. Ill interpret them with rigour. It is to be observed, however, that the authority to do any particular thing will include, without express mention, a power to use all necessary and proper means of carrying out and completing the transaction. An agent, for instance, who is employed to get a note discounted, may, unless expressly forbidden, endorse his prin- cipal's name on that bill, and bind him by such endorsement. It is the duty of the agent strictly to adhere to the instructions of his principal, and if, in conse- quence of his exceeding his authority, the principal goes free in any transaction, then third persons can hold the agent liable for the damages they have sus- tained by his exceeding his authority. Moreover, if any loss happen to the principal on acconnt of a deviation by the agent from his instruc* tions, the agent will be liable; though a ratification of the deviation by the principal, either before or after the damage has occurred, will exonerate the agent. If the agent makes an extra profit by the deviation, that profit will belong to the principal. An agent who is remunerated for his services is required to pv^isess and to exercise ordinary skill and care in executing the trust reposed in him, and will be liable in damages to his principal for any loss the latter may suffer through any want of either on his part. An unremunerated agent will be responsi- ble only for damage occasioned by gross negligence or gross incompetency on his part. In matters of agency, as in partnership transactions, the utmost good faith must be observed, and Courts 11 -':m m 1 i y 112 PRINCIPAL AND AGENT. of Equity will not allow an agent to put himself into a position where ho may bo unduly exposed to temp- tation. If an agent employed to sell goods for his principal purchases them himself, or when employed to purchase any specific article for his principal pur- chases it for himself, the principal, on discovering the facts may in the first case, either repudiate the transac- tion or hold the agent to his bargain ; and in the second case, will be entitled to have the agent declared a trustee of the property for him, and to take the bene*' fit of the purchase himself. So also, in any agency transaction whatever, if the agent stipulate privately for and obtain any extra profit for himself, he will be obliged to account for it to his principal. The principal will be entitled to interest on his monies lying in the hands of his agent, where the agent has actually received such interest. But the agent will not be liable to pay interest on money lying dead in his hands, unless it was his duty to have put it out at interest. It is the agent's duty to keep accounts between himself and his principal of what is due to him for his commission. If he neglects to do this, so that no items can be proved, he can recover no compen- sation for his services. A factor is bound to keep the goods intrusted to him for sale, with the same care that a prudent man would keep his own. He is not liable in caise of robbery, fire, or other accidental damage, happening without his default, unless previous to such damage he had committed some improper act, had it not been for which the property might have escaped, for PKIKCIPAL AND AQENT. 118 d to man Se of ning age not i,for then he will be answerable, and will not bo allowed to say that perhaps it might not have escaped even had he acted rightly, for it is a rule of law that no man shall qualify his own wroog. Where goods are consigned to a factor it is his duty to insure them, or at leaHt make every usual exertion to insure them at the request of his principal, if in the course of their previous dealings he have been used to do so ; or even though he may not have been used, if he have effects in hand enough to cover the expenses of insurance, or if the bill of lading contain a requisi- tion to insure, for by accepting the goods under it he agrees to such requisition. In any of these oases if he neglects to make the fit insurance, he will be responsible for damage which would have been covered thereby ; and where it is the duty of an agent to insure, it is his duty also to give notice to his principal in case of his being unable to effect an insurance. Sometimes a factor for an additional premium beyond the usual commission when he sells goods on credit, becomes bound to warrant the solvency of the purchaser. The agency is then called a del credere agency. It was at one time thought that a del credere agent was not merely a surety, responsible only in case of the default of a purchaser, but that he was liable to his principal in the first instance, but that doctrine has been questioned and at last overturned by subsequent authorities, which have settled that he is but a surety. If indeed the factor after a sale remit his own note or acceptance to his principal, for the amount of the proceeds, he will be v"i »•((, ■: '.'/' rdM\ ^^11 ; '■ fife i^\'.£ 114 PRINCIPAL AND AGENT. I® ' liable on that, whether employed as a del credere a^ent or not, and whether the vendee be or be not solvent, for by giving such an instrument he lulls all the suspicions of his employer, and causes him to dismiss all care about the solvency of the purchaser. The principal is liable to third persons for any damage done by the negligent conduct of his agent, while about his principal's business ; but if the dam- age be done wilfully, the agent alone will be liable. For instance, if A's servant, B, while driving along the street, carrying parcels for A, negligently runs his waggon against another waggon and injures it, A will be responsible. But if B wilfully drives against the other waggon, A will not be liable, as the principal is not liable for the wilful trespass of his agent, when committed without his knowledge or assent. Neither, of course, would the principal be liable if the agent's act, though merely negligent, was not done during the course of the business of his agency ; as for instance, if the servant had taken his master's waggon out without leave, and had been driving about for his own amusement, when the neg- ligent act was committed. It has been decided that it is only to strangers that a principal can become liable for the carelessness of an agent, and consequently, that an agent cannot hold his principal liable for the carelessness of ano- ther agent employed in the same general business. This decides a point frequently arising in actions against railroad companies by their employees. But it has been said, that if an injury arises to one ser- vant, from the incompetency or want of ordinary \ PRINCIPAL AND AOENT. IIA skill in a fellow-servant, while both are cn<;aged about their master's business, then the master will be liable. It is a well known rule of evidence, that a man's own admissions about any transaction may always be used against him, as evidence of the fact admitted. In the same way, a man may beoome liable through the admissions or statements of an agent, in the same way as by his own. There is this difference, however, between the two oases. The princip^J's admissions, no matter when made, will be evidence against him; but the agent's admissions, in order to be of any use as evidence, mnst have been made, not only during the course of his employment as agent, but also during the transaction of the business to which the admissions relate. The reason of the restriction is this, that while the statements of an agent made under the above circumstances are admitted as evidence from neces- sity, there being seldom in actions against a principal any other evidence within reach and while it is not likely that an agent will make false statements against the interest of his principal concerning any transac- tion, while actually engaged in it, it would be exposing the principal to too great a risk if, after the conclusion of the transactions in question or after the dismissal of his agent, the unsworn state- ments of the latter, perhaps carelessly or even maliciously made, should be considered as conclusive against the principal as that person's own admissions. Again, notice to the agent is notice to the princi- pal Very often in Courts of Common Law and in mi .1 It 116 PMINOIPAL AKD AORNT. CuurtH of Equity, one of the parties to a suit will endeavour to prove that his opponent was aware of certuirj facts, or, in legal phraseology, had notice of uurtuiu fuctSy the knowledge of which will afToct the right of the latter to a verdict or to equitable relief. For inntance, if a man buys a promissory note before it is due, and knows nothing of any suspicious cir- cumstances connected with it, he will be entitle I to recover the whole face of the note, but if in a buu brought by him on the note the maker of the note can prove that the note was stolen from him by the person who sold it to the plaintiff, and that the plain- tiff knew enough to make him suspect that this was the case, then the plaintiff can recover nothing, because he had notice of the circumstances. Let us suppose that *hc plaintiff did not buy the note himself, and Jld not know anything of the history of the note, but that his agent bought the note for him, and was aware of the suspiciousness of the transac- tion, but told his principal nothing about it. On proof of this knowledge on the part of the agent the principal will h^ prevented from recovering, by the rule of law which says, that notice to the agent is notice to the principal. p^ ^ If an agent . ontract with thirrl porsjo'^a wither? f letting them know who his pri it^ the agent will be personally liable to them for the performance of the contract. Moreover, if these persons subse- quently ascertain who the principal is, they may proceed against him instead, if they choose. If B., the agent of A., sells goods to G. without disclosing the fac. of his being an agent, and C. has at the time PRFNCIPAL aM> aqrm». 117 agoub of purcluiHO a claim nguinnt IV, the princ pal may, it is true, buo C. for payment, bit ho will be compel ImI to stand in theflnmo position that 13. would iiuve been in if he had sued j for instance. A, will bo coiu- j'Clled to allow C. to set off H.'s debt to C. aguiiiM li'uj claim. We may as well notice in this place the positiuQ and powers of a factor, who, as has been mentioned, is an agent entrusted with the possession of tl»6 goods he is authorized to sell. A factor has, i\a u matter of course, full power to sell goods in tre ordinary course of business, so as to give a good title to a ho7id fide purchaser against his principal Thus if A. be entrusted by B. with a number of ploughs to peddle through the country for him as his agent, though A. may after selling all the ploughs appropriate the money to his own use, 13. will have no remedy against tho purchasers, who have now a good title to what they have bought, but his remedy will be against the agent alone. iJut formerly, before the passing of tho Act now contained in chapter 59 Con. Stat. Can., agents employed to sell had no implied authority to pledge. In the case above mentioned, for instance, the factor could not have given a valid pledge of any of .his principal's merchandize in order to raise money for travelling expenses or to meet any press- ing emergency, without express authority from the latter, and consequently few persons would advance money to an agent on a security which might turn out worthless. This restriction was felt to be a great inconvenience both to principals and agents, to obviate which the Act above mentioned was passed. WW •.".f.4 •■I; "%'* ,•' '•■■lt| Mil * 'mi 118 PRINCIPAL AND AGENT. li- ,'■ > I This Act provides in effect that factors or agents entrusted with the possession of goods or of the documents used in the ordinary course of business as evidence of title to goods, such as Bills of Lading, Warehouse-keepers' certificates, &c., shall be deemed to have authority, not only to sell, but to pledge the goods, either directly or by a deposit of the docu- ments of title representing them, to any person who though he knows that the vendor or pledgor is only an agent, has no express knowledge that the agent is violating his instructions. The pledge however must be for a contemporaneous advance, and a pledge made in consideration of a previous debt due by the agent will be void. Thus if a factor were to pledge part of his principal's goods for a tavern bill pre- viously incurred, the landlord could not retain the goods against the principal ; but the landlord would be perfectly safe in taking the goods as a secu- rity for a present advance made by him to the agent. This Act, though it secures the rights of third par- ties against the principal, even in cases where the agent xnay be transgressing his principal's orders in making a sale or pledge, dees not prevent the princi- pal from recovering against the agent, any damage he may sustain through the agent's improper conduct; and it provides an additional safeguard against fraud on the part of the agent, by making a breach of trust by the "Jgent punishable, in certain cases, by fine and imprisonment, or both. For further important par- ticulars, too numerous to mention now, the reader will do well to look at the Act itself. iL PRINCIPAL AND AOENT. 110 Payment to an agent in the course of his employ- ment, is payment to the principal. But if, for exam- ple, a man comes to pay a mortgage debt due to a merchant, and hands the money to a clerk in the mer- chant's counting-house, the collection of mortgage money not being a mercantile transaction, the pay- ment is not made to the clerk in the course of his employment. If, therefore, the clerk absconds with the money, the merchant can insist on the amount being paid to him over again. An agent, contracting as such for a known and responsible employer, incurs no personal liability to third parties. But if he contract without disclosing the fact that he is an agent, or, even while he professes to be an agent, without disclosing the name of his principal, ho will be personally liable for the fulfil- ment of the contract, though the persons with whom he has contracted, on ascertaining who the principal is, may, if they choose, proceed against the principal instead. Moreover, if an agent exceeds his authority in entering into a bargain, and it happens that in consequence of his want of authority the principal is not bound, the agent may be made to answer for any damages which those who have contracted with him have suflFered on account of the contract having fallen through. If an agent commit, through negligence or wilful malice, any injury to the person or property of third parties, he will be always liable, though, as we have seen above, the principal is only sometimes so. If a party who has paid money to an agent for the use of his principal becomes entitled to recall it, ho -mi -ry 120 PRINCIPAL AND AGENT. f i: iii may, upon notice to the agent, recall it, provided the the agent has not paid it over to his principal, and also provided no change has taken place in the situ- ation of the agent since the payment to him before such notice. The mere fact that the agent has passed such money iu account with his principal, or that he has made a rest in his accounts without any new credit being given to the principal, will not of itself be sufficient to entitle the agent 40 retain the money, when the party entitled to recall it de- mands it. But if a new credit has been given to the princi- pal since the payment, or if bills have been accepted, or if advances have been made on the footing of it, the payment cannot be recalled. In signing any document for a principal, the agent should take care to express that he does it for the principal, or that the principal does it through him. The ordinary form of signing, where the principal's name is put first, is " James Smith, per {i.e. through or by) John Brown;" or, "James Smith, per pro. (i.e. per procuration) John Brown;" and when the agents name is put first, " John Brown, for James Smith." The relations between principal and agent, which, as we have seen, are in a great measure governed during their continuance by the same rules as regu- late the mutual rights of the different members of a partnership, are dissolved by almost precisely similar causes. An agency may be terminated : 1st. By the ex- piration of the time limited at its original creation. PRINCIPAL AND AGENT. 121 2nd. By completion of the particular business for which the agency was created, if that business has any natural termination. 3rd. The bankruptcy of the principal operates as a revocation of the authority of his agent touching any rights of property of which he is divested by the bankruptcy, for the bankrupt thereby ceases to be the owner, and consequently is incapable of personally passing any title to it, and the act of his agent cannot have any higher validity. But as to other rights and property which do not pass by the bankruptcy, but remain personally in the bankrupt, as, for example, the rights in pro- perty which hte holds as trustee or as guardian or as i executor, the authority of his agent will not be sus- pended or revoked by his bankruptcy. 4th. If the principal, a single woman, marries, the husband does not become the principal, but the agency is terminated. 5th. By insanity of the principal pro- perly declared by the Court of Chancery. 6th. By the insanity of the agent. 7th. By the death of the principal. In the case of an agency coupled with an interest, the agent, it is true, on the death of the principal, ceases to be his agent, but he may be con- sidered the agent of his representatives for the pur- poses of enjoying the interest with which his power is coupled. 8th. By revocation by the principal. In cases where the person appointed agent receives at the same time a right to collect money in the course, and by virtue of the agency for his own benefit, as, for in- stance, where a power of attorney accompanies the as- signment of a chose in action, or where any valuable interest in real or personal property is accompanied 11 ^^*:':.^ u(' '•■■■■ :")' km 122 PRINCIPAL AND AGENT. fi'i ! by a power necessary to the enjoyment of tlie inter- est, the power of revocation cannot be exercised, unless the right to do so has been reserved to the principal by the original contract creating the agency. But if the authority given to the agent is merely a naked power, that is to say, one which though it may entitle the agent to remuneration in the shape of commission, does not confer any of the advantages above mentioned, and if there is no time limited by the original agreement between the parties, and no natural limit to the duration of the agency indicated by the nature of its business, then the authority may be revoked by the principal at any time. 9th. By re- nunciation on the part of the agent. Very nearly the same principles affect the agent's right to renounce as those that govern the priucipaPs right to reivoke. But in all cases where the .^gent renounces his agency, he ought to give notice thereof to the principal, for if he does not, ar.d damage is thereby sustained, it may, perhaps, if the omission be fraudulent give rise to a claim for damages, even though it be a case of gratuitous agency. w CHAPTER IV. '«'>-i?^:: MERCAJNJTILE CONTRACTS. 1. — Bills of Exchange and Promissory Notes. A bill of exchaoge is a written order from one person to another, desiring him to pay to a third person, or to the order of a third person, or to the bearer of the order, a certain sum of money uncon- ditionally. It may be inferred from the above definition that the bill is a written instrument, and that it orders the payment of money. An order to give goods to a certain value is not a bill of exchange. The pay- ment, moreover, must not be required upon a condi- tion, or upon a contingency that may or may not happen. The order may be to pay on demand, at sight, or a certain time after date, or even on the death of a particular person, for that event is sup- posed certain to happen, but not upon the marriage of a. particular person. An instrument, however, which does not comply with this definition is not on that account void, but it will merely want certain qualities to be hereafter mentioned which render bills of exchange particularly valuable as instruments of commerce. •■■# T "■M :^s^\.; ■■;m ■0 n\ w 124 KBOOTIABLE IKSTRUHEMO'S. Before the invention of bills of exchange, when a merchant was the debtor or creditor of another mer- chant at a distance, payment was generally attended by the inconvenience and risk of transporting the money from one place to another. But wherever commerce became active the necessity of the case introduced these instruments. If A. a merchant in Toronto owes C. a merchant in London, England, a thousand dollars, he never thinks of sending the money in specie, as he has several ways open to him of avoiding the inconvenience. lie can, for instance, purchase a bill of exchange directed to some person or banking house near the residence of his creditor, directing payment of the amount of the debt to the creditor, and so framed that it will be of no use to any one till received and endorsed by the creditor ; or he can adopt the ruder contrivance, which was the germ of the more artificial contrivances of modern days. He can single out some one in London who happens to be a debtor to himself, and order him to pay this money or part of it over to C. The differ- ence between this expedient and the modern prac^ tice of purchasing exchange is that, instead of being dependent on the chance of having a debtor living close by his creditor, the person desiring to make the payment can buy himself a debtor in any foreign country by purchasing a draft upon some banking house carrying on business there. \ When A., in the example above given, determines to hand over B.'s debt in payment of his liability to C, he draws an instrument in something like the following form : NEGOtlABLB INSTROMENTS. 125 llOOO Toronto, July 1st, 1864. Three months after date pay to C. or order the sum of one thousand dollars, for value received, and charge the same to my account. ToB. A. This instrument, called a bill of exchange, is transmitted to C, who applies to B. to know whether he is willing to comply with this request* If B. is willing to do so, he signifies his assent by accepting the bill. A. is called tho drawer because he draws upon B., B. is called the drawee because he is drawn upon, and after he accepts he is called the acceptor. C. is called the payee because the money is directed to be paid to him. G. is also called the holder as long as he retains possession of the bill. There is another party to bills of exchange, called the eu" dorser, whose position cannot be well defined till we come to the subject of negotiability 3 but we may mention that he derives his name from his writing his name across the back of the j)ill. By the act of indorsing he becomes a party to the bill. If C, after obtaining B.'s acceptance, does not wish to wait till the bill becomes due, he sells it and hands it to *the 3 purchaser with his name written across the back. C. is then called the indorser, and the purchaser becomes the holder. In the same way, if the pur- chaser writes his name across the back and transfers the note, he becomes the indorser, and the transferee becomes the holder. The bill can thus pass through any number of hands. The acceptor is considered the principal debtor, and the person primarily liable to pay the bill when it ':-n m' 'ii m m m ^ 1$ 126 NEGOTIABLE INSTRUM£NtS. becomes due. All prior parties are liable to be sued by the holder in case the bill is not paid, but as among themselves they are liable in the following order. If the acceptor docs not pay, and the drawer pays, the drawer can recover what he has paid from the acceptor. If the payee (having become an indorsee as above explained) pays, he can recover from the drawer and acceptor ; and if a second indorser pays, he can recover from the first indorser, drawer and acceptor, and so on, the rule being that subsequent parties can recover against prior ones, the promise of each party to the instrument being considered as made to all subsequent holders. The distinction between a foreign and an inland bill of exchange has been accurately ascertained in England on account of the wording of the stamp laws, which exempted foreign bills from stamp duties When an unstamped bill was offered in evidence, in any court in England, and its admissibility was disputed on account of the absence of a stamp, the objection might be answered by showing that it was a foreign bill. The results of the decisions wMch arose on these objections, and in certain other ways, may be thus stated : Inland bills of exchange are such as are both drawn and payaMe in England, Wales, or Berwick-on-Tweed, or drawn and payable in Ireland, or drawn and payable in Scotland. Foreign bills, as distinguished from in- land bills, are such as arc drawn, or payable, or both, abroad, or drawn in one realm of the United King- dom and payable in another. Bills drawn in England and payable in Scotland or Ireland, or vice versa, are NEGOTIABLE INSTRUIIENTS. Iflt foreign bills, for they were so before the Union be- tween the countries, and the Union does not make them inland bills. But bills drawn and payable in Scotland, or drawn and payable in Ireland, are inland bills within Imperial Stat. 1 & 2 Geo. IV. cap. 78, to which an acceptance in writing is necessary. Another circumstance which rendered the distinc- tion important was that, in order to charge the drawer, the dishonour of a foreign bill must bd attested by a protest. The reason why a protest, though not absolutely necessary in the case of inland bills and notes, or even in the case of foreigti promis- sory notes, was required in the case of foreign bills of exchange, was that by the law of most foreign nations a protest was essential in case of dishonour of any bill, and the protest was required for the sake of uniformity in international transactions. With regard to the stamp duties payable in Canada, the distinction between inland and foreign bills above pointed out is not important , for our sta* tute 27 & 28 Vie. cap. 4, sec. 1, imposes the duty only upon promissory notes, drafts, or bills of ex- change, made, drawn or accepted^ in this Province- The explicit wording of the statute will save the necessity of referring to the above mentioned distinc- tions on any question as to whether bills ought, under our act, to bear a stamp. As to the necessity of a protest on bills of ex- change, however, the analogies furnished by the English cases will be a guide to us here. In accord- ance with those cases, it is submitted that we should treat as foreign bills, bills drawn and payable in any - ''.1 ■; it ■' '' i :^ 'M ^li^: V'll^ ':yh ■■m ■vJM ■Ma ■Wi m lU KBOOTiABLE IKSTRUHEKTS. foreign country, bills drawn in Canada and payable in any other country or colony, and vice versd ; and that even bills drawn in Upper Canada and payable in Lower Canada, and vice verad, should be considered as foreign bills ; for granting that before the Union such bills would have been foreign, the Act of Union did not make them inland bills. Bills drawn and payable in Lower Canada would on the same prin- ciple be considered in Upper Canada, and bil^s drawn and payable in Upper Canada would ic Lower Canada be considered to be foreign bills. A promissory note is a written promise to pay a certain sum of money unconditionally. The promise must be in writing, must be to pay a certain sum of money, not other things than money, as goods or lands, and must be unconditional. Like a bill of exchange, it may be payable on demand, or at a cer- tain time after date, or on the happening of an event which, though uncertain as to its time of occurrence, is yet certain to happen. If a promissory note be drawn and signed as follows : $400 Toronto, July 1st, 1864. Three months after date, I promise to pay to C. or order four hundred dollars, at the Bank of Toronto, in Toronto, for value received. B. B. is called the maker, and is the principal debtor on the instrument, being in the same position as the acceptor of a bill of exchange. C. is called the payee, and, while he holds the note, the holder; and if he indorses and delivers it over to D. he becomes I KIBGOTIABLB INBTRVMENm 129 tlie indorser, and D. the holder. D. may likewise mdorse and transfer, and so on, ad infinitum. The same rule as to liability prevails hero ad with the parties to bills of exchange, prior parties being liable to snbsequent parties. The order of priority is aa follows : Maker, first indorser, second indorser, and so on. Before ^e go fuilher, a few technical points as to the transfer of bills and notes had better be ex- plained. Where an ordinary book debt is assigned the assignee can sue on it, but at law it must be sued in the name of the original creditor, and no matter through how many hands the debt passes, the name of that creditor, or in case of his decease in the meantime, of hb personal representative, must be used. When bills of exchange and promissory notes, drawn in negotiable form, are properly transferred, the transferee has the right to sue on them in his own name. If the bill or note is by its terms pay- able to bearer, it may be transferred by mere delivery through any number of hands, and the holder for the time being may sue on it in his own name. If payable to "the order of C." or to "C. or order," C. must indorse it when he transfers it ; and in case he indorses by simply writing his name across the back of it, then the person receiving it, or any one to whom that person delivers it, may sue in his own name. This peculiarity, distinguishing bill and notes from other choses in action, is called " negotiability." If however a bill or note is expressed as "payable to 0.'^ merely, no mode of transfer can make it nego- 12 'mt ■■M^. .e-'^ M .,-;.;;lJ ISO MEOOTIAULB iNBtKUMiTNTS. ;i I 1 1 tiablo, and it must always bo sued iu the name of C. The indurseroont spoken of heretofore is the indorse- ment in blank, e£feoted by merely writing the name across the back of the instrument; but if the indorser write above his name the words " pay to the order of D." the indorsement is called an indorsement in full. The instrument then ceases to be negotiable until D. indorses ; and if he indorses in blank, then it will pass by delivery. A restrictive indorsement is one which puts aD end to the negotiability of the instrument for ever. For instance, if the indorser's name is accompanied by the words " pay to C. only," C. can never transfer to another party the right to sue on the instrument in the name of that other party. It has been decided however that an indorsement with the words '' pay to C," will not deprive C. of the power of transferring such a right by his indorsement. As we have just seen, however, these words have a different effect when appearing in the body of the instrument. Either of these modes of indorsement makes the indorser liable as a party, and sometimes, in order to prevent this, where an indorsement is required merely for the purpose of transfer, the words "without recourse*' are added before or after the name. The effect of these words is to protect the indorser using them from all liability as such. Simple contracts, that is, contracts not under seal, require a consideration to support them ; and bills and notes are contracts within this rule. If B. makes a promissory «note for 9100 to C, 'and there is no consideration for the giving of the 'iiL to C, of the NEUOTIABLE INSTUUMENTS. 131 noto, B. ( in sot up tho absonco of consideration ds a (lofcnco to C.'s action on tho noto. In tho same way, tho acceptor of a bill of exchange can set up thiM defence as against the drawer. But there is a differ^ eaco, which is however merely a matter of cvidenoe, between an action on bills and notes and an action on other contracts. In the latter the consideration must be proved to exist, by the plaintiff, and he can< not recover unless he proves it. In the former, the consideration is presumed to exist until the defendant proves its absence, and the plaintiff will recover on mere proof of the signing of tho instrument by tho defendant. The defence of want of consideration can always be set up between immediate parties to a bill or note, that is to say, in the ease of a bill of ex- change, by the acceptor against the drawer, by tho drawer against tho payee, by the payee on being sued as an indorser, against his immediate indorsee ; and, in the case of a promissory note, by the uioker against the payee, by the payee on being sued as an indorser against his immediate indorsee, and so on. But between remote parties, that is for instance between acceptor and payee, between drawer and indorsee, between first indorser and second or third indorsee, this defence is subject to the following restriction. It cannot be set up by one remote party against another who received the note before it was due and gave value for it, and was ignorant at the time of receiving it of the fact that the former had received no consideration for becoming a party to the instru- ment. For the security of trade, the custom of merchants, sanctioned by tho decisions of the courts Hi 4 ■>■, \ rce here, ;, or cr ran- these what ument, signs, irposes e here, TSEGOTIABLB INSTRUMENTS. 135 though alte/ed as to England by subsequent statutes of the Imperial Parliament, As to gaming securities, it was never any objection to an action against the indorser that the bill or note was made on a gaming consideration; for though the statute directed that they should be void to all intents and purposes, that meant only so far as was necessary to further the purposes of the act, and to exempt an indorser from suit might assist a winner whom the statute meant to punish, not to protect. By certain statutes consolidated in cap. 58 Con. Stat. Can., bills of exchange and promissory notes on which is reserved more than a certain rate of inter- est are in certain eases declared to be "utterly void/' but this enactment is modified as to Upper Canada by the statute cap. 42 Con. Stat. U.C, sec. 8, which J declares that ''no bill of exchange or promissory note, although given for a usurious consideration or upon a usurious contract, shall be void in the hands of an indorsee (or, if a note transferable by delivery, in the hands of a person who acquired the same as bearer) for valuable consideration, unless such in- dorsee or bearer had at the time of . discounting or paying such consideration for the same, actual know- ledge that such bill of exchange or promissory note . was originally given for a usurious consideration or upon a usurious contract." There are certain technical formalities required to be observed by the holders of negotiable instruments in order to secure or maintain their rights against the different parties thereto. 1'^ 156 WEOOTIABLE INSTRVMEliITB. 1. Presentment of bills of exchange for acceptance. If A. dra\HfS on B. by a bill of exchange, and deli- vers the bill to C. for value, A. undertakes to pay the bill if B. either refuses to accept on present- ment for acceptance, or after acceptance refuses or neglects to pay. If the bill is drawn payable at sight, or a certain time after sight, or on demand, G. must present the bill to B. for acceptance within a reason- able time, otherwise the drawer and indorsers will be discharged, for an unreasonable delay might either change the state of accounts between A. and B. to such an extent as to render B. unwilling to accept, or might change B/s financial position so far as to render his acceptance worthless, and thus prejudice the drawer by depriving him of the benefit of his recourse against B. What is a reasonable time differs witli the circumstances of each particular case, and the question of reasonableness is in case of dispute left to the jury to decide. In estimating what shall be considered a reason- able time, among the circumstances to be taken into account are the distance of the holder from the place of presentment, and the facilities of communication between the holder and the drawee. Moreover, where the bill has been constantly in oirculiition since it passed oat of the hands of the drawer, a consider- able period will be allowed for prepie^itment. But where the bill is drawn payable on a certain day or a certain time after date, the holder is not obliged to present for acceptance until the day for payment arrives ; though the usual course is to present for acceptance as soon as possible, as the bill will be t NEGOTIABLE IMSTRUMBMTS. isr 'yV' more marketable with the additional security of the acceptor's liability. The drawee is not bound to accept unless he has made &ome binding contract with the drawer to do so, but as soon as he accepts he becomes liable as the principal debtor on the bill. If he refuses to accept, the holder must give notice of non-acceptance to the drawer in the same manner as notice of nonpayment is required to be given. The drawer will then be liable to pay the amount of the bill at once. The object of this notice is to en- able the drawer to withdraw at once from the hands of the drawee any funds he has left with him. If there are indorsers on the bill at the time that acceptance is refused, they too must be notified, and when so notified are liable as well as the drawer to have immediate payment enforced. By cap. 42, Con. Stat. U. C, it is enacted, that '' no acceptance of any bill of exchange shall be sufficient to bind or charge any person, unless su( i acceptance is in writing on the bill; or if there be more than one part to such bill, then on one of the said parts.'' Acceptance is usually made by the drawee's writing across the bill the word '^accepted," and signing his :iame thereto, though this word is not necessary. In fact any writing on the bill from which an intention to accept can be inferred, will be a binding acceptance. Thus, if a drawee merely writes his name upon the face of the bill, without the word " accepted," or if he writes " accepted," " presented," or " seen," or the day of the month, on the bill, this will primd facie amount to m. ac- ceptance. ■■^Jifi I'! =','M.I 138 NSaOTIABLE INSTRUMENTS. The acceptance may be either absolute or condi- tional. The holder is entitled to require from the drawee an absolute engagement to pay in money according to the tenor and effect of the bill, unen- cumbered with any conditions or qualifications. A general acceptance, without any express words to restrain it, will be such an absolute acceptance. A conditional acceptance may be an acceptance as to part of the amount, or as to part or the whole upon a condition, as for instance, an acceptance " when the acceptor shall receive funds from the drawer." The holder not being bound to receive a conditional acceptance, is entitled, when he finds that he cannot obtain a general acceptance, to give notice of dis- honor, and to hold liable the drawer and indorsers. Sometimes, when the drawee has refused to accept eitBcx' absolutely or with such conditions (if any) as the holder is prepared to agree to, a person not a party to the bill will accept for the honor of some party. This is called an acceptance supra protest, and is effected by writing *' accepted supra protest for the honor of ." This acceptance is so called because^ where the form of protesting is actually gone through, the acceptance ii given after the protest; but as this form is necessary only in the case of what are called foreign bills, it would seem that this acceptance can be given after a refusal to accept where there is no protest. \ The effect of such an f ?ceptance is, that the ac- ceptor becomes liable to all the pa "ties to the bill sub- sequent to the one for whose honor he accepted ; and if he pays the bill, he can look to that party, and all NEGOTIABLE INSTRUMENTS. 139 he ac- laub- and ndall parties prior to that party,for repayment. "When this acceptance is given, however, it becomes the duty of the holder, when the bill becomes due, to present the same to the drawee for payment, and give notice to the acceptor supra protest of the nonpayment of the bill. This ceremony of giving notice of non-payment need not be given to an ordinary acceptor, and need only be given to the acceptor supra protest because he stands in the position of an endorser. 2. Presentment for payment and notice of dishonor. The most important formalities, besides that of presentment for acceptance, are presentment for payment and notice of dishonor. When a bill or note is payable in a certain number of months, calendar months are meant. By the custom of mer- chants, three days of grace are, in this Province, in Great Britain, and in the United States, allowed on bills and notes payable a certain time after date or afler sight. Thus, if a bill, according to its terms, would fall due on Monday, it actually matures on the following Thursday, and presentment, if ueces- sary, must be made on the latter, not on the former day, and presentment on the former day is of no use. Days of grace are not allowed on bills and notes payable on demand, and it is as yet undecided whether they are allowed when the instrument is payable at sight. In Great Britain and the United States, when the last day of grace falls upon a Sun- day, or upon any of certain holidays, it is payable on the day preceding; but in Upper Canada and in Lower Canada, in such case, the bill is payable ou the following day. '>-:^i V'U 1 ^' I^^M 'I- " -ml 1 -■ • trJ 140 NEQOTIABLIE INSTRUMENTS. By Con. Stat. U. C. cap. 42, see. 20, the following days are made holidays for the purpose of postponing the maturity of a bill or note : Sunday, Christmas Day, Good Friday, Easter Monday, Ash Wednesday, any day set apart by Koyal proclamation for fasting or thanksgiving, the birth-day of the reigning Sovereign, and the first day of January. But in order to preserve the remedy of the holder against parties other than the acceptor of the bill and the maker of the note, presentment for payment must be made, no matter how the instrument is expressed to be payable, on the day when the note falls due, at the place where the instrument is payable, if any place of payment is mentioned therein, or to the acceptor or maker. If the bill or note is made paya- ble at a particular house, presentment to any inmate will suffice ; or if the house is shut up, it will be enough to present it at the house door. If drawn or made payable at a particular place, and if the holder takes the bill with him to the town, and makes in- quiries for the acceptor or maker (as the case may be), and cannot find him, that is a sufficient present- ment. If drawn or made payable at a bank, and the bank are the holders of the instrument, on the d%y it falls due, no formal presentment is necessary, as the circumstances are held to amount to a presentment. With regard to presentment for payment, in order to avoid confusion on the subject, we may firsts con- sider the cases in which this form must bo complied with, in order to secure the holder's claim against the acceptor of a bill or the maker of a promissory note. These parties, as we have seen, stand in the relation KKGOtlAn- INStRtJlIKNTS. 141 of principal debtors on the bill or note respectively. • When an ordinary book debt is due, a demand or the rendering of an account is not in strictness necessary in order to entitle the creditor to sue. Similarly, if A makes a promissory note, payable in three months, without specifying any place of payment, When the note falls due it is A's duty to find out the holder, and not that of the holder to make any demand upon A ; and the holder may at once, in case of non-pay- ment, commence an action against the maker. Even if a particular place of payment is specified, it is not necessary, in Upper Canada, in order to charge the acoeptoi^ or maker, to present at that place, unless the words ^< and not otherwise or elsewhere'' are used. In Lower Canada, however, presentment at the place specified is necessary, in order to charge the maker or acceptor, without the presence of the above words. It is somewhat remarkable that even where a note is made payable on demand, a demand is not necessary, the oommenoement of an action being considered a sufficient demand. If, however, a bill or note is made payable a certain time after demand, the demand q^ust be regularly made in order to fix the date of maturity. If no particular place is mentioned, presentment may be made to the acceptor or maker personally, wherever he can be found. But there is a sufficient presentment if payment be demanded of a clerk or other agent at the acceptor's or maker's customary place of business, or of any grown-up person at his residence. If he has shut up his house and absconded, and cannot be found, present- ment is excused, because it cannot be made, and % J f ' ■ m jj'! ii ■ ■ ft ■ !* U •'■.•i'm I'l i ;v'5?;';f '■biip 142 NEGUTIAHLB INSTR'JIIENTS. . the bill or note may be treated as dishonored. But if he has merely removed to a different residence and can be discovered, the bill must be presented in the regular way. If he bo dead, presentment must bo made to one of his executors or adminis- trators, if he have any ; and if ho have not, then at his last place of residence. The bankruptcy or insolvency of the acceptor or maker is not of itself an excuse for an omissipn to present, nor is a decla* ration made by him before the day of maturity of the bill that he will not pay it. If, however, a bill of exchange is merely an accommodation bill, and the acceptor had no funds of the drawer in his hands during any portion of the period tlmt the bill had to run, and the drawer could have had no reasonable expectation that the bill would be honored by the acceptor, then an omission to present to the acceptor and notify the drawer will not let the drawer go free, aa the omission could have done him no harm. But an endorser of a bill stands on a different footing, and no proof of knowledge on his part that the bill would not be paid by the acceptor at maturity will dispense with presentment and notice to him. When the bill or note has been duly presented aind remains unpaid, the holder should immediately give notice of the presentment and non-payment to all those parties to the instrument whom he intends to hold liable upon it. This notice may be verbal or in writing; at all events it must be such as to convey the intelligence, directly or indirectly, that the bill or note has been presented for payment, and that it has not been paid. A statement that it remains unpaid SSCOTIikDLti: INSTRUMSNT8. 143 at tlio time of giving the Doiice, will not bo sufficient. But the statement that it has boon <' dishonored '' will be sufficient, as it has been decided that this word implies presentment for payment as well as non. payment. The notice must give sufficient informa- tion to identify the instrument, but a trifling error of description will not vitiate the notice, as long as it has not been sufficient to mislead. The time and manner of giving the notice vary with the circum- stances of the case, and the distance at which the parties to be notified live from the party who is required to give the notice. If both live in the same city or village, the notice must be given by the holchr in time to reaoh the other in the course of the day following. The notice is therefore, in this case, generally sent by a messenger, and given or left at the place of business of tho drawer or indorser during business hours, or at his residence; and if he is not in, a yerbal message may be given to any grown-up person on the premises. If the house is shut up, and the party sent to give notice puts a written notice through or under the door, that will suffice. When both live in the same city or village^ the Lotioe is not generally sent by mail, as the holder will then have to prove that the notice reached its destination in time. When both parties do not live in the same city or village, the notice is generally sent by post, in which case the notice will have to be posted in time for some mail leaving on the day fol- lowing the dishonor. All that the holdef will then have to prove is, that the notice was posted in time, and it will make no difference if the notice has actually 144 NtaOTUDLB INStRUMKirrfl. miscarried. If the holder ohooses to send the notiod by a messenger, then ho will have to prove that the notice arrived as soon as it would have done by the regular mail. If there is no regular mail, then the notice must be sent by the ordinary means of convey- ance by stage or ship. There are thus two modes of proving the service of the notice of dishonor. One is to prove the receipt of it by the party who ought to receive it ; the other, to prove that it has been sent. As only those who are notified of the dishonor become liable to pay, the holder might, if he were the only person authorized to give this notice, at any time intentionally deprive some of the parties of their remedy against prior parties, by refraining to give any notice to the latter. But in fact each party to the instrument, after receiving notice, is allowed the same time for securing his rights by giving notice to any or all parties prior to himself, as the holder has to give the notices required of him. Thus, if A be the acceptor, and B, and D be the subsequent par- ties to a bill, and E the holder, and E notifies D only, who receives notice on Monday, D, who may not know whether the others have received notice, need not, if resides at a distance, send off his notice to G until the mail leaves on Tuesday ; and supposing that C, having received no prior notice from E, receives D's notice on Friday, he has, if B resides at a distance, until the closing of the mail on Saturday to send [notice to B. D. will then have recourse against C, and C against B; and moreover these notices will enure to the benefit of all parties and the NfiUOTIAULE INSTRUMENTS. 145 holder, so that the holder will bo entitled to recover against C by virtue of the notice given by D, nnd D ogainst B, by virtue of the notice given by C. Where notices are sent by mail, the rule is to direct to the post office nearest the place of residence of the party to be notified. If the holder or any of the parties desiring to give notice cannot, after mak- ing proper and reasonable exertions, ascertain the residence of the party to bo notified, the failure to give notice will be excused, so long as the inability to give it continues ; but notice must be given promptly, as soon as the necessary information i^ received. It is a safe and convenient practice for the holder, when he knows the address of some of the parties required to be notified, and is ignorant of that of others, to enclose to the former, with their own notices, notices for such of the latter as are prior to them, with the addretMCS in blank, and with a request to forward them to the proper post office. When notice of non-acceptance of a bill is to bo given, the same rules are to be observed as to the time and manner of giving the notice, a-^ those laid down as to noticr, of non-payment. These are the rules applicable to those cases where the holder of the instrument or his ap;cnt presents it and gives notice of dishonor or non-acceptance, with- out employing the services of a Notary Public. It is not necessary to employ the services of this officer in any case except where a foreign bill is dishonored. When a foreign bill is dishonored here, a Notary Public must be employed to protest it ; and a notice of the fact of the bill having been protested, not 18 - -:\ im'f 146 NEGOTIABLE INSTRUMENTS. i. merely of its having been dishonored (i. e., presented and not paid), must be sent to the drawer if he reside abroad. It is not necessary that this notice of the protest and dishonor should be sent by the Notary, but it may be sent by the holder or his agent. But in this Province it is customary for the Notary, who protests also, to send the notice. The statutes (Con. Stat. U. C. cap. 42, and Con. Stat. Can. cap. 57) have introduced so many variations from the English law, and have, by the character of their provisions, ren- dered the employment of Notaries so much more common among mercantile men, that it will be worth while to give, at some length, the substance of these Acts, so far as they relate to our present subject. These statutes do not render the employment of a Notary necessary in any cases where it Was not former- ly necessary ; and it is still necessary to employ one in the case of a foreign bill only, and not even in the case of a foreign promissory note ; but by allowing the notary's charges for protesting and giving notice of protest and dishonor of any bill or note, they have rendered the employment of a Notary almost a matter of course among business men. A Notary Public in this Province is an officer appointed under a commission signed by the Governor-General, as Her Majesty's representative, and empowered by that commission, among other things, to protest bills and notes. Before protesting for non-payment or non-acceptance, the Notary must, in person or by his clerk, present the bill or note for payn^ent or acceptance. As far as the place at which or the person to whom the presentment is (;o be made NEGOTIABLE INSTRUMENTS. 147 is oonceraed, he must observe the same rules as any other person. But he must present a bill or note for payment at some time after three o'clock on the last day of grace. He may of course present it before that hour, for the purpose of ascertaining if the drawer or acceptor really means to pay j but in any case he must present again after three o'clock before he makes his protest. The protest is a formal decla- ration, signed by the Notary and sealed with his seal, setting forth the facts of presentment and of non- payment, or non-acceptance (as the case may be)^ and protesting as well against all the parties to the bill as against all whom it may concern, for all interest, damages, costs, charges and expenses arising from the non-payment or non-acceptance of the bill or note. It also states when and how the notice of protest and dishonor or non-acceptance has been served. The bill or note, or a copy thereof, is an- nexed to the protest. After the Notary has made presentment, and payment or acceptance has been refused, he usually notes the bill or note by making a memorandum across tLc^ face of it to this effect : i P'^M im - mm iM'% Protested for non-payment (or non-acceptance) this 1st day of June, A.D. 1865. Fees, $1 35. A. B., K P. , The formal protest bears date on the day of present- ment, but need not be drawn up till it is required to be used as evidence. When the holdei cr an ordi- nary agent of the holder sends the notice by mail, he is obliged to send it by some mail going out on the day following the dishonor; but a Notary Public is IP ■'■■•'ttk'jl 148 NEQOTIABLK INSTRDMENTS. allowed by the statute (Con. Stat. U. C. cap. 42) the whole of the following day till twelve o'clock at mid- night to mail the notice of dishonor and pretest. The Notary, moreover, may always send the notice hy mail, and in every case the service of the notice is sufficiently proved by evidence that the notice was duly mailed; whereas in some cases, as we have seen, where an ordinary person sends a notice, proof of the mailing is not sufficient, but the notice must be proved to have actually reached its destination in time. But the greatest convenience resulting from the employment of a Notary is in the matter of evidence. Where the notice has to be proved at a trial, and it has been given by an unofficial person, that person must attend court and prove on oath either that the notice reached its destination, or that it was duly mailed, as the law may require; but cap. 57, Con. Stat. Can., dispenses with the attendance of the Notary to prove the sending of any notice by him, by enact- ing that the production of the protest shall be primd facie evidence of the allegations and facts therein contained, among which, of course, is the sending of the notice of dishonor or non-acceptance and of protest. The eflFect of a neglect to present regularly for payment and give notice of dishonor to a drawer or indorser is, as we have seen, to release that party from all liability. But if the drawer or indorser, after the bill or note becomes due, and being aware of the omission, promise to pay, or admit that he is liable to pay, or actually pay part, this will be evi- NEGOTIABLE IN8TRDHENTS. 149 denoe from which a jury will be allowed to infer that he has waived the objection of want of notice; and the waiver of notice, however proved, will place him in the same position as if he had received due notice. So if the drawer or indorser, before the bill becomes due, dis+,inctly state to the holder that he does not wish notice to be given to him, the failure to give notice will not release him. The acceptor stands to the holder of the bill in the relation of the principal debtor, and the drawer and indorsers are sureties for the acceptor. Any binding , . lement, therefore, which the holder makes with «/.i6 acceptor, to give him further time for payment, or to release him, or an actual release to him, operates as a release to all subsequent parties, if made or given without their consent. The indorsers are sureties for the drawer, and an agreement of the sort just men- tioned, in favor of the drawer, will release the indor- sers. The general rule is, that the giving of further time, or a release, to any party, releases all parties subsequent to that party. This rule applies to pro- missory notes, the maker of a note standing in the place of the acceptor of a bill ; but if any subsequent party have given his consent to the proceeding, then he will not be discharged. It has been decided, moreaver, that if, at the time of making an agree- ment to discharge or give time, there be a stipulation between the holder and the principal that the surety shall not be released, then the surety will still be liable, although not a party to the agreement above mentioned, and not even aware of it. However, if the surety, after such discharge of the principal, is ail 1^' ■\ii-J tm 150 NEGOTIABLE IN8TRUMFNT8. compelled to pay tbe amount of the bill or note, he can recover it again from the principal, although that principal has long before ceased to be liable to the holder. It must be understood, however, that the mere forbearance to sue, or an agreement not to sue, which fails to be binding on account of the absence of consideratiuii, will not prejudice the rig^hts of the holder. A. promissory note, made by two or more ma7iers, may be either joint or bevei-al. A note made by more than one person, and beginning ^ we promise/' &c., is a joint note ; but if it begins with " T promise/' it is several as well as joint. A joint and several note generally expresses that the makers "jointly and severally promise." One important consequence of the distinction is, that in an action on a note which is merely joint, all the makers must be made defen- dants ', but where it is joint and several, one or more of the makers may be sued without joining the rest. The respective promises of the raaker, acceptor, drawer, and of each indorser, are distinct promises, and each may be sued alone, as if he were the maker of a separate note. Formerly, if the holder desired to sue more than one of the parties (not being joint makers) to a bill or note, he was obliged to bring separate actions ; but by Con. Stat. U. 0. cap. 42, he is allowed to bring one action against all ', and if he brings separata suits, he will not — except in certain cases, mentioned in the Act, in which he is specially authorized to bring separate actions — be allowed more than the cosls taxed in one suit, and the actual disbursements in the others. The Act further pro- MICGOTIABLE IW!!TRUMINTS. 151 tt , >f vides, tbat when an aotioD is thus oonsolidated, the mere faot of one party to the note being a defendant in the action, shall not prevent a co-defendant from calling him as a witness, if such co-defcndpurposG ly after lent, a usually ransfers he time ilation 'f who in- ?hole of r of the m from der the ased hy mg the ich it is nto con- que has The omission to give notice of dishonor will not discharge the drawer of a. cheque, as it will the drawer of a hill of exchange, unless some special damage is proved to have resulted therefrom. But it will always he prudent to give such notice, and the holder will be safe if he follow the rules relating to bills and notes on this point. It is, however, clearly necessary to give notice cf dishonor to tho indorsers of the cheque. If a banker pay a forged cheque, he will have to sustain the loss occasioned by the forgery, unless the carelessness of the dr' . has facilitated the decep- tion. In a case, for instance, where the drawer lefl sufficient space in front of the amount mentioned in the cheque to allow of words being inserted ^here without interlineation, and words were in ted increasing the sum payable, and the banker paid the cheque as altered, the drawer was made to bear the loss. If a cheque in a negotiable state be stolen or lost, and presented by the thief or finder, the banker pay- ing it will not be responsible, unless payment has been stopped, or he has knowledge of any circum- stances which ought to have put him on his guard. There is a custom prevalent in England, of writing across the face of a cheque the name of a banker. The cheque is then called a crossed cheque. The effect of this proceeding is to insure the presentment of the cheque through some banker, and thus lessen the chance of presentment being made by a wrongful holder. But the crossing of a cheque with the name of a particular banker, has been held not to prevent 14 4:'': 154 NE06TIABLB! INSTRUMENTS. its being presented by another barker, but only to require that it shall be presented by some banker, and not by a private individual. This custom, however, does not seem to have been adopted among business Then in Upper Canada. ^ When interest is nci reserved in a bill or note, none is payable till after the instrument falls due. Interest then runs at six per cent, from maturity. When interest is expressly made payable upon the face of the instrument, it carries interest from its date, and not merely from its maturity. Where interest at any higher rate than six per cent, is reserved, the interest runs on at this rate until payment, or until judgment is recovered upon it, when interest at six per cent, runs on the whole amount of principal and interest due at the time of signing judgment, and on the taxed costs of obtain- ing the judgment. The IfiW of the Province of Canada respecting the amount of interest that may be received on money is contained in cap. 58, Con. Stat. Can., intituled, " An Act respecting Interest." The eflFect of this Act, so far as it is of practical importance to us, may be stated as follows : Since the 1 5th day of August, 1858, all persons, except those especially excepted by the Act, may stipulate for, allow and exact, on any contract or agreement whatsoever, any rate of interest or discount which may be agreed upon. The persons who have not this privilege are certain Banks, and those corporations or associations of persons not being Banks, authorized by law, before the 16th day of August, 1858, to lend or borrow money. KEGOTtABLB IK8TRUMENTS. 155 As to Banks, it is provided that no Bank incorpo- rated by any act of the Legislature of this Province, or of the late Provinces of Upper and Lovrer Canada, or by royal charter, or established or thereafter to be established iiiider the Act respecting Banks and Freedom of Banking, is to stipulate for, take, reserve or exact a higher rate of discount or interest than seven per cent, per annum. They may, however, receive and take in advance any rate not exceeding seven per cent. And such Banks are allowed to pay any rate of interest whatsoever on money deposited with them. Any Bank, in discounting at one of its offices paper payable at another, may receive or retain, in addition to the discount, the followiag rates, accord- ing to the time the paper has to run, that is to say : under thirty days, one-eighth of one per cent. ', thin;' days and over, but under sixty days, one-fourth of one per cent. ; sixty days and over, but under ninety days, three-eighths of one per cent. ; ninety days and over, one-half of one per cent. Where the paper discounted is payable at some place within the Pro- vince different from that at which it is discounted, and not at any of the offices of the Bank which dis- counts it, the additional charge allowed beyond the discount is one-half per cent., no matter what time the paper has to run. It will be perceived that the Banks are enabled, by the additional charges permitted to bo made by them under the Act, to add a considerable per cent- age to the amount retained by them on a discount. Thus if seven per cent, discount be charged on a note 1 ■■I -J P ^1 •'1:1 i Id6 NUUOTIABLB INSTRUMENTS. which has thirty days to run, and tbo additional per oentagc of one-fourth per cent, be charged on account of its being payable at another office of the same Bank, an amount equal to three per centum per annum will be added to the discount. Where the paper is payable at a different oflBoe from that at which it is discounted, for the sake of the convenience of the party obtaining the discount, or for any other bond fide reason, then there can be no doubt that the^additional charge will be justified by the statute. But it may and does often happen that where a person obtains large discounts at a par- ticular Bank, ho agrees with the Bank, in order to recompense it for the accommodation, to present paper for discount, on which an additional charge may be collected in the manner above mentioned. The ille- gality of transactions based on an express agreement of this sort, seems to be clear; but when it only appears that the borrower has voluntarily made his paper payable at a place different from that at which it is discounted, in order to induce a Bank to nego- tiate it for him, this, it seems, will not be of itself sufficient evidence of a usurious contract. As to corporations, or companies, or associations of persons authorized by law to lend or borrow money, the law may be said to stand as follows: The Act under consideration does not authorize them to stipulate for or retain an unlimited rate of interest, or even the discount or additional charges allowed to be received by the Banks. They can therefore law- fully receive only such interest as they are authorized to receive by some special legislative authority. This NEOOTIABLK INSTRUMENTS. 167 may be more or less than the ordinary rate of six per cent. J but whatever it is, the fact of their having been specially authorized by \&w to lend or borrow money deprives them of the liberty allowed by the Act to ordinary persons. It is presumed that any corpora- tion or company, or association of persons, which was not, before the 15th day of August, 1858, authorized by law to lend or borrow money, may bo considered a person within the third section of the Act, and be allowed to receive an unlimited rato of interest. As to what corporations are to be consi- dered corporations aulhorized to lend or borrow money within the meaning of the Act, we may refer to the language of Eichards, C. J., in the case of The Corporation of North GwUlimhury v. Moore et al. " We are of opinion that the legislature, in the dif- ferent enactments on the subject, did not intend to restrict corporations not incorporated for the business of lending money, but only allowed by law to lend money which they might have to invest, from charg- ing more than six or seven per cent, for money. In fact, as to these latter corporations, we are of opinion that the legislature did not intend to impose any greater restrictions on them than on any other per- sons. The reasons which would make it necessary to limit the amount of interest to be charged by corporations which were engaged in the business of lending money, do not, in our judgment, apply to municipal corporations." By the statute 27 & 28 Yic, cap. 4, and by 29 Vic, cap. 4, amending the former Act, duties payable by means of stamps, have been imposed on certain ..V M 158 NEOOTUnLE INSTRUMENTS. instruments. On ovory promissory noto, draft, or bill of exchange " made, drawn, or accepted in tliia Province," is imposed a duty aocording to the fol- lowing scale : Oq every bill of exchange, draft, or promissory note, not exceeding in amount $25, a duty of one cent. If the amount is over $25 and under $50 a duty of two cents. If over $50 and not more than $100, a duty of three cents. If over $100 and less than $200 a duty of six cents ; and so on, the duty increasing after this point at the rate of three cents For each additional $100 or fractional part of $100. If the draft or bill of exchange be for $100 or over, and be executed in duplicate, a duty is imposed on each part or duplicate, of two cents for each additional $100 or fraction of $100. If executed in more than two parts, then a duty is payable of one cent on each part instead of two cents. The later of the two Acts above mentioned, in im- posing for the first time a duty on bills, drafts and notes under $100 in amount, does not say anything about a special rate to be paid on bills and drafts when executed in sets. The effect of this omission will, we presume, be that, instead of the reduced rate payable on the various members of the set when the instrument is of an amount equal to or over $100, the same dut} .vill be payable in case of instruments under $100, on each one of the set; as on an inde- pendent instrument. Any interest made payable at the maturity of the instrument is to be reckoned as part of the amount thereof for the purpose of estimating the duty. [ » NEOOTIAULB INSTIIUMEMTS. 150 ** Every bill, draft, order or instrument for the payment of any sum of money by a bill or promis- sory note, whctlitT Bucli payment bo required to be tnudo to the bearer or to order, — every doeument usually termed a letter of credit, or whereby any per- son is entitled to have credit with or recvuvc from or draw npon any person for any sum of money, — and every receipt for money, given by any b' nk or per- son, which shall entitle the person paying such money, or the bearer of such receipt, to receive the like sum from any third person," is to be deem ^ to be a bill of exchange or draft chargeable with dut j under the Act. The following instruments are specially exempted from payment of duty : — Every bill, draft or order, drawn by any officer of Her Majesty's commiss.riat, or by any other officer in Her Majesty's Imperial or Provincial service, in his official capacity, or any acceptance or endorsement by any such officer, on a bill of exchange drawn out of Canada, or any draft of or on any bank, payable to the n {. - of any such officer in his official capacity, or any note payable on demand to bearer, issued by any chartered bank of Canada, or by any bank ipsuin? such note under the Act, cap. 55 Con. Stat. Can., any cheque upon any chartered bank, or licensed banker, or on any savings bank, if the same shall be payable on demand, any post-office money order, and any municipal deben- ture, or coupon of such debenture." The duty is to be paid by affixing to the instru- ment an adhesive stamp, or stamps, of the kind pre- scribed by the Act, to the value of the duty. V. \ ■■-■'I . M ^ 'I j i 160 NEGOTIABLE INSTRUMENTS. I i m ii The stamp, or stamps, ought to be affi2£ed, in the case of any promissory note, draft, or bill of exchange made or drawn in Canada by the maker or drawer, and in the case of a draft or bill of exchange drawn out of Canada, by the acceptor thereof, or the first person who endorses it in Canada ; and such maker or drawer, acceptor or first endorser, failing to affix such stamp or stamps at the time of making, draw- ing, accepting or indorsing such instrument, or affixing stamps of insufficient amount, is liable to a penalty of one hundred dollars. The stamp is to be cancelled by writing or stamp- ing thereon the date at which it is affixed, and the stamp is held primd facie to have been affixed at the date stamped or written thereon. If no date is affixed the stamp will be of no avail. Any person who pays or becomes the holder of any instrument which ought to have been stamped, and which has not been stamped, or which has not been sufficiently stamped, may give the instrument validity by affixing, at the time of his paying or be- coming a party theretq, stamps to double the amount of the duty, or of the deficiency. Under the Act of 1864 not only was a penalty imposed on persons drawing or making bills, drafts or notes in Canada, or accepting in Canada bills or drafts drawn out of Canada, of a certain amount, without affixing the proper stamps, but by section 9 a penalty was imposed on any person who in Canada should make, draw, accept, indorse, sign) become a party to or pay any promissory note, draft, or bill of exchange chargeable with duti/ under in NEGOTIABLE INSTRUMENTS. 161 the Act, before the duty or Jouble duty had been paid, and the instrument could only be rendered valid by the payment of double duty by a subsequent party, or by a person who paid the instrument. By the Act of 1835, amending the former Act, it is provided that no party or holder shall incur any penalty by reason of the duty not having been paid at the proper time and by the proper parties, pro- vided that at the time the instrument came into his hands, it had affixed to it stamps to the amount of the duty apparently payable on it, that he had no knowledge that they were not affixed at the proper time and by^the proper parties, and that he pays such duty as soon as he acquires such knowledge. As to the validity of the instrument, it is provided by the same Act that any holder may pay the double duty and give the instrument validity without becom- ing a party to the instrument. The amendments thus introduced, it will be seen, provide for the case that may frequently occur of a person taking an instrument apparently regular under the stamp laws, but which, nevertheless, might not have been stamped at the proper time. The hardship of making inno- cent holders or purchasers^responsible for such irregu- larities is removed by the amendment. Again, in order to enable a person who received an instrument not properly stamped without knowledge of the irregularity, to make the instrument valid he would have been obliged to adopt some such device as indorsing the instrument to some one else, and get- ting that person to indorse it back to him in order that he might become a party under the wording of I ■'■*; !!s f-.. ^•■':\\ K^U M ■M ■ ■ . ^'f •i;- 162 NEGOTIABLF INSTRUMENTS. ■ the ninth section. But by the later Act this pro- ceeding is rendered unnecessary. Under the Act of 1864 the law seems to have stood as follows, as to the manner of cancelling stamps : they might be cancelled by writing some material part of the instrument, or part of the signa- v ture of the person whose duty it was to affix the stamp or the initials of that person on' them. In the 9th section of the Act, it was strangely provided that in suing for the penalty mentioned in the sec- tion, the fact that no part of the signature of the party charged with neglecting to affix the proper stamp was written thereupon should be primd facie evidence that such party did not affix such stamp, as required by the Act. The effect of this provision would seem to have been that although the stamp might have some material part of the instrument written over it, or have the initials of the proper party written upon it, yet if part of that party's sig- nature were not written upon it, the presumption would be that the stamp was not affixed as required by the Act, and witnesses would have to be called to prove the actual circumstance of the affixing of the stamp. But since the first day of October, 1865, all that is necessary is that the proper party shall write or stamp the date of affixing upon the stamp, and the stamp will be held primd facie to have been properly affixed at the date stamped or written thereon. A bill or note, or other instrument required to be stamped, not duly stamped, is ** invalid and of no effect in law or in equity, and the acceptance or pay NEGOTIABLE INSTRUMENTS. 1C3 ment or protest thereof shall be of no effect." On the authority of the case of Baxter v. Bai/nes, 1 U. C. L. J. N. S., p. 148, it-would seem that the only mode of raising the defence of the want of a legal stamp is by a plea denying the fact. Whether, supposing this defence not to have been raised by the pleadings, but some plea rendering necessary the proof of the signa- ture to have been put in, the admission of the un- stamped or deficiently stamped note as evidence cou'.d be objected to at the trial, has not yet been decided. Under the Imperial Act, relating to stamps on bills and notes, this objection can be taken, under the peculiar wording of the Act which says " that unless the paper on which the bill or note be written be stamped with a proper duty or a higher duty, it shall not be pleaded or given in evidence in any court, or admitted to be good, useful, or available in law or in equity." But even under this Act, if an un- stamped bill is read in evidence before an objection has been taken to it, the objection cannot be after- ward taken either at the trial or by motion for a new trial. If then the English courts, in default of the objection being taken at the proper time under the Imperial Act, feel justified in concluding that the instrument, though not bearing a stamp, is available and valid, it may reasonably be inferred that our courts, by which it has been decided that the objec- tion ought to be taken by plea, will, on the same principle, after the proper opportunity for such objec- tion has passed without being taken advantage of, presume that the instrument has been regularly $ VM v:m n -:;!>* I i i " f i- :» 164 NEGOTIABLE INSTRUMENTS. i . ^1 ' stamped, ;cn though the absence of the stamp is presentee^ to :*ts notice on a subsequent occasion, for example hy objection to its admissibility as evidence at the trial. Where payment of a negotiable instrument is demanded, the person of whom payment is required ought, in order to protect himself against the claims of any person into whose hands it may have fallen, to require the instrument to be given up. Formerly, when the instrument had been lost, the person enti- tled to demand payment could not enforce payment at law, provided the fact of the loss had been specially pleaded, but Con. Stat. U. C, c. 42, s. 33, provides that when an action at law is brought upon any nego- tiable instrument which has been lost, the court or a judge of the court in which such action is brought may, upon proper indemnity being given to the defendant against the claims of any other person upon him in respect of such instrument, prevent the defendant from setting up the loss as a defence to the action. The Statute of Limitations runs on a bill or note payable a certain time after date, from the last day of grace. Thus, if the last day of grace be the 3rd January, 1864, the claim of the holder will be barred at the expiration of the second day of January, 1870. An action cannot be brought on the 3rd January, 1870, the last day of grace being reckoned against the holder, because at some time during that day he could have commenced au action, he will not be allowed any portion of the sixth anniversary, on NEGOTIABLE INSTRUMENTS. 165 Ml- ,1 on account of his not having a right to sue in the earlier portion of the day on which the note fell due. If a bill or note be made payable on dunand, the six years will be reckoned from the date of the instrument, because the holder had a right to sue upon it as soon as it was made, as we have already seen. Rut if a bill be made payable at sight, the statute rans from the time of presentment ; and if a bill or note be payable a certain time after demand or after sight, then it does not commence to run till demand of payment has been made, and the time mentioned, together with the days of grace, has elapsed, after such demand. But if, at the time the right to sue on the bill or note accrues, the person liable is out of Upper Canada, the holder will have six years from the time of his return to bring an action against him. It must be remembered, however, that if the person to be sued is in Upper Canada at the time the right of action accrues, his subsequent absence will not extend ^the time for commencing an action. The operation of the statute can be obviated by issuing a writ and keeping it renewed. Formerly, the absence of the creditor from Upper Canadt. was an excuse for ex- tending the time for bringing his action, but by statute 25 Vic. c. 20, the law has been changed in this respect, and such absence will not prevent the statute from running. i •i-f,! : '« if-.,' ''.mil 'M li iL I #1 m <'! 1G6 nUAUANTY AND SURETYSDII'. I ;< : ! 2. Guaranty and L^nrttjjsf>.ip. A guarj^nty I'^ a contract by a pjrson •;'. answer for the payriieut of srnie debt s.r the performance of some duty by some other person wht; is himself ia tho firs! instance' dtill liable. The psrson v;ho contracts lu answer Jbr another in this way is eaUed the t .^ ^ty :'-n^ the person fcx whose default be beconies liable h califd th<.^ principal. 1;iO eiloct of such a contract is not in itself to It nder the surety immediately liable to pay or per- form anything. The time for payiuent or perform- ance by the principal must arrivfe, and his default must be ascertained according to the terms of the contract on which he is liable ; and then, when default is made, the surety becomes liable to make it good. In every case of guaranty where any act has to be done by the creditor or person having the claim against the principal, in order to fix the liability and ascertain the default of the principal, that act must be performed before the surety becomes liable. As iox instance, if the contract be to deliver on demand a quantity of goods, the demand is as necessary to bind the surety as it is to ascertain the default of the principal. There is a sort of quasi suretyship, how- ever, which must be carefully distinguished from the contract already defined If B. goes into A.'s shop with C., and, in order to procure him a credit which he would not otherwise obtain, agrees to pay for goods to be supplied to C, in case G. makes default in payment, this will be a genuine contract of surety- GUAKANTY AND SUBETYSPIP. 167 ship, for C. is still liable to pay for the goods. But if B. were to direct the shopkeeper to send the goods to C, but to charge them to him (B.), there would be no contract of suretyship, and B. would be the principal and only debtor. The distinction between these two contracts is important, in connection with the interpretation of the Statute of Frauds. The fourth section of that statute enacts, that " no action shall be brought whereby to charge any defendant upon any special promise to answer for the debt, default or miscarriage of another person, unless the agreement upon which such action shall be brought, or some memorandum thereof, shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized." This section has been held to apply only to a pro- mise to answer for a debt, default or miscarriage of another, for which that other still continues liable. The former of the two contracts above mentioned falls within the statute, and will require to be evi- denced in the manner required by it ; but the latter does not, and the contract can be proved without any written evidence. In order to prove contracts falling within this section, there must be some memorandum of the agreement sufficient to show the nature of the promise entered into. It was long ago decided that the memorandum must not only show the character of the promise, but must also show the consideration for that promise. Thus, the words, "1 agree to be responsible for C.'s liability to you," although signed by B., would not be a sufficient memorandum. ,,)-; V »?, .'>:>M . ^:-' 'W m '#*[> 168 OVAUANTY AND SUHETYSniP. i . : This decision was based on the meaning of the word *' agreement/^ a memorandum of wbish, it was consi- dered, should contain not only the promise of the surety, but also the consideration proceeding from the other side, and supporting the promise. A great deal of learning, on the application of this principle, is to be found in the English reports, which has been rendered inapplicable to the law of Upper Canada by a recent Provincial statute (26 Vic. cap. 45), which declares that no promise to answer for another shall bo deemed invalid to support an action on it, by rea- son only that the consideration for such promise does not appear in writing or by necessary inference from a written document. This enactment, however, leaves the Statute of Frauds in full force as to all the other requisites of a guaranty. The signature required by the Statute of Frauds is that of the party to be charged, or his agent ; so that it is no objection to the memordndum given in evidence, that it is not signed by the party seeking to enforce the contract. Moreover, the signature of the agent will be sufficient to bind the principal; and it is not necessary, in giving proof of the agent's authority, to produce written instructions, or a formal appointment in writing. It must be remembered, however, that although the memorandum now required in our Courts need not express any consideration for the promise sued upon, nevertheless a consideration for the promise must be proved, as in actions upon other promises. The consideration supporting promises of this sort is generally of a peculiar character. Thus, in the GUARANTY AND SURETVSUIP. 169 example above given, where B. booomes surety for G. for the price of goods, altnough B. does not receive the goods, and may receive nothing .rom C. for undertaking such a responsibility, there is yet a consideration to support the promise. A. parts with the goodp, and suflFers a loss or inconvenience, which is sufficient to support the promise. But if, after C. had boir!:ht the goods on his own credit, B. had then gone to A. and promised to become responsible for C.'s default, without A.'s suffering any further incon- venience — such as agreeing to give further time for payment, or reducing the amount of his claim, or the like — then B. would not have been liable, evdn though he had signed a memorandum as required by the statute. If by the terms of a contract a person makes him- self liable for the debt of another by substituting himself for and procuring the release of that other person, then the contract is not within the statute, and need not be evidenced by writing. When the contract of suretyship has been entered into with the knowledge and consent of the principal, and the surety has been obliged to make good the obligation of the principal, the surety is not supposed to have made a gift of the money to the principal, but has a right to recover from him what he has paid for him, with interest. This is his right to what is called reimbursement. As soon as the obliga- tion accrues, or the debt becomes due, the surety may make good the default, and immediately sue for reimbursement. He is not obliged to wait till an action is brought. But on the other hand, he bag 4 I /I m •A:f> >}. I : W I ll m ■M m 170 OUAKANTT AND SURETYSniP. no right to accelerate his remedy against the princi- pal debtor by paying the debt before it is due; and if he does so, he will have no right to reimbiirscmont. Nor can he claim anything from the principal until he has actually paid the money ; and if by a compro- mise he settles a claim in full by payment of part, ho can only recover what he has 'actually paid. If the creditor holds any collateral securities from the debtor, such as mortgages or the promissory note» of third parties, the surety, on payment of the debt, will be entitled to a transfer of such securities for his own benefit. Moreover, by statute 26 Vic. cap. 45, every surety who pays a debt is now entitled to have assigned to him every judgment, specialty, or other security which shall bo held by the creditor in re- spect of such debt, whether such judgment, specialty or other security shall or shall not be deemed at law to be satisfied by the payment of the debt; and such person shall be entitled to stand in the place of tho creditor, and to use all the remedies, and, if need be, and upon a proper indemnity, the name of the credi- tor in any action to obtain from the principal debtor indemnification for his loss; and the payment made by the surety shall not be pleadable in bar of any action or other proceeding by him. As soon as the debt or obligation becomes due, the creditor may piooeed to recover the amount by suing either the principal, or the sureties, or all simultane- ously. He is not obliged to sue the principal first. Where sureties are jointly amJ severally liable, and not merely jointly liable, the creditor may proceed to recov- er the whole amount from any one surety. The surety aUARANTY AMD SURBTTBDIP. 171 wlio has been obliged to pay may, as wc have seen, bring an action against the principal for reimbursement. When there are several co-sureties, oach surety, as between himself and his co-sureties, is presumed, in the absence of any special stipulation, to be liable for an equal proportion of the debt ; and any surety who has paid more than his proportion either of the whole debt or of the part which remains due from his principal, may bring an action against each of his co-sureties for a ratable proportion of the excess. This is the surety's right to contribution. Thus, if A., B. and C. are co-sureties for a debt of three hun- dred dollars, and A., on default being made by the principal, pays the three hundred dollars, ho can immediately sue B. for one hundred dollars, and 0. for one^ hundred dollars. If he has only been obliged to pay one hundred dollars, and the balance of the debt remains unpaid, he has so far only paid his pro- portion ; but if the principal were to pay the residuci then, as the whole of the possible liability of the three has been ascertained, he may immediately sue B. and C. for thirty-three dollars and thirty-throe cents each. In the Common Law Courts A '^Ji ruc only for the ratable proportion above mention hsd ; arid even if B., for instance, became insolvent, ue oould not recover any more from C. on that account. But by proceeding in equity, and proving the fact of B.'s insolvency, he could recover the same amount from C. that he could have done if C had been the only co-surety liable with him. And the remedies given by statute 26 Vic. cap. 45, above mentioned, to a surety against his principal, upon payment of the .fe,a ■i^-r m- I ,Hf^^1«[^^/ ^.. 172 CUARANTY AND 8UUKTY8II1P. debt, nro extended to co-sureties j thus enabling a surety who has paid the lobt to obtain from his co- sureties indcinnificution for itis Iosh; provided that no co-surety shall bo ntitled to recover from any other co-surety by the ineuns aforesaid more than the just proportion to which, as between those parties themselves, such last mentioned person shall bo justly liable. The surety, as wo have seen, has no right to acce- lerate his remedy against the principal by puying off the principal's debt before it falls due, and from this restriction arises one of tho greatest risks of the surety. While tho debt is accruing due, the surety may bo aware that tho principal is gradually becom- ing embarrassed, and will bo insolvent at the time payment is called for; yet he is not allowed to pay at once the amount which will one day bo demanded, and which be may then be obliged to pay without any hope of reimbursement. The Itvw will not allow the ereditor, without tho consent of the surety, to increase this risk by postponing the day of the maturity of the debt, or by making a binding contrac'; not to sue. If the creditor enters into any such contract without the consent of the surety, the latter is at once discharged from all liability. How- ever, as this result follows, not because such a con- tract g'ves an unfair indulgence to the debtor, but because it would postpone the right of the surety to pay, it has been decided that the ereditor may, with- out the consent of the surety, bind himself not to claim the amount of his debt from the principal, if at the same time he expressly reserves his right to pro- UUAUANTV AND SUKETY8IIIF. 171 cood iip;uinst the surety. Tlio reason of tliis dooiHion, it is pro^uinod, is that tho reservation of the yreditor'H right to sue tho surety h a, reservation of tho surety's right to pay and sue for reimbursement. If, without fiueh reservation or consent, tho creditor releases the principal debtor, tho surety will bo discharged; but a release of tho surety will not discharge the prin- cipal. If any contract bo voidable by tho principal on the ground of fraud practised upon him by tho i)arty contracting with him, the same defence that tho principal could have set up is also open to the surety. If the creditor and principal join in deceiving the surety as to the nature of tho liability he is under- taking, or as to any circumstances which might influence him -in deciding whether to enter into the contract or not, the surety can set up this misrepre* sentation as a defence to any action brought against him on his contract. " If, with the knowledge or assent of the creditor, any material ^art of tho trans- action between the creditor and his debtor is misre- presented to the surety^ the misrepresentation being such that but for the same having taken place, either the suretyship would anot have been entered into at all, or, being entered into, the extent of the surety's liability might be thereby increased, the security so given is voidable at law on the ground of fraud." In entering into a contract of suretyship, persons should be careful, when thoy intend to beconpe res- ponsible in one isolated transaction merely, not to enter by mistake into what is called u continuing or standing guaranty. The laUguago of the following ■ '; 1 . !l I' 174 GUARANTT AND SURETTSIIIP. iiji I t guaranties has been considered to import a continuing liability : "I consider myself bound for any debt A. B. may contract with you in his business, not to exceed one hundred pounds." " I undertake to be answerable to the extent of ne hundred pounds for any tallow supplied by you to A. B." It is quite possible that many persons should carelessly sign contracts similar to these, without having the remotest intention to become liable for more than one debt of the amount specified ; yet it has been clearly held that the surety in such cases might law- fully be called upon to satisfy any debts not exceed- ing the amount thus specified; which the party on whose behalf the g^iaranty is given may from time to time contract The following guaranties have, on the other hand, been held to limit che liability of the surety to one solitary Uansaction : " I hereby under- take to be answerable to K. for the amount of five sacks of flour, to be delivered to W. P., payable in one month." " I hereby agree to be answerable for the payment of fifty pounds for L. L., in case he does not pay for the gin he receives from you/' But in all cases it will be better to take the advice of a learned English judge,«and, whenever it is is intended to limit the liability to one transaction, to take care to insert in the contract an express stipu- lation to that effect. Attempts were at one time made to evade the pro* visions of the statute requiring guaranties to be in writing, by bringing actions against, persons who had made verbal promises on the nature of guaranties without entering into any written contract of gua- \ inuiDg y debt not to to be ids for 3 quite y sign g the e than < B been ht law- jxceed- Tty on time to ive, on r of the under- of five able in ible for lase he you/' advice •a. • It IS iioD, to I stipu- he pro- ) be in ho had stranties of gua- (70MTRACTS WITH CUMMOH CARRIERS. 175 ranty, to recover damages for loss or injury caused by an alleged wilful misrepresentation. In order to remedy this mischief, the statute commonly called Lord Tenterden^s Act was passed in England ; and similar provisions are to be found in cap. 44, Con. Stat. U. C. sec. 10, which enacts : " No action shall be brought, whereby to charge any person, upon or by reason of any representation or assurance made or given concerning or relating to the character, con- duct, credit, ability, trade or dealings of any other person, to the intent or purpose that such other per- son may obtain money, goods or credit thereupon, unless such representation or assurance be made in writing, signed by the party to be charged there- with." - •-♦- 3. Contracts with Common Carriers. There is a certain class of persons who do not usually enter into a special agreement for the convey- ance of goods, but hold themselves out as ready to transport merchandise or passengers between certain points on certain terms, which tliey make known to the public by advertisement or otherwise. These are called common carriers ; and in consequence of the nature of the' offer they make to the public, their duty is to carry the goods of all persons offering to pay their hire, unless, indeed, their conveyances or vessels be full, or the goods are of a kind that he is unaccus- tomed, or has never undertaken, or is unable to carry. To the class of common carriers belong the proprie- tors of stages, canal boatmen, barge owners, ferrymen^ owners or masters of ships engaged generally in the 9' in M 41 m ■M (m m .V.N I 176 CONTRACTS WITH COMMON CAKRIEHS. » ! « 'I' m' m transportation of goods for hire, and other persons or companies owning similar inptrumcnts of public con- veyance. Jiailway Coojpar«ies are common carriers with regard to tne goods they profess to convey, unless the Act constituting them limit their liability. The responsibility incurred by the common carrier is a very heavy one, and renders him, in the absence of express stipulations, responsible for all losses occa- sioned by any caus. except the act of God, such as a tcn)pest, or that of the Queen's enemies, that is to say, of a people or nation at war with Greac Britain. Thus, he is liable for a loss occasioned by an acciden- tal fire, or by c robbery. There is this distinction, however, to be observed between common carriers by ^ea and common carriers by land, that in case of loss bj piracy the former are not responsible, whereas in case of robbery on land the carrier is bound to make good the loss. The reason of this is, the greater possibility of collusion in the case of the latter than in that of the former. The common carrier by water has, moreover, always been exempt from responsi. bility for losses occasioned by the perils and dangers of the sea and of navigation. The responsibility of the owners of sea-going British ships has been light- ened, as will be hereafter explained in speaking of contracts of a£freightment, by an Imperial statute (17 & 18 Vic. cap. 104), which applies to Canada. Common carriers have been in the habit, on account of the strictness of the common law in this respect, of stipulating for an extraordinary premium in case of the risk becoming unusual on account of the peculiar character or great value of the goods \ CONTRACTS WITH COMMON CARRIEUS. 177 xjarried. This is generally done by advertising in the newspapers or sticking up notices near the offices of the carriers containing a statement of the premium required on certain classes of goods. If goods men- tioned in such advertisements or notices are shipped as ordinary good.s, and the carrier can prove by rea- sonably strong evidence that the shipper saw or was aware of this notice, and if the misconduct of the shipper, in so concealing the true value of the goods, led to their loss, by inducing the carrier to be less careful of them, the latter will not be liable. But if such misconduct on the part of the shipper was not conducive to the loss, the carrier will be liable at any rate for the apparent value of the goods at the time of shipping. But these notices only exouerate the carrier from liability for loss or damage occurring without fault on his part ; for if be be guilty of wilful misconduct or. gross negligence, he is charge- able with the damage occasion ;d the ,oy, and his notice is not permitted to limit his responsibility. This was formerly the law in England, as it still is in Upper Canada, but the Imperial >\tute 11 Geo. IV. and 1 Wm. IV. cap. 68, has a!t [jred it as to England in the case of carriers hy land. Protection is thereby afforded such carriers against loss or damage occur- ring to certain goods or classes of goods, enumerated in the statute, exceeding £10 in value, unleso the shipper at the time of delivery to the carrier notliies him of their value and nature, and consents to pay an increased rate for their carriage. A question frequently arises, whether carriers who have received a parcel to be taken to a point beyond 13 * responsible to the same extent as the com- mon carrier ; that is to gay, he is responsible for all perils, except those occasioned by ihe act of God, bv the Queen's enemies, and the dangers and perils of the sea and of navigation. However, this their common law liability is usually narrowed by their own express stipulations in the charter party or bill of lading, and has also boen qualified, so far as the owners of sea-going ships are ■'•r i- 1 iM m '".if. M m ISO C0NTUACT8 OF AfFUtlCillTMEHl'. I ;i I concerned, by Imperial Statute 17 & 18 Vic, cap. 104, part IX. of which, it is declared by the statute, shall apply to the whole of Iler Majesty's dominions. By sec. 503, one of the sections of part IX., it is provided that no owner of any sea-going ship or share therein shall be liable to make good, to any extent whatever, any loss or damage that may hap- pen without his actual fault or privity, of any goods, merchandise, or other thingii whatsoever, taken in or put on board any such ship, by reason of any fire happening on beard such ship, or of any .gold, silver, diamonds, watches, jewels, or precious stones taken in or put on board any such ship, by reason of any robbery, embezzlement, or making away with or secreting thereof, unless the owner or shipper thereof has, at the time of shipment, inserted in his bills of lading, or otherwise declared in writing to the master or owner, the true nature and value of such articles. By sec. 504, another section of the same part, no tar as it relates to goods, it is enacted, that no owner of any sea-going ship or share therein shall be answerable in damages where any damage or loss is caused to any goods, merchandise, or other things whatsoever, a board such ship, to an extent beyond the value of his ship, and the freight due or to grow due in respect of it during the voyage which, at the time of the happening of the event, is in pro- secution or contracted for. The protection thus afford" ed is confined to ships recognized as British by the Act. When the master and owner of a ship engage with fccparato merchants to convey their goods to the place liiii !! Q., cap. statute, linions. L, it is jhip or to any ay hap- of any tsoever, 3ason of ' of any precious sship, by making )wner or inserted 1 writing value of Q of the enacted, 3 therein amage or or other extent it due or ;e which, s in pro- US afford* ih by the ;age with the place CONTRACTS OF AFFREIOnTMENT. 181 of her destination, the contract is said to be for con- veyance in a general ship. When the goods of a merchant are put on board a general ship, the master draws out a bill of lading, in something like the fol- lowing form : Shipped in goorJ order and condition, by A. B,, mer- chant, on account of C. D., merchant, and consigned to E. F., broker, in and upon the good brigantino Dart, whereof G. II. is master for this present voyage, and now lying at Wyatt's wharf, in the city of Toronto, viz. : 40,000 feet of lumber, being marked and numbered as per margin ; to be delivered in the like good order and condition at the port of Oswego (the act of God, the Queen's enemies, fire, and all and every dangers and accidents of the seas, rivers and navigation, of whatso- ever nature and kind, excepted); ho or they paying freight for said goods at the rate of , and shipper's charges. In witness whereof the master or purser of said vessel hath affirmed to three bills of lading, all of this tenor and date ; one of which being accomplished, the rest to stand void. Dated Toronto, this 25th day of May, 1865. Several parts of this document arc made out, two and sometimes three of which are given to the ship- per. The shipper commonly sends one or two to his consignee, that is, one on board the ship with the goods, one by the post, and one he retains for his own security. The master must also take care to have a part made out for his own use. The bill of lading operates as a receipt for the goods, and a memorandum of the terms of the coo- tract for their conveyance between the merchant and the ship-owner, and, in the hands of the consigucc or his assigns, as an evidence of title to the goods. 1 1 i ^i m i 1i 182 CONTRACTS OP APFRBIOnTMENT. ''li i ' One great peouliarity of the bill of iading is, that it is to a certain extent negotiable, like a promissory note or bill of exchange. It is, by the custom of merchants, recognized and sanctioned by the common law, a negotiable instrument; and the indorsement and delivery of it to third parties, who have given credit to such bill of lading, and have bought the goods mentioned therein in ignorance of the state of accounts between the shipper and his immediate pur- chaser, transfer the property to the indorsee as abso- lutely and effectually as if the goods themselves had been manually delivered. But althou/^h the bill of lading is thus negotiable, its indorsement transfers no more than the property in the goods. It does not transfer the contract between the original parties to it, and therefore the assignee of such an instrument cannot maintain an action founded upon that con- tract. There are certain terms used in connection with this subject, such as " primage," " demurrage," ''average," "general average," and "salvage," which it may be well to explain. Primage is a small customary payment to the master for his care and trouble. Demurrage '*£. 'he amount claimed by the ship-owner for damages occasioned by the delay of the shipper. If the shipper agrees to have his goods ready for loading on a certaii day, but does not do so, and the vessel is delayed in consequence, the ship-owner can claim demurrage. The shipper will be responsible even though the delay is occasioned by the crowded state of the docks, or by some un- foreseen impediment, not at all attributable to his Wi CONTRACTS OF AFFREIOHTMENT. 183 >> fault. But the dckv must be for the purpose of loafling or unloading; and therefore if the ship, after being laden, U obliged to wait in harbor on account of ice or tempestuous weather, the shipper, will of oourse, not be chargeable. Under the term " averaj'e" are included several petty charges, such as towage, beaconage, &c. By "general average" is meant that contribution which the owners of the ship and of the cargo are required to make when any part of either is voluntarily thrown overboard or destroyed, for the purpose of saving the rest. It is to be observed that the loss or sacrifice must be a voluntary one. Thus, in a storm at sea, where part of the cargo is thrown overboard to lighten the vessel, the owner of the part lost is compensated by a general average. But if, for instance, the captain of a vessel in carrying on sail to avoid capture by an enemy, were to lose a mast or a spar, as the loss was not vol- untary, but accidental, there would be no compensa- tion of this sort given, though it would be given if the mast or spar wore cut away and abandoned for the preservation of the ship. The general average is ascertained by cotnputing the value of the ship and the cargo, including what is lost, and then calling for contribution from the owners according to the value of their property, not forgetting to charge the owner of the property lost with his share, for otherwise hp would be the only one among the owners who suf- fered no loss. Salvage is a charge made by persons who have rescued property from the perils of the sea, or the hands of enemies, without having been bound by ^. 4;H m-'-v'.- ii m i 184 BOTTOMRY ANP RESPONDENTIA. ^} " any contraefc or obligation to do so. Whoever thu» rescues a slirp or goods, is entitled to claim a certain proportion, depending upon the value of the thing saved, the degree of danger of loss, and the amount of labour and skill employed in saving it. It cannot be claimed by any one who is bound by any contract to assist in preserving the thing saved. Thus, tho oflBcers or scai len of a ship that is wrecked, canaot claim any reward for saving ship or cargo. The peculiarities of this claim are, firstly, that it is made by persons who volunteer their services ; and, secondly, that if their services are ineffectual, they ■vm claim nothing. (•artain circumstances may arise, after parties have ofif ored into a contract for the carrying of goods, f.hat will release them from their engagements. Thus, if hostilities break out between the country to which the ship belongs, and that to which she is bound, or if tho exportation of the goods of which the cargo is to consist be prohibited, the contract of affreightment is dissolved. 5. Bottomry and Respondentia. Bottomry is an agreement entered into by tho owner of a ship or his agent, whereby, in considera- tion of a sum of money advanced for the use of the ship, the borrower undertakes to repay the same with interest" on the ship terminating her voyage success- fully, and binds or hypothecates the ship for the performance of his contract. If the loan be not upon BOTTOMRY AND RESPONDENTIA. 185 •(' 1 1)6 vessel, but on the goods or mcrchandizol adon on board of her, it is called respondentia. During the courso of long voyn- s it mny become necessary to raise money for t' «08 of the ship, and this may happen in port ship-owner : , unknown. The custom of ^s has sanc- tioned the use of bottomry and rospoudehtia bonds, by which the vessel or cargo may bo hypothecated by the master of the ship under certain circum- stances. The circumstances necessary to make such bonds valid are these : the money must bo abso- lutely required for the purpose of enabling the vessel to continue her voyage ; there must be no means of raising the money in time, on the credit of the ship- owner. If these conditions are present, the bottomry bond gives to the lender a lien on the vessel, and the respondentia bond a lien on the cargo If bottomry bonds are given at diflferent periods oi a voyage, and the value of the ship is insufficient to discharge them all, the last in point of date is entitled to priority of payment, because the last loan furnishes the means of preserving the shiii, and without it the former lenders would have entirely lost their security. As the repayment of the loan depends upon the safe arrival in port of the ship, this description of loan was always, on account of the unusual risk attending it, exempt from the operation of the Usury laws. This peculiarity, however, has, since the last Provincial Act respecting interest, ceased to be noteworthy. m if: f* IMAGE EVALUATION TEST TARGET (MT-3) •^^ A . ^d 1.0 ^^ l£^ I.I 1.25 2.2 lift US 112.0 I U ■ 1.6 ffh 71 f /. ^J> V *^ «> 7 /^ Photographic Sdences Corporation 23 WEST MAIN STREET WEBSTER, N.Y. 14580 (716) 872-4S03 186 INSURAMCB. 6. Insurance. Insurance is a contract bj which one party, in consideration of a premium, agrees to' indemnify another party against a particular event. A policy of insurance is the instrument in which this contract is set forth. The party who undertakes to indemnify is called the insurer, and, having subscribed th« policy, the underwriter. The party indemnified is called the insured or assured. When the value of the property assured, as between the assured and the underwriter, is expressed on the face of the policy, the policy is called a valued policy. When it is not EO expressed, but is left to be estimated in case of loss, the policy is called an open policy. The subject matter of iasurauce is very extensive, since any description of interest may be insured against any species of danger, save only where the contract would be opposed to the common law or to some statute (e. g. 9 Anne, cap. 6, see. 57, which forbids insurance on marrages, births, christenings, and service). At common law any individual, partnership or corporation, might have become insurers. The busi- ness of insurance is mostly carried on by companies, the large capital required for the proper carrying on of such a business placing it out of the reach of single individuals. Any person may, in this Pro- vince, be insured, whether he be a British subject or an alien. The three principal species of insurance are, first, maritime insurance; second, insurance on lives; third, insurance against loss by fire. INSURANCl. 187 I. Maritime Insurance. ' Maritime insarance takes plaoe when a merchant gives a premium to others to assure his ship or goods from one port to another. At common law, an interest on the part of the insured in the subject matter of in- surance, was not absolutely requisite, and might have been dispensed with by a policy containing the words "itterest" or "no interest;" though in the absence of such words it was understood to exist and must have been proved. However, by 19 Geo. II. cap. 37, sec. 1, it is enacted, that " no in- surance shall be made by any person, bodies corpo- rate or politic, on any ship belonging to His Majesty or any of his subjects, or any goods, merchandise or e£fects laden or to be laden on board such ships, interest or no interest, or without further proof of interest than the policy, or by way of gaming or wagering, or without benefit of salvage to the assurer, and that every such assurance shall be void." The effect of this statute is to require that the assured shall have some interest in the prop(;rty on which the insurance is effected. There are many sorts of interest that are insurable. For instance, not only may a merchant vessel itself be insured, or a part-owner's share of it, but any interest in it by way of mortgage or hypothecation (as the obligee's interest under a bottomry bond) ; also goods, or the special property therein that the common carrier has ; a lien pn goods, or the commission expected to be derived froai the sale of goods by one who is not the owner, but only entrusted with the care of them for the pur- pose of sale. The ship-owner may insure the freight Mi 188 INSURANCE. he expects for the carriage of a cargo ; or if he is the owner of the goods to be carried, as well as of the vessel, he may insure the extra profit which he would derive from carrying his own goods in his own vessel. But in order to recover on a policy upon freight, the assured must show that but for the intervention of a peril insured against, some freight would have been earned, by showing either that some goods were put on board or that there was some contract for doing so. The underwriter cannot, by virtue of the interest he acquires in the goods insured, protect himself by reassurance. This re-assurance is rendered illegal by the Imperial act 19 Geo. II. cap. 87, sec. 4, in all except the three following cases, viz., the insolvency, the bankruptcy, or the death of the insurer. If the voyage insured is one prohibited by law, or the goods are intended for carrying on an illegal com- merse, the policy will be unavailable. The form of marine poI' ^iven by Mr. Smith, in his Compendium of Merc. l. ale Law, as that usually adopted by British insurers, has been adopted as the model for those rsed by the various insurance com- panies in Upper Canada. This form runs as follows : In the name of Ood. Amen. A. B., as well in his own name, as for and in the name and names of all and every other person or persons to whom the same doth, may or shall appertain, in part or in all, doth make assurance and cause himself and them and every of them to be insured, lost or not lost, at and from . Upon any kind of goods and merchan- dises, and also upon the body tackle, apparel, ordnance, munition, artillery, boat and other furniture, of and in the good ship or vessel cayed the ; whereof is master, under God, for this present voyage, E. T., or IMSOUANCE. 180 whosoever else shall go for master in the same ship, or by whatsoever other name or names the same ship or the master thereof is as shall be named or called ; begin- ning the adventure upon the said goods and merchant dises from the loading thereof aboard the said ship , upon the said ship, &c. , and so shall continue and endure during her abode there, upon the said ship, &c. And further, until the said ship, with all her ordnsence, tackle, apparel, &c., and goods and merchandises what- soever, shall be arrived at , upon the said ship, &c., until she hath moored at anchor twenty-four hours in good safety ; and upon the goods and merchandises until the same be there discharged and safely landed. And it shall be lawful for the said ship, &c., in this voyage to proceed and sail to and touch and stay at any ports and places whatsoever without prejudice to this insurance. The said ship and goods and merchan- dises, &c., for so much as concerns the assureds by agreement between the assureds and assurers in this policy are and shall be valued at . Touching the adventures and perils which we the assurers are con- tented t) bear, and to take upon us in this voyage: they are of the seas, men of war, enemies, pirates, rovers, thieves, jettisons, letters of mart and countermart, sur- prisals, takings at sea, arrests, restraints and detain- ments of all kings, princes and peoples, of what nation, condition or quality whatsoever, barratry of the masters and mariners, and of all other perils, losses and misfor* tunes, that have or shall come to the hurt, detriment or damage of the said goods and merchandises, and ship, &c., or any part thereof. And in case of any loss or misfortune, it shall be lawful to the assureds, their fac- tors, servants and assigns, to sue, labour and travel for, in, and about the defence, safeguard and recovery of the said goods and merchandises and ship, &c., or any part thereof, without prejudice to this insurance; to the charges whereof vto the assurers will contribute, each one according to the rate and quantity of his sum herein assured. And it if. agreed by us the insurers, th&t this writing or policy oi assurance shall be of as much force and effect as the surest writing or policy of assurance heretofore made in Lombard-street, or in the Eoyal Exchange, or elsewhere in London. And so we the as- surers are contented, and do hereby promise and bind k ■■ :,i i _■ ■ ? 1,''; •xi.- '.■ t;tl |c •IS 100 ttistRA.nct. m 4"; ourselves, each one for his own part, our heirs, execu-' tors and goods, to the assureds, their executors, admin- istrators and assigns, for the true performance of the premises, confessing ourselves paid the consideration due unto us for this assurance by the assured at and after the rate of — — . In witness whereof we the assurers have subscribed our names and sums assured in London. N'. B. — Corn, fish, salt, fruit, flour and seed, are war- ranted free from average unless general, or the ship be stranded. Sugar, tobacco, hemp, flax, hides and skins^ are warranted free from average under bl. per cent. And all other goods, also the ship and freight, are warranted free from average under 8^. per cent., unless general, or the ship bo stranded. The principal parts of the policy are, as inay be Been, 1st, the name of the insured or his agent; 2nd, t^at of the ship ; 3rd; the sul)jeot matter of insur- ance ; 4th, the voyage insured or duration of policy ; 5th; the perils insured against; 6th, the date and subscription; ^th, the memorandum; 8th, the war* ranties. Let us consider the more important of these parts in their order, premising, however, that when the insurance is on a voyage from one port to another, without reference to time, as in the above form, the policy is called a voyage policy ; but when it is from one fixed period to another, such as from the 1st April tu the 20th November, 1865, or for three, six or twelve months, and so forth, the policy is a time policy. Vessels navigating the Canadian lakes are usually insured by policies of the latter class. The voyage insured. — The voyage must be accu- rately described, the description comprehending the times and places at which the risk is to begin and tSSVUAKCt. 191 \ , execu' admin- 1 of the ioration >8cribed ire war- ship be d skins^ nt. And arranted neral, or may be It; 2nd, )f insur- f policy J late and the var- Bse parts hen the another, brm, the t is from 1 the Ist hree, six is a time lakes are be accu- ading the )egin and end. The insertion of the words '' at and from the ship's loading port,'' has the effect of making the insurer answerable for any misfortune which may happen while she remains there, as, if she be burnt or lost there, or detained there by an embargo. When these words are used it is implied that the ship is either there at tho time or shortly will be there, in default of wbich the underwriter is discharged ; and if she be not there when the policy is made, she must, in order that the risk may attach, arrive there in good physical safety. A voyage to A., B. and C. means a voyage to all or any of them, with this reserve, that if the ship go to more places than one, she must visit them in the order in which they are mentioned in the policy. ^ The voyage, as far as the underwriter's risk is con- cerned, is generally limited to determine when the ship has been moored twenty-four hours <'in good safety." The words "good safety" are material; for instance, though she arrive ia port and remain there more than twenty-four hours, yet if she arrive a mere wreck, and afterwards founder, she cannot be said to have been moored an instant in good safety, and the underwriter will not be discharged. If the words "good safety" be not used, the risk terminates at the end of the limited time, whatever be the con- dition of the vessel. The risk on goods is generally limited to continue until they shall be '' discharged and safely landed." This landing must, however, be accomplished with reasonable expedition ; delay would be in the nature of a deviation, and would discharge the underwriter. 'i -I ■■: • 'I '«■> I •if 192 iNsnuAMce. B.ut, as the policy proteots the goo(l3 till landed, tho underwriter is liable, though tho loss happen ailer a transhipment into shallops, lighters or launches, such transhipment being in the usual oourso of the voyage^ But it is otherwise, if the assured tranship them into another vessel, or send his own lighter and take the goods into his own custody. The perils insured against.— ^The perils against which the insurer guarantees are described to be, " of the seas, men of war, fire, enemies, pirates, , rovers, thieves, jettisons, letters of mart and coun- termart, surprisals, takings at sea, arrests, restraints and detainments of all kings, princes and peoples, of what nation, condition or quality whatsoever; bar- ratry of the master and mariners, and all other perils, losses and misfortunes that have or shall come, to he hurt or detriment or damage of the said or any part thereof When the words "lost or not lost '^ are inserted, they render the underwriter liable in respect of loss by any of the above perils, though the ship be lost at the time of insurance, a circumstance which, but for these words, would avoid the policy. It is sometimes the practice to restrain these words by warranting the vessel to be well on a particular day ; yet eveh then, if she were well on any part of that day, though she be lost before the policy be effected, the underwriter will be liable. Indeed, if the assured knew at the time of making tho in- surance that the ship was lost, that fraud avoids the policy. Let us now examine the extent of the above words, and see what losses will be covered by them. m INSURANCE. 198 Perils of the »ea.— these words mean losses oooa- sioned strictly by sea damage, e. g., by stress of wea- ther, winds and waves, lightning and tempest, rocks and sands, &o. A loss occasioned by the ship insured being run down, is one of the perils of the sea; so is a loss of animals occasioned by the agitation of the ship in a storm. Fire. — How the fire was occasioned is immaterial ; whether by a common accident, or lightning, or an act done in duty to the state. But if goods be put on board in a damaged condition, and are in conse- quence liable to effervesce and generate the fire by which they are consumed, the underwriters are not liable. Enemies. — This word is used in oontra-distinotion to ** pirates, rovers, thieves,'' afterwards mentioned, a capture by whom is an act of depredation, whereas one by enemies is an act done jure belli. Pirates, rovers and thieves. — A pirate is one who commits on the high seas those acts o' -'.^bbery and depredation which if committed on land \/ouId have been felonies. Jettison is a throwing of goods overboard for any just and reasonable cause, as, for example, to prevent them being captured by an enemy. Arrests, detainments^ &c.-^One of the most usual species of detainment is an embargo, which is an arrest laid on a ship or merchandise by public autho- rity, or a prohibition of state commonly issued to prevent foreign ships from putting to sea in time of war, and sometimes to exclude them from entering our ports. 17 H^?' •'1 m '■i'\ ..->'•'!'■ .;J| - -A.t i 194 INSURANCE. n#(4 Barratry hy the masUr and marinert. — Barratry is derived from an Italian word, which signifies to oheat. In policies it includes every species of fraud or knavery in the master or mariners, by which the owners are injured. Thus, barratry may be commit- ted by a wilful deviation in fraud of the owner, by smuggling, by running away with the ship, by sink- ing or deserting her, or by delaying the voyage with a criminal intent. If, by reason of these or other similar acts, the subject matter of insurance is de- tained, lost or forfeited, the insured will be entitled to recover for loss by barratry. Other perils. — ^These general words may be useful where the loss, though one against which the insured ought to be indemnified, does not fall within any of the other classes mentioned in the policy. Thus, where the crew of a British ship, believing the ship insured to be an enemy, fired upon her and sunk her, this was held to be a loss by '^ other perils.'' The memorandum at the end of the policy above recited, is inserted to protect the underwriter from liability for small averages, i. e., partial losses, which might be claimed in respect of certain perishable comn odities. This memorandum protects the under- writer from making good any partial loss whatever upon the class of articles first enumerated, and any loss under five per cent on the class secondly speci- fied ; unless in either case the loss were incurred in consequence of a general average, or the ship be stranded. Where a ship takes the ground under any unusual circumstances of time and place, and not in the usual INSUnANGB. 190 rratry led to fraud h the mmit- er, by r siok- e Tvith otber is de- \ intitled I useful insured I any of Thus, he ship ink her, ly above ler from B, whicb irishable e under- irhatever and any ly speci- mrred in ship be unusual the usual course of navigation and management, such an event is oonsiderod a stranding. When this stranding occurs during the continuance of the risk, the un- derwriter becomes liable for partial losses, however small, although not occasioned by the stranding. Warranties. — A warranty in a policy of insurance is a condition or contingency; and unless that be performed, there is not any contract. It is perfectly immaterial for what purpose it was introduced ; but, being once inserted, the contract does not exist unless it be literally complied with ; and in this respect it differs from a representation, which it is sufficient to perform substantially. Warranties are either express, that is, appearing in the body or margin, or at the bottom of the policy, or in some writing which is by reference incorporated with it ; or implied^ that is, understood to exist in every policy, unless expressly negatived. The most usual express warranties are five in number, and refer to, 1st, The time of sailing. — When a ship is war- ranted to sail on a particular day, that means that she must have all her preparations for her voyage complete, and be completely unmoored, and start upon her voyage on that day. If she be afterwards detained in another part of the same river or territory beyond that day, by stress of weather or an embargo for instance, that will not violate the warranty ; but if she is prevented from starting at all on that day by any cause whatever, even by stress of weather, the warranty will be broken. Where the warranty is to depart from a particular place, it is necessary ■i '; ' ^ Insurance upon a life is a contract by which the insurer, in consideration of a certain premium, either in a gross sum or by annual payments, undertakes to pay to the person for whose benefit the insurance is made, a certain sum of money or annuity, on the death of the person whose life is insured. If the insurance be for the whole life, he undertakes to make the payment whenever the death happens ; if otherwise, he undertakes to make it in case the death should happen within a certain period, for which period the insurance is said to be made. Insurable interests. — Insurance upon lives in which the assured has no interest, or which are made by way of gaming or wagering, are declared void by the Irjperial Statute 14 Geo. III. cap. 48. Every man, however, is considered to have a suffi- cient interest in his own life to enable him to insure it. A creditor has an insurable interest in the life of his debtor to the extent of the debt, and a trustee may insure in respect of the interest of which he is INSURANCE. 207 trustee. When a life policy has been assigned, it is not necessary that the assignee should huvo had any interest, or have paid any consideration fur the assign- ment, for he stands upon the rights of the party who effected the insurance, and the statute 14 Geo. III. cap. 48, only applies to the original parties, not to the assignees. Insurances under 29 Vic. cap. 17. — Until recently, where a person in insolvent circumstances insured his life, or kept up an insurance thereupon in favour of his wife or children, it was considered that the withdrawal by him from his estate of the funds ne- cessary to pay the premiums on such insurance was a fraud upon creditors, and that the creditors could, in case of the debtor's death, lay claim to a sufficient portion of the insurance money to cover the amount of the premiums so improperly paid in fraud of their rights. The legislature of this Province have, how- ever, by the above mentioned Act, deprived creditors of any such right, by providing, (in sec. 5,) that upon the death of the person whose life is insur«id by any policy made or endorsed under the Act, the insur- ance money due upon the policy shall be payable according to the terms of the policy, free from the claims of any creditor or creditors whomsoever. ^ It is to be noted, that in order that the policy may be within the protection of the Act, the premiums must be payable by annual, quarterlyy or monthly payments (sec. 2). Special conditions. — If there be no special condi- tion in the policy, the insurer is liable to all risks; but it is usually stipulated that the policy shall be ■■M i: ■■ .1 J.: •^'i' ■'in'! 208 COOTHACTS or APPKENTlCESirrr, AC. \'k void if the nssurcd die upon the seas, or travel bojond certain limits, or die by suicide or by the hands of justice, or be nt the time of the insurance afSicted with any disease tending to shorten life. The leaning of the English Courts seems to be, that whether or not the words "by suicide," or the words « by his own hands," are used, any act of self-destruc- tion by the assured will avoid the policy, and it is immaterial whether he was ot the time sane or not. Fraud and misrepresentation. — Any fraudulent concealment or misrepresentation, or non-coramuni- catiou of material facts known to the assured, will avoid the policy. It is the duty of the assured to disclose all material facts within his knuwlcdge; and if the fact suppressed be inateii il, it matters not whether the party did or did not believe it to be so; its materiality being a qnestion fur the jury. Where one person insures the lite of another, the party whose life is insured, if applied to for information, is, in giving it, impliedly the agent of the party in- sured, who is therefore bound by his statements, and must suffer if they are false, though he himself was not acquainted with the life insured. 7. Contracts of Apprenticeship, an<^ of Hiring and Service. \ The contract of apprenticeship is a bargain for in- struction, to be bestowed by one person on another, who in return agrees to give up his whole time and services to his instructor, and very frequently also to bestow upon him a pecuniary recompense. The con- ^i CONTRACTS or ArPnES'TIC'ESniP, AC. 209 tract is usually effected by deed, that formality bein^ required by Sfututo 5 Eliz. cap. 4. By the Provincial Act respecting Master and Servant (Con. Stat. U. C. cap. 75, sec. 2), the duration of the contract is restrict- ed to nine years at the longest. By the common law the master is allowed to administer, in case of misoonduot> such reasonable corporal punishment to his appren- tice as a parent may give to his child, or a school- master to his pupil. The Act respecting Apprentices and Minors (Con. Stat U. C. cap. 76) contains some imporfaiit y>vovisions and regulations respecting the conrract <>f apprenticeship, and the rights and reme- dies of master and apprentice against each other: The first section of this Act provides that when a minor, over the age of sixteen years, who has no parent or legal guardian, or who does not reside with his parent or guardian, enters into an engagement, written or verbal, to perform any service or work, he shall be liable upon the same, and shall have the benefit thereof, as if he had been of legal age. Section 2 provides that a parent, guardian or other person having the care or charge of a minor under the age of fourteen years, may, with the consent of the minor, put and bind him as an apprentice, by indenture, to any master-mechanic, farmer or other person carrying on a trade or calling, for a term not to extend beyond the minority of the apprentice. Section 3 provides that when the father of an infant child abandons and leaves the child with the mother, the mother, with the approbation of two justices of the peace, may bind the child as an apprentice to any person mentioned in the last see" •'f /■' if. m m %^ 210 CONTRACTS OF APPHENTICESIIir, AC. tion, uutil tho child attains tho ngo of tv^cnty-ono yours in tho cuho of a nialu, and eighteen in the case of a female; and an indenture to that effect, under the hand and seal of tho mother, and countersigned by such justices, shall bo valid; but no child havii'<^ attained the age of fourteen years shall be so appreiu ttocd unless ho or she oonsoots. ^ < •■ / .. r.^ .i«> Section 4 provides fur the apprcntioebhip of orphans or minors, who have been deserted by their parents or guardians. [JH'- ^ Section 5 provides that if the master of an appren- tice dies, the apprentice shall by act of law bo trans- ferred to the person, if any, who continues tho establishment of the deceased ; and such person shall hula (lie apprentice upon the same terms as tho deceased, if alive, would have done. Section 6 provides that a master may transfer his apprentice to any peison who is competent to receive or take an apprentice, and who carries on the same kind of business. The consent of the apprentice to the assignment is not hero mentioned, and this section seems to intro- duce a change into the coiLmon law, according to which ail apprentice coulcl. not b<> -rssignec^ ' 'thout bis consent, -^.. For refusing the apprentice necessary provisions, or for misusago, cruelty or ill-treatment, the master acay bo fined by any justice, mayor or police magis- trj(''j; and for disobedience or other improper con^ diA, tho apprentice may be imprisoned in the com- mon gaol or house of correction for not more than one month (sees. 9 & 10). CONTK ' TS OF A i lilKNTICHWlIIl', A«, 'ill Any person knowin{i;Iv harboring or ein|>li).ying uq absconding apprentice, becomes liable to pay the full vuluo of the apprentice's labour (>*>^.q. 14). , In the cases provided for by thu above uiciuioned Bootions 2, 3 & 4, an instruinoiit under Houi seems to be rof^uired; but seution 1 sooms to permit a minor, under the circutnstuncMjs th(n'oiii luentioned, to enter into nn onga«^emcnt to perform un^- service or work, which, whether written or verbal Hhtill bo binding on him. This seution does not soeid to refer to c'bntructs of apprenticeship, but to contracts fur the performance of any service or labour; unl there- fore, notwithstanding the wording of this sci tion, it is probably still necessary in all eases that en itracts of apprenticeship should be by indenture undor seal. A great part of the law respecting the relation of master and servant has already been treated of under the head of "Principal and Agent j" for ever) ser- vant is, in executing the duties required from him by his contract of service, his master's agent. A nw remarks on the contract by which this relation is created, and an account of the changes in the 1 .w introduced by Con. Stat. U. C, cap. 75, intituh J, *' An Act respecting Master and Servant," are there- fore all that is here necessary. * When the hiring is under a special agreement, the terms of that agreement must of course be observed. If there be no special agreement, but the hiring is a genoral one, without mention of time, it is considered to be for a year certain. If the servant continue in employment beyond that year, a contract for a second year is implied, and so on. Indeed in case of menial I"- *i \^.] \:>\ J-:,l >'. !! --tft ■'::m m •Mi 11 212 CONTRACTS OP APPRENTICESUIP, AC. or domestic servants, the contract is by general cus- tom dissoluble by a month's warning, or payment of a montli's wages. And though a hiring in general words is pnmd facie presumed to be for a year, even though the master and servant may have thought that they could separate within the year; and though the circumstance of the servant's leaving in the middle of a year, or having previously served for a shorter time than a year, will not prevent the usual inter- pretation from taking place; yet this presumption, arising from the use of general words, is capable of being rebutted. Thus, a general hiring at weekly wages is but a weekly hiring, if there be no other circumstance whence the duration of the contract can be collected, e. g., a hiring at so much per week, " for so long a time as the master shall want a ser- vant," or "for so long a time as the master and servant shall agree," are weekly hirings. But, if there be any circumstance to show that a yearly hiring was intended, a reservation of wages payable at shorter intervals will not control it ; as, where the contract was to serve " at the rate of four shillings a week," the parties having liberty to part at a month's notice from either, this was held to be a hiring for a year; for the mention of a month showed that the stipulation for a weekly payment of wages was not intended to limit the duration of the contract. But an indefinite hiring by piece work, or a hiring to do a certain quantity of work, cannot be considered a yearly hiring. ^ • .^ i /•; ..'!ii,r«. >;v ;«;,;»;«, ,:*ni;n It follows from what is above stated, that if a master dismiss his servant (hired generally) without ■•L CONTKAOTS OF APPUENTICESllIP, &C. 213 f ral cus- ment of jiencral ir, evon thought thouch ) middle shorter al inter- raption, pable of weekly no other contract er week, nt a ser- 3ter and But, if yearly payable here the illiu^s a month's ng for a that the was not it. But ng to do idered a lat if a without cause, the latter will have a right to wages up to the expiration of the year; while, on the other hand, if the servant quit his master causelessly, he will bo entitled to no wages: nor will he be so entitled if dismissed before the expiration of his term of service for misconduct. The master will be justified in taking this step by any exhibition of moral turpitude on the part of the servant, e. g., an assault on a maid servant, or the persuasion of an apprentice to elope; by a refusal to obey his lawful orders, or the servant's unwarrantable absence from his duty, even though involuntary ; as, if he subject himself to imprisonment. Though it hi otherwise if the absence be warrantable, e. g., for the purpose of having a severe hurt remedied. And a mere temporary absence without leave, involving no immoral purpose, appears not to be a sufficient ground for his dismissal ; especially if the master's business be not seriously impeded. When a clerk claimed to be a partner, and to transact business as such, his master was held justified in immediately dismissing him from his service. As it would be found expensive and oppressive if disputes between master and servant were always to be settled by means of an action at law, summary jurisdiction was at an early period given in England to justices of the peace, to adjudicate upon certain matters of dispute between masters and servants. The statute which grants and regulates this summary jurisdiction of n)agistv;ites in Upper Canada, is cap. 75, Con. Stat. U. C, intituled, *' An Act respecting Master and Servant." ^ ^ ' *■! ;-l '■■1 111 :;•»■ 1i* iti -I ■*," :i 214 CONTRACTS OP APPRENTICESHIP, AC. By section 3 of that Act it is provided, that all agreements or bargains, verbal or written, between masters and journeyman or skilled labourers in any trade, calling or craft, or between masters and ser- vants or lab^ irers, for the performance of any duties or service of whatsoever nature, shall, whether the perfoi'niance has been entered into or not, be binding on each party for the due fulfilment thereof ; but a verbal agreement shall not exceed the term of one -,'/■■: --, 4. year. ' " •'-'': •• - - - - The fourth section of the Statute of Frauds enacts, amongst other things, that no action shall be brought whereby to charge any person upon any agreement that is not to be performed within the space of one year from the making thereof, unless the agreement upon which such action is brought, or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized. Section 3 of the Act above mentioned seems to provide for cases of agreement not exceeding the term of one year, but which are to commence at a future period, and would therefore be within the provisions of the fourth section of the Statute of Frauds. It will be noted that a contract for service which is not to be performed within the year must, accord- ing to the decisions, be evidenced by a writing or writings, in which must appear not only the promise to serve, but the consideration for the promise. By section 4 it is enacted, that if, after any such engagement as is mentioned in foction 3 is entered \ that all between •8 in any and ser- ly duties ther the I binding f ; but a n of one Is enacts, ! brought ^reeraent ce of one greeraent e note or id signed me other d. - ' seems to iding the snce at a ithin the tatute of ice which it, accord- yriting or e promise liise. any such is entered CONTltACTS OF APPKENTICESIIIP, &C. 215 Into, and during the period of such engagement, whether such employment has been commenced or not, the person who thereby undertook to perform any service or work, refuses to go to work, or (without permission or discharge) leaves the employ of the party whom he has engaged to serve, or refuses to obey the lawful commands of the person under whose direction such (services are to be performed, or neglects the service or injures the property of his employer, the offender shall (upon the complaint of such em- ployer or any person in charge under him) be liable to punishment for such offence, as prescribed by the Section 5 renders tavern-keepers and other persons liable to punishment for inducing servants to confe- derate for demanding extravagant or high wages ; and section 6 provides that no tavern-keeper or boarding- house-keeper shall keep labourers' wearing apparel in pledge for more than six dollars. Section 7 provides that any one or more justices of the peace may receive the complaints, on oath, of parties complaining of any contravention of the pre- ceding sections of the Act, and may cause all parties concerned to appear before him or them,' and shall hear and determine the complaint in a summary and expeditious manner, and punish parties found guilty of the oflFenco alleged, by fine or imprisonment allowing such costs as may bo legal and just. On the peculiar wording of section 4, " and during the period of such engagement," it was decided that all complaints under this section must be brought before the term of the engagement had expired ; and i, - < * ! .; ' ■< 'irM m •-■■ill m •i}.- i iir v<"i" 216 CONTRACTS OF APPRENTICESHIP, AC •, ( the words contained in the seventh section, " may receive the complaint, upon oath, of parties com- plaining," gave rise to a doubt whether the magis- trate could, in his discretion, examine the defendant on oath. Accordingly, the Aci 29 Vic, cap. 33, was passed,* by the first section of which the jurisdiction of ujagistratos is extended to complaints brought within one month after the termination of the engage- ment for service; and by section 2 magistrates are required to take the evidence of the defendant, if tendered, as well, as that of the complainant. A summary remedy is also given by section 12 of the Act respecting Master and Servant, to the servant or labourer against his master, in case of misusage, refu- sal of necessary provisions, cruelty, ill-treatment, or non-payment of wages. It is to be observed that the punishment imposed upon servants and tavern-keepers for offences against the provisions of sections 4 and 5 of the Act respec- tively, is a fine or imprisonment; and where the fine is not paid, the defendant may be imprisoned. But section 12, under which the Master may be directed to pay wages and costs, only empowers the magis- trate to issue a distress in default of payment, but not to imprison. It is not deemed necessary to devote a section to the subject of contracts with seamen, as there is no special legislation affecting mariners navigating the Canadian lakes. If any such mariner or sailor has a claim for wnizcs, he may enforce it in Upper Canada under the Act respecting Master and Servant, or bring an action to recover the wngos in the ordinq,ry COKTRACtS or SAL&. 2lY courts. Disputes between master mariners and their seamen may in general be settled under the provi- sions of the above mentioned Act, as the relation of master and servant has been held to exist between such persons. 8. Contracts of Sale, A sale is a transmutation of property from one man to another, in consideration of a money price^ It differs from barter or exchange in this respect, that exchange is, correctly speaking, a transmutation of property from one man to another for a considera- tion not given in money, but in some o%er sort of commodity. Where a man has in himself the property in goods, the generd rule is that he may dispose of them by sale to whomsoever and however he pleases ; provided that the circumstances of such disposal are not such as to bring it within the scope of Section 18 of the Act for the relief of Insolvent Debtors, or that of the Insolvent Acts of 1864 and 1865 ; and provided that judgment has not been obtained against him, and the writ of execution actually delivered to the sheriff, for then the goods are bound to answer the debt from the time of the delivery of the writ to the sheriff. Even in this latter case, as the property remains in him, he may dispose of them subject to the sheriff's right to seize. By the law of England, sales of goods made in certain privileged places in England called markets overt, by persons who have no property in the goods, but only the possession of them, confer a 19 U J:| ,''««» ?*■'" n 218 CONTIIACTS OP SALfc. I good title on the purchaser; but it seems to be gene- rally eonsidered that the law of market overt does not apply to this Province, and consequently a sale of goods by a person who has no right to sell is in no case valid against the rightful owner. And a person whose goods have been stolen may recover them or their value by action from an innocent vendee, though he has taken no steps to prosecute the thief. t' A sale of goods must be either by deed or parol. When the sale is made by deed, the instrument is called a bill of sale, and the property in the goods passes by the delivery of the instrument out of the vendor into the vendee. Other writings, not under seal, do not of themselves convey the property, but are merely evidence of parol sales and contracts of sale, by virtue of which the property passes. By Imperial Statute 29 Car. II. cap. 3, commonly called the Statute of Frauds, which is in force in Upper Canada, and by cap. 44, Con. Stat. U. C, certain contracts for the sale of goods are required to be evidenced by writing. Before we come to them it may be well to point out what was necessary, before these statutes came into force, to effect a valid sale of goods. By the common law, if A made an offer to B to pay him a certain price for his goods, and B accepted his offer unconditionally, the bargain was complete; and A, if he tendered the «tipulated price, might, on B's refusal to deliver the goods, have brought an action of trover for them. In the same way, if A refused to pay the price on the goods being offered to him, B might have brought an action against A for the price. But if A and B separated without / 1 (ft ■ )i CbNtllAdTS OF SALE; 219 be gcne- 'ert does ' a sale of is in no a person ' them or 2, though or parol, ument is he goods ut of the [lot under )erty, but ntracts of 3. jommonly force in It. U. C, jquired to e to them ,ry, before ilid sale of in offer to is, and B rgain was ited price, re brought way, if A ]g offered against A d without further words, after concluding a bargain, which, like this, contemplated a present and immediate completion of the sale, and a transfer of the goods and the price respectively, such separation would have been considered as equivalent to mutual consent/ to rescind the contract. This, of course, would not have been the case if anything were given in part payment, or part of the gooda were delivered by way of earnest ; nor would any such inference have been drawn from their separation if the bargain was not by its terms intended to be performed at once, but at some future time. • •• , \. • Thus the parties were, according to the common law, personally bound by their contract to each other as soon as words of agreement had passed between them. Such was the common law respecting all sales of personal property, and such is still the law respect- ing sales of goods under the value of £10 sterling ($48.60), with this addition, that, by the fourth sec- tion of the Statute of Frauds, no action can be main- tained on any agreement for the sale of them that is not to be performed within the space of one year from the making thereof, unless the agreement be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized. It has been decided, however, that an agreement is valid though not in writing, if it possibly could be performed within the year. »¥- With respect to contracts for the sale of goods of the value of £10 sterling and upwards, they, besides being within the section of the Statute of Frauds * ''1 .rl , !='•;: is t'' <. ■ m r m- '.■■.n p f » ■ ,■ - fc 1^20 COKTAACtS 6r BAL^. I just commented upoD| are also governed by thd seventeenth section, which enacts that no contract for the sale of any goods, wares and merchandise, for the price of £10 [sterling] or upwards, shall be al* , lowed to be good, except the buyer shall accept part of the goods so sold) and actually receive the same, or give something in earnest to bind the bargain, or in part payment, or that some note or memorandum in writing of the said bargain be made and signed by the parties lo be charged by such contract, or their agents thereunto lawfully authorized. We will con-^ sider one by one the parts of this important section. No contract for the sale of any goods j wares and merchandises. — A distinction was formerly taken between cases in which the thing contracted for was in existence and capable of delivery at the time of the contract, and cases in which it was necessary that something should bo done in order to render it capa- ble of delivery. The former oases were universally allowed to be within the Act ; but the decisions on the question whether the latter were so, were not very consistent. However, by sec. 11, cap. 44, Con* Stat. U. C, following Imperial statute 9 Geo. IV. cap. . 14, sec. 7, it is enacted that the seventeenth section of the Statute of Frauds shall extend to all contracts for the sale of goods to the value of $40 and upwards, notwithstanding the goods may be intended to be delivered at some future time, or may not at the time of such contract be actually made, procured or provided, or fit or ready for delivery, or some act may be requisite for the making or com- pleting thereof, or rendering the flame fit for deliveryi .{ toKtttActS Ot SkL^. 221 by tlid contract dise, for il be al- ept part same, or in, or in ad am ia gned by or their will con* ; section. ares and ly taken d for waa Q time of isary that r it capa- niversally visions on were not . 44, Con^ Geo. IV. venteenth end to all ue of HO may be ae, or may ally made, elivery, or g or com- )r deliveryi tt is tu be observed that while, in order that the con* tract for the, sale of goods may come within the seven- teenth section of the Statute of Frauds, it is necessary that the goods which are the subject of the contract should be of the value of £10 sterling or upwards, seci 11, cap. 44, Coui Stat. U. C, applies to contracts for the sale of goods of the value of 940 and upwards^ A contract for the sale of stock, or shares in a canal company, or similar public undertaking, is not within the seventeenth section of the Statute of Frauds, nor is a contract to procure goods and carry them. Sal6s by auction, however, are within this section. Except the buyer shall accept part of the goods so soldf and actually receive the same. — There are two sorts of acceptance recognized by the Courts under this section, an actual and a constructive acceptance. An actual delivery of the whole of the goods into the possession of the purchaser, is easily recognized when it occurs; but in many cases, where the nature, weight, size or situation of the goods would render the actual delivery inconvenient, a symbolical delivery and acceptance has been allowed. For instance, the delivery of the key of the warehouse in which the goods are lodged, or of some other of the indicia of property, suoh as the bill of lading, has been held a sufficient delivery. So also a sufficient delivery may be in some cases inferred from the vendee's dealing, and the vendor's sufifering him to deal, with goods as his own property. A transfer of a horse, by order of the vendee, from the vendor's sale stable into another of his stables, has been held sufficient. Where a lip M H ■11 i|:0 m *i23 do^TUACTS oif SALti; hogshead of wiue in the warehouse of the London Dock Company was verbally sold, and a delivery order given to the vendee, the acceptance of the delivery order by the vendee was held to be no accep- tance of the wine, and to be incomplete until the London Dock Company accepted the order for deli- very, and thereby assented to held the wine as the agents of the vendee. But where the acceptance of part of the goods only is relied od, it seems that the acceptance of a sample which is n part of the goods intended to be sold, and diminishes by an amount, however small, the quantity of the goods remaining to be delivered, is a sufficient acceptance under the statute to bind the bargain m to the whole. Where two or mc i -^ classes of goods are jointly ordered, acceptance of one is an acceptance of the other. Thus, where a person goes into a shop and buys various different articles at the same time, such a person does not make as many different co^xtracts as there are articles purchased, but one contaudt for the whole ; and the acceptance and receipt of any one of the articles so purchased, will take the contract as to all of them out of the operation of the statute. But where growing crops were put up to auction in several lots, and separately knocked down to a bidder at separate prices, it was held that there was a dis- tinct contract of sale as to each lot. It is decided that one person in possession of another's goods may become the purchaser of them by parol, and may do subsequent acts without any writing between the parties, which may amount to nn acceptance. ;; ^^ ^ r . >^ a- -i- CONTRACTS OF SALt. '22^ Or t/iuc something in earnest to bind the bargain, or in part payment. — If a purchaser of goods draw the cdgo of a shilling over the hand of the vendor, and return the money into his own pocket, which in the north of England is called " striking a bargain," that will not bo sufficient. A contemporaneous agreement that a smaller debt due fi'ora the vendor shall go in part payment of the goods when delivered, is not a part payment within the provision. Or that some note or memorandum of the bargain be made. — The terms of the bargain may bo collected from various instruments, and need not necessarily be contained in one. Thus, a series of letters relat- ing to a bargain, and terminated by a letter express^ ing the assent of one of the parties to the contract, would be sufficient evidence against that party to satisfy the statute. The contract must stand as it appears' in the written contract, as no alteration can be made in it by word of mouth, though it may bo altogether rescinded by a parol agreement to that efiPect. And signed by the parties to be charged. — The appearance of the vendor's name, printed in a bill of parcels, is, it seems, a sufficient signature to bind him. If the note commences with " I, A. B., agree to sell," that is a sufficient signature by A. B., though it is otherwise where a signature at the end of the instrument was manifestly intended in order to its completion ; as, where it concluded " as witness our hands." And as the statute only requires the signa- ture of the parties to be charged, a memorandum signed by the vendor has been held sufficient to bind 1 1 ;£■ y ■I f 224 CONtRACfS 0# 8ALB. • ■ •! V fl % ^M^ % him, though it was not signed hy tho vendee, against whom, therefore, the contract could not have been enforced. Or their agents thereunto laiofully authorized. — The authority need not be in writing, and a subse- quent recognition by the principal is sufficient evi- dence of its having been given. But it has been held that one of the contracting parties cannot be the agent of the other for this purpose. An auctioneer^ however, is in general considered, as the agent of both parties, to bind them by signing for them ; and if the auctioneer, or auctioneer's clerk, write down the pur- chaser's name in the sale-book, opposite the lot for which he is the highest bidder, that is a sufficient signature within the Act. But the contract has also, in some cases, the further effect, besides that of binding the parties, of transferring the property in the goods to the person purchasing, and that in the price to tho person sell- ing ; so that the goods, though in the possession of the vendor, are nevertheless at the risk of the pur- chaser. This effect takes place where a contract is made with a view to immediate completion, and the price of the goods is tendered, or in whole or in part paid, or the goods, on the other hand, are offered to the purchaser, or a part, even the smallest portion, delivered to him. Again, where a contract is made, the completion of which is postponed by agreement till a future day, and the goods purchased are in the possession of the vendor, and nothing is required to be done in the way of preparation or of selecting them, or setting them apart before delivery to the or rail tha is, of ei 11 TONTUACTS OF SALE. 225 purchaser, tho goods aro, imniodiatcly nfter the nakiDg of tho contract, held by the vendor at the risk of tho purchaser ; but in cases where tho pro- perty in the goods has passed, the vendor may stiU have a right to retain tho goods by virtue of his lien for the purchase money. If tho bargain is for rvady money, the vendor is not obliged to part with the goods till the price is paid. If, however, credit is given for the prise, and the vendor has contracted to deliver the goods either immediately or at some day before the expiration of tho credit, he has no right to detain the goods. A lien is wholly inconsistent with a dealing on credit, and can only exist where payment is to be made in ready money, or by the giving of security ; and if security is agreed to be given, the lien will exist until the security is given. The vendor must deliver the goods as soon as tho vendee has performed all the conditions precedent on his part, and may, if he refuse to do so, bo sued either specially for non-performance of his contract, or in trover for tho goods themselves. If it be gene- rally mentioned that the vendor shall send the goods, that means within a reasonable time ; and what time is, under the circumstances, reasonable, is a question of evidence. If a particular day for delivery be spe- cified, an actual tender of the goods to the purchaser, if he he at his warehouse, at any hour of the day which will allow him before midnight to examine, weigh and receive them, will be good, in the absence of any special custom; but the purchaser is not bound to remain at his warehouse after a reasonable time before sunset to allow of the examination. In 20 '.» .!!» Hi 226 CDNtRACTS Of SALE. -i .' mk;' 1 i'l .I'J J if ■: the absence of special stipulation, the condition pfe^ cedent on the vendee's part is readiness to pay the price; and of this readiness to pay, a demand of the goods is primd facie evidence. But where the good* are sold on credit, the vendor may be compelled to deliver up the goods without payment or tender of the price. And where goods are not sold on credit, and the vendor, without insisting on payment before- hand, has done that which amounts to a delivery of the goods, e. ff.j has made a symbolical transfer of property which by its nature is unfit to be delivered otherwise — as, for instance, by giving up to the ven- dee the key of the warehouse where it is deposited, or giving a delivery order to the wharfinger in whose possession it is, to which order the wharfinger haa signified his assent, or where he has done any act which would determine his right to stop in transitu — he cannot take advantage of the circumstance that the goods are not gone entirely beyond his control, ta retract his act of delivery, and detain the goods untif the price is paid. If an article is bespoken to answer a particular purpose, a warranty is implied that it will answer such purpose. In every contract to supply manufac" tured goods, a warranty is implied that they shall be of a merchantable quality. But where goods are sold by sample, though the vendor is bound by his express contract to furnish something corresponding with the sample, no warranty as to their being merchantable is implied. Every aflSrmation at the time of sale of personal chattels is an express warranti/, provided it appear to have been so intended; but a warranty CONTRACTS OF SALE. 227 "1 • 'ii'l ion pW- pay the i of the le good* jelled to ender of Q credit, t before- ilivery of msfer of delivered the ven- leposited, in whose Inger haa [0 any acfe ransitu — aoce that jontrol, to 3ods untii particular ill answer manufac- y shall be 3s are sold is express g with the lantable is of sale of )rovided it warranty aftet the sale is void; for want of consideration > Where the sale is by a written contract, how3ver, no oral allegation can possibly operate as a warranty, for the writing is the only evidence of the contract. The vendee of a specific chattel, delivered with a warranty, has no right to return it, though he may use the breach of that warranty as evidence in reduction of the vendor's claim for compensation, or may bring an action thereon against him. But if an article is ordered from a manufacturer, who engages that it shall be of a certain quality, or fit for a certain pur^ pose, and the article is never completely accepted by the party ordering it, the latter may return it £S soon as he discovers the defect, provided he has done nothing more in the meantime than was necessary to give the article a fair trial. And where goods are purchased by sample, the purchaser may return them, if not in accordance with the sample, within a reason^' able time for examination and comparison. It is to be observed, moreover, that defects apparent at the time of a bargain are not included in a warranty, however general, because they can form no subject of deceit or fraud, and both parties must be held to have understood that the warranty was made, saving those manifest defects contemplated by the parties. If the vendee refuse to accept the goods, the ven- dor, having performed all conditions precedent on his part, may sue him either specially upon his contract, or, if the property have passed to the vendee, for goods bargained and sold; in which latter form of action he will recover his entire price, while in the special form he will recover but the amount of damage '■'ill ■ * " i - ' i. m W I?! 228 CONtllAC'rS of SALti. sustained by him. If the goods are to be delivered at a stipulated place, the vendor, before suing for the price, must tender them there, unless, indeed, the vendee have refused or put it out of his own power to complete the contract. If there be no stipulated place, it is the vendee's business to fetch them. Where the goods are to be forwarded hy a carrier, the vendor must enter them so that the carrier may be responsible for their value if lost. As fraud vitiates every contract, it will be a sufficient excuse for the vendee's non-performance of his part, that the vendor was guilty of fraud, as by employing puffers at an auction to enhance the price, without giving notice of his intention to do so j though there will be a difference if the intent were not to enhance the price generally, but only to prevent the goods from going at an under value. And it is clear that an employment of any one to bid vitiates a sale advertised to be *' without reserve." Fraud in one party gives the other party a right to rescind the contract; but if a vendee, after discovering the imposition, choose to lie by and treat the property as his own, he will be considered as having elected to confirm the transaction, and that even though he has discovered a new incident in the fraud, for that does not give him a new right to rescind, but merely strengthens the evidence of the vendor's dishonesty. Either party may of course excuse himself from ihe performance of his contract by showing that it is illegal: in other words, any illegality either in the promise sought to be enforced, or in the consideration supporting the promise, is a ground for avoiding the / CONTRACTS OF SALE. 229 contract. But wbere both the consideration and tho matter to be performed are legale the plaintiff will not be prevented from recovering by an infringement of the law, not contemplated by the contract, in the performance of something to be done on his part. Thus, a rectifier in England having, contrary to statute 6 Geo. lY. cap. 8, sold spirits without a permit expressing their true strength, was allowed to main- tain an action for the price. By sec. 8, cap. 104, Con. Stat. U. C, " all sales and purchases, and all contracts and agreements for sale or purchase, of any real or personal property whatsoever, made by any person or persons on the Lord's Day, shall be utterly null and void.^' It will be observed that this enactment is more sweeping than the English act, which has been held only to render illegal and void sales made in the course of the ordinary calling of the vendor. Thus, where in England a man sold a horse on Sunday, the sale was upheld on the ground th^t the sale was not within the vendor's ordinary calling. But such a sale would be clearly void by our statute. Contracts of sale may also be held void for ille- gality, independently of any statute, on account of immorality; as, a contract for the sale of obscene or libellous prints. It is not necessary that an act forbidding any con<- tract should declare it to be illegal, nor does it matter what the object of the statute may be ; nor if an act or contract is prohibited merely by the imposition of a penalty, is any one allowed to sustain the legality of the contract by declaring himself ready to pay tbe penalty. ■/il. w ,-. in/: CHAPTER V. MEECANTILE KEMEDTES. 'I- • X- 1. Stoppage in Transitu. .« . r "When goods are consigned on credit by one mer- chant to another, it sometimes happens that the consignee becomes bankrupt or insolvent, while the goods are on their way to. him and before they are delivered. In such case, as it would be hard that the goods of the consignor should be applied in pay- ment of the debts of the consignee, the former is allowed by law to resume possession of them if he can succeed in doing so while they are on their way. This resumption is called stoppage in transitu. One who is a mere surety for the price of goods consigned has not, as such surety, the right to stop in transitu. If a person abroad, who, in pursuance of orders sent him by a merchant here, purchases goods on his own credit of otlers whose names are unknown to the merchant, aud charges a commission on the price, he will have ^ right to stop in transitu^ if the merchant fails while they are on their journey. So also will a person who consigns goods to be sold on the joint account of himself and the consignee. As to the period during which goods may be thus stopped, the general rule is that they are in transitu so long as they remiin in the possession of the STOPPAOE IN TRANSITU. 231 carrier, as such, whether by land or water, even although such carrier may have been appointed by the consignee himself; and also while they are in any place of deposit connected with the transmission and delivery of them, and until they come into the actual or eonstractive possession of the consignee. Thus, if goods be landed at a sea-port town, and there deposited with a wharfinger appointed by the con- Bignee to forward them thence by land to his own residence, they are subject to the consignor's right of stoppage while in the hands of the wharfinger. But the transit is completely at an end when the goods arrive at an agent's who is to keep them till he receives the further orders of the vendee. When the possession of goods has been resumed by the vendor under his right of stoppage in transitu he is restored to the lien for the unpaid purchase- money which he had before he parted with such pos- session, but according to the better opinion, the con- tract for sale is not thereby rescinded. The right to stop in transitu may be defeated^ however, by the assignment of the bill of lading of the goods by the consignee, made for a valuable consideration and without notice to tho assignee that the goods were not paid for. A consignor who is desirous and who has a right to stop the goods in transitu is not obliged to make an actual seizure of them while upon their road ; it is sufficient to give notice to the carrier in whose hands they are, on the delivery of which notice it becomes that person's duty to retain the goods, so that if he afterwards by mistake deliver them to the i 232 LIEN. v=p:i '*f vendee, the vendor may bring trover for them, evea against the vendee's assignees, if he himself have become bankrupt; and the carrier who after the receipt of such a notice delivers goods to the vendee is guilty of a tortious act, for which he may, of course, be held responsible. 2. Lien. A lien is a right to retain property until a debt due to the person retaining has been satisfied. It is not incompatible with a right in the party retaining it to sue for the same debt. Particular liens are where persons claim to retain the goods in respect of which the debt arises, and these are favoured by the law. General liens are claimed in respect of a gen- eral balance of account, and these are to be taken strictly. Where a lien exists it is available although the debt for which the party retaining claims to hold the goods be of more than six years' standing, and the remedy by action at law barred, in consequence, by the Statute of Limitations. The doctrine of lien originated in certain princi- ples of the common law, by which a party who was compelled to receive the goods of another was also enti* tied to retain them for his indemnity ; thus carriers and inn-keepers have by the common law a lien on the goods entrusted to their charge; the rescuer of goods from perils of the sea has a lien for salvage ; and it is a principle that where an individual has bestowed labour and skill in the alteration and im- provement of the properties of the subject delivered to him he has a lien on it for his charges, thus a miller and shipwright have each a lion; so has a •/■ LIGN. 283 trainer for tho expenses of keeping and training a a race-horse. Such is the description of a lien at common law. Whenever one of any other kind is sought to he established, the claim to it is not to be deduced from the principles of the common law, but founded on the agreement of the parties either expressed or to he inferred from usage, and will fail if some such contract be not shown to have existed. With respect to liens by special agreement, the question whether one has or has not been created, depends on the special terms of each individual con« tract. The mere existence of a special agreement as to price or other particulars will not of itself exclude the right of lien, but if any of the terms of the agree- ment are inconsistent with that right, it will be excluded. Thus an agreement stipulating for pay<- ment in a particular manner, and out of a particular fund, might be held inconsistent with a right of lien. As express liens depend upon expiess contract, so implied liens depend upon the implied contract which may or may not be inferred from usage. The usage whence such an agreement may be inferred is either the common usage of trade, or that of the parties themselves in their previous dealings with each other. O^ this description are most general liens, none of which existed at common law, but all depend upon the agreements of the parties themselves either ex- pressed, or to be inferred from their previous deaU ings, or from the usage of trade and the decisions of the courts of law thereon. It has been settled that m attorney has a lien for his general balance on f I i ::ii 234 LIE1«. the papers of his client, which came to his hands in the course of his professional employment, but this right is only co-extensive with his client's interest in the papers. A factor has a lien upon all goods in his hands for the balance of his general account, and even on the price of those with the possession of which he has parted. As a lien is a right to retain possession, it follows that where there is no posses- sion there can be no lien. It also follows that where the possession of the goods has once been abandoned the lien is gone. The rule concerning possession is so strict, that if a party having possession of goods cause them to be taken in execution at his own suit and purchase them, he so alters the nature of the possession that his lien is destroyed, though the goods may have never left his premises. And if when the goods fire demanded from him, he claim to retain them on some different ground, and make no men- tion of his lien, he will be considered as having waived it. If a security be taken for a debt for which the p J} ' ',-1 \ 7 -r .-<»■': '; „* . . .(. !■• , . INDEX. M,| Abandonment, 198, 199. See Maritime Inauranee. AOOSPTANOS — of bills of exchange, 125-6, 137-8-9. See Billa of J. Exchange. ^ ,. ,^ a > tupra protest, \Z^-^. ' " • " of goods -within meaning of Statute of Frauds, 221. See Contraeti of Sale. ,i. =. ■> Accommodation Bul — ;>Tr presentment of, when dispensed with, 142. i..- notice to drawer of, when dispensed with, 142. Account — between partners cannot be had at lav,, 98. how taken in equity, 93, et teq. under builder's hand to be produced on registry of a ship, 81. AOTS— ^., " of bankruptcy, 44. See Bankruptcy. r- of God, carrier or ship-owner not rosporisible for, 176, 179. See Carriers and Contracts of Affreightment. Actions — in Superior Courts, 16. ' . County Courts, 15. Division Courts, 15, 16, 18. See Collection of Debts by Suit. - , Autiolbs — of partnership, 89, 90. See Parinerahip. - A88JG*riiii — iw;«- , of bankrupt, 42, 48, 50, 51, 63, 65, et teq. See Bank- ruptcy. ' of bill of lading, rights of, 182. See Contracts of Affreiffhtment. ■■.„•■ j Assignment — ' under Insolvent Acts, 41, 47. See Bankruptcy, of apprentice, 210. See Apprentice. At and From — construction of these words in policies, 101. See Maritime Insurance. Auction— sale by, within Statute of Frauds, 221. See Contracts of Sale. Auctioneer — authority of, to act as agent of both parties, 224. See Contracts of Salt. .,.;.,, ,,, r-_ I^DtX. 637 AtJTIIORlTt — of ageat, 108, et aeq. AVBBAaEl — general, 188. " particular, 183. See Principal and Agent* fi \ Banrrvptot — fnaolYent acts, objeciof, 40. ^ mode of aocomplishing their object, 41. tolttntary assignment, under Act of 1866, may be made without advertisement, 42. but then must be made to an " official assignee," 42. Voluntary assignment, mode of pfocedure in, under Act of 1864, 43. voluntary assignment to be by deed, 48. effect of assignment, 43. what passes by, 44. what acts of debtors generally are acts of bankruptcy under the Insolvent Acts, 44, et aeq. if a trader allows execution to remain unsatisfied till within forty-eight hours from sale, he commits an act of bankruptcy, 46. consequences of a trader ceasing to meet his commer- cial liabilities as they fall due, 46. how taken advantage of, 46. , .' . /. compulsory liquidation, 46, et aeq. ** guardian under the writ," 48-9. assignee, effect of the appointment of, 61. registration of deed of assignment, or order appoint* ing assignee, 68. powers of assignee, 63. Claim of set-off against insolvent may now be set up against assignee, 64. duties of assignee, 66. claim of landlord for rent as against assignee re- stricted, 66. leasehold property, sale of insolvent's right in, by assignee, 66. real estate of insolvent, sale of, by assignee, 66. rights of purchaser of, 67. debts due to insolvent, sale by auction of, under order of judge, 67, 69. rights of purchaser of such debts, 68. examination of debtor under oath as to assets and liabilities, 58. creditors, how notified to prove claims, 58. ars .f If l> ■ 1 1-' '',■.;■■ iiii': ' ^ I' ' 111' ;• iil In;' ,! 3 ;:■■ '■ m 238 tNDBi. f It Bankruptcy — Contimitd. creditors, proof of demands by, G8. what debts may rank on insolTent's eHtuto, CS. right of surety to rank upon cstitte, 09. privileged claim of clerks and others in employ of in- solvent, 59. costs of suits, incurred previously to assigomont, rank upon estate, 60. provisions of the Insolvent Acts, in case of creditor holding security from the insolvent, or from his estate, 50, 00. dividends, declaration of, 01. final account of assignee, 01. discharge of assignee from office, 61. t payment of surplus to insolvent, Ul. ,.v ts . discharge of insolvent, 01-2. three modes of discharge provided by the Act, 02. deed of composition and discharge, 03. consent to discharge, 03-4. Unknown bolder of negotiable paper bound by dis- charge, 04. proceedings upon petition to confirm discharge, 05. .1. grounds of opposition to petition, 05. petition for discharge, 06. grounds of opposition to, 66. ..« . . * effect of discharge of insolvent, 66, 67. power of judge to confirm discliarge suspensively, conditionally or absolutely, or to annul it altoge- ther, 65. composition or discharge obtained by corrupt bargains between insolvent and creditor void, 66. penalty impos«d upon creditor taking bribe to consent to discharge, iao., 07. persons secondarily liable for assignee not discharged by discharge of insolvent, 67. mortgages and collateral securities not discharged thereby, 07. ', liabilities and obligations from which debtor not freed by discharge, 07-8. holders of such obligations may, however, roceite dividends, 08. ^ Barbatrt — perils by, 194. See Maritime Assurance, Bill or ExoHANGK — .,, ,„ ^ ,, . „ ., definition of, 123. ' must be a written order, 123. lADBX. 239 y of in- nt, rank cro' ^«^^a>h i-Cf ult INDEX. 243 married justomers, ( an accep- &2. •'•■ • eloss, 153. Bss oif the ble cheque len prop.er, uctiou sale •'% Collection of Debts by Suit — * r i ■ * three classes of Courts, 15. i ■ ^^ jurisdiction of Division Courts, 15. County Courts, 15. no costs except disbursements in Division Courts, 1 5. , costs allowed in the County Courts and Superior Courts, 15. rules for choice of Division Court, 15, 16. no restriction on choice of County Courts or Superior Courts in transitory actions, 16. change of venue in Superior Courts, 17. rules of evidence modified as to Division Courts, 17. service of summons in Division Courts, 18. confessions in Division Courts, 18. r,.- ,■ ' executions in Division Courts, 18. sittings of County Courts for trial of causes in the City of Toronto, 19. sittings of County Courts for trial of cattr-^s it} other counties, 19. sittings of Superior Courts for trial of causes in the City of Toronto, 1 9. sittings of Superior Courts for trial of causes in other counties, 19. time occupied in collection of debts in Superior Courts, 19, 20. \ ; . time occupied in collection of debts in County Courts, 4. 19, 20. power of judge of Superior Courts to order action , ^ brought in Superior Court to be tried in County Court, 21. immediate execution in County Courts, 21. -^-^^ Superior Courts, 21. v «'•' effect of the order for immediate execution, 21-2. ,- terms in County Courts, 22, >i ^a.i^xi*?; .m Superior Courts, 22. execution in County Courts, 22. Superior Courts, 22. » claim of landlord for rent as against fi. fa., 28. exemptions from seizure ucder execution, 22-3. chattel mortgage, sheriff can sell subject to, 24. execution against lands, how to be advertised, 24. land may be sold under an execution, sutyect to a .,u mortgage, 24. ,^ interest of mortgagee cannot be so sold, 24. but mortgage itself may be soM under h. ^a. goods, 25- interest of joint owner of land may be sold, 26. . DM m 244 INllEX. Collection of Debts by Suit — Continued. what interests in lands generally may be sold, 24-5. attachment ol debts and garnishing process, 25. examination of judgment debtor, 2b. punishment of for fraud, 26. ' ' '^ '^ '• proceedings where debtor resides out of jurisdiction, 26-6. attachment of property of absconding debtors, 28. "QSt of absconding debtor, 29. discharge of, on his showing that he is not yrorth $20, 29. suing in other countries on judgments obtained in Upper Canada, SO. COLLGOTOR — of customs, duty of in registering ships, ^J. See Shij>ping Common Law Peocsdurb Act, 25, 26, 98. Composition — : with creditcs, 63. See Bankruptcy. ' ' V Company — See Corporations and Joint Stock Companies. Concealment — of a material fact^avoids policy, 202, 208. See In- surance. Consideration — for bill or note primd facie presumed, 181. want of, a defence, when, 181-2. illegality of, 184, et seq., 228, et seq. See, further, Bills of Exchange and Promissory Notes, Gua- ranty and Suretyship, and Contracts of Sale, r Contingent — debts provable under bankruptcy, 69. Contracts OF Affebigutment — what, 178. ^ r^J^:^ two classes of, 178-9. tw • .^ti.." contract by charter party, what, 178-9. contents of charter party, 179. seaworthiness, covenant for, when implied, 179. liability of carrier when no restriction as to perils in charter party, 179. sometimes restricted by express stipulation, 179. also restricted as to sea-going ships by Imperial statute 17 & 18 Vic. cap. 104, 180. part 9 of this statute applies to all British dominions, 180, ;. s provisions of this statute, 180. owner not liable for loss by fire wltboat his fault, 180. INDEX. 245 II 24-6. >• ' diction, ,28. t iiyortb xined in ^X See amea. See /«- „ further, tesj Qua- ale. a if 79. } perils in 179. ial statute dominions, fault, 180. Contracts of Affrsightmext — Continued. or for losses to certain goods, unless true nature, &c., declared at time of shipping, ISO. nor in any case liable beyond yalue of ship and freight on goods lost, 180. ■{ contracts for conveyance in a general ship, what, 180, 181. bill of lading, form of, 181. use of, 181. ' , negotiability of, 182. indorsement and delivery of, does not transfer con- tract, 182. , , primage, "what, 182. ' r v . demurrage, what, 182-3. « average, what, 183. general average, what, 183. loss must be voluntary to be subject of, 183. how ascertained, 183. salvage, what, 183-4. ' ' ' cannot be claimed by those bound by contract to assist in saving, 184. cannot be claimed if services ineffectual, 184. contracts of affreightment, in what cases dissolved, 184. COMTBAGTS OF SaLK — ? what, 217. difference between, and barter and exchange, 217. may be affected by Insolvent Debtors Act. 217. or Insolvent Acts 1864-5, 217. how affected by execut'*'^ against goods of vendor at time of contract, 21/. sales in England in market overt, 217. ' no market overt in Upper Canada, 218. sales of goods must be either by deed or parol, 218. effect of sale by deed, 218. usr of other writings, 218. T^-^ f '*' certain contracts for sale of goods must be in writing, by provisions of Statute of Frauds and Con. Stat. r. C. cap. 44, 218. ^ ' M common law respecting 3uch sales, 21^, et teq. still governs as to sales under £10 sterling, 219. ;d contracts uot tc be performed wiwhin % year must be in writing, 219. • statutory provisions respecting sales of goods over £10 {V sterling in value, 219, «t ««;. EiT'a 4!:>: I 246 INDEX. si^i-^!' II CoNTHAOT OK Salk — Continued. former distinction when goods not capable of delivery at time of contract, 220. removed by Con. 8tat. U. G. cap. 44, 220. contract for sale of stock not within Statute of Frauds, 221. :;■ :-....■ nor of shares in canal company, 221. nor to procure goods and carry them, 221. . , , , sales by auction within statute, 221. , , , , . acceptance of goods, 221. • »' . ; of two sorts, actual and constructive, 221. actual acceptance, what, 221.] . >, . .' T constructive, what, 221. symbolical delivery of goods, what, 221, et teq. acceptance of part, 222. . ,(>^, ^ ,. of sample, 222. of one of two classes of goods, 222. purchaser in possession at time of purchase may do acts amounting to acceptance, 222. part payment, what does not constitute, 223. terms of contract need not be comprised in one writ- ing, 228. no verbal alterations in terms of written contract allowed, 228. signature of party to be charged, 223. what a sufficient signing, 228. '- ' ' need not he signed by both parties, 228. agent's authority to sign need not be in writing, 224. one contracting party cannot be agent for other, 224. auctioneer or auctioneer's olerk may be agent for both parties, 224. transfer of property in goods by effect of contract, 224, et seq. vendor in possession may have right to lien, notwith- standing transfer of property, 226. but not if credit given, and delivery is to be made before expiry of time, 226. when vendor bound to deliver goods, 226, 226, 228. where goods to be delivered, 226, 228. remedy of vendee on non-delivery, 226. conditions precedent to performance of, on part of vendee, 226 6. implied warranty in case of article for particular pur- pose, 226. in case of manufactured goods, 226. ^,^ express warranty, what, 226. f INDXX. 247 part of alar pur- ^ Contract of Sais — Conlirmed. warrant void if made after sale, 227. ' no verbal warraaty when oontraot in writinp;, 227. right of yendoe to return warranted gooda, 227. ' manifest defects not included in warranty, 227. refusal of vendee to accept goods, 227. remedy of vwndor en, 227. fraud avoids contract, 228. . employment of puffers at auction sale, 228. of person to bid at sale ** without reserve," 228. party injured by fraud may confirm trausactru, 228. ^ what amounts to confirmation, 228. illegality avoids contracts, 228. but infringement of law not contemplatod by contract does not avoid it, 229. contracts made on Lord's Day, 229. provisions of C' i. Stat. U.C. cap. 104, respecting, 229. difference in . . of England and Upper Canada, 229. ' immoral contract void, 229. not necessary that statute forbidding contract should declare it illegal, 229. CONTEIBUTION — right of surety to, 171. See Ouarantiec COHVOT — \ -, what, 196. nature of warranty to depart with, 196. COBPORATIONS — ^ :, . .• corporation aggregate, what, 103. U not dissolved by death of all original members, as long as sufficient added to keep up required num- ber, 103. may sue or be sued, by corporate name, 103. signify their assent to contracts by means of common seal, 103. : :nay be bound, in certain cases, where contract not entered into by means of their common seal, 103. common seal not all that is required to bind, 104. contract must also be signed by the proper officers, 104. Costs — ' ', , ,- " ^•:-'; '*--^:>^'; '■>, ' '•V} Dbviation — ^ ' ■ its effect on policy, 196-7. See Maritime Insurance. Discharge — of insolvent, 61, et seq. » - =' ? of servant for misconduct, 218. : '■* ^•■■ Dismissal — ^ of servant, when justifiable, 218. Dissolution — - of corporations, 108. See Corporations. of partnership, 96, et seq. See Partnership. Dividend — under a bankruptcy, 61. See Bankruptcy. Division Courts — rules of evidence modified in, 17. See Collection of ' Debts hy Suit. DOOUMINTATION — implied warranty of, in policy, 198. Dormant Fastnhr, 91-2. Bw Partnership. Earnest, 228. See Contract of Sale, , Embaboo— • Effect of on a contract of affreightment, 184. Enemies — ^ , perils by, 198. 8w Perils. carriers not responsible for loss occasioned by, 176. See Carriers. Evidence — rules of, modified as to Division Courts, «17, EXOHANGR — , what, 217. how it differs from a sale, 217. ,-. . r Vv. INIHBX, 249 8.' suranee. Jdleetion of "'•W'- 184. ed by, 176. 17, < •', SSXBOUTIONB — t against goods, 22. ' ' against lands, 24. See Collection of DebU by Suit. EXBOUTOB — of a deceased partner, rights and liabilities of, 94, 99. of deceased debtor, liabilities of, 70, et aeq. See Pro'. "^ meetings againtt Repreientattvea. Faotor, 110. See Principal and Agent. FuMB CovBBT — Bee Married Woman. ; ,• ■- FlBK — perils by, 198. 8m Perils. FiBB iNSUBANOB — nature of contract of, 200. insurable interests, irhat, 200, 201. wager policies illegal, 200, 201. misrepresentations and warranties in, 201. when description of property interpreted as warranty, 201. mere reference to description in policy will not make it a warranty, 201. conditions and stipulations indorsed on policy, when part of policy, 201. effect of misrepresentation or concealment of *naterial \ facts, 201, 202. accuracy in describing property insured essential, 202. . sufficient, however, if description substantially «orreot, 202. special conditions, use of camphene, 202. notice to first insurers of subsequent insurance, 208. ■•-^ notice of .previous insurance, 208. liability of insurer in absence of special conditions, 208. lirtbility of several insurers in same property, 203. hazardous and extra-hazardous goods, 208, 204. assignment of policy, 204. policy not assignable before loss without consent of insurer, 204. otherwise after loss, 204. ' loss and proceedings thereon. 204, '105. open and valued policies, 204, 205. distinction as to aiQustment of loss between fire and marine insurance, 205. no Abandonment in fire insuranees, 206. application of insurance money to repairs, under Im" perial statute 14 Geo. III. cap. 78, 205, 206. 22 ■;:-;,-..: i'?:il ii.ii %: m SiSi ,i m 1 250 INDEX. ^. m I'i / Firm — See Partnership. .;;' FOBBBABAMOB — to sue principal does not discliargo surety, 150. Fbaudb — Statute of, 109, 167, 108, 214, 218, 219, 221. See Contracta of Sale. - •. p .7 Fbattdulint PBBrBBBMOEB — See Bankruptcy. Con. Stat. U. C. cap. 45, 81. Con. Stat. U. C. cap. 26, sees. 17 & 18, 31. state of law before these Acts, 31. chattel mortgages and sales of personal property regu- lated by Con. Stat. IT. C. cap. 46, 82. registration and renewal thereof, under this statute^ 22, 88. insolvent Debtors, Act respecting, effect of, 88. FBBionT — See Contracts of Affreightment. meaning of word in policy, 188. ^ Gahinq — ' when a defence to action on bill or note, 184. Gamino Foliot, 187, 200, 206. See Insurance. Obnbbaii Aybbagb — meaping of the term, 188. loss must have been incurred Toluntarily, 183. amount of contribution, how calculated, 1 83. G0OD-WII.L — -,-■---; .,,-•',:' '..;'-•;• -^.' " '•' what, 77. : vT^-.-., .■ ,,, .,,■..• ..,'. ■■- ,v..^'r . examples of^ 78. doctrine of, of recent origin, 78. * 'vi -r ,> ;ij . t> Gbaob — days of, 139. See Bills of Exchange aj)d Promissory Notes. .,:';:■:.* : . -=.;,-i'r ;■ GVABANTIBS — y what, 166. •'■ ' :■■.(■- - i ■■d'"\i::'' liability of surety under, 166. quasi-suretyship distinguished from genuine contract of, 166-7. sec. 4 of Statute of Frauds applies to latter only, 167, requisites of guaranty under that Act, 167, et seq. ^ consideration not required to appear in the agreement ' in Upper Canada, 168. r ' though consideration must still be proved, 168-9. when person becoming liable for another procures the release of the latter at same time, the contract is not a guaranty, 169. reimbuTsement, right of surety to, 169. ; iMDSt. 251 11. See irty rega- j Btatttte, 33. 4. ' 183. (3. Promiitory line contract er only, 167, 7, et seq. le agreement , 168-9. procures tne ■iQ contract is GuARANTies — Continued. collateral securities, right of surety to ou payincDt of debt, 170, provisions of 26 Vic. cap. 45, on this point, 170. rights of creditor agninst principal and sureties, 170. may sue any or all simultaneously, 170. contribution, right of surety to, 170, 171. equitable remedy of surety in ease of insolrcucy of one or more of his co-sureties, 171-2. effect of release of principal by creditor, 172. of binding agreements to give time to principal, 178-3. fraud of creditor will vitiate contract as against sure- ty, as w<)ll aa against prinoipnl, 173. fraud by creditor and principal, effect of, 174. continuing guaranty, vrhat, 173-4. examples of, 174. - ■ ' terbal promises in nature of guaranties, 174-6. actions on, restrained in Upper Canada, 175. IIisiMG AND Sbuvich — See Apprenticeship and Matter and Servant. law of, 211. » ' changes in, in Upper Canada, effected by Act respect-^ ing Master and Servant, 211. general hiring, without mention of time, considered to be for a year, 211. contract in case of domestic servants dissolved by month's warning, 212. or payment of month's wages, 212. what constitutes a weekly hiring, 212. may be yearly hiring although wages payable at shorter intervals, 212. hiring by piece-work not considered yearly hiring, 212. nor hiring to do certain quantity of work, 212. when servant entitled to wages on dismissal before ex- piration of term of service, 218. when not, 213. provisions of Con. Stat. U. C, cap. 75, re'jpeoting contracts and agreements of, 213, et seq. provisions of 29 Vic. cap. 33, respecting contracts and agreements of, 216. law of contracts of hiring with seamen same in Upper Canada as law of other hiringg, 216. mutual remedies of master-mariners and seamen against each other, 217. Husband and Wife, 35. See Married Woman's Act. i'-i M W 15 i m m V i262 INDIX. I J^k IlTPoTllftqUIS— holders of, on insoWent's estate, may take assiKnmetit of equity of redemption on certain conditiuns, 60. Illeoalitt — effect of, on a sale, 228. on insurance, 187, 200, 206. See Tniurance. Indorse! — See Indorteinent, Imdobsehent — of bill, 129, laO. See Bill of Exchange. of note, 129, 180. See Promissortf Notts. of bill of lading, 182. See Bill of Lading. Infant — cannot trade, 88-9. ■ may be an agent, 88. Inland Bill, 1 26. ^w Bill of Exchange.. Insolvbnot — See Bankruptcy. Insolvent Debtors — Act for Relief of, 29, 81, et aeq. 217. Insurance — what, 186. policy, what, 186. . insurer, who, 186. • underwriter, who, 186. open and yalued policies, difference between, 186. subject matter of, 186. who may be insurers, 186. who may be insured, 186. See Maritime, Fire and Life Insurance. agent, when bound to make, 118. See Principal and Agent. Intxrest — See Utury. on promissory notes and bills of exchange, after ma- turity, 164. any rate of, may be reserved by indiTiduals, 164. restriction as to banks, 166. certain corporations restricted, 166. what corporations unrestricted, 167. Interest oe no Interest — ?^'''«* meaning of; in policy, 187. '- • - s^^' ^/ ^ ?' t , - ^ . ... ■ ■■ .^ .-..Mj;-^' '.' Jettison — "" •■'■•*•■ m^9i perils by, 198. r- i Joint Stock Companies — "it <; . r. rt??„j:y^»i j; what, 104. every member of, formerly liable for whole of debts of company, 104. INDBX. 253 ions, 00. Joint Stock Companies — Continued. proTinoial statates respecting, 104-6. / proyiatODB of cap. 64, Con. Stat. Can., 104, et tea. petroleum wells, provisions of above Act cxtendec !j companies working, bv 29 Vic. cap. 21, 106. effect of incorporation under these and similar Acta, 106-7. as to suing and being sued by r rporate name, lv;0. as to liability of members, 106. imperial statute 26 & 20 Vic, cap. 89, provisions of, respecting Joint Stock Compcnies in England and and Ireland, 107. ' JuSTtOES Of THE PbAOB — powers of, under the Act relating to Apprentice' rnd Minors, 209, 210. under the Act respecting Master and '-^i^int, 218, 216, 210. See Apprenticeship ani Hiring and Service. n, 186. Fire and rincipal and ;e, after ma- 154. I \ ,le of debts of Lamdlord— * of bankrupt, right to arrears of rent restricted, 56. Laws in porcb in Uppbe Canada — introduction of civil and criminal law of England into Upper Canada by proclamation, 10. French laws in force before cession of Canada reserved for French population, 10. laws of Great Britain, how far applicable to Upper Canada, 11. cap. 9, Con. Stat. Can., its '^er «c, when, 198. ., when assured may abandon, 198. : ' notice of abandonment, what a reasonable time for, 198, 199. need not be in writing unless required to be so by .' : , policy, 199. effect of an abandonment, 199. Tar Hal loss — '" -.-.. ^^ loss once total may become partial, 199. sum to be paid on account of, how calculated^ 19a, 20a sf INDEX. 257 ties and 195. lay, 195. age, 19G. 196. I time of to guara iuments a abandon- lable time be 80 by )9. salculated. Mabkbt Ovbet — doctrine of, not in force in Upper Canada, 218. Mabrikd Woman — See Married Woman'a Act. disabilities of, 89. =. , may be an agent, 108. separate property liable in cqaity on her contract, 89. Married Wombn's Act — Con. Stat. (J. G. cap. 73, 34, et seg. property, mutual relations of husb&nd and wife in res- pect to, 35, et aeq. wife's equity to a settlement, 87-8, 40. power of married woman to dispose of her property by will under the Act, 39. liability of husband for wife's debts contracted before marriage, 89. limitation of, by the Act, 39. liability of wife on her contracts made during cover- ture, what, 89. liability of wife's property for husband's debts, 36, 89. antenuptial settlements not afTected by Act, 89. Master and Servant — See Hiring and Service and Princi- pal and Agent. master may administer reasonable punishment to apprentice, 209. may assign his apprentice to certain persons without his consent, 210. penalty on muster for misusage of, or cruelty to, appren- tice, 210. general rules as to hiring between master and ser- vant, 211, 212. when master may dismiss servant before expiration of term of service, 218. provisions of Con. Stat. U. C. cap. 75, respecting mas- ters and servants, 213, et seq. enlargement of these provisions by 29 Vic. cap. 33, 216. law of master and servant applies to master-mariners and seamen in Upper Canada, 216. dispute? between master-mariners and seamen may bo adjusted under Con. Stat. U. C. cap. 75, 217. Master oj Ship — power of, to hypothecate, 185. ^a,L Memorandum — of bargain, 223. See Contract* of Sale. in policy, 190, 194, See Maritime Insurance. Ijii I •ii*-; ii 'mmm¥mfl n » ^ m 1 258 INDEX. s* ■ i¥«< MWTUJANTILB PrUSONS — >^ may be sole traders, partners or corporations, 88. infants and married women oaiinot be traders, 88. ' aliens, rights of, in Upper Canada, 88. infant may not bind himself by ordinary mercantile contract, 88. but may enforce contracts made with him by adults, P". may bind others as their agout, 83. See Principal and Agent. , .^^ ratification of contracts by, 88-9. ] !/" married woman, disabilities of, 89. ' ' married woman may be bound in equity to extent of her separate property by contracts made by her dur- ing coverture, 89. Mbroantilh Tkopbety — real and personal property, distinction between, 7C. descent of lands in Upper Canada and in England, 76. certain interests in land may bo personal estate, 76 -T. personal property divided into two classes — ohoses in action and choses in possession, 77. See Gooi- will a.nd Shipping . ,, , , Misconduct— ''■' '"'■ •'*■''•"' "■'^ of servant justifies dismissal, when, 218. MlSBBPRESBNTATION — ;' of material facts avoids maritime policy, 105. ^ - ^ • fire policy, 2C1. , <■ life policy, 208. of bankrupt's property, regulations of Insolvent Act respecting, 59, et aeq. See Bankruptcy. of ships, 87. See Shipping. v .1. Neoessitt — justifies deviation, 196-7. See Deviation. ^ Nboliobnob — of agent, 111, 119. See Principal and Agent. > NBaOTIABLB InSTEUJIBNT — > what bills and notes are negotiable, 129, 180. <' may cease to be so, how, 180. bill of lading negotiable, 182. Nbutbal Propbbtt — warranty of, in policy, 196. See Maritime Inauratice. Notary Public — See Bills of Exchange! and Promissory Notes. when necessary to employ, 145. how appointed, 146. vi i^Idi Umsj^-m .;■% INDEX. 259 B. 8. ' oantile incipul t of hor ler dur- \ 1,70. nd, 76. G, 76 7. UoscB in )e Good- rent Aot ,1 lauraAce. 'romissory Notary Vxmuo — Continued. dutios of, in protesting notes and billfl, 140-7. , oonvonionoc of employing, to prutout notes and bills, 148. in writing of bargain, wliat it must contain, 219, 223. Seo ConiraclH of Sale, NOTIOK — of intention to make aHsignmont in bankruptcy, 41-2. dlsponscd with in certain caHCH, 42. Soo liankruplcy. by carrier to limit his rospooBibility, 170, et aeq. Sei' Carriers. ' of dishonour, 1 12, et acq. See Bills of Exchange and ' Promissory Note. Noting — of bill or note, what, 147. OrPioiAi, AssiONBBS, 42, 51, 54, 55, 61. See Bankruptcy. Ophn Policy, 186. See Maritime Insurance. Partial Loss — ' occurs, when, 199. amount of, how calculated, on marine policy, 199. on fire policy, 206. Particular Avbhaqe — what, 194. exemption from, in memorandum to policy, 194. Partners — Bw Partnership v:;i c' i .^ -'>'.•' . Partnkrshtp — . ' jm; what, 89. ' • V ; test of, community of profit, 89. how partnership formed, 89, 90. variation of provisions of deed of partnership by acts of partners, 90. 1^ iv*. how partnerships may be dissolved, 96, et seq. in what cases Courts of Equity will interfere to dis- solve, 97. dissolution of partnership is a dissolution as to all the members, 97. except in case of express agreement to the contrary, 97-8. each partner has power to collect debts after dissolu- tion, 98. V, but not to bind the firm by new contracts, 98. winding up partnerships by compromise, 98. under provisions of articles of partnership, 98. by reference to arbitration, 98. proceedings to enforce reference under Common Law Procedure Act, where no arbitrator named in agreement to refer, 98. f iKDKi. 261 .' rile ft retitage 9 BUCh, to each ihare ia od hate obliged partner- an bring tnerehip, ll decree, ained by ■B, 94-5. 96. on oredi- •e to diB* as to all contrary, r dissolu- 3. . 08. ^ ' mon Law named in JpAETN aasuip — Continu«d. dissolution by death of partner, rights of porsonal representatives of deceased partner, in case of, 99. separate creditors of deceased partner will first be paid in full out of separate estate, before its ap" plication to pay debts of partnership, 99. debts to the firm to be sued in name of surviving partners, 99. survivors are trustees for personal representatives of deceased partner of his share, 99. undertaking by one partner to pay debts of dissolved firm wiPi not prevent creditor holding other part- ners liable, 99. . effect of such undertaking, 99, 100. withdrawing partner, precautions to be taken by, in order to avoid liability for future acts of his co- partners, 100. dissolution by death of partner need not be adver- tised, 100. limited partnerships, provision, s of Act respecting, 100, et aeq, Paet Ownbes — of ship, 80. See Shipping. t*ATEB — of bill or note, 125, 128. See £ill of Exchange and Promiaaory Notea. . . Patment — presentment for, 189, 141. See Preaentment. PsBits, 179, 192, et aeq. See Maritime Inauranee. Psr6onal Propbrtt — of bankrupt, interest of assignees in, 43, 61. PBTROLBUM WbLLS — cap. 68 Con. Stat. Can. extended to companies formed for boring, 106. Pirates— ''« -^^ • perils by, 193. Sw Maritime Inaurance. ' '^^'^ Pledge — by factor of princlpars goods, invalid at common law, 117. ■ ,, ,, when valid nnder Factors* Act, 118. ' ' ' | Policy of Insurance, 186. See Inaurance. Post — notice of dishonour sent by, when sufficient, 143-4. Powers — of bankrupt may be executed by assignee, when, 64. 262 INDEX. m % hi: Presentment of Bill or Note, 186, et »eq. See Biltt of Exchange aud Promiaaory Notes. Primage — . i , ■what, 182, , - ,* Pbinoipal and Agent — > , agent, what, 108. ^ ■■..,. .,. . ..^ ,, , who may appoint, 108. many persouB who cannot act for themBelvea may act as agents, 108. ^ .. e. ff. infants and married women, IC 8. .' agency, how created, 108. agent cantfot conrey land unless authorized by an instrument under seal, 108. terbal authority sufficient in ordinary cases, except where Statute of Frauds requires written author- ity, 108, 109. authority sometimes implied from conduct of prin- cipal, 109. aeneral o.nd particular ageniB, distinction between, 109, 110. limited and unlimited authority of agents, 110. factor and broker, difference between, 110. evidence of agent's authority, conduct of principal, 110. formal evidence. 111. authority to do any act implies authority to use neces- sary means of doing so, 111. ^ agent must follow instructions strictly, 111.' if principal go free on accuant of agent exceeding his authority, third person may hold agent liable for damages, 111. agent liable for injury occasioned by deviation from his principal's instructions, 111. but ratification of deviation will exonerate the agent, 111. extra profit resulting from deviation, belongs to prin- cipal, 111. remunerated agent required to exercise ordinary skill, &c.. 111. unrcmunerated agent' liable only for gross negligence or gross incompetency. 111. good faith required between principal and agent, 111. illustrations of this principle, 112. when principal entitled to interest on money in hands of agent, 112. agent must keep proper accounts of agency transac- tions, 112. % ! 2NDKX. 263 ills of ay act by an except author* )f prin- E)D, 109, pal, 110. le neces- iding his iable for ion from le agent, 1 to prin- ordinary gUgence ent, 111. in hands transac- ?HliroiPAt AND AoBNT — C ntttiued. how far factor liable for safety of goods entruelecl ' to him for sale, 112. duty of factor to insure, 118. del credere agency, what, 113-14. when principal liable for negligence of agent, 114. when agent alone liable, 114. principal only liable to strangers, for negligence of agent, and not to another agent in same business, 114. admissions of agent, when binding on principal, 115. notice to agent is notice to principal, 115. agent for undisclosed principal personally liablo, 116. ' !f principal subsequently discoyered, he may be held liable, 116. right of person purchasing Arom agent witb undis- closed principal, to set-off debt due to agent, 117. factor, power of, implied from his possession of goods, 117. powers of factor under Factors Act, 117-18. payment to agent in the course of his employment is payment to principal, 119. agent contracting for known and responsible employer incurs no personal liability, 119. ' but is liable if he does not disclose that he is agent,119. or, professing to be agent, does not disclose the name of his principal, 119. if agent exceeds his authority, and in consequence * - his principal is not bound, agent may be liable in damages to third parties, 119. '"^ agent committing injury through negligence or wilful malice, always liable, 119. when money paid to agent may be recalled, 120. how agent should sign for principal, 120. relations of principal and agent resemble those of partners, 130. ^'^ agency, how terminated, 120, et aeq. agency, coupled with an interest, cannot be revoked at pleasure of principal, 121. renunciation by agent, 122. notice of renunciation should be given by agent, 122. or he may become liable for damages, 122. Peincipai. and Surety, 149, 166. See Guaranties and Bills of Exchange and Promitsory Notet. i ii isj>tt. m m .?>'■ : m: m m. pBOOEBDINaS AGAINST RlPBUaMTATITBS Of DIOIASltt Debtors — Ho pruoeodings can be commenced or continued affer decease of debtor till personal representative ap* pointed, 69. except where execution against debtor's goods or lands has been placed in sheriff's hands, 09. creditor may be appointed administrator in certain cases, 70. judgment may be obtained against executor or admin- istrator, 70. executor or administrator putting in false pleas liable for costi, 70. what creditor can seise under execution against exe- cutor or administrator, 71. execution against lands of deceased debtor 71. may be defeated by sale by heirs or devisees to purcha- ser for value before delivery of writ to sheriff, 71. reviving suits abated by decease of debtor when abate- ment occurred before execution, 71. and after, 72. priorities among debts of persons dying before 18th September, 1865, 72-8. creditors share equally in estate of person dying after that date, 78. administration of^estates of deceased persons in Chan- cery, 78-4. - effect of decree or order for such administration, 78. leffal and equitable assets, distinction formerly existing between, 74. mortgagee or holder of lien upon estate not affected by deficiency of assets, 74-6. creditor who has obtained execution before decease of debtor, may enforce his lien as if debtor were living, 75. IPeofits — community of, test of partnership, 89, 91. See Part' ma^, be insured, 188. i^ . , \ Pbomissobt NOTB — , definition of, 128. <,., ^ form of, 128. ' "' / must be in writin^, 128. must be a promise to pay money, 128. must bo unconditional, 128. how to be made payable 128. '*j., \ INDEX. 2G5 PftOMissoRY NoTK — Continued. parties to, maker, indoreer, 128. , their liability, 129. transfer of, 128-9. in whose name to be sued, 129. negotiability of, 129, 130. when not nogotiable, 120, 180. indorsement in blank, in full, 130. restrictive indorsemfint, 180. effect of restrictive indorsement, 180. liability of indorser, 180. how obviated, 130. indorsement, "without recourse," 180. are contracts requiring consideration to support them, 180, 131. but absence of consideration must be pleaded, 181. when defence of want of oonsideration can be set up, 181-2. rights of parties receiving, before due, 132-8. and after due, 132-3. liability of parties as among themselves, 183. this liability may be varied by special oircumstanoes or special stipulations, 1 38-4. oases under 9 Anne, cap. 14, 184, 136. when this statute no defence, 186. " usurious consideration," effect of, 185. days of grace, when allowed, 189. when last pay of grace falls on Sunday, or any of cer- tain holidays, note is payable upon following day in Upper Canada, 139. but on preceding day in Great Britain and the United States, 189. holidays, what days are, for porpo^d o/ postponing maturity of note, 140. presentment for payment always to bo xrtado, in order to bind parties other than maker, iiO. when to be made in order to bind maker, 140. not necessary in Upper Canada to bind maker, even when a particular place specified, 141. otherwise in Lower Canada, 141. when no particular place mentioned, presentment for payment how to be made, 141, 142. presentment in case of death of maker, 142. when presentment excused, 141-2. notice of dishonor, 142, et teq. Qw Notice of Dithonof and Notary Public, ?8 .<^i 266 INDGX. X II' 1 Promis.S()kv Notk — Conlinued. Erincipal and surety in reltition to, 149. inding agrwsmont by holder to give time to, or a r©- leaat) of maker, relcauoH indorflers, HO. effect of stipulation sating rights of holder ngainHt indo-sers, 140, 160. joint and several, 160. promises of nialter and each iudorser distinct, and each may bo sued separately, 160. or all together, 150. ' ' ^' vrhen all sued, one defendant may call oo-defcndant as a witness in certain oases, 150, 151. interest on, 154, et aeg. Seo Interest. stamps on, 157, et aeg. See Slampa. "* lost notes, remedy on, IGi. Statute of Limitations, yihen it commences to run on, 164-5. if person liable out of Upper Canada, when right to sue accrues, time extended for suing, 165. but absence of creditor will not extend the time, 166. PnooF — of debts in Division Court by production of plaintiff's books, 17. of debts under Insolvent Acts, 58. Propbety — ' ■ in ships, 79. how transferred, 83. See Shipping. in goods passes to yendee, when, 218, 224. Pkotkst, 145, et aeg. See Billa of Exchange and Promisaory Notes. Eatifioation — by principal of agent's acts, 109, 111. RXASSCRAXCE — illegal, 188. except in certain cases, 188. Recognition — ^ '^'• of agent's authority cures previous excess, 111. Registry — of deed of assignment to official assignee, 53. , of order appointing assignee, 53. of ships, 80. See Shipping. of chattel mortgage and bill of sale, 82. Reimbursement — right of surety tOj 169. See Guaranties. Release — by one partner binds firm, 96. ,;n r'"'' '.U., v., INUKX. 207 )r a re- ngainst ot, and idant as rua on, rlgbt to 0, 165. tlaintiff's romistorj/ 11. ■\ - llEl-nKHKNTATIONS — of agcut bind principal, 116. diatinotion between representations and wnrrnntioa in insuranoeH, 106. ▼erbai representations in tlie nature of gnariintioH, 1 74. under Con. Stat. U. C. cnp. 44, must be in writing, 175. Respondentia, 184-5. Sale — of goods under ft. fa., 22, et seq. by deed or parol contract, 218. Seo Contracls of Sale. of insolvent's goods, credits and lands, by assignee, 65-6-7. Seo Bankruptcy. of lands under fi. fa., 24, 26. on Lord's Day illegal, 229. Salvage — what, 183. Sample — sale by, 227. See Contracii of Sale. Sea — ^ perils of, 193. See Perils. Seamen — rights of, regulated in Upper Canada in part by Act respecting Master anil Servant, 216. Mrages of, how recoverable, 217. See Iliring and Ser- vice. Servant — See Master and Servant and Hiring and Service. right of, to wages in case of master's bankruptcy, 69. Service — See Hiring and Service. Set-off — -<^;,--f against holder of bill or note, 183. . . > , . , against assignee of bankrupt, 64. right to set off against principal debt due by agent, when it exists, 117. SUIPPING — Con. Stat. Can. cap. 41, 79. objects of Canadian and Imperial statutes oompared,79. privilege of registration confined to certain vessels, 80. where vessel to be registered, 80. who may make registry, 80. declaration required in order to obtain registry, 80. what it must contain, 80, 81. builder's account of ship's time and place of building, &c., to be given, 81. may be dispensed with in case of death of builder, 81. certificate of registry, contents of, 81. _ _ 268 INDEX. '.■^;■vf'^ v:--- I a 1,4 vi I . Shipping — Continued. ..>i^.-."» registry book to be kept, 82. copy to be transmitted to the Minister of Finance,82. change of master, provision for registry of, 82. alteration of vessel, registration de novo in case of, 82. penalty for negleo* to register de novo in this case, 82. registration de nov.. permitted in other cases, 82-3. transfer of vessel to be eflFected by bill of sale, 83. bill of sale must recite certificate or principal contents thereof, 83. how bill of sale to be registered, 83. effect of entry of bill of sale in book of registry, 83-4. priorities regulated, in case of several transfers, 84-6. loss of certificate, time may be given to vendee or mort^'^agee for registry, in case of, 85. provision for endorsement of transfer on cortificate at port other than that to which the vessel belongs, 86-7. effect of such provision, 87. mortgages of vessels, how registered, 87. unregistered vessels, law applicable to transfer of, 87. Signature — of vendor or vendee, what a sufficient one, 223. See Contracts of Sale. Stamps — on bills and notes, 157, et aeq. See Bills of Exchange and Promissory Notes, Stoppage in Transitu — > - what, 280. when right to accrues, 230. mere surety has no right to, 230. but commission merchant purchasing for person abroad may have, 230. BO consignor of goods to be sold on joint account of self and consii^nee, 280. rule as to period daring which right exists, 230, et seq. does not rescind contract, 281. but only restores vendor to right of lien, 231. how right may be defeated, 281. actual seizure of goods in transitu not necessary, 231. duty of carrier to whom notice of stoppage is given, 231. liability of carrier for neglect of, 232. Statutes — ''" of jeofails, 11. ,: • of limitations, 11, 12, 164, 282. -. -^ : - -^^w INDEX. 269 Statutes — Continued- ' - ■^• 5 Eliz. cap. 4 (Imp.), 209. 29 Car. II. cap. 8 (Imp.), 218. See Frauds, Statute of. 9 Anne, cap. 6 (Imp.), 186. 19 Geo. II. cap. 87 (Imp.), 187, 188. 13 Geo. III. cap. 48 (Imp.), 200, 206-207. 14 Geo. III. cap. 78 (Imp.). 206. 14 Geo. III. cap. 83 (Imp.), 10. 1 & 2 Geo. IV. cap. 78 (Imp.), 127. 6 Geo. IV. cap. 8 (Imp.), 229. 9 Geo. IV. cap. 14 (Imp.), 220, 11 Geo. IV. and 1 Will. IV. cap. 68 (Imp.), 176, 180. 14 A 16 Vic. cap. 99 (Imp.), 30. 17 & 18 Vic. cap. 104 (Imp.), 176, 180. Con. Stat. Can. cap. 41, 79. 65, 67, 58, 69, 60, 63, 79, 80, 169. 13, 146, 148. 135, 154. 117. 100. 104. 14. 80. cap. cap. cap. cnp. cap. cap. cap. cap. Con. Stat. U. C. cap. 9, 11. cap. 26, 31, 217. cap. 42, 186, 137, 140, 146, 148, 150, 161, 164. cap. 44, 176, 218, 220. cap. 46, 81. cap. 73, 84. cap. 7i>, 209, 211,218,216. cap. 76, 209. cap. 104, 229. 26 Vic. cap. 20 (Can.), 165. 25 & 26 Vic. cap. 89 (Imp.), 107. 26 Vic. cap. 45 (Can.), 168, 170, 171. 27 4 28 Vie. cap. 4 (Can.), 127, 157. cap. 17 (Can.), 40. 4 (Can.), 167. 17 (Can.), 207. 18 (Can.), 40. Can.), 106. Can.), 78. Can.), 216. 27 & 28 Vic. 29 Vic. cap. 29 Vic. . ^ 29 Vic. 29 Vic. 29 Vic. 29 Vic. Stbanding — what, in policy, cap. cap. cap. cap. cap. 194-6. 270 INDEX. *^f( IM. m Surety — 8ee Guaraiities. .. -^ , for bankrupt, may pj.'ove, l^hen, 59. Surplus — V*. of bankrupt's estate, how disposed of, 61. V - TiTLK — of purchaser from assignee of lands of insolvent, 57. of purchaser of debts due insolvent, 58. to registered vessels, 83, et aeq. See Shipping. Torts — of agent principal when liable for, 114. Total Loss — when it ours, 198-9. Traders — act of bankruptcy peculiar to trader under Insolvent Acts, what, 44, 46. Transfer — of insolvent's property by assignment or order appoint- ing assignee, 43, 51. of bill or note, 126, 129. See Bills of Exchange and Promissory Notes. of bill of lading, 182, 281. Underwriter, 186. See Insurance. UsuRY: — Acts respecting, 185, 154. See Bills of Exchange and Promissory Notes. bottomry and respondentia bonds, exempt from laws respecting, 185. Valued PoLiOT, 186. ^qq Insurance. Vendees — See Contracts of Sale. of property in shipping, priority against each other, 84, et seq. See Shipping. Vendor — lien of, 225, 226. See Contracts of Sale. Voyage — .;• policy on, 190. Voluntart Conveyance — See Fraudulent Preferences. Wager Policy — meaning of term, 200, 201. , . , generally illegal, 187, 200, 206. . Wages — \ of servants, 213, 216. See Hiring and Service. of seamen, 216. Warranty — ^ * ' in policy, 195. See Fire Insurance, Marine Insurance, and Life Insurance. on sale, 226, See Contracts of Sale. . ., Wife — See Married Woman^s Act, 'f "-•fi . i -.y; at, 57. solvent , \ ppoint- \ge and xge and m laws other, I urance. ^ PKINTED AT TAB STEAM PRESS ESTABLISHMENT OF W. KING STREET EAST, TORONTO. C. CHEWETT 4 CO.,