UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 SCHOOL OF LAW 
 LIBRARY
 
 /7 * THE PROPEii 
 
 L . 1 3 id THE LA # SOCIET 
 
 * 
 
 BANKS AND BANKING 
 
 CONTAINING 
 
 . . 
 
 A FULL ANNOTATION OF 
 
 The Bank Act" 
 
 53 VIC. (D.) CHAPTER 31, (1890). 
 
 TOGETHER WITH 
 
 THOSE SECTIONS OF THE CRIMINAL CODE, 
 
 1892, WHICH ARE OF SPECIAL 
 
 IMPORTANCE TO BANKERS. 
 
 SECOND EDITION. 
 
 BY 
 
 J. J. GORMULLY, Esq., 
 
 One of Her Majesty's Counsel, 
 
 R. V. SINCLAIR, Esq., 
 
 Of Osgoode Hall, Barrister-at-law. 
 
 OTTAWA : 
 
 PRINTED BY A. S. WOODBURN. 
 192.
 
 T 
 
 Entered according to Act of the Parliament of Canada, in the year 1892, 
 by J. J. Gormully and R. V. Sinclair at the Department of 
 Agriculture. 
 
 J
 
 THE PROPERTY OF 
 ^ T1 ? LAW S 
 
 I TABLE OF CASES 
 
 A. 
 
 Allan v. First National Bank of Xenia. P. ............... 74 
 
 Alma Spinning Co., in re ...... ...... ................ 1 6 
 
 Athill, in re Athill v. Athill .<? ....................... 97 
 
 Ayers v. South Australian Banking Co ................. 73 
 
 B. 
 
 Bailey v. Finch . .". ............................... 126 
 
 Baines' Case.? ........... ............. 29, 35, 75, 139 
 
 Baird v. Bank of Washington ..... ............... 90, 91 
 
 Bank of B. N. A. v. Clarkson , . . ................... 98 
 
 Bank of Hamilton v. Noye ......... 98, 101, 1 12, 113, 115 
 
 Bank of Liverpool v. Bigelow ......................... 30 
 
 Bank of Ontario, in re .......................... 28, 38 
 
 Bank of Montreal v. McWhirter ...................... 85 
 
 Bank of Montreal v. Sweeney ........................ 43 
 
 Bank of New South Wales v. Campbell ............. 74, 88 
 
 Bank of Toronto v. Perkins. . . .......... 71, 72, 81, 119 
 
 Bank of Toronto v. Lambe . ........................... i 
 
 Bank of Toronto v. Wilmot ........................ 19 
 
 Bank of U. C. v. Covert ............................. 19 
 
 Bank of U. C. v. Killaly ............................. 85 
 
 Bank of U. C. v. Scott .............................. 88 
 
 Bank of U. C. v. Widmer .......................... 14 
 
 Barrs v. Bank of Nova Scotia ........................ 28 
 
 Becher v. Woods ................................... 90 
 
 Bottomley's Case . . ................................ 30 
 
 Brooke v. Bank of Upper Canada .............. 133, 137 
 
 Brown v. MacNab ..................... ........... 90 
 
 Burland v. Moffatt ................................. 85 
 
 Bush v. Fry ..................................... 105 
 
 C. 
 
 Cameron v. Kerr .................................. 83 
 
 Carver v. Braintree ................................ 83
 
 iv. BANKS AND BANKING 
 
 Central Bank, re, Baines' Case 29, 35, 75, 139 
 
 Central Bank, re, Nasmith's Case 29, 35, 75 
 
 Central Bank, re, J. D. Henderson's Case 75, 139 
 
 Central Bank, re, Home Savings & L. Go's Case .... 35, 134 
 
 Central Bank, re, Hogg's Case 35 
 
 Central Bank v. Garland 86 
 
 Central Bank, re, Morton & Blocks Claims 123 
 
 Chaudiere Gold Mining Co. v. Desbarets 89 
 
 City Bank v. Barrow 104 
 
 Clench v. Consolidated Bank 127 
 
 Cockburn v. Sylvester 113 
 
 Coffee v. Quebec Bank 101, 115 
 
 Cole v. North Western Bank 104, 105 
 
 Coleman, in re 101, 113, 115 
 
 Colonial Bank v. Whinney 28 
 
 Commercial Bank v. Bank of Upper Canada 74, 80 
 
 Commercial Bank v. Cotton 120 
 
 Cook v. Royal Canadian Bank 36, 38, 76 
 
 D. 
 
 Dominion Bank v. Davidson 99 
 
 Dominion Bank v. Oliver 84, 1 12 
 
 Duggan v. London & Canadian Loan & Agency Co .... 44 
 Dupuy v. Gushing 94 
 
 E. 
 
 Earl of Sheffield v. London Joint Stock Bank 44 
 
 Early v. Early 97 
 
 Exchange Bank v. Barnes 19, 46 
 
 Exchange Bank v. Fletcher 70, 7 1, 89 
 
 Exchange Bank v. M. C. & D. S. Bank 134 
 
 Exchange Bank v. Regina 53 
 
 Exchange Bank v. Springer 19, 46 
 
 F. 
 
 Foley v. Hill 126 
 
 Foster v. Bowes. . in
 
 TABLE OF CASES v. 
 
 G. 
 
 Garden Gully, &c., Co. v. McLister 30 
 
 Goodfallow, re Traders Bank v. Goodfallow 101 
 
 Goodwin v. Robarts .. 126 
 
 Grant v. La Banque Nationale 74, 85 
 
 Great Western Ry. Co. v. Hodgson 101 
 
 Grey v. Johnson 126 
 
 H. 
 
 Hallock v. Wilson 90 
 
 Harben v. Phillips 21 
 
 Henderson's case 75, 139 
 
 Heyman v. Flewker 104, 105 
 
 Hogg's case 35 
 
 Home Savings & Loan Go's Case 35, 134 
 
 Hopkins v. Abbott 124 
 
 Husband v. Davis 126 
 
 Hutton v. Federal Bank 120 
 
 I 
 
 Imperial Hy. Hotel Co. Blackpool v. Hampson 21 
 
 Innes v. Stephenson 126 
 
 J. 
 
 Jackson v. Munster Bank 14 
 
 Johnson v. Credit Lyonnaise 104 
 
 Jones v. Imperial Bank 67 
 
 K. 
 
 Kansas Valley National Bank v. Powell 74 
 
 Keene v. Robarts 126 
 
 Kingston, Ex parte 126 
 
 L. 
 
 Llado v. Morgan 101 
 
 London & Canada Loan, &c., Co. v. Graham 89 
 
 London Joint Stock Bank v. Simmons 44 
 
 Leazure v. Hillegas 90
 
 vi. BANKS AND BANKING 
 
 M. 
 
 McCrae v. Molson's Bank 113 
 
 McDairmid v. Hughes 89 
 
 McDonall v. Bank of Upper Canada 85 
 
 Maritime Bank v. Queen 54 
 
 Maritime Bank v. Troop 134 
 
 Mason v. Great Western Ry. Co 101, 102, 115 
 
 Merchant's Bank of Canada v. Bostwick 85 
 
 Merchant's Bank of Canada v. Moffatt 84 
 
 Merchant's Bank of Canada v. Smith i> 93, 94, 
 
 98, 99, lor, 102 
 
 Milloy v. Kerr 94 
 
 Molleur v. Loupret .141 
 
 Molson's Bank v. Brockville t . . 127 
 
 Molson's Bank v. Janes . . . . 98 
 
 AT! s 
 
 Molson's Bank v. Kennedy .yip ... 69 
 
 Molson's Bank v. McDonald '. . . . . . 85 
 
 Monteith in re 95 
 
 Muir v. City of Glasgow Bank 45 
 
 N. 
 
 Nasmith's Case 29, 35, 75, 139 
 
 National Bank of Australasia v. Cherry 72, 74 
 
 P. 
 
 Petry v. La Caisse d'Economie 44 
 
 Portalis v. Tetley 106 
 
 Porteous v. Reynar 85 
 
 Q. 
 
 Quinlan v. Gordon 120 
 
 Quirt v. Queen i, 68 
 
 R. 
 
 Radford v. Merchant's Bank of Canada 69 
 
 Rainy Lake Lumber Co. in re 85 
 
 Raphael v. McFarlane 44 
 
 Regina v, Bank of Upper Canada 22
 
 TABLE OF CASES vn. 
 
 Regina v. Bank of Nova Scotia 54 
 
 Regina v. Buntin 140 
 
 Regina v. Hincks .. 141 
 
 Reese v. Bank of Commerce 77 
 
 Richer v. Voyer 124 
 
 Robertson v. La Banque d'Hochelaga 31, 33, 137 
 
 Robinson v. Cook 85 
 
 Royal Canadian Bank v. Carruthers 98 
 
 Royal Canadian Bank v. Cummer 81, 83 
 
 Royal Canadian Bank v. Miller 98 
 
 Royal Canadian Bank v. Ross 112 
 
 Royal Canadian Bank v. Shaw 120 
 
 Royal Canadian Bank v. Yates 19 
 
 Ryan v. McConnell 85 
 
 s. 
 
 Sackett's Head Bank v. Lewis' Bank 69 
 
 Saderquist v. Ontario Bank 124 
 
 Scottish Petroleum Co. in re 17 
 
 Sibree v. Tripp 124 
 
 Smith v. Bank of Nova Scotia 27 
 
 Societe Generate de Paris v. Walker 42 
 
 Stockton v. Malleable Iron Co 77 
 
 Suter v. Merchants Bank of Canada 113 
 
 T. 
 
 Tennant v. Union Bank 85, 94, 95, 98, 100, 106, in 
 
 Thompson v. Molson's Bank 84 
 
 Tomlinson v. Gilby 31 
 
 Trader's Bank v. Brown Manufacturing Co 102 
 
 Trueman v. Appleyard 97 
 
 V. 
 
 Vigers v. St. Pauls 90 
 
 w. 
 
 Wilmot v. Maitland.... . . 101
 
 vin. BANKS AND BANKING 
 
 BOOKS REFERRED TO. 
 
 Abbot's Dig. Corporations. 
 
 Angell & Ames on Corporations. 
 
 Brice on Ultra Vires. 
 
 Civil Code of Lower Canada. 
 
 Grant on Banking. 
 
 Morse on Banking. 
 
 Pothier. 
 
 Robinson Joseph's Digests. 
 
 Sheldon on Mortmain.
 
 THE PROPER: . 
 
 53 VICTORIA.] [CHAP. 31. 
 
 AN ACT RESPECTING BANKS AND 
 BANKING. 
 
 [Assented to i6th May, 
 
 HER Majesty, by and with the advice and 
 consent of the Senate and House of 
 Commons of Canada, enacts as follows : 
 
 SHORT TITLE. 
 
 1. This Act may be cited as " The 
 Act." (R.S.C. cap. 120, sec. 1.) 
 
 The power to incorporate Banks and to legislate 
 generally in respect of them is expressly conferred 
 on the Parliament of Canada by section 91 of the B. N. A. 
 Act. There have been several cases in which the extent 
 of this power has been considered. See Quirt v. Queen, 19 
 S. C. R. 510, (1891). Merchants v. Smith, 8, S. C. R. 512, 
 (1884). ' 
 
 As to the power of the Provincial Legislatures to impose 
 taxes on Banks. See Bank of Toronto v. Lambe, 12 App- 
 Cas. 575, (1887). 
 
 INTERPRETATION 
 
 2. In this Act, unless the context otherwise interpretation. 
 requires, 
 
 () The expression "the bank" means any The bank." 
 bank to which this Act applies; (R.S.C. cap. 
 120, sec. 2. ss. e.)
 
 "Treasury 
 
 "Goods, 
 
 " Warehouse 
 
 receipt." 
 
 2 BANKS AND BANKING 
 
 (&) The expression "Treasury Board" 
 means the board provided for by section 
 nine of chapter twenty-eight of the Re- 
 vised Statutes of Canada, or any Act in 
 amendment thereof or substitution therefor. 
 (New.) 
 
 (c.) The expression " goods, wares and mer- 
 chandise " includes, in addition to the things 
 usually understood thereby, timber, deals, 
 boards, staves, saw-logs and other lumber, 
 petroleum, crude oil, and all agricultural 
 produce, and other articles of commerce. (R.S. 
 C. cap. 120, sec. 2, ss. a.) 
 
 For further notes on this subsection see Sec. 73. 
 (d.) The expression "warehouse receipt'' 
 
 . , 
 
 means any receipt given by any person for any 
 goods, wares, or merchandise, in his actual, 
 visible and continued possession, as bailee 
 thereof, in good faith, and not as of his own 
 property, and includes receipts given by any 
 person who is the owner or keeper of a harbor, 
 cove, pond, wharf, yard, warehouse, shed, store- 
 house or other place for the storage of goods, 
 wares or merchandise, for goods, wares and mer- 
 chandise delivered to him as bailee and actually 
 in the place, or in one or more of the places 
 owned or kept by him, whether such person is 
 engaged in other business or not. 
 
 The corresponding subsection in the Repealed Act is 
 R. S. C. Cap. 120, Sec. 2, ss. b. The present subsection
 
 INTERPRETATION 3 
 
 omits words from and adds words to the repealed subsection. 
 For notes on the meaning of the expression " warehouse 
 Yeceipt " see Sec. 73. 
 
 (e.} The expression "bill of lading " includes B m of 
 all receipts for goods, wares or merchandise, 
 accompanied by an undertaking to transport the 
 same from the place where they were received 
 to some other place, whether by land or water, 
 or partly by land and partly by water, and by 
 any mode of carriage whatever. (R.S.C. cap. 
 120, sec. 2, ss. c. slightly changed). 
 
 For further notes on this subsection see sec. 73. 
 (/.) The word "manufacturer" includes "Manufac- 
 
 ^ . . turer." 
 
 maltsters, distillers, brewers refiners and pro- 
 ducers of petroleum, tanners, curriers, packers, 
 canners of meat, pork, fish, fruit or vegetables, 
 and any person who produces by hand, art, 
 process or mechanical means any goods, wares 
 or merchandise. (New.) 
 
 For notes on this subsection see sec. 74. 
 
 APPLICATION OF ACT. 
 3. The provisions of this Act apply to the 
 
 r n To what banks 
 
 several banks enumerated in Schedule A to the Act a pp lies - 
 this Act, and to every bank incorporated after 
 the first day of January, in the year one 
 thousand eight hundred and ninety, whether 
 this Act is specially mentioned in its Act^of in- 
 corporation or not, but not to any other bank, 
 except as hereinafter specially provided.
 
 BANKS AND BANKING 
 
 Charters con- 
 tinued to 1st 
 July, 1901. 
 
 Aa to other 
 particulars. 
 
 Proviso : as 
 forfeiture. 
 
 The corresponding section of the old Act is R. S. C. Cap. 
 120, Sec. 3. The language of the present section is slightly 
 changed to meet the new circumstances. 
 
 4. The charters or Acts of incorporation, and 
 any Acts in amendment thereof, of the several 
 banks enumerated in Schedule A to this Act 
 are continued in force, so far as regards incor- 
 poration and corporate name, the amount of 
 capital stock, the amount of each share of such 
 stock and the chief place of business of each 
 bank, until the first day of July, in the year 
 one thousand nine hundred and one, subject to 
 the right of each bank to increase or reduce its 
 capital stock in the manner hereinafter provided ; 
 and as to all other particulars this Act shall 
 form and be the charter of each of the 
 said banks until the said first day of July, in the 
 year one thousand nine hundred and one, 
 subject in the case of La Banque du Peuple to 
 the provisions hereinafter made in respect to 
 that bank : Provided always, that the said 
 charters or Acts of incorporation are hereby con- 
 tinued in force only in so far as they, or any of 
 them, are not forfeited or rendered void under 
 the terms thereof, or of this Act, or of any 
 other Act passed or to be passed, by reason of 
 the non-performance of the conditions thereof, 
 or by insolvency or otherwise. 
 
 The corresponding section of the old Act is R. S. C. Cap. 
 120, Sec. 4. The language of the present section is changed 
 to meet the new circumstances, and a reference is made to 
 the power to reduce the capital stock which is given for the 
 first time by this Act. (See Sec. 28).
 
 APPLICATION OF ACT 5 
 
 5. All the provisions of this Act, except those what provi- 
 
 L -t .' sions snail 
 
 contained in sections three, six to seventeen apply to La 
 
 / 1 i . Banque du 
 
 (both inclusive), nineteen to twenty-seven Peu P le - 
 (both inclusive), thirty-three, forty-five, and 
 eighty-nine to ninety-six (both inclusive), apply 
 to La Banque du Peuple : Provided that wher- Rectors M 
 ever the word " directors " is used in any of the 
 sections which apply to the said bank, it shall 
 be read and construed as meaning the principal 
 partners or members of the corporation of the 
 .said bank ; and so much of the Act incorporating 
 
 1 Inconsistent 
 
 the said bank, or of any Act amending or con- JJfgggJ 1 * 
 tinuing it, as is inconsistent with any section of 
 this Act applying to the said bank, or which 
 makes any provision in any matter provided for 
 by such sections other than is hereby made, is 
 hereby repealed ; otherwise the said Acts are 
 continued in force, subject to the proviso con- 
 tained in section four of this Act. 
 
 This is a special section applying to the Banque du 
 Peuple. The corresponding section of the old Act is R. 
 S. C Cap. 120, S c. 88. 
 
 6. The provisions contained in sections two, What ovi . 
 seven, thirty-seven, forty-seven to eighty-eight piy n to s ti 
 (both inclusive), and ninety -seven to one Britoiororth 
 hundred and four (both inclusive), apply to the of B 
 Bank of British North America and the Bank of 
 British Columbia respectively ; and the 
 provisions contained in the other sections of 
 
 this Act do not apply to the said banks. 
 
 This and the following section are applicable specially to 
 the Bank of British North America and the Bank of British
 
 6 BANKS AND BANKING 
 
 Columbia, both of which possess English Charters. The 
 corresponding sections are R. S. C. Cap, 120, Sees. 87 and 89 
 
 chief seat of 7. For the purposes of the several sections of 
 said banks. "" this Act made applicable to the Bank of British 
 North America and the Bank of British Colum- 
 bia, the chief office of the Bank of British North 
 America shall be the office of the Bank of Mon- 
 treal, in the Province of Quebec, and the chief 
 office of the Bank of British Columbia shall be 
 the office of the Bank at Victoria, in the 
 Province of British Columbia. 
 
 8. The provisions of this Act may be extended 
 chantj'Bank to the Merchants' Bank of Prince Edward Island 
 
 of P.E.I rnay 
 
 by the Treasury Board, upon the application of 
 the directors of the said bank before the expira- 
 tion of the present charter of the said bank ; 
 and upon publication in the Canada Gazette of 
 the resolution of the directors applying here- 
 under, and of the minute of the Treasury Board 
 thereon allowing such application, the provisions 
 of this Act shall, from the time named in such 
 minute, or if there is no time named therein, 
 from the date of the publication thereof in the 
 Canada Gazette, apply to the said bank ; and its 
 charter and Act of incorporation, and any Acts 
 in amendment thereof, shall thereupon be ex- 
 tended for the same time and to the extent as 
 if the name of the said bank had been includ- 
 ed in Schedule A to this Act. (New). 
 
 The provisions of this Act were extended to the Merchants 
 Bank ot Prince Edward Island on the rst of February 1892.
 
 INCORPORATION AND ORGANIZATION 
 
 INCORPORATION AND ORGANIZATION OF 
 BANKS. 
 
 9. The capital stock of every bank hereafter Matters to be 
 incorporated, the name of the bank, the place spec]ai e Act. r n 
 where its chief office is to be situate, and the 
 
 name of the provisional directors shall be de- 
 clared in the Act of incorporation of every such 
 bank. (R.S.C. cap. 120, sec. 6, slightly changed.) 
 
 2. An Act of incorporation of a bank in the 
 form set forth in Schedule B to this Act shall 
 be construed to confer upon the bank thereby 
 incorporated all the powers, privileges and 
 immunities, and to subject it to all the liabil- 
 ities and provisions set forth in this Act. (New). 
 
 10. The capital stock of anv bank hereafter capital stock 
 
 i T i i i n i i -i and sllares - 
 
 incorporated shall be not less than five hundred 
 thousand dollars, and shall be divided into shares 
 of one hundred dollars each. (New.) 
 
 11. The number of provisional directors shall 
 
 1 Provisional 
 
 not be less than five nor more than ten, and directors, 
 they shall hold office until directors are elected 
 by the subscribers to the stock, as hereinafter 
 provided. (New.) 
 
 12. For the purpose of organizing the bank, Opening of 
 the provisional directors may cause stock books stock book8 ' 
 to be opened, after giving public notice thereof, 
 
 upon which stock books shall be recorded the
 
 8 BANKS AND BANKING 
 
 subscriptions of such persons as desire to become 
 shareholders in the bank ; and such books shall 
 be opened at the place where the chief office of 
 the bank is to be situate, and elsewhere, in the 
 discretion of the provisional directors, and may 
 be kept open for such time as they deem 
 necessary, (New). 
 
 First meetin- ijj So soon as a sum not less than five 
 
 of subscribers. 
 
 hundred thousand dollars of the capital stock of 
 the bank has been bona fide subscribed, and a 
 sum not less than two hundred and fifty thou- 
 sand dollars thereof has been paid to the 
 Minister of Finance and Receiver General, the 
 
 Notice. provisional directors may, by public notice, pub- 
 
 lished, for at least four weeks, call a meeting of 
 the subscribers to the said stock, to be held in 
 the place named in the Act of incorporation as 
 the chief place of business of the bank, at such 
 time and at such place therein as set forth in the 
 said notice ; at which meeting the subscribers 
 shall determine the day upon which the annual 
 general meeting of the bank is to be held, and 
 
 Election of shall elect such number of directors, duly quali- 
 
 directors. * * 
 
 fied under this Act, not less than five nor more 
 than ten, as they think necessary, who shall hold 
 office until the annual general meeting in the 
 year next succeeding their election ; and upon 
 the election of directors as aforesaid the func- 
 tions of the provisional directors shall cease. 
 (New), 
 
 This section provides for the first meeting of shareholders 
 and for fixing the day of the annual meeting and for the 
 election of the first board of directors.
 
 INCORPORATION AND ORGANIZATION 9 
 
 14. The bank shall not issue notes nor com- conditions 
 
 previous to 
 
 mence the business of banking until it has ob- S3?b 
 tained from the Treasury Board a certificate m 
 permitting it to do so, and no application for 
 sued certificate shall be made until directors 
 have been elected by the subscribers to the 
 stock in the manner hereinbefore provided ; 
 and every director, provisional director, or 
 other person, issuing or authorizing the issue of 
 the notes of such bank or transacting or author- 
 izing the transaction of any business in connec- 
 tion with such bank, except such as is herein- 
 before provided, before the obtaining of the 
 certificate from the Treasury Board, shall be 
 guilty of an offence against the Act. (New). 
 
 This section prohibits the commencement of business by 
 the bank until it has obtained a certificate of permission to 
 do so from the Treasury Board. 
 
 15. No certificate shall be given by the JJJ 
 Treasury Board until it has been shown to the sranted - 
 satisfaction of the Board, by affidavit or other- 
 wise, that all the requirements of this Act and 
 
 of the special Act of incorporation of the bank, 
 as to the payment required to be made to the 
 Minister of Finance and Receiver General, the 
 election of directors, deposit for security for note 
 issue, or otherwise, have been complied with, 
 and that the sum so paid was then held by the 
 Minister of Finance and Receiver General ; and 
 no certificate as aforesaid shall be given except 
 within one year from the passing of the Act of 
 incorporation of the bank applying for the snid 
 certificate. (New).
 
 10 BANKS AND BANKING 
 
 This section prescribes the conditions upon which the 
 Certificate of the Treasury Board referred to in Section 14 
 will issue. It is important to note that this certificate must 
 be obtained within one year from the passing of the Act of 
 incoporation of the bank, and if not so obtained that the 
 Charter of the bank lapses. (See Section 16). 
 
 if certificate is 16. In the event of the bank not obtaining 
 
 not granted. . . 
 
 a certificate from the Treasury Board within 
 one year from the time of the passing of its Act 
 of incorporation, all rights, powers and privi- 
 leges conferred upon such bank by its Act of 
 incorporation shall thereupon cease and deter- 
 mine and be of no force and effect whatever. 
 (New). 
 
 SSSStdXo- 17- Upon the issue of the certificate in 
 Sinister 1 !* manner hereinbefore provided, the Minister of 
 Finance and Receiver General shall forthwith 
 pay to the bank the amonnt of money so de- 
 posited with him as aforesaid, without interest, 
 after deducting therefrom the amount required 
 to be deposited under section fifty-four of this 
 Act ; and in case no certificate is issued by the 
 Treasury Board within the time limited for the 
 issue thereof, the amount so deposited shall be 
 returned to the person depositing the same ; 
 but in no case shall the Minister of Finance and 
 Receiver General be under any obligation to 
 see to the proper application of the same in any 
 way. (New).
 
 INTERNAL REGULATIONS 11 
 
 INTERNAL REGULATIONS 
 
 IS. The shareholders of the bank (or, in the By . law . 8may 
 case of La Banque du Peuple, ^he principal bt 
 partners or members of the corporation thereof,) 
 may regulate by by-law, the following matters 
 incident to the management and administration 
 of the affairs of the bank, that is to say : The 
 day upon which the annual general meeting of 
 the shareholders for the election of directors 
 shall be held ; the record to be kept of proxies, 
 and the time, not exceeding thirl y days, within 
 which proxies must be produced and recorded 
 prior to a meeting in order to entitle the holder 
 to vote thereon ; the number of the directors, 
 which shall not be less than five and not more 
 than ten, and the quorum thereof, which shall 
 not be less than three ; their qualification, sub- 
 ject to the provisions hereinafter made; the 
 method of filling vacancies in the board of 
 directors whenever the same occur during each 
 year, and the time and proceedings for the elec- 
 tion of directors, in case of failure of any elec- 
 tion on the day appointed for it ; the remunera- 
 tion of the president, vice-president and other 
 directors ; and the amount of discounts or loans 
 which may be made to directors, either jointly 
 or severally, or to any one firm or person, or to 
 any shareholder, or to corporations.
 
 12 BANKS AND BANKING 
 
 SHAREHOLDERS' POWERS. 
 
 This section is a combination of several sections of the old 
 Act with some change* and additions. (See R. S. C. Cap. 
 120, Sec. 9, ss. i & 3, and Sees. 14 & 16). By it the share- 
 holders are empowered to regulate by by-law certain specified 
 matters, viz : 
 
 (i)-The day upon which the annual general meeting of 
 shareholders for the election of directors shall be held. 
 (See also Sees. 13 & 19, ss. 4). 
 
 (2) The record to be kept of proxies. 
 
 (3) The time, not exceeding 30 days prior to a meeting, 
 within which proxies must be produced and recorded. (See 
 also Sec. 25, ss. 4 & 5). 
 
 (4) The number of directors, which shall not be less than 
 five nor more than ten. 
 
 (5) The quorum, of directors which shall not be less than 
 three. 
 
 (6) The qualification of the directors, which must also 
 conform to certain statutory requirements. (See ss. 3, 
 hereof and Sec. 19, ss. 2). 
 
 (7) The filling of vacancies in the Board during each year. 
 (See Sec. 19, ss. 7). 
 
 (8) The time and proceedings for the election of directors 
 in case of failure of election on the proper day. (See Sec. 20). 
 
 (9) The remuneration of the President, Vice-President 
 add other directors. 
 
 (10) The amount of discounts or loans to directors and 
 others. (The aggregate of these have to be shewn in the 
 monthly statement to the government see schedule D.) 
 
 The next sub-section empowers the shareholders to estab- 
 lish guarantee and pension funds for bank officials. 
 
 Sec. 24, ss. i, empowers a certain proportion of the share- 
 holders to call a special general meeting. 
 
 Sec. 24, ss. 2, by implication empowers the shareholders 
 to remove the President, Vice President or Directors fo 
 misconduct. 
 
 Sec. 26 empowers the shareholders to increase the capital 
 stock. 
 
 Sec. 28 empowers the shareholders to reduce the capital 
 stock under certain conditions and restrictions.
 
 INTERNAL REGULATIONS 13 
 
 2. The shareholders may authorize the direc- Guarantee and 
 tors to establish guarantee and pension funds pt 
 for the officers and employees of the bank and 
 their families, and to contribute thereto out of 
 the funds of the bank. (New). 
 
 The power to create guarantee and pension funds is here 
 expressly conferred and contribution thereto authorized out 
 of the funds of the bank. The prior practice of creating a guar 
 antee fund was however recognised and impliedly legalized 
 by the old Act. (See R. S. C. Cap. 120, Sec. 17) and the 
 prior practice of creating a pension fund is recognized and 
 impliedly legalized by this Act by Sec. 22. 
 
 3. Until it is otherwise prescribed by b 
 
 under this section, the by-laws of the bank on timic <J- 
 any matter which may be regulated by by-law 
 under this section shall remain in force, except 
 as to any provision fixing the qualification of 
 directors at an amount less than that prescribed 
 by this Act ; and no person shall be elected or 
 continue to be a director unless he holds stock 
 paid up to the amount required by this Act, or 
 such greater amount as is required by any by- 
 law in that behalf. (R.S.C. cap. 120, sec. 4). 
 
 By this clause it is provided that no person shall be elected 
 a director unless at the time of his election he possesses the 
 necessary stock qualification and also that no director shall 
 continue as such unless he continues to possess such stock 
 qualification. 
 
 4. The foregoing provisions of this section, Bamme d 
 
 Peuple 
 
 tOUchlllg directors, shall not apply to La Banque 
 du Peuple, which shall in these matters be 
 governed by the provisions of its charter. (R. 
 S.C. cap. 120, sec. 9. ss. 2, slightly changed).
 
 14 
 
 BANKS AND BANKING 
 
 Board of 
 directors. 
 
 Qualification. 
 
 19. The stock, property, affairs and concerns 
 of the bank shall be managed by a board of 
 directors who shall be elected annually in 
 manner hereinafter provided, and shall be 
 eligible for re-election, (R.S.C. cap. 120, sec. 
 9, as. 2 and sec. 12). 
 
 This clause places the property and business of the bank 
 under the management of the board of directors subject to 
 the control of the shareholders in certain specified matters. 
 
 For the powers of the shareholders, see notes to sec. 18. 
 
 As to the powers of the directors to make by laws, calls, 
 convene meetings, allot stock, and sue &c., see Section 19, 
 ss. 7, and Sections 22, 23, 24, 27, 29, 30, 31, 32, 33, 39, 46, 
 47, 58 and 92. 
 
 As to the qualifications required by, and the duties and 
 liabilities expressly imposed on directors, see sec. 18, ss. 2, 
 Sec. 19, ss. 2, 4, 6 and 7, and Sections 45, 48, 52, 92, 97 
 and 99. 
 
 As to the quorum of directors, see Section. 18. 
 
 A bond may be given up to be cancelled by the president 
 and directors of a banking corporation without their assent 
 being signified under the corporate seal. The Bank of 
 Upper Canada vs. Widmer 2 O. S. 222 (1829). 
 
 A director of a company from the time he becomes aware 
 of breaches of trust by his co-directors, incurs liability even 
 though he did not directly sanction them, and may be held 
 personally answerable for any losses sustained thereby, if he 
 remains passive and omits to take proper steps to prevent 
 such misconduct, and to institute if necessary proceedings 
 against his colleagues in default. Jackson vs. The Munster 
 Bank 15 L. R. Ir. 356 (1885). 
 
 2. Each director shall hold capital stock of 
 the bank as follows : When the paid-up capital 
 stock is one million dollars or less, each director 
 shall hold stock on which not less than three
 
 INTERNAL REGULATIONS 15 
 
 thousand dollars has been paid up ; when the 
 paid-up capital stock is over one million dollars, 
 and does not exceed three million dollars, 
 each director shall hold stock on which not less 
 than four thousand dollars has been paid up ; 
 and when the paid-up capital stock exceeds 
 three million dollars, each director shall hold 
 stock on which not less than five thousand 
 dollars has been paid up: (R.S.C. cap. 120, sec. 9, 
 ss. 2, changed). 
 
 By the above sub-section the minimum share qualification 
 of a director is fixed. (See also Section 18). 
 
 3. A majority of the directors shall be British sub be 
 natural-born or naturalized subjects of Her je 
 Majesty: (R.S.C. cap. 120, sec. 12). 
 
 4. The directors shall be elected by the Election, 
 shareholders on such day in each year as is 
 appointed by the charter or by any by-law of 
 
 the bank, and such election shall take place at 
 the head office of the bank at such time of the 
 day as the directors appoint ; and public notice Notice, 
 thereof shall be given by the directors, by pub- 
 lishing the same for at least four weeks pre- 
 vious to the time of holding such election, in a 
 newspaper published at the place where the 
 said head office is situate : (R.S.C. cap. 120, sec. 
 12, part, slightly changed). 
 
 5. The persons, to the number authorized to who shall be 
 
 i , directors. 
 
 be elected, who have the greatest number of 
 votes at any election, shall be directors: (R.S. 
 C. cap. 120, sec. 12, ss. 3, slightly changed).
 
 16 
 
 BANKS AND BANKING 
 
 Provision in Q If it happens at any election that two or 
 
 case of equality 
 
 more persons have an equal number of votes 
 and the election or non-election of one or more 
 such persons as a director or directors depends 
 on such equality, then the directors who have 
 a greater number, or the majority of them, 
 shall determine which of the said persons so 
 having an equal number of votes shall be the 
 director or directors, so as to complete the full 
 number ; and the said directors, as soon as may 
 be, after the said election, shall proceed to 
 elect, by ballot, two of their number to be presi- 
 dent and vice-president respectively : (R.S.C. 
 cap. 120, sec. 12, ss. 4, slightly changed). 
 
 Election of 
 dresident, &c. 
 
 Vacancies, 
 how tilled. 
 
 7 If a vacancy occurs in the board of direc- 
 tors, such vacancy shall be filled in the manner 
 provided by the by-laws ; but the non -filling of 
 the vacancy shall not vitiate the acts of a 
 quorum of the remaining directors; and if the 
 vacancy so created is in the office of the presi- 
 dent or vice-president, the directors shall, from 
 among themselves, elect a president or vice- 
 president, who shall continue in office for the 
 remainder of the year. (R.S,C. cap. 120, sec. 
 12, ss. 5, slightly changed). 
 
 Section 18 provides that the directors shall not be less 
 than five nor more than ten, and that the quorum shall not 
 be less than three. Where there is a maximum and mini 
 mum number of directors fixed by law, then directors can- 
 not act if the number falls below the minimum, Alma 
 Spinning Co. L. R. 16 Chy. Div. 68 1 (1880), unless as in 
 this sub-section, there is power given to act notwithstanding
 
 INTERNAL REGULATIONS 17 
 
 vacancies, Scottish Petroleum Co. L R. 23 Chy. Div. 431 
 (1883). Here the power to act continued as long as there 
 is a quorum present at a meeting of the hoard. 
 
 2O. If an election of directors is not made on Provision in 
 
 CuS6 OI IcLllUr C 
 
 the day appointed for that purpose, such elec- of 
 tion of directors may take place on any other 
 day according to the by-laws made by the 
 shareholders in that behalf ; and the directors 
 then in office shall remain in office until a new 
 election is made, (R.S.C. cap. 120, sec. 15, 
 changed). 
 
 1. At all meetings of the directors, the Meetings of 
 
 , . . - directors. 
 
 president, or m his absence the vice-president, 
 or in the absence of both of them, one of the 
 directors present, chosen to act pro tempore, 
 
 i -i Casting vote 
 
 shall preside ; and the president, vice-prebident ^[ r ^ r ding 
 or president pro tempore so presiding shall vote 
 as a director, and if there is an equal division 
 on any question shall also have a casting vote. 
 (R.S.C. cap. 120, sec. 16, part). 
 
 It may be noted that this section gives to the presiding 
 officer of a directors' meeting in addition to his own vote a 
 casting vote in case of an equality of votes. 
 
 22. The directors may make by-laws and Gene rai 
 regulations (not repugnant to the provisions of 
 this Act or the laws of Canada) touching the 
 management and disposition of the stock, 
 property, affairs and concerns of the bank, and 
 touching the duties and conduct of the officers, 
 clerks and servants employed therein, and all
 
 18 BANKS AND BANKING 
 
 such other matters as appertain to the business 
 40 of a bank : Provided always, that all by-laws 
 of the bank heretofore lawfully made and now 
 in force, in regard to any matter respecting which 
 the directors may make by-laws under this 
 section (including any by-laws for establishing 
 guarantee and pension funds for the employees 
 of the bank), shall remain in force until they 
 are repealed or altered by others made under 
 this Act. (R.S.C. cap. 120, sec. 17, changed). 
 
 The power to authorize the creation of pension and guar- 
 antee funds is now expressly conferred on the shareholders 
 by Sec. 18, ss. 2 of this Act. 
 
 As to the shareholders' powers to make by-laws see notes 
 to Sec. 1 8. 
 
 As to the shareholders' power of repealing or changing 
 existing by-laws that under this Act can only be made by 
 shareholders, see Sec. 18, ss. 3. 
 
 A^pwntment f& m The directors may appoint as many 
 officers, clerks and servants for carrying on the 
 business of the bank, and with such salaries and 
 allowances, as they consider necessary, and 
 they may also appoint a director or directors 
 for any branch of the bank : (R.S.C. cap. 120, 
 sec. 18). 
 
 security to be 2. Before permitting any cashier, officer, 
 clerk or servant of the bank to enter upon the 
 duties of his office, the directors shall require 
 him to give bond, guarantee, or other security 
 to the satisfaction of the directors, for the due 
 and faithful performance of his duties : R.S.C. 
 cap. 120, sec. 18, ss. 2 slightly changed).
 
 INTERNAL REGULATIONS 19 
 
 A surety by bond for the due performance of the office of 
 a bank agent is not responsible for losses occurring after the 
 nature of the agency has been changed and the agent 
 appointed a cashier. Bank of Upper Canada v. Covert, 5 
 O.S. 541 (1834). 
 
 In an action on a bond. Plea, that the mode of paying 
 the clerk's salary had been changed from the manner stipu- 
 lated in the bond. Held, no defence. Bank of Toronto v. 
 Wilmot, 19 U. C. Q. B. 73 (1859). 
 
 Where the bond was for due performance of duties as 
 clerk, or in any other capacity whatsoever, and it was pleaded 
 that the clerk was, without the defendant's consent, made 
 teller, which was another and more responsible office, and 
 that the defendant was thereby discharged, it was held 
 that this defence was bad. Royal Canadian Bank v. Yates, 
 19 U. C. C. P. 439 (1869). 
 
 In an action against the sureties on a bond guaranteeing 
 the honesty of one M. as cashier, a defence was pleaded 
 by the sureties of neglect of the directors of the bank in 
 not inspecting the books so as to detect any malversation on 
 the part of M. Held, that to sustain this defence the 
 sureties must show connivance or such gross negligence as 
 to warrant the inference of fraud or connivance between 
 the bank and M. A further defence was raised that the 
 cashier had been employed by the directors in unlawful 
 speculations in the stock of the bank and other stocks in 
 the course of which he appropriated to his own use certain 
 funds of the bank kept at special accounts in connection 
 with such speculations. 
 
 Held, no defence as the claim of the bank against the 
 sureties was for moneys so misappropriated and not for 
 losses occasioned by such unlawful speculations. 
 
 Exchange Bank vs. Barnes, j ' -, A R ( 886^- 
 
 Exchange Bank vs. Springer, ^ R -, 39 '' 
 
 04. The directors of the Lank, or anv four of special gener- 
 
 J al meetings. 
 
 them, or any number not less than twenty- 
 five of the shareholders of the bank, who are
 
 20 
 
 BANKS AND BANKING 
 
 Removal of 
 president, 
 director, &c. 
 
 together proprietors of at least one-tenth of the 
 paid-up capital stock of the bank, by themselves 
 or by their proxies, may, at any time, call a 
 special general meeting of the shareholders, to 
 be held at their usual place of meeting, upon 
 giving six weeks' previous public notice, speci- 
 fying in such notice the object of such meeting: 
 (R.S.C. cap. 120, sec. 11). 
 
 It is a general principle of corporation law that the notice 
 convening a meeting should specify in a general way the 
 business intended to be transacted thereat. 
 
 2. If the object of any such special general 
 meeting is to consider the proposed removal of 
 the president or vice-president, or of a director 
 of the bank, for maladministration or other 
 specified and apparently just cause, and if a 
 majority of the votes of the shareholders at 
 such meeting is given for such removal, a direc- 
 election. j. Qr O re pi ace hi m shall be elected or appointed 
 in the manner provided by the by-laws of the 
 bank, or if there are no by-laws providing 
 therefor, then by the shareholders at such meet- 
 ing ; and if it is the president or vice-president 
 who is removed, his office shall be filled by the 
 directors in the manner provided in case of 
 a vacancy occurring in the office of president or 
 vice-president. (R.S.C. cap. 120. sec. 11, ss. 2). 
 
 As to shareholders' powers generally see notes to Sec. 18. 
 
 This sub-section gives the shareholders power to remove 
 directors for cause. Without this statutory power it would 
 appear that a company whose directors are appointed for a 
 definite period has no inherent power to remove them before
 
 INTERNAL REGULATIONS 21 
 
 the expiration of that period. Imperial Hy. Hotel Co. 
 Blackpool vs. Hampson, L. R. 23 Ch. Div. i (1882). See 
 also Harben vs. Phillips, L. R. 23 Ch. Div. 14 (1883). 
 
 25. Every shareholder shall, on all occasions votesonsharea 
 on which the votes of the shareholders are 
 taken, have one vote for each share held by 
 him for at least thirty days before the time of 
 meeting (see also ss. 6 hereof) ; and in all cases Ballot 
 when the votes of the shareholders are taken, 
 the voting shall be by ballot : (R.S.C. cap. 120, 
 sec. 10, ss. 1 part, ss. 4). 
 
 2 All questions proposed for the considera-Majorit/to 
 tion of the shareholders shall be determined by 
 the majority of the votes of the shareholders 
 present in person or represented by proxy ; and 
 the chairman elected to preside at any such meet- 
 ing of the shareholders shall vote as a share- 
 holder only, unless there is a tie, in which case, 
 except as to the election of a director, he shall casting vote, 
 have a casting vote : (R.S.C, cap. 120, sec. 10, ss. 
 2, slightly changed.) 
 
 It is important to observe that this clause in case of an 
 equality of votes gives the chairman of a shareholders 
 meeting a casting vote on all questions except that of the 
 election of a director, which is otherwise provided for, see sec. 
 19 ss. 6. 
 
 3. If two or more persons are ioint holders AS to joint 
 
 r J holders of 
 
 of shares, any one such joint holder may be 8hares - 
 empowered, by letter of attorney from the 
 other joint holder or holders, or a majority of 
 them, to represent the said shares, and vote 
 accordingly : (R.S.C. cap. 120, sec. 10 ss. 3).
 
 22 BANKS AND BANKING 
 
 Proxies. 4. Shareholders may vote by proxy, but no 
 
 person other than a shareholder eligible to voter 
 shall be permitted to vote or act as such proxy* 
 and no manager, cashier, clerk or other subor- 
 dinate officer of the bank shall vote either in 
 person or by proxy, or hold a proxy for that 
 purpose : (R.S.C. cap. 120, sec. 10, ss. 1 part, 
 slightly changed). 
 
 It must be noted that by this sub-section the proxy must 
 not only be a shareholder, but a shareholder eligible to vote- 
 (see ss. i, 3 & 6 hereof). 
 
 As to the proxies see next sub-section and section 18 
 hereof. 
 
 The president of a bank is not prohibited from voting on 
 proxies handed to him by other shareholders. Regina vs. 
 The Bank of Upper Canada, 5 U. C. Q. B., 338 (1849). 
 
 Stoles* 1 of 5. No appointment off proxy to vote at any 
 meeting of the shareholders of the bank shall 
 be valid for that purpose unless it has been 
 made or renewed in writing within the two 
 years next preceding the time of such meeting: 
 (R.S.C. cap. 120, sec. 4, changed). 
 
 Under this Act proxies must be renewed every two years 
 instead of three years as prescribed by the repealed Act. 
 As to the recording of proxies see Sec. 18. 
 
 cLesc^ns 6. No shareholder shall vote, either in person 
 
 must be paid 
 
 before voting. O r by proxy, on any question proposed for the 
 consideration of the shareholders of the bank at 
 any meeting of such shareholders, or in any 
 case in which the votes of the shareholders of 
 the bank are taken, unless he has paid all calls 
 made by the directors which are then due and
 
 INTERNAL REGULATIONS. 23 
 
 payable: (R.S.C. cap. 120, sec. 13, slightly 
 changed). 
 
 As to what shareholders are entitled to vote see Sec. 25, 
 ss. i and 3. 
 
 CAPITAL STOCK. 
 
 26. The capital stock of the bank may be capital 86 c 
 increased from time to time, by such percentage 
 or by such amount, as is determined upon by 
 by-law passed by the shareholders, at the 
 annual general meeting, or at any special 
 general meeting called for the purpose: Pr 
 vided always, that no such by-law shall come 
 into operation, or be of any force or effect, 
 unless and until a certificate approving thereof 
 has been issued by the Treasury Board : (R.S.C. 
 cap. 120, sec. 7 part, changed). 
 
 The proviso at the end of the above section requiring the 
 approval of the Treasury Board is new. For the meaning 
 of the expression " Treasujy Board " see sec. 2 ss (b). 
 
 As to the powers of shareholders generally, see notes to 
 section 18. 
 
 2. No such certificate shall be issued by the 
 Treasury Board unless application therefor is appro 
 made within three months from the time of 
 the passing of such by-law, nor unless it appears 
 to the satisfaction of the Treasury Board that a 
 copy of such by-law, together with notice of in- 
 tention to apply for such certificate, has been 
 published for at least four weeks in the Canada
 
 24 BANKS AND BANKING 
 
 Gazette, and in one or more newspapers pub- 
 lished in the place where the chief office or 
 place of business of the bank is situate ; nothing 
 herein contained, however, shall be construed 
 to prevent the Treasury Board from refusing to 
 issue such certificate if it thinks jDest so to do. 
 (New). 
 
 HOW stock 27. Any of the original unsubscribed capital 
 tel. stock, or of the increased stock of the bank, 
 
 shall, when the directors so determine, be 
 allotted to the then shareholders of the bank 
 pro raid, and at such rate as is fixed by the 
 -directors, but no fraction of a share shall be so 
 allotted ; provided that in no case shall a rate 
 be fixed by the directors, which will make the 
 premium (if any) paid or payable on such 
 stock so allotted exceed the percentage which 
 the reserve fund of the bank then bears to the 
 paid-up capital stock thereof ; and any of such 
 alloted stock which is not taken up by the 
 . shareholder to whom such allotment has been 
 made, within six months from the time when 
 notice of the allotment was mailed to his 
 address, or which he declines to accept, may be 
 offered for subscription to the public, in such 
 manner and on such terms as the directors pre- 
 scribe. (R.S.C. cap. 120, sec. 8, added to 
 and changed). 
 
 The proviso which limits the Directors in fixing the 
 premium price of the stocks to be allotted hereunder is new. 
 
 capital stock gg The capital stock of the bank may be 
 
 may be re- 
 
 reduced by by-law passed by the shareholders
 
 CAPITAL STOCK 25 
 
 "%t the annual general meeting, or at a special 
 general meeting called for the purpose ; but no 
 such by-law shall come into operation or be of 
 force or effect until a certificate approving 
 thereof has been issued by the Treasury Board : 
 (New). 
 
 Until the passing of this Act the capital stock of a bank 
 could only be reduced by Act of Parliament. By this sec- 
 tion, however, power to reduce the capital stock is given to 
 the shareholders to be exercised as provided -herein. (See 
 sections 4 and 48). 
 
 2. No such certificate shall be issued by the certificate of 
 
 . Treasury 
 
 Treasury Board unless application therefor is Board, 
 made within three months from the time of 
 the passing of the by-law, nor unless it appears 
 to the satisfaction of the Board that the share- 
 holders voting for such by-law .represent a 
 majority in value of all the shares then issued 
 by the bank, and that a copy of the by-law, 
 together with notice of intention to apply to 
 the Treasury Board for the issue of a certificate 
 approving thereof, has been published for at 
 least four weeks in the Canada Gazette, and in 
 one or more newspapers published in the place 
 where the chief office or place of business of the 
 bank is situate; nothing herein contained, how- 
 ever, shall be construed to prevent the Treasury 
 Board from refusing to issue such certificate if 
 it thinks best so to d^>: (New). 
 
 3. In addition to evidence of the passing of statements to 
 
 . t i ke submitted. 
 
 the by-law and the publication thereof in the 
 manner above provided, statements showing
 
 26 
 
 BANKS AND BANKING 
 
 the amount of stock issued and the number of 
 shareholders, with the amount of stock held by 
 each, represented at such meeting, and the 
 number of shareholders, with the amount of 
 stock held by each, who voted for such by-law, 
 and also full statements of the assets and liabili- 
 ties of the bank, together with a statement of 
 the reasons and causes why such reduction is 
 sought, shall be laid before the Treasury Board 
 at the time of the application for the issue of a 
 certificate approving such by-Kw : (New). 
 
 Reduction not 4 " The Posing of such by-law, and any 
 reduction of the capital stock of the bank there- 
 under, shall not, in any way, diminish or inter- 
 fere with the liability of the shareholders of the 
 bank to the creditors thereof at the time of the 
 issue of the certificate approving such by-law : 
 (New). 
 
 holders. 
 
 If legislation 
 is asked to 
 sanction re- 
 duction . 
 
 Limit to re- 
 duction. 
 
 5. If, in any case, legislation is sought to 
 sanction any reduction of the capital stock of 
 any bank, a copy of the by-law or resolution 
 passed by the shareholders in regard thereto, 
 together with statements similar to those above 
 provided to be laid before the Treasury Bjard, 
 shall be filed with the Minister of Finance and 
 Receiver-General, at least one month prior to 
 the introduction into Parliament of the Bill 
 relating to such reduction : (New). 
 
 6. The capital shall not be reduced below the 
 amount of two hundred and fifty thousand 
 dollars of paid-up stock. (New).
 
 SHARES AND CALLS. 27 
 
 SHARES AND CALLS. 
 
 29. The shares of the capital stock of the shares and 
 bank shall be personal estate, and shall be of. 
 assignable and transferable at the chief place 
 of business of the bank, or at such of its 
 branches, or at such other place or places in the 
 United Kingdom, or in any of the British 
 colonies or possessions, and according to such 
 form, and subject to such rules and regulations, 
 as the directors prescribe ; and books of sub- 
 scription may be opened, and the dividends 
 accruing on any shares of such stock may be 
 made payable at any of the places aforesaid ; 
 and the directors may appoint such agents in 
 the United Kingdom, or in any of the British 
 colonies or possessions, for the purposes of this 
 section, as they deem necessary. (R. S. C. cap. 
 120, sees. 19 in part and 29 in part, with addi- 
 tions ; see also sees. 35 to 41 of this Act). 
 
 SHARES ARE BY THIS CLAUSE DECLARED TRANSFERABLE. 
 
 In Smith v. The Bank of Nova Scotia, 8 S.C.R. 558 (1883) 
 it was held, that shares are, by the express provisions of the 
 Bank Act (then 34 V., c. 5, s. 19) transferable at the will of 
 the holder, and that the directors are bound to register the 
 transfer unless there are debts or liabilities owing by the 
 shareholder to the bank, and that to justify the directors in 
 refusing to register transfers of shares they must bring them- 
 selves strictly within the terms of the section, and that a 
 resolution passed at a meeting of directors and shareholders,
 
 28 BANKS AND BANKING 
 
 purporting to restrain for a certain time the transfer of shares, 
 was ultra vires, and consequently not binding on dissenting 
 or absent shareholders. See also Barss v. Bank of Nova 
 Scotia, 6 C.L.T. 443 (1885). 
 
 Opinions have been recently expressed in the House of 
 Lords in England, that where the stock certificate issued by 
 a bank contains a note that the certificate must be sur- 
 rendered with the instrument of or at the time of transfer, it 
 would be wrong for the bank to register a transfer until the 
 certificate was produced, or its non-production satisfactorily 
 accounted for. This was decided in the case of a company 
 to which the Companies Clauses Consolidation (Scotland) 
 Acts applied (8 & 9 Vic. ch. 17) the language of section 21 
 of which is almost identical with section 43 of this Act, it 
 was argued that the directors had no right to hamper the 
 transfer of shares by such a condition or regulation, but Lord 
 Blackburn said he thought they had. See Colonial Bank v. 
 Whinney, L.R. n App. Cas. 426 (1886). 
 
 WHERE SHARES CAN BE SOLD IN EXECUTION. 
 
 In re The Bank of Ontario, 44 U.C.Q.B., 247 (1879). 
 It did not appear in this case that the Ontario Bank had a 
 share register in Montreal, but it was decided that a sale in 
 execution in the Province of Quebec might be made of 
 shares of this bank whose head office was in Ontario, it 
 appsaring that by the law of the Province of Quebec service 
 of process could be legally effected at the branch of such 
 bank in Montreal, and that the Consolidated Statute of 
 Canada, c. 70, is in force in that province, by which 
 statute (section 2) it is provided that where service of process 
 can be legally made on the company, there the shares may 
 be seized and notice given. 
 
 Payment of jo. The shares of the capital stock phall be 
 
 snares. 
 
 paid in by such instalments and at such times 
 and places as the directors appoint : Provided
 
 SHARES AND CALLS. 29 
 
 always, that the directors may cancel any sub- Proviso = ten 
 
 <f J J p er cen t. pa 
 
 scription for any share unless a sum equal to j 
 ten per cent, at least on the amount subscribed 
 for is actually paid at the time of, or within 
 thirty days after, the time of subscribing ; but 
 such cancellation shall not relieve the subscriber 
 from his liability to creditors in the event of 
 insolvency as hereinafter provided. (R. S. C. 
 cap. 120, sec. 20 changed). 
 
 The language of the proviso to sec. 20 of the previous 
 Bank Act was as follows : " Provided always that no share 
 shall be held to be lawfully subscribed for unless a sum 
 equal to at least ten per centum on the amount subscribed 
 for is actually paid at the time of or within thirty days after 
 the time of subscribing.' 1 Its meaning was discussed in the 
 winding up proceedings of the Central Bank. Some of the 
 contributories contended, though unsuccessfully, that if the 
 ten per cent, on the amount subscribed was not paid at the 
 timeof the original subscription for bank shares or within thirty 
 days thereafter as required by the above proviso although 
 afterwards paid to and accepted by the bank before the first 
 transfer of the shares took place, subsequent transferees of 
 the shares could not be placed on the list of contributories 
 in the winding up. In Baines & Nasmith's case (16 Ont. R. 
 293, 1888, affd. 16 App. R. 237, 1889, iSA.R. 209, 1889), the 
 Chancellor held that the provision as to payment of the ten 
 per cent, is for the protection of .the public, and till payment 
 is made the person subscribing may not be able to deal with 
 the stock, but he is at least equitable owner, and may 
 become legally entitled on making the prescribed payment. 
 The contention thus put forward by the contributories in 
 Baines case would not be possible as the law now stands. The 
 language of the old proviso " no share shall be held to be law- 
 fully subscribed, &c." has been changed, and instead thereof a 
 power is given to the directors to cancel the subscription, the 
 subscriber still, however, remaining liable to creditors in the 
 event of the insolvency of the bank. (See sec. 89 et seq.)
 
 3D BANKS AND BANKING 
 
 calls on shares. 31. The directors may make such calls of 
 money from the several shareholders for the 
 time being, upon the shares subscribed for by 
 them respectively, as they find necessary : (R. 
 S.C. cap. 120, sec. 21). 
 
 A call was made by four directors, one of whom was 
 not legally appointed. It was held that though on ; of the 
 directors who joined in making the call was not legally 
 appointed, the call was valid, three of the directors who 
 made it being duly qualified, and that number being 
 sufficient under section 16. Bank of Liverpool v. Bigelow, 
 3 R. & C. 236, Nova Scotia (1878). The facts on which 
 this decision is founded do not appear very clearly in the 
 report. In Brice on Ultra Vires, 2nd edition, page 362, it 
 is laid down that where the power to make calls is vested in 
 the directors, a call made by those who are actually directors 
 and not yet removed, even though illegally elected, will be 
 good. It would appear, however, from the decision of the 
 Privy Council in The Garden Gully United Quartz Mining 
 Company v. McLister, L.R., i App. Cases, 39 (1875), that 
 to justify a forfeiture for non-payment of calls, the calls must 
 have been regularly made by a board of directors who had 
 been duly elected, and this case seems to throw doubt on 
 the validity of calls made by a de factu board of directors. 
 See also Bottomley's Case, 16 Ch. Div. 68 1 (1880). As to 
 the powers and duties of directors to make calls when the 
 bank is insolvent, see section 92. 
 
 Time of calls 
 and notice. 
 
 Limitation. 
 
 2. Such calls shall be made at intervals of not 
 less than thirty days, and upon notice to be 
 given at least thirty days prior to the day on 
 which such calls shall be payable ; and no such 
 call shall exceed ten per cent, of each share 
 subscribed. (R.S.C. cap. 120, sec. 21, ss. 2). 
 
 There must be an interval of not less than thirty days 
 between the making of two successive calls as well as an
 
 SHARES AND CALLS. 31 
 
 interval of at least thiity days between the time of making 
 a call and the time fixed for payment thereof. Robertson v. 
 La Banque d'Hochelaga, 4 L.N. 314(1881). 
 
 32. The directors may, in case of the non- Recovery of 
 payment of any call, in the corporate name of 
 the bank, sue for, recover, collect and get in all 
 such calls, or may cause and declare such shares 
 to be forfeited to the bank. (R,S.C. cap. 120, 
 sec. .52, slightly changed). 
 
 See also seccions 33 and 34. 
 
 This section gives power to the directors to forfeit shares 
 for non-payment of calls. 
 
 See Robertson v. Banque d'Hochelaga, 4 L.N. 314 
 (1881). The plaintiff in this action sought to have restored to 
 him certain shares in the defendant bank, which had been 
 forfeited by the directors for non-payment of calls. The 
 directors on three several occasions notified the plaintiff that 
 unless the calls were paid they would sue him for the 
 amount. Without any further or other notification than this 
 they passed a resolution confiscating the shares. The court 
 decided that the directors having elected to sue could not 
 alter their election and proceed to confiscate the shares 
 without first giving the plaintiff a notice of their intention so to 
 do. 
 
 It has been decided that where the holder of stock dies 
 intestate and a call is made thereon after his death, admin- 
 istration will be granted to the nominee of the company as a 
 creditor of the estate of the deceased. Tomlinson v. Gilby, 
 54 L.J., 80(1885). 
 
 33 If any shareholder refuses or neglects to Forfeiture of 
 
 . i 1-1 f , i shares for non- 
 
 pay any instalment upon his shares of the pavm 
 
 capital stock at the time appointed therefor, 
 such shareholder shall incur a penalty to the 
 use of the bank of a sum of money equal to ten
 
 BANKS AND BANKING 
 sale in such per cent, of the amount of such shares; and if 
 
 case. x 
 
 the directors declare any shares to bt forfeited 
 to the bank they shall within six months there- 
 after, without any previous formality other than 
 thirty days' public notice of their intention so 
 to do. sell at public auction the said shares, or 
 so many of the said shares as shall, after deduct- 
 ing the reasonable expenses of the sale, yield a 
 sum of money sufficient to pay the unpaid 
 instalments due on the remainder of the said 
 shares and the amount of penalties incurred 
 
 And transfer, upon the whole ; and the president or vice- 
 president, manager or cashier of the bank shall 
 execute the transfer to the purchaser of the 
 shares so sold ; and such transfer shall be as 
 valid and effectual in law as if it had been 
 executed by the original holder of the shares 
 
 Proviso. thereby transferred ; but the directors, or the 
 shareholders at a general meeting, may, notwith- 
 standing anything in this section contained, 
 remit, either in whole or in part, and condi- 
 tionally or unconditionally, any forfeiture or 
 penalty incurred by the non-payment of 
 instalments as aforesaid, or the bank may 
 enforce the payment of any call or calls by suit, 
 instead of declaring the shares forfeited. (R.S. 
 C. cap. 120, sec. 23, slightly changed). 
 
 Under section 32 the directors are empowered to 
 forfeit shares absolutely in case of non-payment of calls. 
 
 Under this section the shareholder by neglect to pay 
 calls incurs a forfeiture to the use of the bank of a sum of 
 money equal to ten per cent, on the amount of his shares ; 
 and the directors are empowered to sell at public auction
 
 INTERNAL REGULATIONS. 33 
 
 on giving thirty days' prior public notice of sale the said 
 shares or so many of them as shall, after deducting reasonable 
 expenses of sale, yield sufficient to pay the unpaid instalments 
 due on the remainder thereof and the amount of forfeitures 
 incurred on the whole. 
 
 Section 33 would, therefore, seem to limit to the extent 
 therein provided the apparently larger right of forfeiture 
 given by section 32. 
 
 As to forfeiture for non-payment when bank is insolvent. 
 (See sees. 92 to 94). 
 
 Under this and also the preceding section the directors 
 are empowered to sue the shareholders for the amount due 
 on any call. 
 
 It would seem, however, that the directors have no power 
 to forfeit and to sue. The power is apparently conferred in 
 the alternative either to forfeit or sue. See Robertson v. 
 La Banque d'Hochelaga (1881), cited in note to section 32- 
 
 34. In any action brought to recover any 
 
 j i~ n -j. i n i Recoverylby 
 
 money due on any such call it shall not be suit. 
 
 necessary to set forth the special matter in the 
 
 declaration or statement of claim, but it shall 
 
 be sufficient to allege that the defendant is 
 
 holder of one share or more, as the case may 
 
 be. in the capital stock of the bank, and is i?eed a Uproved. 
 
 indebted lo the bank for a call or calls upon 
 
 such share or shares, in the sum to which the 
 
 call or calls amount, as the case may be, stating 
 
 the amount and number of such calls, whereby 
 
 an action has accrued to the bank to recover the 
 
 same from such defendant by virtue of this Act ; 
 
 and it shall not be necessary to prove the 
 
 appointment of the directors. (R.S.C. cap. 120, 
 
 sec. 22, ss. 2, changed).
 
 34 
 
 BANKS AND BANKING 
 
 Conditions of 
 transfer of 
 shares. 
 
 Fraction of 
 share not 
 
 transferable 
 
 TRANSFER AND TRANSMISSION OF SHARES. 
 
 35. No assignment or transfer of the shares 
 of the capital st<>ck of the bank shall be valid 
 ur.less it is made and registered and accepted 
 by the person to whom the transfer is made, in 
 a book or books kept for that purpose, nor unless 
 the person making the same has, if required by 
 the bank, previously discharged all his debts 
 or liabilities to the bank which exceed in 
 amount the remaining stock, if :my, belonging 
 to such person, valued at the then current rate ; 
 and no fractional part of a share, or less than a 
 whole share, shall be assignable or transferable. 
 (R.S.C. cap. 120, sec. 29, in part). 
 
 In the liquidation of the Central Bank (a bank having its 
 head office in the Province of Ontario) the evidence showed 
 that the bank had adopted the practice of dealing with its 
 shares by way of marginal transfer, that the first transferor 
 executed a transfer in blank, subject as by marginal note,, 
 initialed by him, to the order of a broker, and that the 
 ultimate purchaser signed an acceptance in the transfer 
 book immediately under the transfer so signed in blank by 
 the first transferor, the intermediate dealing of the broker 
 being omitted from extended record in the bank books, and 
 the ultimate purchaser being duly entered as a shareholder 
 in the stock ledger of the bank : Held, that this amounted 
 substantially to an acceptance of shares transferred in blank, 
 which was lawful where transfer by deed was not prescribed, 
 and the entry in the stock ledger amounted to registration 
 within the meaning of the Act. 
 
 Where it appeared that in one such case the transferee 
 did not sign the acceptance, but that he subsequently dealt
 
 TRANSFER AND TRANSMISSION OF SHARES. 35 
 
 with the shares by selling and transferring them : 
 
 Held, that the transferees from him were properly placed 
 upon the list of contributories, notwithstanding anything in 
 the corresponding section of the Act then in force : In re- 
 Central Bank-Baines & Nasmiths case 16 Ont. R. 293 (1888) 
 affirmed in App. 16 App. R. 237 (1889); 18 App. R. 209 
 
 After a winding up order has been made it is too late for 
 holders of sharer, entered as such in the books of the bank, 
 to escape liability by showing irregularities in transfers to more 
 or less remote predecessors in title. A loan company which 
 advances money on the security of shares, which are trans- 
 ferred to and accepted by it in the ordinary absolute 
 form cannot escape liability on the ground that it is merely 
 a trustee for the borrower. In re Central Bank of Canada- 
 Home Savings and Loan Company's case 18 Ont. Appeal 
 Reports 489 (1891). 
 
 An infant, however, may repudiate his ^liability as a con- 
 tributory. thus when the infant's father signed her name 
 to a stock subscription book of a bank, paid the calls, and 
 received the dividend cheques, which were endorsed by 
 her at har father's request, the moneys being received by 
 him, and the bank was put into liquidation by winding up 
 proceedings, and the order for call against contributories 
 was made three months before she came of age ; and a 
 year after the liquidation commenced she took proceedings 
 to have her name removed from the list of contributories : 
 Held, that she was not liable as a contributory and that 
 her name must be removed from the list. In re Central 
 Bank-Hoggs case 19 Ont. R. 7 (1890). 
 
 Where an intending purchaser of stock enquired of the 
 bank officers what claims the bank held against such stock, 
 and certain information was given, but before the arrange- 
 ment for the transfer of the stock was completed another 
 claim, which was then current in one of the other agencies 
 of the bank, was returned unpaid : Held, that the bank had 
 a right to retain its lien on the stock for the additional sum 
 before allowing the transfer.of the stock in its books : Cook
 
 36 BANKS AND BANKING 
 
 v. Royal Canadian Bank, 20 Chy., i (1873). See also sec- 
 tions 29, 37, 38 and 65. 
 
 Transferors of shares whose transfers have been registered 
 \vithin sixty days of the suspension of payment by the bank 
 remain liable for calls. See sections 89 and 96. 
 
 By the combined effect of this section and section 65 the 
 bank is entitled to a lien upon the shares of any shareholder 
 for any debt or liability for any debt to the bank and 
 whether matured or only maturing and may decline to 
 permit any transfer of such shareholder's shares until pay- 
 ment of such debt. 
 
 36. A list of all transfers of shares registered 
 each day in the books of the bank, showing the 
 parties to such transfers and the number of 
 shares transferred in each case, shall be made 
 up at the end of each day and kept at the chief 
 place of business of the bank, for the inspection 
 of its shareholders. (R.S.C. cap. 120, sec. 30). 
 
 37. All sales or transfers of shares, and all 
 
 Transferor of , . , _ 
 
 shares must be contracts and agreements in respect thereof, 
 
 registered . 7 
 
 hereafter made or purporting to be made, shall 
 be null and void (saving however, as to a pur- 
 chaser not having knowledge of the defect, his 
 rights and remedies under the contract of sale), 
 unless the person making such sale or transfer, 
 or in whose name or on whose behalf the same 
 is made, is at the time thereof the registered 
 owner in the books of the bank of the share or 
 shares so sold or transferred, or intended or 
 purported so to be, or has the registered owner's 
 assent to the sale, and the distinguishing 
 number or numbers of such share or shares, if
 
 TRANSFER AND TRANSMISSION OF SHARES, 37 
 
 any, shall be designated in the contract or 
 agreement of sale or transfer ; and any person, 
 whether principal, broker or agent, who violates 
 the provisions of this section by wilfully selling 
 or transferring, or attempting to sell or trans- 
 fer, any share or shares by a false number, or 
 of which the principal is not, at the time of 
 such sale or attempted gale, the registered 
 owner, or acting with the registered owner's 
 assent to the sale, shall be guilty of an offence 
 against this Act. (New). 
 
 This is a new section and is intended to prevent as much 
 as possible the rigging of the market and the trafficking in 
 bank shares. 
 
 38. When any share of the capital stock has 
 been sold under a writ of execution, the officer S 
 by whom the writ was executed shall, within 
 thirty days after the sale, leave with the bank 
 an attested copy of the writ, with the certificate 
 of such officer endorsed thereon, certifying to 
 whom the sale has been made ; and thereupon 
 (but not until after all debts and liabilities of 
 the holder of the share to the bank, and all 
 liens existing in favor of the bank thereon, 
 have been discharged, as herein provided), the 
 president, vice-president, manager or cashier of 
 the bank shall execute the transfer of the share 
 so sold to the purchaser ; and such transfer 
 shall be, to all intents and purposes, as valid 
 and effectual in law as if it had been executed 
 by the holder of the said share. (R.S.C. cap. 
 120, sec 31, slightly changed).
 
 38 BANKS AND BANKING 
 
 By 34 Vic., c. 5, s. 19. the sheriff was the officer 
 empowered to sell shares under a writ of execution. But it 
 was, notwithstanding, held in In re The Bank of Ontario, 
 44 U.C.Q.B., 250 (1879), that an execution from the Superior 
 Court of Montreal might be validly executed by a sworn 
 bailiff of the court instead of by the sheriff, and the bailiff 
 might fulfil the duties imposed on the sheriff by that section, 
 it appearing that under the law of the Province of Quebec 
 the bailiff is authorized to act and sell in the same way as 
 the sheriff. This last point would not arise under this section 
 as now worded. 
 
 Cook v. Royal Canadian Bank, 20 Chy., (1873), an d 
 notes to section 35 and section 65. 
 
 39 If the interest in any share in the capital 
 
 Transmission . * 
 
 otherwise than stock becomes transmitted in consequence of 
 bow tr atbenti- the death, bankruptcy, or insolvency of 
 any shareholder, or in consequence of the 
 marriage of a female shareholder, or by any 
 other lawful means than by a transfer according 
 to the provisions of this Act, such transmission 
 shall be authenticated by a declaration in 
 writing, as hereinafter mentioned, or in such 
 other manner as the directors of the bank 
 require ; and every such declaration shall 
 distinctly state the manner in which and the 
 person to whom such shares have been trans- 
 mitted, and shall be made and signed by such 
 person ; and the person making and signing 
 such declaration shall acknowledge the same 
 before a judge of a court of record, or before 
 the mayor, provost or chief magistrate of a city, 
 town, borough or other place, or before a notary 
 public, where the same is made and signed; 
 and every declaration so signed and acknowl-
 
 TRANSFER AND TRANSMISSION OF SHARES. 39 
 
 edged shall be left with the cashier, manager or 
 other officer or agent of the bank, who shall 
 thereupon enter the name of the person entitled 
 under such transmission in the register of share- 
 holders; and until such transmission has been 
 so authenticated, no person claiming by virtue 
 of any such transmission shall be entitled to 
 participate in the profits of the bank, or to vote 
 in respect of any such share of the capital 
 stock : Provided always, that every such 
 
 * ' J Proviso : as to 
 
 declaration and instrument as, by this and the SSSSfS 
 next following section of this Act, are required Cj 
 to perfect the transmission of a share in the 
 bank which is made in any country other than 
 Canada, or any other British colony, or the 
 United Kingdom, shall be further authenticated 
 by the clerk of a court of record and under the 
 seal of such court, or by the British consul or 
 vice-consul, or other accredited representative 
 of the British Government in the country 
 where the declaration is made, or shall be made 
 directly before such British consul or vice- 
 consul or other accredited representative ; and 
 provided also, that the directors, cashier or Proviso : fur- 
 
 . ther evidence 
 
 other officer or agent of the bank may require maybe reqmr- 
 corroborative evidence of any fact alleged in 
 any such declaration. (R.S.C. cap. 120, sec, 32, 
 slightly changed). 
 
 4O. If the transmission of any share of the 
 capital stock has taken place by virtue of the ^y marriage of 
 
 1 f if female share- 
 
 marriage of a female shareholder, the declara- holder 
 tion shall be accompanied by a copy of the
 
 40 BANKS AND BANKING 
 
 register of such marriage, or other particulars 
 of the celebration thereof, and shall declare the 
 identity of the wife with the holder of such 
 share, and shall be made and signed by such 
 female shareholder and her husband ; and they 
 may include therein a declaration to the effect 
 that the share transmitted is the separate 
 property and under the sole control of the wife, 
 and that she may receive and grant receipts for 
 the dividends and profits accruing in respect 
 thereof, and dispose of and transfer the share 
 itself, without requiring the consent or authority 
 of her husband ; and such declaration shall be 
 binding upon the bank and persons making 
 the same, until the said persons see fit to 
 revoke it by a written notice to that effect to 
 the bank ; but the omission of a statement in 
 any such declaration that the wife making the 
 same is duly authorized by her husband to 
 make the same shall not invalidate the declara- 
 tion. (R.S.C. cap. 120, sec. 33). 
 
 Transmission 41. If the transmission has taken place b}' 
 
 by decease. . . . 
 
 virtue of any testamentary instrument, or by 
 intestacy, the probate of the will, or the 
 letters of administration, or act of curatorship 
 or tutorship, or an official extract therefrom, 
 shall, together with such declaration, be pro- 
 duced and left with the cashier or other officer 
 or agent of the bank, who shall, thereupon, 
 enter in the register of shareholders the name 
 of the person entitled under such transmission. 
 (R.S.C. cap. 120, sec. 34).
 
 TRANSFER AND TRANSMISSION OF SHARES. 41 
 42. If the transmission of any share of the farther pro- 
 
 * vision in such 
 
 capital stock has taken place by virtue of the case - 
 decease of any shareholder, the production to 
 the directors and the deposit with them of an 
 authentic notarial copy of the will of the 
 deceased shareholder, if such will is in notarial 
 form according to the law of the Province of 
 Quebec, or of any authenticated copy of the 
 probate of the will of the deceased shareholder, 
 or of letters of administration of his estate, 
 or of letters of verification of heirship. or of the 
 act of curatorship or tutorship, granted by any 
 court in Canada having power to grant the 
 same, or by any court or authority in England, 
 Wales, Ireland, or any British colony, or of any 
 testament testamentary or testament dative 
 expede in Scotland, or, if the deceased share- 
 holder died out of Her Majesty's dominions, 
 the production to and deposit with the directors 
 of any authenticated copy of the probate of his 
 will or letters of administration of his property, 
 or other document of like import, granted by 
 any court or authority having the requisite 
 power in such matters, shall be sufficient justi- 
 fication and authority to the directors for paying 
 any dividend, or for transferring or authorizing 
 the transfer of any share, in pursuance of and 
 in conformity to such probate, letters of admin- 
 istration, or other such document as aforesaid. 
 (R.S.C. cap. 120, sec. 34, changed). 
 
 This section gives more specific directions than its prede- 
 cessors as to the proofs to be produced hereunder.
 
 42 BANKS AND BANKING 
 
 Bank not 4$ The bank shall not be bound to see to the 
 
 bound to see to 
 
 sares? f * execution of any trust, whether express, implied 
 or constructive, to which any share of its stock 
 is subject ; and the receipt of the person in 
 whose name any such share stands in the books 
 of the bank, or, if it stands in the name of more 
 persons than one, the receipt of one of such per- 
 sons shall be a sufficient discharge to the bank 
 for any dividend or any other sum of money 
 payable in respect of such share, unless express 
 notice to the contrary has been given to the 
 bank ; and the bank shall not be bound to see 
 to the application of the money paid upon such 
 receipt, whether given by one of such persons 
 or all of them. (R.S.C. cap. 120, sec. 37.) 
 
 This section deals with trusts to which shares may be 
 subject see also sections 29, 35 & 36. As to trusts to which 
 deposits may be subject, see section 84, ss. 2. 
 
 Under 25 and 26 Vic., cap. 89, sec. 30 (imp.) " The Com- 
 pany's Act, 1862" which is as follows : " No notice of any 
 trust, expressed, implied, or constructive, shall be entered on 
 the register, or be receivable by the registrar, in the case of 
 Companies under this Act," it was decided that where the 
 owner of shares at different times makes in favor of each of 
 two persons, an equitable assignment of such shares, such 
 assignments rank according to their respective dates, and the 
 second transferee by giving notice of his assignment to the 
 bank, before the first transferee does so, does not thereby 
 acquire any priority over the first transferee because to hold 
 otherwise would be to convert the bank into a trustee and to 
 bind it with the notice of a trust. Socie'te Generale de Paris 
 vs. Walker, L.R. n App. Cases, 20 (1885) affirming S.C. in 
 L.R. 14 Q.B.D. 426. 
 
 From the opinions expressed by the Lord Justices in the 
 above case it would seem that section 43 of this Act on this
 
 TRANSFER AND TRANSMISSION OF SHARES. 4H 
 
 point would probably receive a similar interpretation to that 
 placed upon section 30 of the Companies Act, 1862. It 
 will of course be observed that section 44 of this Act evid- 
 ently contemplates the entry of trusts to some extent on the 
 books of the bank. 
 
 Now if a share stands on the books of the bank, earmarked 
 with a trust or, if stands on its books, not so earmarked but 
 the bank has in fact received actual notice that such share is 
 affected by a trust, is it lawful for the bank to allow a transfer 
 of the same, without the concurrence of any one except the 
 person in whose name the share stands in the books of the 
 bank? This is a very important question. It is conceived 
 that the bank will be safe, if the transfer is executed by the 
 person who is the registered shareholder. It has been the 
 universal practice and rightly so, as we think, to act upon 
 transfers so executed. But Mr. Justice Lindley in the case 
 cited in his judgment says : " I have no doubt that if direct- 
 ors allow a transferor to make a transfer which they know to 
 be fraudulent they could be made liable for the value of the 
 shares transferred ; they would make themselves parties to 
 his fraud. Moreover, a refusal by directors, or an omission 
 on their part, to pay attention to a notice'given to them by a 
 person having an equitable interest in shares, and requiring 
 the directors not to register a transfer for such time as may 
 be necessary to allow him time to apply for a proper restrain- 
 ing order, would be prima facie improper. Such conduct on 
 the part of directors, unless explained, would be strong evi- 
 dence of fraud on their part. But this is quite consistent 
 with holding companies not bound to take notice of equitable 
 interests in shares, not followed up by proceedings to restrain 
 a transfer." 
 
 Though a bank is not bound to see to the execution of 
 any trust in regard to its own shares it, like all other persons, 
 is bound by notices of trust in respect of shares which may 
 be accepted by it as collateral security for advances. 
 
 There have been several important cases decided on this 
 point quite recently, In the bank of Montreal vs. Sweeny, 
 L.R. 12 App. Cases 617 (1887), where shares of a Rolling
 
 44 BANKS AND BANKING 
 
 Mill Co. stood in the name of one Rose, in trust, and he 
 transferred the same to the bank as security for a debt which 
 he owed to it, the Privy Council decided that the bank 
 had express notice that, as regards the shares transferred to 
 it, Rose stood to some person in the relation expressed by 
 the words " in trust," and it was the duty of the bank to de- 
 cline to take the shares until it had ascertained that Rose's 
 transfer was authorized by the nature of the trust, and as 
 Rose had no authority to make such a transfer, the bank 
 could not retain the shares against the person proved to be 
 beneficially entitled to them and for whom Rose held them 
 intrust; see also Raphael vs. McFarlane, 18 S.C.R. 183 
 (1890); Petry vs. La Caisse D'Economie, 19 S.C.R. 713 
 (1891). Duggan vs. London & Canadian Loan & Agency 
 Co. 19 O.R. 272 (1890); 18 A.R. 305 (1891); 20 S.C.R. 
 481 (1892) ; Earl of Sheffield vs. London Joint Stock Bank, 
 13 App. Cas. 333 (1888) ; London Joint Stock Bank vs. 
 Simmons, 1892, App. Cas. 201. 
 
 44. No person holding stock in the bank as 
 
 Executors and -i i i r 
 
 trustees not executor, administrator, guardian or trustee, of 
 Cable, or for any person named in the books of the 
 
 bank as being so represented by him, shall be 
 personally subject to any liability as a share- 
 holder, but the estate and funds in his hands 
 shall be liable in like manner and to the same 
 extent as the testator, intestate, ward or person 
 interested in such trust fund would be, if living 
 and competent to hold the stock in his own 
 name ; and if the trust is for a living person, 
 such person shall also himself be liable as a 
 Exception. shareholder ; but if such testator, intestate, 
 ward or person so represented is not so named 
 in the books of the bank, the executor, admin- 
 istrator, guardian or trustee shall be personally
 
 TRANSFER AND TRANSMISSION OF SHARES. 45 
 
 liable in respect of such stock as if he held it in 
 his own name as owner thereof. 
 
 In order to exempt the executor, administrator, guardian 
 or trustee from personal liability under this section, the name 
 of the testator, intestate, ward or person beneficially interest- 
 ed must appear on the books of the bank. After the City of 
 Glasgow Bank failure the personal liability of Trustee Share- 
 holders was brought prominently before the public and led, 
 it is believed, to the adding of this clause to the Bank Act. 
 See Muir vs. City of Glasgow Bank, L R. 4 App. Cas. 43-7 33 
 (1879). 
 
 ANNUAL STATEMENT AND INSPECTION. 
 
 45. At every annual meeting of the share- statement to 
 holders for the election of directors, the out- annual meet 
 going directors shall submit a clear and full 
 statement of the affairs of the bank, containing 
 on the one part, 
 
 The amount of the capital stock paid in, the 
 amount of notes of the bank in circulation, the Liat 
 net profits made, the balances due to other 
 banks, and the cash deposited in the bank, dis- 
 tinguishing deposits bearing interest from those 
 not bearing interest ; and on the other part, 
 
 The amount of the current coin, the gold and 
 
 Assets. 
 
 silver bullion, and the Dominion notes held by 
 the bank, the balances due to the bank from 
 other banks, the value of the real and other 
 property of the bank, and the amount of debts
 
 BANKS AND BANKING 
 
 What state- 
 ment shall 
 show. 
 
 Inspection of 
 books, &c. 
 
 owing to the bank, including and particulariz- 
 ing the amounts so owing upon bills of ex- 
 change, discounted notes, mortgages and other 
 securities, 
 
 Exhibiting, on the one hand, the liabilities 
 of, or the debts due by the bank, and on the 
 other hand the assets and resources thereof; 
 and the said statement shall also exhibit the 
 rate and amount of the last dividend declared by 
 the directors, the amount ot reserved profits at 
 the date of such statement, and the amount of 
 debts due to the bank, over-due and not paid, 
 with an estimate of the loss which will probably 
 accrue thereon. (R.S.C. cap. 120, sec. 24, 
 changed.) 
 
 46. The books, correspondence and funds of 
 the bank shall, at all times, be subject to the 
 inspection of the directors ; but no person, who 
 is not a director, shall be allowed to inspect the 
 account of any person dealing with the bank. 
 (RS.C. cap. 120, sec. 25). 
 
 In an action against the sureties on a bond guarantee- 
 ing the honesty of one M. as cashier, a defence was pleaded 
 by the sureties of neglect of the directors of the bank in not 
 inspecting the books so as to detect any malversation on the 
 part of M. Held, that to sustain this defence the sureties 
 must show connivance or such gross negligence as to warrant 
 the inference of fraud or connivance between the bank and M. 
 
 Exchange Bank vs. Barnes, ) J <>:* 
 T-, , T>I o > 13 A.K 
 
 Exchange Bank vs. Springer, j" ^ S-C 
 
 ** >d '
 
 DIVIDENDS. 47 
 
 DIVIDENDS. 
 
 47. The directors of the bank shall, subject 
 
 to the provisions of this Act, declare quarterly Dmdends - 
 or halfyearly dividends of so much of the profits 
 of the bank as to the majority of them seems 
 advisable ; and they shall give at least thirty 
 days' public notice of the payment of such divi- 
 dends previously to the date fixed for such pay- 
 ment ; and they may close the transfer books 
 during a certain time, not exceeding fifteen 
 days, before the payment of each dividend. 
 (R.S.C. cap. 120, sec. 9 part, sec. 26 part, slight- 
 ly changed). 
 
 The restrictions imposed on directors in connection with 
 the declaration of dividends are contained in the next two 
 sections, viz : Sections 48 and 49. 
 
 48. No dividend cr bonus shall ever be de- 
 
 . , Dividend not 
 
 clared so as to impair the paid-up capital; and j impair 
 if any dividend or bonus is so declared or made 
 payable, the directors who knowingly and wil- 
 fully concur therein shall be jointly and sever- 
 ally liable for the amount thereof as a debt due 
 by them to the bank ; and if any part of the 
 paid-up capital is lost, the directors shall, if all Ca itallogtto 
 the subscribed stock is not paid up, forth with bemadeup 
 make calls upon the shareholders to an amount 
 equivalent to such loss ; and such loss and the 
 calls, if any, shall be mentioned in the next re-
 
 48 BANKS AND BANKING 
 
 turn made by the bank to the Minister of 
 Proviso Finance and Receiver-General : Provided that. 
 in any case in which the capital has been im- 
 paired as aforesaid, all net profits shall be 
 applied to make good such loss. (R.S.C. cap. 
 120, sec. 27). 
 
 When a bank has impaired its paid-up capital by losses it 
 is expressly forbidden by the proviso at the end of the above 
 section to pay any dividend until such impairment has been 
 made good. Consequently, heretofore the bank has generally 
 made application to Parliament to reduce its capital so as to 
 enable it to go on paying dividends. By this Act, however, 
 power is given to the shareholders to reduce the capital of 
 the bank by by-law. See sections 4 and 28. 
 
 49. No division of profits, either by way of 
 P^nfess there dividends or bonus, or both combined, or in any 
 
 is a. certain re- o fa er wa y, exceeding the rate of eight per cent 
 per annum, shall be made by the hank, unless, 
 after making the same, it has a rest or reserve 
 fund equal to at least thirty per cent of its paid- 
 up capital ; and all bad and doubtful debts shall 
 be deducted before the amount of such rest is 
 calculated. (R.S.C. cap, 120, sec. 28, slightly 
 changed).
 
 RESERVES. 49 
 
 RESERVES. 
 
 5O. The bank shall hold not less than forty p art0 f reserve 
 per cent of its cash reserves in Dominion notes ; iS 
 and every bank holding at any time a less 
 amount of its cash reserves in Dominion notes 
 than is prescribed by this section shall incur a 
 penalty of five hundred dollars for each and 
 every violation of the provisions of this section : 
 (R.S.C. cap. 120, sec. 39 part, slightly changed). anee - 
 
 2. The Minister of Finance and Receiver 
 General shall make such arrangements as are supply of 
 necessary for insuring the delivery of Dominion notTs" 110 
 notes to any bank, in exchange for an equival- 
 ent amount of specie, at the several offices at 
 which Dominion notes are redeemable, in the 
 cities of Toronto, Montreal, Halifax, St. John, 
 N.B., Winnipeg, Charlotte town and Victoria, 
 respectively ; and such notes shall be redeem- 
 able at the office for redemption of Dominion 
 notes in the place where such specie is given in 
 exchange. (R.S.C. cap. 120, sec. 39, ss. 2 
 added to). 
 
 As to issue and payment of Dominion notes generally, see 
 Revised Statutes of Canada, cap. 31.
 
 50 
 
 BANKS AND BANKING 
 
 NOTE ISSUE. 
 
 51. The bank may issue and re-issue notes 
 
 Amount and payable to bearer on demand and intended for 
 
 ot bak n note". circulation ; but no such note shall be for a sum 
 
 less than five dollars, or for any sum which is 
 
 not a multiple of five dollars, and the total 
 
 amount of such notes, in circulation at any time, 
 
 shall not exceed the amount of the unimpaired 
 
 paid-up capital of the bank : (R.S.C. cap. 120 V 
 
 sec. 40, changed) . 
 
 Note issue of 
 Banque an 
 People and 
 Bank of Bri- 
 tish North 
 America. 
 
 2. Notwithstanding anything contained in 
 the next preceding sub-section, the total 
 amount of such notes in circulation at any time 
 of La Banque du Peuple and the Bank of Brit- 
 ish North America respectively shall not exceed 
 seventy -five per cent of the unimpaired paid-up 
 capital of such banks respectively, but each of 
 such banks may issue such notes in excess of the 
 said seventy-five per cent upon depositing, with 
 respect to such excess, with the Minister of 
 Finance and Receiver General, in cash or bonds 
 of the Dominion of Canada, an amount equal to 
 the excess ; provided always that in no case 
 shall the total amount of the notes of either of 
 the said banks in circulation at any time exceed 
 the unimpaired paid-up capital of such bank ; 
 and the cash or bonds so deposited shall be 
 available by the Minister of Finance and 
 Receiver General for the redemption of notes 
 issued in excess as aforesaid, in the event of the
 
 NOTE ISSUE. 51 
 
 suspension of the said banks respectively : 
 (New). 
 
 3. If the total amount of the notes of the 
 
 IT , . . . . -iii Penalties for 
 
 Dank in circulation at any time exceeds the excess of cir- 
 
 ~ culation. 
 
 amount authorized by this section, the bank 
 shall incur penalties as follows : If the amount 
 of such excess is not over one thousand dollars, 
 a penalty equal to the amount of such excess ; 
 if the amount of such excess is over one thous- 
 and dollars and is not over twenty thousand 
 dollars, a penalty of one thousand dollars; if 
 the amount of such excess is over twenty thous- 
 and dollars and is not over one hundred thous- 
 and dollars, a penalty of ten thousand dollars ; 
 if the amount of such excess is over one hun- 
 dred thousand dollars and not over two hundred 
 thousand dollars, a penalty of fifty thousand 
 dollars; and if the amount of such excess is 
 over two hundred thousand dollars, a penalty of 
 one hundred thousand dollars: (R.S.C. cap. 
 120, sec. 40, ss. 2, changed.) 
 
 4. All notes heretofore issued or re-issued by Notes under *s 
 the bank, and now in circulation, which are for 
 
 a sum less than five dollars, or for a sum which 
 is not a multiple of five dollars, shall be called 
 in and cancelled as soon as practicable. (R.S.C. 
 cap. 120, part of sec. 40.) 
 
 52. The bank shall not pledge, assign, or pledgingo , 
 hypothecate its notes ; and no advance or loan tes probibit " 
 made on the security of the notes of a bank
 
 52 
 
 BANKS AND BANKING 
 
 pledging? 01 * 
 
 
 or taking of 
 
 notes. 
 
 shall be recoverable from the bank or its assets : 
 (New). 
 
 This sub-section strikes at and prohibits the creation of 
 preferences by the transfer of blocks of bank notes by the 
 bank officers by way of pledge or assignment or hypotheca- 
 tion. 
 
 2. Every person who, being the president, 
 vice-president, director, principal partner en 
 commandite, general manager, manager, cashier, 
 or other officer of the bank, pledges, assigns, or 
 hypothecates, or authorizes, or is concerned in 
 the pledge, assignment or hypothecation of the 
 notes of the bank, and every person who accepts, 
 receives or takes, or authorizes or is concerned 
 in the acceptance or receipt or taking of such 
 notes as a pledge, assignment or hypothecation, 
 shall be liable to a fine of not less than four 
 hundred dollars and not more than two thous- 
 and dollars,, or to imprisonment for not more 
 than two years, or to both: (New). 
 
 3. Every person who, being the president, 
 vice-president, director, principal partner en 
 
 7 . . . . 
 
 commanaite, general manager, manager, cashier, 
 or other officer of a bank, with intent to de- 
 fraud, issues or delivers, or authorizes or is con- 
 cerned in the issue or delivery of notes of the 
 bank intended for circulation and not then in 
 circulation, and every person who, with know- 
 ledge of such intent, accepts, receives or takes, 
 or authorizes or is concerned in the accept- 
 ance, receipt or taking of such notes, shall be 
 guilty of a mis-demeanor, and liable to im-
 
 NOTE ISSUE. 53 
 
 prisonment for a term not exceeding seven 
 years, or to a fine not exceeding two thousand 
 dollars, or to both. (New.) 
 
 The currency of this country consisting substantially of 
 the notes of chartered banks, this act contains several provi- 
 sions for increasing the circulating power thereof and in the 
 event of the insolvency of the bank for ensuring the payment 
 of the same. (See sees. 53, 54, 55, 56.) These provisions 
 it is believed will prove sufficient for the purpose, but they 
 were only designed to ensure payment of notes bonS fide in 
 circulation and performing the functions of currency or 
 money. 
 
 53. The payment of the notes issued or re- 
 issued bv the bank and intended for circulation, N' 
 
 * . 7 charge on 
 
 and then in circulation, together with any interest assets< 
 paid or payable thereon as hereinafter provided, 
 shall be the first charge upon the assets of the 
 bank in case of its insolvency; and the payment 
 of any amount due to the Government of Canada, 
 in trust or otherwise, shall be the second 
 charge upon such assets ; and the payment of 
 any amount due to the Government of any 
 of the Provinces, in trust or otherwise, shall be 
 the third charge upon such assets: (R.S C. 
 cap. 1*20, sec. 79, added to.) 
 
 In cases of insolvency of the bank this section makes the 
 " notes in circulation " a first charge upon its assets and 
 then declares that the Dominion Government's indebtedness 
 shall be the second charge and the Provincial Government's 
 indebtedness the third charge. The priority of Crown 
 debts on the bank's assets now depends on this legislation. 
 See cases on this question decided prior hereto Exchange 
 Bank vs. Queen (Quebec) L.R., n. App. Cas. 157 (1886)
 
 54 BANKS AND BANKING 
 
 Queen vs. Bank of Nova Scotia (P.E.I.) n S.C.R. i (1885), 
 Liquidators Maritime Bank vs. Queen (N.B.) 17 S.C.R. 657 
 (1889). (This last case deals with moneys held in trust by 
 the Crown as represented by the Dominion Government.) 
 Liquidators Maritime Bank vs. Queen (N.B.) App. Cas., 
 (1892). 
 
 2. The amount of any penalties for which the 
 bank is liable shall not form a charge upon the 
 *' assets of such bank, in case of its insolvency, 
 until all other liabilities are paid. (New.) 
 
 Existing banks 
 
 54. Every bank to which this Act applies, 
 and which is carrying on its business at the time 
 
 posit with the . -in-i- 
 
 Minister of when this Act coines into force, shall, within 
 
 Finance equal 
 
 cen\ v oVnote fifteen days thereafter, pay to the Minister of 
 Finance and Receiver General, a sum of money 
 equal to two and one-half per cent, of the aver- 
 , age amount of its notes in circulation during 
 the twelve months next preceding the date of 
 the coming into force of this Act, or if such 
 bank has not been in operation for twelve 
 months, a sum of money equal to two and one- 
 half per cent, of the average amount of its notes 
 in circulation during the time it has been in 
 operation ; and each bank shall, within fifteen 
 days, from and after the first day of July, in 
 the year one thousand eight hundred and 
 ninety-two, pay to the Minister of Finance and 
 Receiver General such further sum of money 
 as is necessary to make the total amount so 
 paid by each bank to be a sum equal to five per 
 cent, of the average amount of its notes in cir-
 
 NOTE ISSUE. 55 
 
 culation during the twelve months next pre- 
 ceding the date last mentioned, which sum 
 shall be adjusted annually as hereinafter pro- 
 vided : (New.) 
 
 2. The Merchants' Bank of Prince Edward 
 
 As to Mer- 
 
 Island shall, on or before the day upon which $ a p 
 it becomes subject to the provisions of this Act, 
 pay to the Minister of Finance and Receiver 
 General such sum as appears to the satisfaction 
 of the Treasury Board to be equal to two and 
 one-half per cent, of the average amount of its 
 notes in circulation during the then preceding 
 twelve months ; and shall further pay to the 
 Minister of Finance and Receiver General, 
 within fifteen days from and after the first day 
 of July in the year then next following, such 
 further sum as is necessary to make the total 
 sum paid by the said bank to be a sum equal 
 to five per cent, of the average amount of its 
 notes in circulation from the time the said bank 
 became subject to the provisions of this Act to 
 the said first day of July, which sum shall be 
 adjusted annually as hereinafter provided : 
 (New.) 
 
 3. The Minister of Finance and Receiver 
 General shall, upon the issue of a certificate banks n 
 under this Act authorizing a bank to issue notes 
 and commence the business of banking, retain 
 out of any moneys of such bank then in his 
 possession the sum of five thousand dollars, 
 which sum shall be held for the purposes of this
 
 56 
 
 BANKS AND BANKING 
 
 Formation of 
 circulation 
 redemption 
 fund. 
 
 fund to bear 
 interest. 
 
 section, until the annual adjustment hereundor 
 takes place in the year then next following, 
 at which time the amount at the credit of the 
 bank shall be adjusted by payment to or by the 
 bank of such sum as is necessary to make the 
 amount at the credit of the bank to be a sum of 
 money equal to five per cent, of the average 
 amount of its notes in circulation from the time 
 it commenced business to the time of such Ad- 
 justment, which sum shall be adjusted an- 
 nually as hereinafter provided : (New.) 
 
 4. The amounts so paid, retained, and 
 kept on deposit as aforesaid shall form a fund to 
 be known as " The Bank Circulation Redemp- 
 tion Fund," which fund shall be held for the 
 following purpose, and for no other, namely : 
 In the event of the suspension by the bank of 
 payment in specie or Dominion notes of any of 
 its liabilities as they accrue, for the payment of 
 the notes then issued or re-issued by such bank, 
 and intended for circulation, and then in circu- 
 lation, and interest thereon ; and the Minister 
 of Finance and Receiver General shall, with 
 respect to all notes paid out of the said fund, 
 have the same rights as any other holder of the 
 notes of the bank : (New. ) 
 
 5. The fund shall bear interest at the rate of 
 three per cent^ per annum, and it shall be ad- 
 justed, as soon as possible after the thirtieth 
 day of June in each year, in such a way as to 
 make the amount at the credit of each bank
 
 NOTE ISSUE. 57 
 
 contributing thereto, unless herein otherwise 
 specially provided, equal to five per cent, of the 
 average note circulation of such bank during the 
 then next preceding twelve months : ( New. ) 
 
 6. The average note circulation of a bank 
 
 . * , Note circula- 
 
 dunng any period shall be determined from the *!rmel de ~ 
 average of the amount of its notes in circulation, 
 as shown by the monthly returns for such period 
 made by the bank to the Minister of Finance 
 and Receiver General ; and where, in any re- 
 turn, the greatest amount of notes in circula- 
 tion at any time during the month is given, 
 such amount shall, for the purposes of this 
 section, be taken to be the amount of the notes 
 of the bank in circulation during the month to 
 which such return relates : (New.) 
 
 7. In the event of the suspension by the Notes of bank 
 bank of payment in specie or Dominion notes pyment n to 
 
 .,,.,.,... ., . near interest 
 
 of any of its liabilities as they accrue, the notes 
 of such bank, issued or re-issued and intended 
 for circulation, and then in circulation, shall 
 bear interest at the rate of six per cent, per 
 annum, from the day of such suspension to 
 such day as is named by the directors, or by 
 the liquidator, receiver, assignee or other pro- 
 per official, for the payment thereof, of which 
 day notice shall be given by advertisement for 
 at least three days in a newspaper published in 
 the place in which the head office of the bank 
 is situate ; but in case any notes presented for 
 payment on or after any day named for pay-
 
 58 BANKS AND BANKING 
 
 ment thereof are not paid, all notes then un- 
 paid and in circulation shall continue to bear 
 interest to such further day as is named for 
 payment thereof, of which day notice shall be 
 given in manner above provided : Provided 
 if not redeem- always, that in case of failure on the part of 
 
 ed to be paid * . . 
 
 out of fund the directors of the bank, or of the liquidator, 
 receiver, assignee or other proper official, to 
 make arrangements within two months from 
 the day of suspension of payment by the bank 
 as aforesaid for the payment of all its notes and 
 interest thereon, the Minister of Finance and 
 Receiver General may thereupon, make arrange- 
 ments for the payment of the notes remaining 
 unpaid, and all interest thereon, out of the 
 said fund, and shall give such notice of such 
 payment as he thinks expedient, and on the 
 day named by him for such payment all interest 
 on such notes shall cease, anything herein con- 
 tained to the contrary notwithstanding ; but 
 
 Proviso. nothing herein contained shall be construed to 
 impose any liability on the Government of Can- 
 ada or on the Minister of Finance and Receiver 
 General beyond the amount available from 
 time to time out of the said fund : (New.) 
 
 8. All payments made from the said fund shall 
 Payments De without regard to the amount contributed 
 
 from fund to be 
 
 to Sunt e !on- thereto by the bank in respect of whose notes 
 the payments are made ; and in case the pay- 
 ments from the fund exceed the amount contri- 
 buted by such bank to the fund, and all 
 interest due or accruing due to such bank there-
 
 NOTE ISSUE. 59 
 
 on, the other banks shall, on demand, make 
 good to the fund the amount of such excess, pro 
 rota to the amount which each bank has at that 
 time contributed to the fund ; and all amounts 
 recovered and received by the Minister of Fin- 
 ance and Receiver General from the bank on 
 whose account such payments were made shall, 
 after the amount of such excess has been made 
 good as aforesaid, be distributed among the 
 banks contributing to make good such excess 
 pro rata to the amount contributed by each : 
 Provided always, that each of such other banks Proviso, 
 shall only be called upon to make good to the 
 said fund its share of such excess, in payments 
 not exceeding in any one year one per cent of 
 the average amount of its notes in circulation, 
 such circulation to be ascertained in such man- 
 ner as the Minister of Finance and Receiver 
 General decides; and his decision shall be 
 final : (New.) 
 
 9. In the event of the winding up the busi- Repayment of 
 
 riii n i amount if bank 
 
 ness ot a bank by reason 01 insolvency or is wound up. 
 otherwise, the Treasury Board may, on the ap- 
 plication of the directors, or of the liquidator, 
 receiver, assignee or other proper official, and on 
 being satisfied that proper arrangements have 
 been made for the payment of the notes of the 
 bank and any interest thereon, pay over to such 
 directors, liquidator, receiver, assignee or other 
 proper official, the amount at the credit of the 
 bank, or such portion thereof as it thinks ex- 
 pedient : (New.)
 
 60 BANKS AND BANKING 
 
 10. The Treasury Board may make all such 
 Bolnfmay re- rules and regulations as it thinks expedient 
 agemenTof with reference to the payment of any moneys 
 
 fund. . r J J J 
 
 out of the said fund, and the manner, place and 
 time of such payments, the collection of all 
 amounts due to the said fund, all accounts to be 
 kept in connection therewith, and generally 
 the management of the said fund and all mat- 
 ters relating thereto : (New.) 
 
 Enforcement 11. The Minister of Finance and Receiver 
 
 of payment. . . 
 
 General may, in his official name, by action in 
 the Exchequer Court of Canada enforce pay- 
 ment (with costs of action) of any sum due 
 and payable by any bank under the provisions 
 of this section. (New.) 
 
 All the provisions of this section are new. They provide 
 for the formation of a safety fund, called " The Bank 
 Circulation Redemption Fund," created for the purpose of 
 ensuring the speedy redemption of the notes of any insol- 
 vent bank bona fide in circulation at the time of the suspen- 
 sion of payment by such bank. 
 
 Not*s of bank **** ^ ne ^ an k shall make such arrangements 
 at par p tHSlgh- as are necessary to ensure the circulation at par 
 ^ a ' in any and every part of Canada of all notes 
 issued or re-issued by it and intended for circu- 
 lation ; and towards this purpose the bank shall 
 establish agencies for the redemption and pay- 
 ment of its notes at the cities of Halifax, St. 
 John, Charlotte town, Montreal, Toronto, Win- 
 nipeg and Victoria, and at such other places as 
 are, from time to time, designated by the Trea- 
 sury Board. (New.)
 
 NOTE ISSUE. 61 
 
 56. The bank shall always receive in pay- Redemption o 
 ment its own notes at par at any of its offices, 
 
 and whether they are made payable there or 
 not : (R.S.C. cap. 120, sec. 41, part.) 
 
 2. The chief place of business of the bank Pa . yab ie at 
 shall always be one of the places at which itsbSstLsa 3 * 6 
 notes are made payable. (R.S.C. cap. 120, sec. 
 41, ss. 2.) 
 
 57. The bank, when making any payment, 
 
 shall, on the request of the person to whom DoSPnion " 
 
 * notes. 
 
 the payment is to be made, pay the same, or 
 such part thereof, not exceeding one hundred 
 dollars, as such person requests, in Dominion 
 notes for one, two or four dollars each, at 
 the option of such person : Provided always, 
 that no payment, whether in Dominion notes Tom or de- 
 
 ' 1-1 -ii i facednotes. 
 
 or bank notes, shall be made in bills that are 
 torn or partially defaced by excessive handling. 
 (R.S C. cap. 120, sec. 42, with proviso added. ) 
 
 58. The bonds, obligations and bills, obliga- 
 tory or of credit, of the bank under its corpor- f^owa'Sl 
 ate seal, and signed by the president or vice- m 
 president and countersigned by a cashier or as- 
 sistant cashier, which are made payable 
 
 to any person, shall be assignable by endorse- 
 ment thereon ; and bills or notes of the bank 
 signed by the president, vice-president, cashier 
 or other officer appointed by the directors of 
 the bank to sign the same, promising the pay-
 
 Proviso : 
 
 62 BANKS AND BANKING 
 
 ment of money to any person or to his order, or 
 to the bearer, though not under the corporate 
 seal of the bank, shall be binding and obliga- 
 tory on it in like manner and with the like 
 force and effect as they would be upon any 
 private person, if issued by him in his private 
 or natural capacity, and shall be assignable in 
 like manner as if they were so issued by a 
 private person in his natural capacity : Pro- 
 mweriiay be vided always, that the directors of the bank 
 
 deputed to 
 
 may, from time to time, authorize, or depute any 
 cashier, assistant cashier or officer of the bank, 
 or any director other than the president or 
 vice-president, or any cashier, manager or local 
 director of any branch or office of discount and 
 deposit of the bank, to sign the notes of the 
 bank intended for circulation. (R.S.C. cap. 
 120, sec. 43.) 
 
 Notesmaybe 59. All bank notes and bills of the bank 
 whereon the name of any person intrusted or 
 authorized to sign such notes or bills on behalf 
 of the bank is impressed by machinery provided 
 for that purpose, by or with the authority of 
 the bank shall be good and valid to all intents 
 and purposes as if such notes and bills had been 
 subscribed in the proper handwriting of the 
 person intrusted or authorized by the bank to 
 sign the same respectively, and shall be bank 
 notes and bills within the meaning of all laws 
 and statutes whatever, and may be described as 
 bank notes or bills in all indictments and civil
 
 NOTE ISSUE. 63 
 
 or criminal proceedings whatsoever : Provided 
 always, that at least one signature to each note j t b? nature 
 or bill must be in the actual handwriting of a w 
 person authorized to sign such note or bill. 
 (R.S.C. cap. 120, sec. 44, with proviso added.) 
 
 6O. Every person, except a bank to which penalty for un 
 
 .-, -,. i . ^ - i authorized 
 
 this Act applies, who issues or re-issues, makes, issue of notes 
 
 5 r . ' for circulation 
 
 draws, or indorses any bill, bond, note, cheque 
 or other instrument, intended to circulate as 
 money, or to be used as a substitute for money, 
 for any amount whatsoever, shall incur a pen- 
 alty of four hundred dollars, which shall be re- 
 coverable with costs, in any court of competent 
 jurisdiction, by any person who sues for the 
 same ; and a moiety of such penalty shall belong 
 to the person suing for same, and the other 
 moiety to Her Majesty for the public uses of 
 Canada. (R.S.C. cap 120, sec. 83, ss. 1.) 
 
 This section is intended to secure to Banks and the Gov- 
 ernment the exclusive privilege of issuing and circulating 
 bank notes as money. 
 
 2. The intention to pass any such instrument 
 as money shall be presumed, if it is made for deemed such 6 
 
 J , . 1 notes. 
 
 the payment of a less sura than twenty 
 dollars, and is payable either in form or in fact 
 to the bearer thereof, or at sight, or on demand, 
 or at less than thirty days thereafter, or is over- 
 due, or is in any way calculated or designed for 
 circulation, or as a substitute for money ; unless 
 such instrument is a cheque on some chartered
 
 64 BANKS AND BANKING 
 
 bank paid by the maker directly to his im- 
 mediate creditor, or a promissory note, bill of 
 exchange, bond or other undertaking for the 
 payment of money, paid or delivered by the 
 maker thereof to his immediate creditor, and is 
 not designed to circulate as money or as a substi- 
 tute for money, (R.S.C. cap. 120, sec. 83, ss. 2.) 
 
 61. Every person who in any way defaces 
 
 notes? 6 " any Dominion or Provincial note or bank note, 
 
 whether by writing, printing, drawing or stamp- 
 
 ing thereon, or by attaching or affixing thereto, 
 
 anything in the nature or form of an adver- 
 
 Penaity. tisement, shall be liable to a penalty not exceed- 
 
 ing twenty dollars. (New.) 
 
 G2. Every officer charged with the receipt 
 counterfeit or disbursement of public moneys, and every 
 
 and fraudulent _ , . , 
 
 notes to be officer of any bank, and every person acting as 
 
 stamped as J '. * 
 
 such. or employed by any banker, shall stamp or 
 
 write in plain letters the word "' counterfeit," 
 "altered" or " worthless," upon every counter. 
 feit or fraudulent note issued in the form of a 
 Dominion or bank note, and intended to circu- 
 late as money, which is presented to him at his 
 place of business ; and if such officer or person 
 wrongfully stamps any genuine note he shall, 
 upon presentation, redeem it at the face value 
 thereof. (New. Taken from the Criminal 
 Law, 50 and 51 Viet., cap. 47, sec. 1.)
 
 NOTE ISSUE. 65 
 
 G3. Every person who designs, engraves, N O adv 
 
 T , ment, &c., to 
 
 prints or in any manner makes, executes, ut- i>e issued in 
 
 . J , . ' the form of a 
 
 ters, issues, distributes, circulates or uses any note 
 business or professional card, notice, placard, 
 circular, hand-bill or advertisement in the like- 
 ness or similitude of anv Dominion or bank 
 note, or any obligation or security of any Gov- 
 ernment, or of any bank, is liable to a penalty 
 of one hundred dollars or to three months' im- 
 prisonment, or to both. (New. Taken from 
 the Criminal Law, 50 and 51 Viet , cap. 47, sec. 
 2, slightly changed.) 
 
 BUSINESS AND POWERS OF THE BANK. 
 
 64. () The bank may open branches, agencies Branches and 
 and offices, and may engage in and carry on af 
 business as a dealer in gold and silver coin and 
 bullion, and it may deal in, discount, and lend 
 money and make advances upon the security of, 
 and may take as collateral security for any loan 
 made by it, bills of exchange, promissory notes 
 and other negotiable securities, or the stock, 
 bonds, debentures and obligations of municipal 
 and other corporations, Avhether secured by 
 mortgage or otherwise, or Dominion, Provincial, 
 British, foreign and other public securities, 
 and it may engage in and carry on such busi- 
 ness generally as appertains to the business of 
 banking; (b) but, except as authorized by this 
 Act, it shall not, either directly or indirectly, deal
 
 66 BANKS AND BANKING 
 
 in the buying, or selling, or bartering of goods, 
 wares and merchandise, or engage or be 
 engaged in any trade or business whatsoever ; 
 and it shall not, either directly or indirectly, 
 purchase, or deal in, or lend money, or make 
 advances upon the security or pledge of any 
 share of its own capital stock, or of the capital 
 stock of any bank ; and it shall not, either 
 directly or indirectly, lend money or make ad- 
 vances upon the security, mortgage, or hypothe- 
 cation of any land, tenements, or immovable 
 property, or of any ships or other vessels, or 
 upon the security of any goods, wares and mer- 
 chandise. 
 
 (a.) This section is a combination with some changes of 
 several sections and parts of sections of the Repealed Act 
 R.S.C. Cap. 120, viz: sections 45, 46, 59 and 60. 
 
 POWERS OF THE BANK. 
 
 The first part of the section, after giving power to open 
 branches, agencies and offices, expressly authorizes the bank 
 
 (1) to carry on business as a dealer in gold and silver coin 
 and bullion : 
 
 (2) To deal in /'Bills of Exchange and 
 
 (3) To discount 
 
 (4) To lend money and make 
 advances upon the security of 
 
 (5) And to take as collateral 
 security for any loan made by it 
 
 Promissory Notes and 
 other negotiable securi- 
 ties or the stock, bonds, 
 debentures and obliga- 
 tions of municipal and 
 
 other Corporations 
 whether secured by mort- 
 gage or otherwise, or 
 Dominion, Provincial, 
 British, Foreign and other 
 public securities. 
 
 (6) and to engage in and carry on such business as generally 
 
 appertains to the business of banking.
 
 BUSINESS AND POWERS OF THE BANK 67 
 
 The previous acts did not in express and positive terras 
 confer many of the above powers on banks, but banks were 
 nevertheless held to have some of them by implica- 
 tion. For example in the case of Jones vs. The Imperial 
 Bank, 23 Gr. 269 (1876) an attempt was made, by means of 
 an injunction, to prevent the Imperial Bank from purchasing, 
 from the Water Commissioners of the City of Toronto, cer- 
 tain debentures of the City of Toronto. It was contended, 
 by the applicants for the injunction, that section 60 of R.S.C. 
 c. 120, by implication, gave power to the bank only to lend 
 money on this class of debentures, that there was no express 
 power to purchase such debentures and by implication, aris- 
 ing from the provisions of said section 60, the bank was pre- 
 vented from purchasing as distinguished from lending money 
 upon the same. Mr. Justice Proudfoot, however, after dis- 
 cussing very fully the meaning of the word " discount," and 
 citing several authorities giving definitions of it, held that the 
 dealing in bonds was covered by the words of exception con- 
 tained in section 45 of the same statute, viz : " except as a 
 " dealer in ... Bills of Exchange, discounting of Pro- 
 "missory Notes and negotiable securities and in such trade 
 "generally as appertains to the business of banking ; " at page 
 274, he thus summarizes his opinion, "The con- 
 " elusion which seems to me deducible from these 
 " acts is that the business of banking consists in dealing in 
 " money, the precious metals, and in bonds and negotiable 
 " securities ; that this dealing confers the power of lending on 
 " them or of purchasing them, whichever the bank directors 
 " may deem most for the advantage of the corporation and 
 '' that whether to buy cr lend is a matter of internal manage- 
 " ment which the directors may determine;" and at page 270 
 he says : " To discount a negotiable security is to buy 
 
 " it at a discount or to lend money on 
 
 " its security." 
 
 See also Grant on banking (1884) p. 291, where 
 it is laid down that " where a banker discounts a bill 
 for a customer, giving him credit for the amount of the bill 
 and debiting him with the discount, there is a complete pur-
 
 *>8 BANKS AND BANKING 
 
 chase of the bill by the banker in whom the whole property 
 and interest vest as much as in any chattel he possesses. A 
 banker discounting a bill, whether for a customer or a 
 stranger, there being no indorsement by the customer or 
 stranger and the bill not being given in payment of an ante- 
 cedent debt, is a mere purchaser and on the bankruptcy of 
 the acceptor has no recourse against the party from whom he 
 took it." 
 
 By the present act the powers of the bank do not rest on 
 implication but are conferred in express terms. The bank 
 is authorized expressly " to deal in " the securities mentioned 
 in clause 64. This would clearly authorize the bank to buy 
 or sell any of such securities. It must be noticed that power 
 is also given, as well to make advances and lend money upon 
 such securities, as to take them as security for past loans. 
 The bank cannot, however, lend money on the ordinary bank 
 notes, see sec. 52. 
 
 As to what comes within the definition of the business of 
 banking See Abbott's Dig. Corp. p. 56 and Quirt vs. Queen 
 19 S.C.R. 510 (1891) and the cases there refened to. 
 
 LIMITATIONS ON THE POWER OF THE BANK. 
 
 () The second part of section 64 commencing with the 
 words, " but except as authorized by this Act," is in restric- 
 tion of the powers of the bank. 
 
 It is conceived that the words " except as authorized by this 
 act" are intended to be read before the words, "it shall not," 
 wherever they subsequently occur in this section. 
 
 Assuming this construction to be correct then : 
 
 Firstly : a bank is forbidden, except as authorized by this 
 act " either directly or indirectly to deal in the buying or 
 " selling or bartering of goods, wares and merchandise or en- 
 "gage or be engaged in any trade or business whatsoever.' 
 
 It is to be observed, that by this part of the clause, banks 
 are prohibited only from dealing in the buying or selling or 
 bartering of goods, wares or merchandise, it would therefore 
 seem most probable that banks may, owing to special cir- 
 cumstances or for reasons which could not have been fore- 
 seen or anticipated, acquire and sell, or dispose of goods,
 
 BUSINESS AND POWERS OF THE BANK 69 
 
 wares or merchandise and for that purpose engage to some 
 extent in business other than banking. Thus, if a bank were 
 to acquire a valid security, say on a mill and a stock of lum- 
 ber and logs, and [afterwards, owing to the inability of the 
 debtor to pay his indebtedness, were to duly obtain an abso- 
 lute title to the property, it seems to us that the bank could, 
 under such circumstances, proceed to sell the lumber and to 
 convert the saw logs into lumber, if that would make them 
 more valuable for sale, and for this purpose to work the mill. 
 This appears to be the result of the English and American 
 authorities on the subject. See Sacketts Head Bank vs: 
 Lewis Bank, n 'Barb., 43. Brice on Ultra Vires, p. 210. 
 
 In Quebec, too, it has been held in the Molson's Bank vs. 
 Kennedy, 10 R.L. no (1879), that where a bank wishing 
 l o guarantee a purchase of goods telegraphs to the sellers 
 " If you send to the M. Bank, Montreal, goods to the amount 
 of jQ purchased by K & Co. about July ist, sending 
 us the bills of lading and documents in time, we will guaran- 
 tee the collection," the bank does not thereby violate the 
 provisions of the Banking Act. 
 
 In Radford vs. the Merchant's Bank of Canada, 3 Ont. R. 
 529 (1883), the facts were as follows : The Agent of the 
 Merchant's Bank at Kingston represented to the plaintiff 
 that the defendants had purchased the business of one A, a 
 manufacturer of horse power machines, and were manufac- 
 turing horse power machines of A's make, and had them for 
 sale, and that he recommended them highly. The plaintiff 
 purchased a machine, and subsequently brought an action 
 against the bank for breach of warranty on the sale of this 
 machine. It appeared in the evidence that A was a debtor 
 of the bank, and having become insolvent, the bank had ac- 
 quired the machines from his assignee. The case was decid- 
 ed on two grounds, but both the judges who decided it ex- 
 pressed the opinion that the bank, being expressly prohibited 
 from buying and selling goods, could not be bound by any 
 warranty, express or implied on their sale. It is true that in 
 this case the bank had improperly acquired the machines 
 (section 69 not authorizing the purchase) and the decision
 
 70 BANKS AND BANKING 
 
 may have been based on that fact ; but, if the machines had 
 been properly acquired say, by a legal and valid mortgage 
 to the bank and thereafter by the extinguishment of the 
 equity of redemption by release under section 70 surely the 
 bank could then sell and dispose of the machines, and if so, 
 why could not it give a warranty on their sale if that would 
 be the most advantageous course to pursue, see also Ex- 
 change Bank vs. Fletcher 19, S.C.R. 278, (1891). 
 
 Secondly : a bank is forbidden, except as authorized by this 
 act, " either directly or indirectly to purchase, deal in or lend 
 " money or make advances upon the security or pledge of 
 '' any share of its own stock or of the stock of any other 
 " bank." This will set at rest all doubt as to the existence 
 of a prohibition in the previous acts against lending money 
 on the stock of other banks [see per Patterson J. in Exchange 
 Bank vs. Fletcher, 19 S.C.R. at p. 284, (1891)]. In the last 
 named case the court held that the prohibition to lend money 
 on the shares of other banks only applied to the bank lend- 
 ing the money and not to the borrower of the money who 
 gave the shares as security, so that on payment of the loan 
 the bank was bound to return the shares or pay their value 
 to the borrower, and this case would still seem to be law 
 under the present Act. 
 
 Although a bank is prohibited from lending money on its 
 own shares it is given a lien thereon for all debts owing by 
 a shareholder ; see sections 35, 38 and 65. 
 
 Thirdly ; a bank is forbidden, except as authorized by this 
 act, " either directly or indirectly to lend money or make ad- 
 " vances upon the security, mortgage or hypothecation of any 
 " land or tenements or immoveable pioperty or of any ships 
 " or other vessels or of any goods, wares or merchandise." 
 
 For the exceptions to the above prohibitions see the sub- 
 sequent clauses of this act from 68 to 79 inclusive. 
 
 The general policy of clause 64, no doubt, is to compel 
 banks to carry on a proper and legitimate banking business 
 and to keep the capital of the banks flowing in the daily 
 channels of commerce and to deter them from locking up 
 their money by lending it or investing it in real estate, or
 
 BUSINESS AND POWERS OF THE BANK 71 
 
 other classes of property which are not easily convertible into 
 cash. 
 
 For an infraction of the provisions of this section a penalty 
 is imposed on the banks by section 79. Supposing a bank 
 enters into a forbidden transaction, lends money on the se- 
 curity of a mortgage on real estate for example, how does the 
 statute affect such a transaction ? Does it merely subject the 
 bank to a penalty and perhaps its charter to possible forfei- 
 ture or does it go further still and also avoid the mortgage 
 security or further still and also make the contract of loan 
 illegal so as to be irrecoverable by the bank ? 
 
 In a recent case on the subject it has been held, that it not 
 only exposes the bank to the penalty, but also avoids the 
 transaction. 
 
 " This prohibition is a law of public policy in the public 
 interest and any transaction in violation thereof is neces- 
 sarily null and void. No court can be called on to give 
 effect to any such transaction, or to enforce any contract or 
 security on which money is lent, or advances, as thus prohi- 
 bited, are made," per Ritchie, C. J., in Bank of Toronto vs. 
 Perkins, 8 S.C.R., 610 (1883). 
 
 In the above extract, the Chief Justice, if correctly re- 
 ported, seems to us to go too far. His judgment would 
 seem to rrnply not only that the mortgage was void, but that 
 the advance which it was given to secure created no valid 
 debt. The other judges who expressed opinions did not go 
 so far. Strong, J., at page 611 of the report says : "All 
 we have to decide is whether a bank making an advance or 
 loan of money on a mortgage of real property in violation 
 of the prohibition contained in the section referred to is not- 
 withstanding entitled to the benefit of the security." 
 
 In the case of Exchange Bank vs. Fletcher, 19 S C.R. 
 278, (1891), it was apparently held that a prohibited trans- 
 action was only avoided as against the bank. That a man 
 who had transferred to the bank shares in another bank as 
 security for a debt could on payment of the debt come into 
 a Court of Justice and demand the return of the shares or 
 the value thereof.
 
 72 BANKS AND BANKING 
 
 There are two cases in the Privy Council both of which 
 are referred to in the Bank of Toronto vs. Perkins, above 
 cited, in which the construction of Bank Charters containing 
 similar prohibitory clauses was much discussed. In the first 
 case, the National Bank of Australasia vs. Cherry, L.R., 3 
 P.C., 299 (1870), Lord Cairns in delivering judgmental p. 307, 
 says : " It appears, therefore, to their lordships that there 
 are considerations of public policy involved in this clause, 
 but it is also true to say, that those considerations of public 
 policy look to and deal with the management of the bank, 
 and have for their object the limitation of the powers and 
 authority of the bank." 
 
 " That being so, and without for the present turning to the 
 facts of this particular case, it would seem to have been the 
 object of the Legislature in this clause, not to make void 
 the contracts for such advances as between the bank and 
 their customers, in the same way that in former times contracts 
 open to the objections of the usury laws were made void, 
 but rather to make it something ultra vires the bank to take, 
 upon the occasion of contracts for those advances, securi- 
 ties of the kind mentioned in this section. And this con- 
 struction of the section would harmonize with what was very 
 properly, as their lordships think, admitted at the bar on be- 
 half of the respondeuts that upon a transaction of the 
 kind described, the contract for the loan of money would be 
 perfectly valid, and the question would be confined to a 
 question as to whether the bank had the power to take the 
 
 security which it took for the advance 
 
 At the time of the advance, and as part of the 
 contract of advance, the bank was not to be at 
 liberty to stipulate for, or to obtain, landed or mercantile 
 security. That is the construction contended for by the Re- 
 spondents, and their Lordships, at all events for the purpose of 
 argument, will assume that it is the proper construction. On 
 the other hand, if there should be an advance made, and a 
 debt incurred and due from the customer to the bank, the 
 bank was to be at liberty to take security for that overdue ad- 
 vance, either in the shape of land or in the shape of 
 merchandise as described in the Act."
 
 BUSINESS AND POWERS OF THE BANK 73 
 
 In the second case, Ayers vs. The South Australian Bank- 
 ing Co., L.R. 3 P.G., 548, (1871), Lord Justice 
 Mellish in the course of delivering the judgment of the 
 Privy Council and in answer to the argument 
 founded on a clause in the charter declaring that it shall 
 not be lawful for the bank to make advances on merchandise 
 says at p. 559: "There may be also question whether, 
 under any circumstances, the effect of violating such a pro- 
 vision is more than this, the Crown may take advantage of 
 it as a forfeiture of the charter, but the only point which it 
 appears to their Lordships is necessary to be determined in 
 the present case is this, that whatever effect such a clause 
 may have, it does not prevent property passing, either in 
 goods or in lands, under a conveyance or instrument which, 
 
 under the ordinary circumstances of law, would pass it 
 
 Their Lordships are of opinion, that whatever other effect it 
 has, it cannot have the effect of preventing the property pass- 
 ing. If that were otherwise, the consequences might be 
 most lamentable, because if the property never passed to 
 them, they could not themselves convey any property to 
 third persons. Transactions of the most honest description 
 might be set aside. They might do what is a very common 
 thing, make advances and take Bills of Exchange with the 
 Bills of Lading attached. If it is to be said that the proper- 
 ty in the goods mentioned in the Bill of Lading does not 
 pass to them, then any purchaser to whom they might sell 
 the goods under the Bill of Lading would get no title, and 
 the original owner who had received the full proceeds of the 
 goods, or a large advance upon them, might say, ' Oh, the 
 property never passed to the South Australian Bank, and there- 
 fore it never passed to you.' Counsel for the appellantsadmitted 
 that he could find no authority for the proposition, that any 
 violation of such a condition of a charter would prevent the 
 property in goods passing to the person to whom an instru- 
 ment otherwise valid professed to pass it, and their Lordships 
 are of opinion, that whatever sffect the violation of such a 
 condition may have, it has not the effect of preventing the 
 property in the goods passing, or of preventing an action of 
 Trover being maintained if there is a wrongful conversion.''
 
 74 BANKS AND BANKING 
 
 See also Bank of New South Wales vs. Campbell L.R. n 
 App. Cases 192 (1886). 
 
 It has been decided here, and in the United States, that it 
 a mortgage of lands be given to a bank to secure indebted- 
 ness previously incurred, and also advances then made on 
 the security of such mortgage, such mortgage is not void in 
 toto, but constitutes a good and valid security to the bank to 
 the extent of the pre-existing indebtedness, if the amount 
 thereof can be clearly shewn. See the following cases 
 
 Commercial Bank vs. Bank of U. C. 7 Gr. 430 (1859). 
 
 Kansas Valley National Bank vs. Powell, 2 Dill. C.C. 371. 
 
 Allen vs. First National Bank of Xenia, 23 Ohio St. R. 97. 
 
 It has also been decided in the National Bank of Australasia 
 vs. Cherry, above cited, and also in the Commercial Bank vs. 
 Bank of Upper Canada, above cited, that though the taking 
 by the bank of a mortgage on real estate, to secure an advance 
 made on such security, would be ultra vires and invalid, the 
 advance itself would create a valid debt and consequently, 
 the bank could acquire a valid charge on the same property, 
 to secure re-payment of the same debt, by a mortgage subse- 
 quently given by the debtor to the bank ; accord also, Grant 
 vs. La Banque Nationale, 9 O.R. 411, (1885). It does not 
 seem to us, that the law is quite settled yet, in regard to the 
 consequences of an infraction by the bank of the provisions 
 of this act in relation to taking securities. At present the 
 law in Canada appears to be, that the act not only imposes a 
 penalty on the bank for lending money or making advances 
 upon the security of real estate, &c., but also renders invalid 
 the secuiity so taken. We do not think any thing further 
 than this has been decided. 
 
 EFFECT OF TRAFFICKING IN SHARES ON THE LIABILITY 
 OF A SHAREHOLDER. 
 
 In the winding up of the Central Bank, some shareholders 
 objected to be placed on the list of contributories, on the 
 ground that the bank had been trafficking in its own shares, 
 and that the shares in question had been acquired in the 
 course of such traffic and transferred to the cashier of the 
 bank, in trust for the bank, by and through whom they had
 
 BUSINESS AND POWERS OF THE BANK 75 
 
 been transferred to or acquired by the contributories. Held, 
 assuming these facts to be true, that though this might give 
 the contributories a right to rescind, during the currency of 
 the banking institution, they were of no moment after the 
 rights of creditors represented by the liquidators arose. The 
 matter was not an absolute nullity, but at most, one which 
 the shareholders could waive as voidable, and it became, by 
 the suspension, of unimpeachable validity as between these 
 contributories and the liquidators. In the matter of the 
 Central Bank of Canada, Baine's case Nasmith's case 16 
 Ontario Reports 293, (1888), 16 Ont. App. R. 237, (1889), 
 18 Ont. App. R. 209 (1891). 
 
 A shareholder having been placed on the list of contribu- 
 tories, in the winding up proceedings of the Central Bank, in 
 respect of certain shares owned by him at the time of the 
 suspension of the bank, appealed on the ground that the 
 transfer of his shares was a fraudulent transaction, since, in 
 violation of the provisions of the bank act R.C.S., cap 120, 
 sec. 45 (now sec. 64), the bank had been trafficking in its own 
 shares, for the purpose of keeping up the appearance of bona 
 fide sales and so increasing the market price of its shares, and 
 had taken the appellant's promissory notes in payment for 
 his shares, undertaking not to enforce such notes, but to de- 
 liver therri up upon a re-sale of the shares being effected, 
 which transactions were ultra vires of the bank. Held, that 
 this was no defence as against the liquidators, who represent- 
 ed the creditors as well as the bank. Re Central Bank J. 
 D. Henderson's case, 17 O.R. no (1889). 
 
 " Goods, wares and merchandise " for the meaning of 
 these words, see sec. 2, ss. 3, and the notes to sec. 73. 
 
 65. The bank shall have a privileged lien, for Bank to have 
 any debt or liability for any debt to the bank, tor"s shares. 
 on the shares of its own capital stock and on 
 any unpaid dividends of the debtor or person 
 liable, and may decline to allow any transfer of 
 the shares of such debtor or person until such
 
 76 
 
 BANKS AND BANKING 
 
 Sale of 
 shares. 
 
 Notice. 
 
 Transfer in 
 case of sale. 
 
 debt is paid ; and the bank shall, within twelve 
 months after such debt has accrued and become 
 payable, sell such shares, and notice shall be 
 given to the holder thereof of the intention of 
 the bank to sell the same, by mailing such no- 
 tice in the post office to the last known address 
 of such holder, at least thirty days prior to such 
 sale ; and upon such sale being made the presi- 
 dent, vice-president, manager or cashier shall 
 execute a transfer of such shares to the pur- 
 chaser thereof in the usual transfer book of the 
 bank, which transfer shall vest in such pur- 
 chaser all the rights in or to such shares which 
 were possessed by the holder thereof, with the 
 same obligation of warranty on his part as if he 
 were the vendor thereof, but without any war- 
 ranty from the bank or by the officer of the 
 bank executing such transfer. (R.S.C. cap. 120 ? 
 sec. 59, changed). 
 
 This section now makes it the duty of the bank to sell the 
 shares on which it is given a lien within 12 months after the 
 debt, secured by such lien, has become payable otherwise 
 the section is substantially the same as it was in the repealed 
 act. 
 
 In the case of Cook vs. Royal Canadian Bank, 20 Gr., 
 i (1873), it was held under the law as it then stood, that 
 the bank had a lien on the stock of any debtor for overdue 
 debts, and could refuse to allow a transfer of such stock un- 
 til such overdue debts were paid. At page 12, Vice-Chan- 
 cellor Blake uses the following language : " I am of opinion 
 that a statement by the bank of the amount for which stock 
 is held on account of past due liabilities, without any further 
 representation, or any agreement in respect thereof, does not 
 bind it at a future day to accept such sum where other lia-
 
 BUSINESS AND POWERS OF THE BANK 77 
 
 bilities incurred at the time the inquiry was made, have 
 meanwhile matured and remain unpaid." 
 
 Since this judgment was delivered sections 19 and 51 of 
 34 Vic., c. 5, have been repealed and new sections, from 
 time to time, substituted therefor, and a clause has been 
 added to what is now section 45. The sections which now 
 deal with the question of the bank's lien are sections 35, 38 
 and 65 and from their language we think that they give the 
 bank a lien for all debts owing to it, as well those " owing 
 and payable," as those "owing but not payable." This pre- 
 sent section now provides that the bank shall have a privi- 
 leged lien for any debt or liability for any debt to the bank, 
 (not saying as the repealed section of 34 Viet., cap. 5, sec. 
 51, did " for any overdue debt"), and may decline to allow 
 any transfer of shares till such debt is paid. Having regard 
 therefore to this change of language, we are inclined to think 
 that the bank, under the present act, has a lien on the stock 
 of a debtor for all current as well as matured debts. See on 
 this point Stockton vs. Malleable Iran Co., L.R. 2 Ch Div. 
 101 (1875). See also Reese vs. The Bank of Commerce, 14 
 Md. 271. Angell & Amos on Corporations (1882) sees. 
 
 571-574- 
 
 In addition to the above lien the banker, by the common 
 law, would, it is conceived, have a general lien for the general 
 balance due by the customer on all bills and negotiable 
 instruments and perhaps other securities handed by the 
 customer to the banker generally ; that is, without specific 
 appropriation, for the purpose of being realized or collected 
 and the proceeds carried into the account of the customer. 
 The lien does not extend to securities handed to the banker 
 for safe-keeping or for the purpose of being dealt with in a 
 specific manner. See \Valker on Banking Law p. 185. 
 
 66. The stock, bonds, debentures or securi- Collateral 
 ties, acquired and held by the bank as collateral jgSSS& 
 
 , f ,, , , , , dealt with. 
 
 security, may, in case ot default to pay the debt, 
 for securing which they were so acquired and 
 held, be dealt with, sold and conveyed either
 
 78 BANKS AND BANKING 
 
 in like manner and subject to the same restric- 
 tions as are herein provided in respect of stock 
 of the bank on which it has acquired a lien under 
 this Act, or in like manner as and subject to 
 the restrictions under which a private in- 
 dividual might in like circumstances deal with, 
 sell and convey the same, but without obliga- 
 tion to sell the same within twelve mouths : 
 (R.S.C. cap. 120j sec. 60, ss. 2, in part with ad- 
 dition.) 
 
 All the words of this section after the words " this Act " 
 are new. They give additional powers of sale to the bank. 
 By the law of England if personal property is pledged to 
 secure a debt payable at a fixed time, if the debt is not paid 
 at such time then the pledgee has a right to sell the pro- 
 perty pledged in order to have his debt. If there is no 
 time fixed for the payment of the debt the pledgee has a 
 right upon request to insist upon prompt payment thereof, 
 and in default thereof the pledgee upon reasonable demand 
 and notice to pledgor may sell the property pledged for the 
 purpose of satisfying the debt.^&0 
 
 2. The right so to deal with and dispose of 
 such stock, bonds, debentures or securities in 
 manner aforesaid may be waived or varied by 
 any agreement between the bank and the 
 owner of such stock, bonds, debentures or se- 
 curities, made at the time at which such debt was 
 incurred, or if the time of payment of such debt 
 has been extended, then by an agreement made 
 at the time of such extension. (R S.C. cap. 120. 
 sec. 60, ss. 2 part.)
 
 BUSINESS AND POWERS OF THE BANK 79 
 
 67. The bank may acquire and hold real and Real estate -.or 
 
 ^ A occupation. 
 
 immovable property for its actual use and occu- 
 pation and the management of its business, and 
 may sell or dispose of the same, and acquire 
 other property in its stead for the same purpose. 
 (R.S.C. cap. 120, sec. 47.) 
 
 68. The bank may take, hold and dispose of Mortgages 
 mortgages and hypolheques upon real or personal, security! 
 immovable or movable property, by way of addi- 
 tional security for debts contracted to the bank 
 
 in the course of its business ; and the rights, 
 powers and privileges which the bank is by this 
 Act declared to have or to have had in respect 
 of real or immovable property mortgaged to it, 
 shall be held and possessed by it in respect of 
 any personal or movable property which is mort- 
 gaged or hypothecated to it. (R.S.C. cap. 120, 
 sec. 48 with slight additions). 
 
 The only change in this section is the addition of the 
 words " immovable and movable " wherever they occur 
 therein. 
 
 Section 64 in substance enacts that the bank shall not 
 " except as authorized by this Act," either directly or 
 indirectly, lend money or make advances upon the security 
 or mortgage of lands, or of goods, wares or merchandize. 
 
 The present section, therefore, is one of the enabling sec- 
 tions referred to in section 64 and authorizes the bank to 
 acquire security on real and personal property under the 
 limitations herein imposed. 
 
 MORTGAGES MAY BE TAKEN FOR " DEBTS CONTRACTED." 
 
 It will be observed that the bank is authorized to take and 
 hold mortgages on real or personal property only by way of 
 additional security for "debts contracted to the bank, in the 
 course of its business"
 
 80 BANKS AND BANKING 
 
 Supposing a bank agrees to discount a note, can it take 
 security for the debt thereby contracted co-temporaneously 
 with the discount of the note ? Opinions have been ex- 
 pressed that if the bank really advances money on the secur- 
 ity of a note or bill (and this is a question of fact to be 
 determined on a consideration of all the circumstances of 
 each case), it may co-temporaneously with such advance 
 validly take a mortgage as collateral security to secure repay- 
 ment thereof. Whenever this is done, however, it will 
 always be a question of fact, whether the money was not 
 really advanced on the mortgage and the note created merely 
 to give color and lend the appearance of legality to the trans- 
 action. It would, therefore, be extremely dangerous for a 
 bank to make an advance on negotiable paper and at the 
 same time take a mortgage as collateral security for repay- 
 ment thereof. There are numerous cases on this section. 
 Only two will be cited at any length, as they really appear to 
 contain a full exposition of the proper interpretation of the 
 clause. 
 
 In the Commercial Bank vs. Bank of U.C., 7 Or., 430, 
 decided in 1859 (and in the court below, 7 Gr. 250) Chief 
 Justice Robinson, at page 430, thus discusses the question 
 now under consideration : " It is quite true that whenever 
 the money is advanced, whether it be just before or at the 
 time of making the mortgage, then there is literally a debt 
 due but . not a debt contracted in the course of the 
 business of the bank that is, of its legitimate and proper 
 business, which the lending money upon mortgage of real pro- 
 perty certainly cannot be, until the statutes are repealed or 
 altered. When it is shewn that the mortgage in any case 
 was taken by a bank ' as an additional security for a debt 
 contracted to it in the course of its business,' then the ques- 
 tion occurs whether that can only be taken to mean a debt 
 that had been previously incurred with it in the course of its 
 business, or whether a mortgage may not be taken as addi- 
 tional security for a debt that had no previous existence, but 
 which the bank were about to allow a party to contract, by 
 advancing him money at that time, in the proper course of 
 their business ; as, for instance, if any merchant had brought
 
 BUSINESS AND POWERS OF THE BANK 81 
 
 to the bank, on the 2ist of May, 1855, for discount, a bill 
 drawn by Henry Bull, jr., on Bull Brothers, and accepted by 
 the latter, could the bank properly have taken a mortgage 
 from either party to the bill, or from the person who brought 
 it and got the money, to secure them the money which they 
 advanced upon the bill ? That is not this case, and I shall 
 only therefore say, that, as the words of the statute are not 
 against it, so I think it might, perhaps, be held that the spirit 
 and intention of the Act are not opposed to it ; and that a 
 mortgage so taken might be upheld, when it appears that the 
 mortgage was really and in truth taken to secure the transac- 
 tion upon the bill, and not that the bill was created for the 
 mere purpose of upholding and giving color to the mortgage. 
 That would be a question of fact, upon which the conclusion 
 that a jury might come to would be in general so uncertain 
 that I dare say the banks will not think it prudent to risk 
 their money on a real security in any such case, where the 
 nature of the transaction might appear to be at all equivocal 
 so long, I mean, as the present statutes continue in force." 
 In the case of the Royal Canadian Bank vs. Cummer, 15 
 Gr., p. 627 (decided in 1869), the late Chief Justice Spragge 
 (then Vice-Chancellor) in his judgment said, at p. 631 : 
 " take the simple fact of deposit by way of security by the 
 debtor of a bank, to a bank, there being a debt, and there 
 being further advances contemplated but not yet made, a 
 deposit for the debt due would be lawful ; but a deposit by 
 way of security, against which the bank customer might draw, 
 would be against the law ; and the law upon this point is so 
 well known to bankers that they would hardly be likely to 
 transgress it." 
 
 In the Bank of Toronto vs. Perkins, 8 S.C. R. 603 
 (decided in 1883), Chief Justice Ritchie in his opinion uses 
 the following language : " I agree with Chief Justice Dorion 
 that the transfer made to the appellants of a mortgage to 
 secure an advance on a promissory note discounted at the 
 same time that the transfer was made, was on the part of the 
 bank in violation of the Banking Act, a clumsy attempt at 
 evasion of the 34th Vic., ch. 5, sec. 40, which enacts that 
 4 the bank shall not, either directly or indirectly, lend money
 
 82 BANKS AND BANKING 
 
 or make advances upon the security, mortgage or hypotheca- 
 tion of any lands and tenements ' " 
 
 Strong, J., in his opinion in the same case uses the follow- 
 ing language : " We must therefore take the transaction to 
 have been a mortgage given, not to secure a past debt, but 
 to cover a contemporaneous loan, and therefore void under 
 the statute." 
 
 Gwynne, J., after citing Chief Justice Robinson's opinion 
 above given in the case of the Commercial Bank vs. Bank of 
 Upper Canada, proceeds as follows : " Now, I do not desire 
 to call in question any part of the opinion of the learned 
 Chief Justice as here expressed as to the validity of a mort- 
 gage bona fide given or assigned to a bank by way of collat- 
 eral security for an advance made by the bank upon regular 
 business paper, or in the ordinary course of their business as 
 bankers, concurrently with the giving or assigning to them of 
 a mortgage upon lands as additional security, or to express 
 any opinion upon that point, inasmuch as sitting here as a 
 juror, and having the duty imposed upon me of finding the 
 facts in the case, I have been unable to bring my mind to 
 the conclusion that this is such a case ; on the contrary, the 
 conviction formed in my mind by the facts is that the trans- 
 action between Bunnell and the bank, of the igth January, 
 1876, was primarily based upon the security of the mortgages 
 upon real estate assigned to the bank by the deed of that 
 date. That the note for $26,000 recited in that deed had 
 not then been, if ever it was, in fact, discounted or agreed to 
 be discounted as an ordinary banking transaction. A note 
 made by one payable to his own order twelve months after 
 date is not ordinary business paper ; that the note did not 
 then constitute any debt due from Bunnell to the bank, that 
 k was not made for the purpose of being discounted by them 
 in the ordinary course of their business as bankers, but was 
 given existence for the mere purpose of upholding and giving 
 golor to the assignment of the mortgages, the whole having 
 been assigned, and contrived for the purpose of evading the 
 statute, and the mortgages were not assigned really and in 
 truth to secure an independent banking transaction on the 
 note. . . . Upon the whole, therefore, as I have
 
 BUSINESS AND POWERS OF THE BANK 83 
 
 said, I can come to no other conclusion than that the note 
 was given existence for the sole purpose of upholding and 
 giving color to the mortgage and its transfer, which latter 
 contained a false recital of a debt due for the purpose of 
 eluding a discovery of the true nature of the transaction." 
 
 The meaning of the words " debts contracted " was very 
 much considered and discussed by Mr. Justice Story in the 
 case of Carver v. Braintree, 2 Story, C.C., at page 448. He 
 thought it was not a violent construction of the statute to 
 read these words as equivalent to " liabilities incurred." In 
 the French law the terms debtor and creditor are applied to 
 the parties who contract any species of obligation. Pothier, 
 vol. i, p. 74. 
 
 AS TO THE PRESUMPTION IN FAVOR OF VALIDITY OF A 
 TRANSACTION. 
 
 In the case of The Royal Canadian Bank v. Cummer, 15 
 Gr., 627 (1869), there being a doubt whether the mortgage 
 in question was intended to secure future advances only, 
 or to secure all past indebtedness as well as future advances, 
 the court decided in favor of the bank, on the ground 
 that where there is a doubt the presumption should be that 
 the transaction was in conformity with the statute, and so 
 legal, the maxim being omnia presummunter rite esse acta. 
 
 AS TO THE APPLICATION OF PAYMENTS WHERE MORTGAGES 
 ARE INTENDED AS CONTINUING SECURITY, &C., AND AS 
 TO THE EFFECT ON THE SECURITY OF THE RENEWAL 
 OF THE PAPER REPRESENTING THE IN- 
 DEBTEDNESS. 
 
 As to the construction of mortgages given under this 
 section, as a continuing security to secure an indebtedness, 
 where the indebtedness has been changed but not reduced 
 in amount, see Cameron v. Kerr, 3 Ont. App. R. 30 (1878)* 
 In this case, after the mortgage was given the mortgagors' 
 line of discount was increased, but no separate account of 
 the liabilities secured by the mortgage and the further 
 advances was kept, the proceeds of the discounts and cash
 
 84 BANKS AND BANKING 
 
 deposits being carried to the mortgagors' credit in one open 
 current account, against which they drew cheques and retired 
 the notes secured by the mortgage as they matured. The 
 mortgagors became insolvent on the i2th August, 1875, 
 their indebtedness in the meantime never having been 
 really reduced below the amount of the mortgage debt. 
 Held, affirming the judgment of Blake, V.C., that 
 this mode of keeping the accounts had not operated as 
 a discharge of the morlgage debt. See also Merchant's 
 Bank v. Moffatt, 5 Ont. R., 122 (1883) and n S.C R., 46 
 (1885). In Dominion Bank v. Oliver, 17 Ont. R., 402 
 (1889) it was held by Chancellor Boyd that "Where a bank, 
 holding a mortgage as additional security for the payment of 
 certain notes, substitutes for these notes renewals from time 
 to time, without, however, receiving actual payment, the 
 whole series of notes and renewals form links in one and the 
 same chain of liability, which is secured by the mortgage, 
 although, as a matter of book-keeping the bank may have 
 treated the first notes, and the subsequent substituted notes 
 as paid by the application of the proceeds, from time to time, 
 of the renewals." 
 
 RIGHTS AND POWERS OF BANK OVER PERSONAL PROPERTY 
 MORTGAGED TO IT. 
 
 By this section the bank is declared to have the same 
 rights, powers and privileges in respect of " personal property 
 mortgaged to it as it possesses in respect of real property 
 mortgaged or hypothecated to it." For the powers which 
 the bank has in respect of real property mortgaged or 
 hypothecated to it, see sections 70 and 71. 
 
 In Thompson v. Molsons Bank, 16 S.C.R., 664 (1889), 
 the Supreme Court of Canada held, that when an advance is 
 made on a warehouse receipt, the bank may stipulate that 
 any surplus moneys, arising from a sale by the bank of the 
 goods covered by such warehouse receipt, after payment 
 of such advance, may be applied in payment of other 
 indebtedness owing to the bank and existing at the time of 
 the making of such advance.
 
 BUSINESS AND POWERS OF THE BANK 85 
 
 See also the following cases, and the cases therein cited, 
 onthe construction of this section generally : McDonell v. 
 Bank of Upper Canada, 7 U. C. Q. B. 252 (1850). Bank 
 of Upper Canada v. Killaly, 21 U.C.Q.B. 9 (1861). Bank 
 of Montreal v. McVvhirter, 17 U. C. C. P. 513 (1867). 
 Molson's Bank v. McDonald, 2 Ont. A. R. 102 (1877), 
 affirming S. C. 40 U. C. Q. B, 529. Merchants' Bank v. 
 Bostwick, 3 Ont. A.R, 24 (1878), and Grant v. La Banque 
 Nationale, 9 Ont. R. 411 (1885), which was a case of a 
 pledge of a timber limit in Quebec, wherein the construc- 
 tion of section 28 of The Quebec Timber Regulations 
 arose. 
 
 TECHNICAL DEFECTS IN SECURITY. 
 
 Can a Liquidator under the Winding-up Act, (R.S.C., 
 cap. 129,) or an assignee under the Ontario Act respecting 
 assignments (R.S.O. 1887, cap. 124,) object to the 
 want of registration or other formal defects in the security ? 
 See in Re Rainy Lake Lumber Co., 15 Ont. App. R. 749, 
 (1888), Burland vs. Moffat, n S.C.R- 76 (1885), Porteous 
 vs. Reynar, L.R, 13 App. Cas. 120 (1887), Robinson vs. 
 Cook, 6 Ont. R., 590 (1884), Tennant vs. Union Bank, 19 
 Ont. App. R. (1892). 
 
 HOLDING NOTES AS COLLATERAL SECURITY. 
 
 A bank holding notes of other persons as collateral secur- 
 ity for a customer's debt is bound to use reasonable diligence 
 in collecting the same, and if loss ensues the bank is liable 
 to the customer to the extent of the loss occasioned by its 
 want of diligence. Ryan vs. McConnell, 18 Ont. R. 409 
 (1889). 
 
 BENEFIT OF SECURITY. 
 
 The bank sometimes gets the benefit of a security without 
 expressly stipulating for it. Thus in a recent case it appears 
 that a tradesman sold goods to customers, taking promissory 
 notes for the price, and also hire receipts, by which the pro-
 
 86 BANKS AND BANKING 
 
 perty remained in him until full payment thereof was made, 
 and that the notes were discounted through the medium of 
 a third person by the Central Bank, and it further appeared 
 that the bank was made aware, when the line of discount was 
 opened, of the course of dealing and of the securities held, 
 but was not put in actual possession of the securities and 
 there was no express contract in regard to them. Neverthe- 
 less, in an action by the bank to recover the securities or 
 their proceeds from the assignee for creditors of the trades- 
 man, it was held, that the securities were accessory to the 
 debt ; that in equity the transfer of the notes was a transfer of 
 the securities ; that the defendant was in no higher position 
 than his assignor, and could not resist the claim to have 
 the receipts accompany the notes ; and that it was not mater- 
 ial that the relation of assignor and assignee did not immedi- 
 ately exist between the tradesman and the Central Bank. 
 Central Bank vs. Garland, 20 Ont. R. 142 (1890), 18 A. 
 R. 438 (1891). 
 
 69. The bank may purchase any lands or 
 real or immovable property offered for sale under 
 
 execution, &c. . . . . , 1,1 i 
 
 execution, or in insolvency, or under the order 
 or decree of a court, as belonging to any debtor 
 to the bank,\pr offered for sale by a mortgagee or 
 other encumbrancer having priority over a mort- 
 gage or other encumbrance held by the bankjor 
 , offered for sale by the bank under a power of 
 sale given to it for that purpose, in cases in 
 which, under similar circumstances, an indi- 
 vidual could so purchase, without any restric- 
 tion as to the value of the 'property which it 
 may so purchase, and may acquire a title there- 
 to as any individual purchasing at sheriff's sale, 
 or under a power of sale, in like circumstances, 
 could do, and may take, have, hold and dispose 
 of the same at pleasure. (R.S.C. cap. 120, sec. 
 49, slightly changed and added to).
 
 BUSINESS AND POWERS OF THE BANK 87 
 
 This section apparently enables the bank to purchase 
 " lands or real or immovable property," (i) offered for sale 
 under execution or (2) in insolvency or (3) under the order or 
 decree of a court, as belonging to a debtor of the bank, or 
 (4) offered for sale by a mortgagee or other incumbrancer 
 having priority over a mortgage or other encum- 
 brance held by the bank. (This power is an additional one 
 given by this Act). (5) or offered for sale by the bank under 
 a power of sale given to it for that purpose, in cases when, in 
 similar circumstances, an individual could so purchase (By 
 English law a mortgagee selling cannot purchase he cannot 
 occupy the antagonistic positions of seller and buyer at the 
 same time.) 
 
 By the conjoint operation of this section, as it now reads, 
 and sec. 68 the bank, holding an incumbrance on personal or 
 moveable property, could purchase the same if offered for 
 sale by a mortgagee or other incumbrancer having a prior 
 incumbrance thereon ; the last mentioned section declaring 
 that the rights, powers and privileges which the bank is by 
 this Act declared to have or to have had in respect of real 
 property mortgaged to it, shall be held or possessed by it, in 
 respect of any personal property which is mortgaged or 
 hypothecated to it. 
 
 7O The bank may acquire and hold an Absolute ti 
 
 . . , maybeac- 
 
 absolute title in or to real or immovable quired. 
 property mortgaged to it as security for a debt 
 due or owing to it, either by obtaining a release 
 of the equity of redemption in the mortgaged 
 property, or by procuring a foreclosure, or by 
 other means whereby, as between individuals, 
 an equity of redemption can, by law, be barred, 
 and may purchase and acquire any prior mort- 
 gage or charge on such property: Provided Provigo:8ale 
 always, that no bank shall hold any real or 
 immovable property, howsoever acquired, ex-
 
 88 BANKS AND BANKING 
 
 cept such as is required tor its own use, for any 
 period exceeding seven years from the date of 
 the acquisition thereof. (R S.C. cap. 120, sec. 
 50, slightly changed). 
 
 See also sections 69 and 71. 
 
 Banks are entitled to a decree of foreclosure upon mort- 
 gages held by them as additional security. Bank of Upper 
 Canada v. Scott, 6 Chy., 451 (1858). 
 
 It will be observed that, under this section, the power of 
 the bank to acquire an absolute title or to acquire a prior 
 charge is restricted to " real or immovable property." The 
 latter part of section 68, however, provides that the bank 
 shall have the same rights, powers and privileges in respect 
 of personal property, mortgaged or hypothecated to it, as by 
 the Act it is declared to have over real estate mortgaged to 
 it. 
 
 The construction of a statute of a similar character, 
 though not in identical language, will be found in the Bank 
 of New South Wales v. Campbell, L. R. n, App. Cas., 192, 
 (1886). 
 
 WHAT IS THE EFFECT OF THE PROVISO TO ABOVE SECTION ? 
 
 The proviso is as follows : 
 
 " Provided always, that no bank shall hold any real or im- 
 " movable property howsoever acquired, except such as is 
 " required for its own use, for any period exceeding seven 
 " years from the date of the acquisition thereof." 
 
 Under the En&lish Common Law corporations had power 
 to take and hold lands just as natural persons had. By a 
 series of Statutes known as the Mortmain Acts, and which 
 have been held to be in force in Ontario, corporations, though 
 not prevented from taking lands, were forbidden from hold- 
 ing the same without a license in mortmain from the Crown 
 under pain of forfeiture of the lands (in this country) to the 
 Crown. As only the power of holding the lands was pro- 
 hibited by these statutes, it followed that grancs of land to
 
 BUSINESS AND POWERS OF THE BANK 89 
 
 corporations were good so as to pass the lands to them, but 
 so soon as such lands were taken by the corporations without 
 a license in mortmain from the Crown, the lands became 
 liable to be forfeited to the Crown. We do not know 
 exactly what the law of Quebec is as to the holding of lands 
 in mortmain by corporations. The Quebec law of mortmain 
 was under discussion in the Chaudiere Gold Mining Com- 
 pany v. Desbarats, L. R. 5, P. C. 277, (1873) and it would 
 appear from that case that the French Law of mortmain is 
 not identical with the English. 
 
 The construction of this proviso would have to be the 
 same in all the Provinces, for as Mr. Justice Patterson 
 recently observed in the Enchange Bank v. Fletcher, 19 
 S.C.R. 288 (1891), "The Banking Act must receive the 
 ' same construction in all parts of the Dominion, what it 
 '' allows or prohibits in Quebec it must allow or prohibit in 
 all the other provinces. If the article (of the Code) 
 " enunciates a rule of law peculiar to one province which 
 " is to govern in that province the operation of this Statute, 
 " each province may also establish a rule of interpretation to 
 " prevail within its borders, and the uniformity of the law on 
 " this important branch of trade and commerce, which was 
 " to be secured by confiding it to the exclusive legislative 
 " jurisdiction of the Dominion Parliament, will be in peril." 
 
 It is submitted that the breach of the proviso would ex- 
 pose the bank to the penalty prescribed by sec. 79. If the 
 breach were wilful and long continued it might be regarded 
 as an abuse of the corporate powers of the bank, and might 
 form the foundation of proceedings for a forfeiture of the 
 Charter. The land might also become forfeitable to the 
 Crown, this however is doubtful and has not been decided 
 so far as we know. We have only been able to 
 find two cases in Ontario in which the effect of a 
 clause of this character has been under discussion. 
 The first is, London & Canadian Loan & Agency Co., vs, 
 Graham, 16 Ont., R. 329 (1888), the second is, McDairmid 
 vs. Hughes, 16 Ont., R. 570 (1888), in which the clause 
 there in question is somewhat similar in its language to the
 
 90 BANKS AND BANKING 
 
 above proviso. The statute in question in the second of these 
 two cases, after giving the Williams Mfg. Co. power to acquire 
 and hold lands, goes on to say, " and the company may retain 
 the whole or any part thereof, for a period not exceeding five 
 years." 
 
 The Chief Justice in his judgment in this case says at 
 page 5 76: 
 
 " It seems that under these statutes an alienation in mort- 
 " main is voidable only, and not void, and that in this Pro- 
 " vince where lands are held in free and common socage, 
 " the lands so aliened can only be forfeited by the Crown, 
 " and that only after office found. See Grant on Corpora- 
 " tions, p. 98; Green's Brice's Ultra Vires, p. 12 ; Becher 
 " vs. Woods, 16 C.P. 29 (1865); Sheldon on Mortmain, p. i ; 
 " Hallockvs. Wilson, 7 C.P. 28 (1857) ; Brown vs. McNab, 
 " 20 Gr. 179(1873) ; Vigersv. St. Paul's, 14 Q.B. 909 (1849). 
 " I am of opinion therefore, that the defendant cannot 
 " take advantage of the statutes of mortmain as against the 
 " alienation by Dawson to the company ; but that the Crown 
 " alone can take advantage of them." 
 
 Mr. Justice Street in his judgment after reviewing and 
 discussing the statutes of mortmain proceeds as follows 
 at page 580 : 
 
 " The law under which the national banks in the United 
 " States are constituted contains a similar provision to this, 
 " but I have been unable to find any express decisions as to 
 " its effect. A somewhatsimilar question is discussed in Baird 
 " vs. The Bank of Washington, n Serg. & Rawle, 411, where 
 " the opinion is expressed that even if the grantees, who had 
 ' taken a conveyance in satisfaction of a debt, had no right 
 " to hold the property conveyed, it would not therefore 
 " follow that the acquittance of the debt would be cancelled, 
 " and the land revert to the grantor, but rather that the 
 " rights of the parties to the conveyance, inter se, would be 
 " preserved, leaving to the state the right to take advantage 
 " of the defective title of the grantees. See also Leazure vs. 
 " Hillegas, 7 Serg. & Rawle, 313. This view of the law is 
 " approved in Morse on Banks and Banking, 3rd ed. sec. 754, 
 : ' where these cases are cited and commented upon. In my
 
 BUSINESS AND POWERS OF THE BANK 91 
 
 " opinion the same consideration should govern the stipula- 
 " tions in this statute which limits the right of the company 
 " to hold for five years. The title of the company became 
 u defeasible by the Crown after the land had been retained 
 " beyond that period, and may be defeasible still on the 
 
 " ground of the limitation in the statute ; 
 
 " but I can find no authority for the proposition that the 
 " title of the company, ipso facto, terminated at the expiia- 
 " tion of five years from the passing of the Act, or the com- 
 " mencement of their holding of the property ; and I am, 
 " therefore, of opinion that their conveyance to the plaintiff 
 " was effectual to pass to him the title which they held, sub- 
 " ject to any right of entry or defeasance which the Crown 
 " might possess." 
 
 If the Crown should intervene to forfeit the land, the loss 
 occasioned would have to be borne by the bank alone ; see 
 Morse on Banking, s. 74, and Baird vs. Bank of Washington, 
 ii Serg. & Rawle, 411. 
 
 71. Nothing in any charter, Act or law shall 
 
 * Title to lands 
 
 be construed as ever having prevented or as 
 preventing the bank from acquiring and hold- 
 ing an absolute title to and in any such mortgaged 
 real or immovable property, whatever the value 
 thereof is, or from exercising or acting upon 
 any power of sale contained in any mortgage 
 given to it or held by it, authorizing or enabling 
 it to sell or convey away any property so 
 mortgaged. CR..S.C. cap. 120 s. 51, changed 
 slightly.) 
 
 See also section 70. 
 
 Section 70 expressly authorizes the bank to get in the title 
 to mortgaged land and immovables by forclosure, or release, 
 or by any other means whereby, as between individuals, an 
 equity of redemption can by law be barred. The present
 
 92 BANKS AND BANKING 
 
 section after again authorizing this to be done, without any 
 limitation as to the value of the property, further expressly 
 authorizes the bank to exercise powers of sale contained in 
 mortgages. 
 
 AS to advances ?'* Every bank advancing money in aid of 
 sh r ips m( the building of any ship or vessel shall have 
 the same right of acquiring and holding security 
 upon such ship or vessel, while building and 
 when completed, either by way of mortgage, 
 hypotheque, hypethecation, privilege, or lien 
 thereon, or purchase or transfer thereof, as 
 individuals have in the Province wherein such 
 ship or vessel is being built, and for that 
 purpose may avail itself of all such rights and 
 means of obtaining and enforcing such security, 
 and shall be subject to all such obligations, limit- 
 ations and conditions as are, by the law of such 
 Province, conferred or imposed upon individuals 
 making such advances. (R S.C. cap. 120, sec. 
 52.) 
 
 This would appear to enable the bank to take security for 
 future, as well as past, advances when made in aid cf the 
 building of any ship or vessel. It is no doubt intended to 
 promote and encourage the ship-building industries ot the 
 Dominion 
 
 "73. The bank may acquire and hold any 
 
 Warehouse re- ... 
 
 tak^as a coHa warehouse receipt or bill of lading as collateral 
 security. secur ity for the payment of any debt incurred 
 in its favor in the course of its banking business ; 
 and the warehouse receipt or bill of lading so 
 acquired shall vest in the bank, from the date 
 of the acquisition thereof, all the right and title
 
 BUSINESS AND POWERS OF THE BANK 5^3 
 
 of the previous holder or owner thereof, or of 
 the person from whom such goods, wares and 
 merchandise were received or acquired by the 
 bank, if the warehouse receipt or bill of lading 
 is made directly in favor of the bank, instead of 
 to the previous holder or owner of such goods, 
 wares and merchandise. (R.S.C cap. 120, sec. 
 53, ss. 2.) 
 
 This section and the five following ones are generally 
 known as the Warehouse Receipt Clauses of the Bank Act. 
 They were passed, no'doubt, for the purpose of increasing the 
 purchasing power of the capital employed in mercantile 
 business, by enabling merchants and manufacturers to obtain 
 advances on their goods whilst on hand or in transit and 
 awaiting sale. For a short review of the previous legislation 
 on this subject, see the judgment of Burton, J., in Smith vs. 
 Merchants Bank, 8 Ont.,A.R. at page 19 (1883.) Through the 
 instrumentality of warehouse receipts, acquired in the manner 
 prescribed, the bank is, in effect, authorized to make advances 
 or loans on the security of goods, wares and merchandise. 
 
 CONSTITUTIONALITY. 
 
 The constitutionality of the warehouse receipt clauses has 
 been questioned. By the B. N. A. Act the Parliament of 
 Canada has exclusive legislative power over Banks and 
 Banking. It is contended that these clauses have nothing to 
 do with " Banks and Banking," but deal with " Property and 
 Civil Rights," one of the subject matters which by the B. 
 N. A. Act are assigned exclusively to the legislative authority 
 of the Provincial Legislatures. The Supreme Court of 
 Canada has, however, decided in favor of the constitutional- 
 ity of these clauses, being of opinion that the Dominion 
 Parliament, having power to legislate.on the subject matter of 
 Banking, might, in the legitimate exercise of that power, say 
 that banks might take warehouse receipts as collateral secur
 
 94 BANKS AND BANKING 
 
 ity for the repayment of advances made, even though inci- 
 dentally such legislation might interfere with " Property and 
 Civil Rights in the Provinces." Merchants Bank of Canada 
 vs. Smith, 8 S.C.R. 512 (1884) See also on this point 
 Dupuy vs. Gushing, L.R. 5 App. Cas. 409 (1880). In the 
 case of Tennant vs. Union Bank, 19 Ont., R. i. (1892) 
 now under appeal to the Privy Council, the question of con 
 stitutionality was again formally raised in the Court below 
 so that it might be discussed in the argument of the case in 
 the Privy Council. 
 
 " WAREHOUSE RECEIPT." 
 
 The expression warehouse receipt used in the above 
 clause is defined in sect. 2, ss. (d) as follows : 
 
 " (d). The expression " warehouse receipt " means any 
 " receiptgiven by any person for any goods, wares, or merchan- 
 " disc, in his actual, visible and continued possession, as 
 " bailee thereof, in good faith, and not as of his own property, 
 " and includes receipts given by any person who is the owner 
 " or keeper of a harbor, cove, pond, wharf, yard, warehouse, 
 " shed, storehouse or other place for the storage of goods, 
 " wares or merchandise, for goods, wares and merchandise 
 " delivered to him as bailee and actually in the place, or in 
 " one or more of the places o^uned or kept by him, whether 
 " such person is engaged in other business or not ;" 
 
 The above definition of a warehouse receipt differs, to 
 some extent, from the one in the preceeding act, R.S,C., 
 cap. 120, sec. 2, ss. (b). The words in italics have been 
 added and the words " aho specification of timber " have 
 been omitted from the end of the clause. 
 
 The definition of " warehouse receipt " was first intro- 
 duced into the Bank Act by 43 Vic. Cap. 22 sec. 7. It is 
 generally supposed that it was framed to meet the difficulties 
 caused by a series of decisions in Ontario, ending in the 
 cases of the Merchants Bank v. Smith, 8 S.C.R. 512 (1884), 
 and Milloy v. Kerr, 8 S.C.R. 474 (1880), deciding that 
 under the section corresponding nearly to section 73 of this
 
 BUSINESS AND POWERS OF THE BANK 95 
 
 Act, a warehouse receipt to be valid must be given by a person 
 exercising the business of a warehouseman. It is conceived that 
 under the law as it at present stands, A, a dry goods merchant, 
 can deliver a bale of silk into the possession of B, another 
 dry goods merchant, to be deposited and kept in B's store, 
 B can then issue a valid warehouse receipt to A for this 
 bale of silk. This is the opinion of Boyd C. in re. Montieth, 
 10 Ont. R. 529 (1886) where the meaning of the expression 
 "warehouse receipt" as used herein is much discussed. 
 At page 540 of his judgment the Chancellor says : " the 
 "present definition discriminates between two classes of 
 " persons who are authorized to issue receipts. 
 
 " i. Any bonafide bailee of goods which are in his actual 
 " visible and continued possession may give receipts therefor. 
 " 2. Any person who is the keeper of a warehouse or other 
 " place for goods can in respect of goods being in that ware- 
 
 " house or place give such receipts The same sort of proof 
 
 " is not required in the case of a warehouseman granting such 
 " documents as in the case of a bailee of goods, and the validity 
 " of such receipts does not necessarily depend upon proof that 
 " the warehouseman was actually, visibly, and continuously in 
 " possession of the goods covered thereby." 
 
 The meaning of the expression " warehouse receipt " was 
 again under discussion in Tennant v. Union Bank, 19 Ont. 
 App. R. t (1892), and the opinion is expressed that a ware- 
 house receipt given by the keeper of a warehouse, &c., must 
 cover goods in some particular warehouse or place kept by 
 such warehouseman. Maclennan, J., at page 13 says " The 
 " next question is whether this paper was a good warehouse 
 " receipt under the Bank Act so that the bank might take it 
 . " as a security under R.S.C. Cap. 120, sec. 53, ss. 2, 
 " (now sec. 73), the logs having been at the time in 
 " transit from the woods where they were cut, to the mill, 
 " and being as desciibed in the document, in Lakes St. 
 " John and Couchiching en route for Bradford's Mill." 
 
 " I think that even if the logs were confined by a boom or 
 
 " booms in those lakes a warehouse receipt could not be given 
 
 ' upon them. What the Statute R S.C. cap. 1 20, sec. 2 (b) says
 
 96 BANKS AND BANKING 
 
 " is in substance this : The expression ' warehouse receipt ' 
 " means a receipt given by a person for goods in his actual 
 " possession as bailee .... and includes receipts 
 " from any person who is keeper of a . . . . mill or 
 " other place in Canada, for goods in the place so kept by 
 " him. I am unable to see how Lakes St. John and Couch- 
 ' iching where these logs were at the date of the receipt, can 
 " be regarded as place .- kept by the signers of the receipt." 
 
 Tennant's case was decided under the Bank Act R.S. of C. 
 c. 1 20. The change in the language of the definition of " ware- 
 house receipt " in the present Act seems stronger in favor of 
 the view expressed by Mr. Justice Maclennan. 
 
 BILL OF LADING. 
 
 Section 2 ss. (e) of the Act defines the expression " bill of 
 lading " as follows : 
 
 " (e.) The expression "bill of lading " includes all receipts 
 " for goods, wares or merchandise, accompanied by an under- 
 " taking to transport the same from the place where they were 
 " received to some other place, whether by land or water, or 
 " partly by land and partly by water, and by any mode of 
 " carriage whatever ;" 
 
 A bill of lading is a memorandum signed by the 
 master acknowledging the receipt of goods to be 
 carried as therein mentioned. It generally has a two-fold 
 character, containing not only a receipt for the goods, but 
 also the contract upon which they are to be carried. By 
 the English law its use is confined to maritime adventures. 
 The above definition however extends its meaning to cover 
 all receipts for goods to be carried by sea or by land. 
 
 GOODS, WARES AND MERCHANDISE. 
 
 Section 2, ss. (c) defines these words as follows : 
 
 " (c) The expression 'goods, wares and merchandise' 
 "includes, in addition to the things usually understood there- 
 " by, timber, deals, boards, staves, saw-logs and other lumber,
 
 BUSINESS AND POWERS OF THE BANK 97 
 
 " petroleum, crude oil, and all agricultural produce and other 
 " articles of commerce " ; 
 
 These words " goods, wares and merchandise " will be 
 found used only in the above sub-clause, and in Section 64, 
 and in the sections of the Act relating to warehouse re- 
 ceipts, viz., Sections 73 to 78 ; as so used they would prob- 
 ably include only " goods, wares and merchandise," dealt 
 with in a mercantile transaction. Under the English Factors 
 Acts similar words were held not to include stock certificates 
 in a joint stock company, see Trueman vs. Appleyaid, 32 
 L. J. Ex. 175; i, N. R. 30, (1862). 
 
 COLLATERAL SECURITY. 
 
 In Early vs. Early L.R., 16, Chy. D., 214 (1878) and in 
 In re Athill Athill vs. Athill L.R., 16, Chy., D. 222 (1880) 
 the word " collateral " was much discussed and its meaning 
 \\as held to be "parallel" or "additional" and not 
 " secondary." 
 
 " DEBTS INCURRED." 
 
 Section 73 declares that the bank may acquire and hold 
 any warehouse receipt or bill of lading as collateral security 
 for the payment of any debts incurred in its favor in the 
 course of its banking business. In order to ascertain the 
 meaning of the words " debts incurred ", as used in this 
 section, reference must be made to section 75, which in effect 
 declares that the debts must be incurred at the time when 
 the warehouse receipt or bill of lading is transferred or pro- 
 mised in writing to be transferred to the bank. 
 
 THE BANK MAY ACQUIRE AND HOLD ANY WAREHOUSE 
 RECEIPT, &C. 
 
 In a case arising under the C.S.C., cap. 54, and 24 Vic., c. 
 23 (Can.), where a bank took a warehouse receipt from a 
 warehouse-man acknowledging to have received from the bank 
 6,000 bales of wool deposited in the warehouse, subject to 
 the order of the bank, it was held by the Ontario Courts, that
 
 98 BANKS AND BANKING 
 
 such warehouse receipt being given direc.tly to the bank was 
 wholly inoperative, the language of the statutes then in force 
 contemplating and authorizing transfers of warehouse receipts 
 to banks by indorsement only. See Bank of British North 
 America vs. Clarkson, 19 U. C. C. P., 182 (1868); Royal 
 Canadian Bank vs. Miller, 28 U. C. C. P., 593 (1869). 
 (In appeal) 29 U. C. Q. B., 266 (1870). This was a very 
 rigid construction of the statutes, and was, it is believed, a 
 surprise to the mercantile community. An opposite view 
 had, moreover, been arrived at by the Courts in Quebec, 
 vide Molsons Bank vs. Janes, 9 L. C. Jur., 81 (1864), and 
 a less rigid construction had been applied to bills of lading 
 in the very same year in the Ontario Court of Appeal, vide 
 Royal Canadian Bank vs. Carruthers. 29 U.C.Q.B., 283 
 (1870) ; consequently, shortly after the pronouncing of the 
 decision in appeal in Ontario, above cited, the language of 
 the clauses was changed (vide 34 Vic., c. 5, s. 46, et seq.\ 
 and subsequently, doubts having been again raised, was again 
 changed (vide 43 Vic., c. 22, s. 7). It is now believed that 
 the words used in the present Act are large enough to enable 
 a bank under this section, to acquire title to a warehouse 
 receipt, either directly from the warehouseman, or by way of 
 endorsement from the holder thereof, See Merchants Bank 
 of Canada vs. Smith, 8 S.C.R., 512 (1884) ; 8 Ont. App. R., 
 15 (1883) ; 28 Gr. 629 (1881); and see B. of Hamilton vs. 
 Noye, 9 Ont. R. at p. 
 
 BY WHOM MAY THE WAREHOUSE RECEIPT BE GIVEN ? 
 
 It may undoubtedly be given by the borrower from the 
 bank. But may it be given by anybody else ? In Tennant 
 vs. Union Bank, 19 Ont., App. R. at p. 6 (1892), Mr. 
 Justice Osier answers this question "It does not appear to 
 " be essential that the borrower should be the holder or owner 
 " of a warehouse receipt. The bank may acquire it as collat- 
 " eral security for him from a third party." 
 
 It is now declared by this section, that the warehouse 
 receipt or bill of lading, so acquired, shall vest in the bank, 
 from the date of the acquisition thereof, all the right and
 
 BUSINESS AND POWERS OF THE BANK 99 
 
 title : (i) "Of the previous holder <yt owner thereof " (thereby 
 implying that there must be a previous holder or owner of 
 of the warehouse receipt or bill of lading) ; or, (2) ''Of the 
 person from whom such goods, wares, or merchandise wer&re- 
 ceived or acquired by the bank, if the warehoiise receipt or bill of 
 lading is made directly in favor of the bank, instead of to the 
 previous holder or owner of such goods, wares or merchandise ." 
 These latter words in italics were added by 43 Vic. c. 22, s. 
 7 (1880), probably in anticipation of an objection which was 
 afterwards raised in the Court of Appeal in Ontario in 
 Merchant's Bank of Canada vs. Smith, (1883), (8 Ont. App. 
 R. 15), that even under the wide language used in 34 Vic., 
 c. 5, s. 46, it is still necessary that there should be a previous 
 holder or owner of the warehouse receipt or bill of lading 
 before it can be validly transferred to or acquired by the 
 bank. 
 
 Under the present law a warehouse receipt given directly 
 to the bank by the bailee or warehousemen, would certainly 
 be g 'od. 
 
 EFFECT OF THE ACQUISITION OF THE WAREHOUSE RECEIPT 
 
 The section now declares that the warehouse receipt or 
 bill of lading, acquired under the act, shall vest in the bank 
 from the date of the acquisition thereof, all the right and 
 title : (i) "Of the previous holder or owner thereof" or, (2) 
 "Of the person from whom such goods, wares or merchandise 
 were received or acquired by the bank, if the warehouse receipt 
 or bill of lading is made directly in favor uf the bank, instead 
 of to the previous holder or owner of such goods, wares or 
 merchandise^ 
 
 A recent case on the subject is The Dominion Bank v. 
 Davidson, 12 Ont. App. R. 90 (1886), in which the facts 
 were as follows : The execution debtors, Chapman & Son, 
 bought the oats in question from the owners thereof, who 
 shipped them to Toronto consigned to their own order or to 
 the order of some bank other than the plaintiffs', sending the 
 shipping receipt, with a draft for the price of the oats 
 attached, to Chapman & Son at Toronto. The latter then
 
 100 BANKS AND BANKING 
 
 took the shipping receipt to the plaintiff bank who advanced 
 the money thereon to pay the draft, returning the shipping 
 receipt to Chapman & Son for the purpose of getting same 
 endorsed by consignee thereof and obtaining the oats from 
 the carriers, first taking from Chapman & Son a receipt in 
 these words : 
 
 " Received in trust from the Dominion Bank bill of lading 
 for bushels oats, and I hereby undertake to sell the 
 
 property specified for said bank and collect the proceeds of 
 sale or sales thereof and deposit the same with the said 
 bank, in Toronto, to the credit of same, I hereby acknow- 
 ledging myself to be bailee of the said property for the said 
 Bank." 
 
 Chapman & Son received the oats from the carriers and 
 warehoused them, taking warehouse receipts in their own 
 name, which they endorsed to the plaintiff bank who gave 
 up the bailee receipt. 
 
 Held, that no property in the oats had passed to Chapman 
 & Son when the plaintiffs made the advarrce, and that the 
 latter were therefore entitled at least as equitable owners, as 
 against execution creditors of Chapman & Son, and held 
 also that the Chattel Mortgage Act could have no applica- 
 tion, for when the oats first came into the possession of 
 Chapman & Son, they came charged with or subject to the 
 plaintiffs' title. 
 
 Another recent case is Tennant v. Union Bank. 19 Ont. 
 App. R. i (1892). 
 
 GOODS SHOULD BE DESCRIBED IN RECEIPT WITH REASONABLE 
 
 CERTAINTY ARE SUBSTITUTED GOODS COVERED ? 
 
 EFFECT OF CO?yjpSION OF PROPERTY. 
 
 When taking warehouse receipts, the goods intended to be 
 covered thereby should be described therein with reasonable 
 certainty, and the agent of the bank should, if possible, see 
 that the goods themselves are in the warehouse and 
 separated from other goods of a similar class. The receipt 
 only covers the actual goods mentioned therein ; it does not 
 ordinarily cover substituted goods. This was expressly
 
 BUSINESS AND POWERS OF THE BANK 101 
 
 decided in Llado v. Morgan, 23 U.C.C.P., 525 (1874). In 
 that case the receipt covered thirty bales of corks, and the 
 court held that it covered the specific bales, and those only, 
 in the warehouse at the time of the giving of the same 
 Where, however, there is a custom or usage of trade, (such 
 as exists in the grain trade), not to deliver back the specific 
 goods, but the same quantity of goods of a similar kind and 
 quality (or such as exists in the milling business, not to 
 deliver back the wheat at all but its equivalent in flour) the 
 operation of the receipt would probably not be restricted as 
 in Llado v. Morgan. 
 
 See on this point Wilmot v. Maitland, 3 Gr., 107 (1851), in 
 which a usage in the flour trade is mentioned. 
 
 Coffee v. The Quebec Bank, 20 U.C.C.P., in and 555 
 (1869), in which the nature and consequences of the usage 
 in the grain trade are discussed. 
 
 Mason v. Great Western Ry. Co., 31 U.C.Q.B., 73 (1874) 
 in which the nature and consequences of the usage in the 
 milling trade are -discussed. 
 
 Where the warehouseman improperly mixes the goods 
 covered by the warehouse receipt, with his own goods, especi- 
 ally where in the warehouse receipt he promises to keep the 
 goods separate; the holder of the receipt, as against the ware- 
 houseman himself and as against his assignee in insolvency^ 
 or for the benefit of creditors, is entitled to be satisfied ou^ 
 of similar goods in the warehouse, to the quantity mentioned 
 in the warehouse receipt. Merchants Bank of Canada v. 
 Smith, 28, Gr., pp. 638-639 (1881). Great Western Ry, 
 Co. v. Hodgson, 44 U.C.Q.B., 196 (1879). Bank of Ham- 
 ilton v. Noye, 9 Ont. R , 63* (1885). Re Goodfallow, 
 Traders Bank v. Goodfallow, 19 Ont. Rep. 299 (1890). 
 See also in re Coleman, 36 U.CQ B., 564 (1875). 
 
 REMEDIES OF THE BANK AFTER REFUSAL TO DELIVER. 
 
 After demand of delivery and refusal to deliver, the bank, 
 if possession of the goods covered by the warehouse receipt 
 can be obtained without force, can take possession of the 
 same, even though on the land of the warehouseman, with"
 
 102 ' BANKS AND BANKING 
 
 out being.liable in trespass. Traders Bank v. Brown Manu- 
 facturing Company, 18 Ont. Rep. 430 (1889). 
 
 GENERAL NOTES. 
 
 It has been decided that on the re-endorsement of a ware- 
 house receipt by the bank, the pledger is in as of his original 
 title, and that his rights must be considered as if the bonk 
 had never intervened. Mason v. The Great Western Ry. 
 Co., 3iU.C.Q.B.,7 3 (iS 7 i). 
 
 There is an Act in force in Ontario relating to warehouse 
 receipts, viz. R.S. of Ont. (1887) cap. 122, sections 14 et seq. 
 
 2. If the previous holder of such warehouse 
 holder ?s e an" s receipt or bill of lading is the agent of the owner 
 of the goods, wares and merchandise mentioned 
 therein, the bank shall be vested with all the 
 right and title of the owner thereof, subject to 
 his right to have the same re-transferred to him, 
 if the debt, as security for which they are held 
 by the bank, is paid : (R.S.C. cap. 120, sec. 53, 
 s.s. 3. ) 
 
 It will be noticed that the language used in this sub-section 
 still is " if the previous holder of such warehouse receipt " is 
 the agent, c., consequently it may be held that " an agent" 
 must transfer an existing warehouse receipt to the bank. See 
 on this point notes to section 73 and the remarks of the 
 Ontario Court of Appeal in Merchants Bank of Canada vs. 
 Smith, 8 Ont. App. R. 15 (1883). 
 
 This sub-section enables an agent, in certain cases, to cre- 
 ate in favor of a bank, a valid pledge on goods belonging to 
 his principal, even though such pledge may be a wrongful 
 and unlawful dealing with the goods as between the 
 agent and the principal. 
 
 MEANING OF THE WORD "AGENT". 
 
 The definition of " agent ", as use.d in section 73, will be
 
 BUSINESS AND POWERS OF THE BANK 103 
 
 found in sec. 73, ss. 3, and is as follows : " The expression 
 " 'agent ' means any person intrusted with the possession of 
 "goods, wares and merchandise, or to whom the same are 
 " consigned, or who is possessed of any bill of lading, receipt' 
 " order, or other document used in the course of business as 
 " proof of the possession or control of goods, wares and 
 " merchandise, or authorizing or purporting to authorize, 
 " either by indorsement or by delivery, the possessor of such 
 " document to transfer or receive the goods, wares and me:- 
 " chandise thereby represented ; and such person shall be 
 " deemed the possessor of such goods, wares and merchan- 
 " disc, bill of lading, receipt, order, or other document as 
 " aforesaid, as well if the same are held by any person for 
 ' ' him or subject to his control as if he is in actual possession 
 '' thereof." 
 
 It is no doubt founded on the definition of Agent given 
 in the Consolidated Statutes ot Canada, chapter 59, which is 
 itself based on the English Factors Acts 4 Geo. IV. cap. 83 ; 
 6 Geo. IV. cap. 94 ; and 5 and 6 Vic. cap. 39 ; see also R.S. 
 of Ontario (1887) cap. 128. The present definition of 
 Agent is not, however, identical with its definition in the 
 above Statutes. In some respects the present definition is 
 much wider, especially in regard to the possession of docu- 
 ments of title. In the Consolidated Statutes, chapter 59, 
 the agent must be "entrusted with '' the possession of good-;, 
 or " entrusted with " the possession of the documents of 
 the title thereto. By section 73, ss. 3, of this Act it is de- 
 clared that "Agent " shall mean "any person entrusted with 
 the possession of goods .... or who is possessed 
 (not " entrusted with " the possession) of any document of 
 title. When this question Who is an agent within the 
 meaning of this sub-section and section 73, ss. 3 comes up 
 before the Courts, for decision, we think it will be answered, 
 that only those persons who are agents within the meaning of 
 the English Factors Acts and the Consolidated Statutes of 
 Canada, chapter 59 and R.S. of Ontario, cap. 128, are agents 
 under this Act. It may, consequently, be useful to state the
 
 104 BANKS AND BANKING 
 
 views which have been adopted in England on this question 
 of 
 
 WHO IS AN AGENT UNDER THE FACTORS ACTS ? 
 
 Now it has been held in Heyman v. Flewker, 13 C.B.N.S. 
 519 (1863), that the term "agent," under the Factors Acts, 
 does not include a mere servant or caretaker, or one who 
 has possession of goods for carriage, safe custody or other- 
 wise, as an independent contracting party, but only "persons, 
 whose employ metit corresponds to that of so'iie known kind of 
 commercial agent like that class (factors) from which the Act 
 has taken its name.'' In Cole v. North Western Bank, L.R. 
 10 C. P. 369 (1875), which contains a most elaborate review 
 of the Factors Acts and the decisions thereon, Mr. Justice 
 Blackburn says : " If a furnished house be let to one who 
 carries on the business of an auctioneer, he is entrusted as 
 tenant with the furniture, being in tact an auctioneer ; but it 
 never was the common law, and could not be intended to be 
 enacted, that, if he carried the furniture to his auction room 
 and there sold it, he could confer any better title on the pur- 
 chaser than if he had as auctioneer acted for some other 
 tenant who committed a similar larceny, as a fraudulent bailee: 
 nor, to come nearer to the present case, that a warehouseman 
 or wharfinger, who, as such, is intrusted with the custody of 
 goods, if he happens also to pursue the trade of a factor, can 
 give a better title by the sale of the goods than if they had 
 been intrusted to some other warehouseman who employed 
 him to sell." See also Johnson v. Credit Lyonnais, L. R. 
 3 C. P. 0,32(1877). 
 
 In the City Bank v. Batrow, L.R. 5 App Cas. 664 (1880), 
 a tanner in Montreal received from a merchant in England 
 hides to be tanned and it was agreed that freight was to be 
 procured for them by the tanner and the hides returned to 
 England ; they were tanned, and freight was accordingly 
 procured for them, but in the meantime the tanner had ob- 
 tained from the Toronto Bank advances on his own account 
 on bills, and hypothecated the hides to the bankers as secur- 
 ity for such advances, engaging to hand over to them the 
 bills of lading if his bills of exchange were not duly honored.
 
 BUSINESS AND POWERS OF THE BANK 105 
 
 They were not duly honored, and the bankers (who had acted in 
 entire ignorance of the transaction between the merchant and 
 the tanner) claimed to retain the bills of lading and the hides 
 until their demands were satisfied. The House of Lords, 
 however, decided that the tanner was not a factor or agent 
 entitled to pledge under any law, Canadian or English, and 
 that the Bank of Toronto acquired no valid lien on the hides, 
 either under the Civil Code, the Consolidated Statutes of 
 Canada, Cap. 59, or the Bank Act. 
 
 Lord Selborne, in the course of his judgment, at page 673, 
 says : " It is manifest that the operation of these Factors 
 clauses under the Canadian Code (which is the same as Con- 
 solidated Statutes of Canada, c. 59, in this respect) is the 
 same as the operation of the Factors Acts in England in a 
 similar case. They are taken almost entirely from the Eng- 
 lish Factors Acts." Again, at page 675, he says : " I do not 
 propose to dwell longer upon the case. The Bankers Act 
 seems to me to carry it no further It is true it refers to the 
 Consolidated Statutes and not to the Code ; but the code is 
 on this point, only a repetition of the Consolidated Statutes, 
 and is a legislative declaration of the true meaning of those 
 former statutes which are incorporated in it." 
 
 Lord Blackburn, in the course of his judgment, at page 
 678, says : " It is sufficient to say, briefly, that the decision 
 in Cole v. the North-Western Bank (from which an extract 
 is given above) comes to this : that an agent who can pledge 
 or sell must be an agent of that class which, like factors, 
 (taking almost the words of Mr. Justice Willis in the case 
 which has already been referred to of Heyman v. Flewker) 
 have a business which, when carried to its legitimate result, 
 would properly end in selling or in receiving payment for 
 goods. That would be a kind of class ; factors, and agents 
 in the class of factors. If such a person is " entrusted " and 
 " is entrusted in that capacity '," then, in the absence of bad 
 faith on the part of the pledgee, the pledge is good." 
 
 See also Bush v. Fry, 15 Ont. R. p. 122 (1887), where the 
 meaning of the word agent under the R S. of Ont. (1887) 
 Cap. 128, was discussed. See also the remarks of Burton J.
 
 106 BANKS AND BANKING 
 
 in Te'nnant v. Union Bank, 19 Ont. R. at pp. 28 and 29 
 (1892). 
 
 The meaning of the words " and such person shall be 
 deemed the possessor of goods or' documents of title as 
 well if the same are held by any person for him or sub" 
 ject to his control as if he is in actual possession thereof," as 
 used in the concluding part of the definition of agent in sec- 
 tion 73, ss. 3, will be found discussed in the case of Portalis 
 v. Tetley, L.R. 5 Eq. 140 (1867) where it was held that " a 
 factor by pledging goods in his possession or under his con- 
 trol, as agent, for an amount which did not exhaust their 
 value had not thereby parted with his control over the goods, 
 so as to preclude himself from making a further pledge 
 for the balance of their value, which should be valid as 
 against the principal under the Factors Acts." 
 
 AS TO NOTICE OR KNOWLEDGE OF AGENCY. 
 
 Under this Act no provisions are made similar to those in 
 the Factors Acts as to the effect of notice to the bank of the 
 fact of the person pledging being an agent. 
 
 It is submitted that the bank's title to a warehouse receipt 
 
 (1) would be invalid if the bank had notice that the agent 
 pledging had no power to pledge ; 
 
 (2) Would be valid if the bank had notice .that the agent 
 pledging was an agent but had no notice that such agent 
 was exceeding his powers as between him and his principal ; 
 
 (3) Would be valid a fortiori if the bank had no notice 
 that the person pledging was an agent. 
 
 3. In this section the expression " agent " 
 means any person intrusted A?ith the possession 
 of goods, wares and merchandise, or to whom 
 the same are consigned, or who is possessed of 
 anv bill of lading, receipt, order, or other docu- 
 ment used in the course of business as proof of 
 the possession or control of goods, wares and
 
 BUSINESS AND POWERS OF THE BANK 107 
 
 merchandise, or authorizing or purporting to 
 authorize, either by indorsement or by delivery, 
 the possessor of such document to transfer or 
 receive the goods, wares and merchandise there 
 by represented ; and such person shall be deem- 
 ed the possessor of such goods, wares and mer- 
 chandise, bill of lading, receipt, orc'er, or other 
 document as aforesaid, as well if the same are 
 held by any person for him or subject to his 
 control as if he is in actual possession thereof. 
 (ft.S.C., cap. 120, sec. 53.) 
 
 See notes to preceding sub-section. 
 74. The bank may lend money to any person Loans to 
 
 J J J r wholesale 
 
 engaged in business as a wholesale manufacturer manufacturers 
 of any goods, wares and merchandise, upon the 
 security of the goods, wares and merchandise 
 manufactured by him or procured for such 
 manufacture : 
 
 2. The bank may also lend money to any Loans to cer- 
 
 , , , , . 01 plain wholesale 
 
 wholesale purchaser or shipper ot products ot purchasers or 
 
 shippers. 
 
 agriculture, the forest and mine, or the sea, 
 lakes and rivers, or to any wholesale purchaser 
 or shipper of live stock or dead stock, and the 
 products thereof, upon the security of such pro- 
 ducts, or of such live stock or dead stock, and 
 the products thereof : 
 
 3. Such security may be given by the owner Form of 
 and may be taken in the form set forth in Sche- se 
 dule C to this act, or to the like effect ; and by 
 virtue of such security, the bank shall acquire
 
 108 BANKS AND BANKING 
 
 the same rights and powers in respect to the 
 goods, wares and merchandise, stock or products 
 covered thereby, as if it had acquired the same 
 by virtue of a warehouse receipt. (New. Sub- 
 stituted for R.S.C., cap. 120, sec. 54.) 
 
 MANUFACTURER. 
 
 The word ' Manufacturer ' is by sec. 2, ss. (f,) defined as 
 follows : " The word " manufacturer " includes ma'sters, dis- 
 " tillers, brewers, refiners and producers of petroleum, tanners, 
 " curers, packers, canners of me.it, pork, fish, fruit or veget- 
 " ables, and any person who produces by hand, art, process 
 " or mechanical means any goods, wares or merchandise," 
 
 GOODS, WARES AND MERCHANDISE. 
 
 This expression is by sec. 2, ss. (c,) defined as follows : 
 *' The expression ' goods, wares and merchandise ' includes 
 " in addition to the things usually understood thereby, timber, 
 " deals, boards, staves, sawlogs and other lumber, petroleum, 
 " crude oil, and all agricultural produce and other articles of 
 " commerce ; '' 
 
 The previous Bank Acts contained a section, which has 
 been omitted from this act, giving power to persons exercis- 
 ing certain trades to issue warehouse receipts by way of 
 security to a bank on their own goods, wares and merchan- 
 ise stored in their own yards or warehouses. (See R.S.C., 
 cap. 120, sec. 54.) 
 
 In lieu of this omitted section, the present section has 
 been substituted. It empowers a bank to lend money to 
 wholesale manufacturers (as above defined) upon the secur- 
 ity of goods, wares and merchandise manufactured by them 
 or procured for such manufacture. It further empowers a 
 bank to lend money to any wholesale purchaser or wholesale 
 shipper of certain products, and live and dead stock as men- 
 tioned in sub-section 2, of the above section upon the 
 security of such products and live and 'dead stock.
 
 BUSINESS AND POWERS OF THE BANK 109 
 
 SECURITY BY WHOM TO BE GIVEN. 
 
 Sub-section 3 provides that the security hereunder may be 
 given by the owner it seems to us that in most, if not in all 
 cases, the security must be given by him. It seems question- 
 able if it can be given by an agent. Section 73 seems" to 
 imit the power of agents to the giving of warehouse receipts 
 as thereby provided for. No pledge of goods to the bank is 
 valid unless authorized by the act, (see sec. 64). No express 
 authority is given, by this or any other section, to agents to 
 pledge under section. 74, and we can find no implied author- 
 ity unless it is conferred by that part of sub-section 3, which 
 declares that the bank shall acquire the same rights to the 
 goods covered by the security as if it had acquired the same 
 by virtue of a warehouse receipt. 
 
 SECURITY, IN WHAT FORM. 
 
 The security may be taken in the form set forth in Sched- 
 ule C. to this Act, or to the like effect. 
 
 The form given in Schedule C. is as follows : 
 
 In consideration of an advance of dollars, 
 
 made by the (name of bank) to A.B., for which the said bank 
 holds the following bills or notes (describe fully the bills or 
 notes held, if any), the goods, wares and merchandise men- 
 tioned below are hereby assigned to the said bank as security 
 for the payment, on or before the day of 
 
 of the said advance, together with interest thereon at the rate 
 of per cent, per annum from the 
 
 day of (or, of the said bills and notes, or renewals 
 
 thereof, or substitutions therefor, and interest thereon, or as 
 the case may be). 
 
 This security is given under the provisions of section 
 seventy-four of " The Bank Act," and is subject to all the 
 provisions of the said Act. 
 
 The said goods, wares and merchandise are now owned 
 by and are now in possession, and are free from any 
 mortgage, lien or charge thereon, (or as the case may be), and
 
 110 BANKS AND BANKING 
 
 are in (place or places where goods are), and are the follow- 
 ing : (particular description of goods assigned}. 
 Dated at 1 8 
 
 FOR WHAT INDEBTEDNESS CAN THE SECURITY BE TAKEN ? 
 
 The section itself provides that the bank may lend the 
 money upon the security. The form, Schedule C, by the use 
 of the word "advances," indicates that the bank may advance 
 the money upon the security the 75th section, however, 
 finally determines the powers of the bank in this respect. 
 The security must be given or must be promised in writing 
 to be given to the bank cotemporaneously with the advance. 
 
 EFFECT OF THE SECURITY WHEN GIVEN, AND POWERS? 
 RIGHTS, AND REMEDIES OF THE BANK THEREUNDER. 
 
 This is declared in sub-section 3 : The bank shall possess 
 the same rights and powers, under the security over the goods 
 covered thereby as it would possess under a warehouse 
 receipt, covering such goods, duly acquired under the other 
 sections of the Act. See sections 73, 75, 76, 77 and 78. 
 
 A doubt has been raised whether the security created un- 
 der sec. 74 would be valid in Ontario without registration, as 
 required by the Chattel Mortgage Act. We think that no 
 regi tration of the security is requisite to perserve its validity. 
 We think thac the rights of the bank to demand and take 
 possession of the goods covered by the security are the same 
 as if it held a warehouse receipt covering such goods. See 
 on this point notes to section 73. 
 
 ' If the debtor, after the maturity of the debt, wilfully with- 
 nolds from the bank possession of the goods upon demand, 
 he is liable to be punished criminally. See sec. 75, ss. 4. 
 
 GENERAL REMARKS. 
 
 This section has not yet been the subject of judicial deci- 
 sion, the general tendency of the courts, however, especially 
 in Ontario, has been to restrict rather than enlarge the Ian-
 
 BUSINESS AND POWERS OF THE BANK. 1 1 i 
 
 guage of the warehouse clauses of the Bank Act. Some of 
 the judges seem to entertain strong views against the policy 
 of these clauses and their decisions reflect their views. The 
 probability is that this section will receive a pretty strict and 
 rigid construction when it is presented to the Courts for inter- 
 pretation. In view, therefore, of this tendency it would be 
 wise in drawing a security hereunder to give as full a descrip- 
 tion of the goods and of their locality as the nature of the 
 case admits of. In Tennant's case, 19 App. R. i (1892) 
 referred to in the notes to section 73, it was 
 intimated that logs lying in rivers and in transit 
 from the timber limits where they were cut, to the mills 
 where they were to be sawn, could not be pledged under the 
 then Bank Act, because they could not be said to be in a place 
 or places kept by the person pledging the same. We think 
 that logs so situated can be pledged under this section. 
 
 75. The bank shall not acquire or hold any -when such 
 
 i 11 i i - . security may 
 
 warehouse receipt or bill 01 lading or security lje acquired. 
 under the next preceding section to secure the 
 payment of any bill, note or debt, unless such 
 bill, note or debt is negotiated or contracted at 
 the time of I he acquisition thereof by the bank, 
 or upon the written promise or agreement that 
 such warehouse receipt or bill of lading or sec- 
 urity would be given to the bank; but such 
 bill, note or debt may be renewed, or the time 
 for the payment tliereof extended, without 
 affecting any such security : (R.S.C. cap. 120 9 
 sec. 53, ss. 4. changed.) 
 
 To negotiate is to transfer for valuable consideration, per 
 Richards J, in Foster vs. Bowes, 2 Ont. P.R. 256 (1857). 
 Where a bank holds warehouse receipts to collaterally secure 
 the payment of notes, and the notes become overdue, and an 
 extension of time is agreed on, the delivery up of the receipts
 
 112 BANKS AND BANKING 
 
 and overdue notes, being a surrender of the hank's lien, is a 
 valuable consideration for and therefore a negotiation of the 
 new renewal notes, or else it is only a substitution or continu- 
 ation of the securities. Bank of Hamilton vs. Noye, 9 O.K. 
 637 (1885). 
 
 But when there is a simple renewal of existing paper and 
 the taking of warehouse receipts on such renewal no new 
 advance being made and no valuable consideration given or 
 surrendered contemporaneously by the bank which might 
 represent the inception of a new transaction or negotiation of 
 securities, Boyd, Chancellor, held the warehouse receipts in- 
 valid Dominion Bank vs. Oliver, 17 Ont. R. 402 (1889). 
 
 In some of the former statutes the word " understanding ' 
 was used. It was afterwards changed to the word " promise." 
 This act makes a further change and requires that there 
 must be a " written promise or agreement." 
 
 This section prohibits the bank from acquiring a ware- 
 house receipt or bill of lading or security under section 74 
 to secure the payment of any bill, note or debt unless, 
 
 (1) Such bill or note is negotiated or debt contracted at the 
 time of the acquisition of such warehouse receipt or bill of 
 lading or security by the bank. 
 
 (2) Or unless such bill or note is negotiated or debt con- 
 tracted upon the written promise or agreement that such 
 warehouse receipt or bill of lading or security will afterwards 
 be given or transferred to the bank. 
 
 Consequently, in The Royal Canadian Bank vs. Ross, 40 
 U.C.Q.B., 466 (1877), it was held, 
 
 FIRSTLY ; that the corresponding sections in 34 Vic. c. 5, 
 sees. 46 and 47, permit the transfer to a bank of a bill o 
 lading or warehouse receipt to secure an antecedent debt 
 where the " promise " at the time of contracting such debt 
 was that the bill of lading or warehouse receipE'should there- 
 after be transferred as collateral security therefor : 
 
 SECONDLY ; that an agreement made at the time the debt 
 was incurred to the bank, to give warehouse receipts on goods 
 which the person at the time of the making of the agreement is
 
 BUSINESS AND POWERS OF THE BANK 113 
 
 not possessed of, if followed by the subsequent giving of such 
 warehouse receipt, in pursuance of such agreement, gives to 
 the bank a valid charge thereon under this section (see 
 specially p.p. 467, 475 and 476). About the same time a 
 similar decision was reached by the Court of Chancery in 
 Ontario, reported as Suter vs. The Merchants Bank of 
 Canada, 24 Gr. 374, (1877). 
 
 See also McCrae vs. Molson's Bank, 25 Gr. 519, (1878). 
 
 Bank of Hamilton vs. Noye, 9 Ont. R. 630 (1885). 
 
 Cockburn vs. Sylvester, i Ont. A. R. 471 (1877), over- 
 ruling in re Coleman, 36, U.C.Q. B. 564, (1875). 
 
 It was held in the case of Cockburn vs. Sylvester, just re- 
 ferred to, that there is no " debt " contracted, within the 
 meaning of this section, by a drawer to an accommodation 
 acceptor, at the time of the giving of such accommodation 
 acceptance so as to support a concurrent endorsement, by 
 such drawer to such accommodation acceptor, of a ware- 
 house receipt, although it is quite possible that a debt may 
 arise by reason of the acceptor being subsequently com- 
 pelled to pay the acceptance. 
 
 As to the meaning of the words " debts contracted " see 
 notes to section 68. 
 
 If the warehouse receipt, bill of lading or security is validly 
 acquired, the debt or bill or note representing same, may be 
 renewed, from time to time, without affecting the security. 
 
 2. The bank may, on shipment of any goods, 
 wares and merchandise for which it holds a warehousere- 
 
 ceipt tor bill 
 
 warehouse receipt, or security as aforesaid, f c 
 surrender such receipt or security and receive 
 a bill of lading in exchange therefor, or, on the 
 receipt of any goods, wares and merchandise 
 for which it holds a bill of lading or security, 
 as aforesaid, it may surrender such bill of lading 
 or security, store such goods, wares and merchan- 
 dise, and take a warehouse receipt therefor, or
 
 114 
 
 BANKS AND BANKING 
 
 Penalty for 
 
 Penalty for 
 
 
 may ship them, or part of them, and take 
 another bill of lading therefor : 
 
 This subsection was first added to the Bank Act in 1880. 
 It declares that the goods covered by the warehouse receipt 
 or security under Sec. 74, may be transported from one 
 place to another without destroying the lien of the bank 
 thereon. It thus facilitates the marketing of the goods. 
 
 It would seem to us that without the aid of this section 
 tVe bank, so soon as it had acquired a valid title to a ware- 
 house receipt under the act, could demand delivery of the 
 goods according to the tenor of the warehouseman's under- 
 taking and having acquired possession of the goods, could 
 ship them or store them as it pleased. It will be observed 
 that the powers expressly given by this section, are extended 
 to goods assigned to the bank as security under the new 
 section 74 as well as to goods secured by warehouse receipts. 
 
 3. Everyone is guilty of a misdemeanor and 
 liable to imprisonment for a term not exceeding 
 two years, who wilfully makes any false state- 
 ment in any warehouse receipt, bill of lading or 
 security, as aforesaid. (R.S.C. cap. 120, sec. 53, 
 ss. 7.) 
 
 4. Every one is guilty of a misdemeanor and 
 
 ... 
 
 l ia bl e to imprisonment for a term not exceeding 
 two years, who, having possession or control of 
 any goods, wares and merchandise covered by 
 any warehouse receipt, bill of lading or secur- 
 ity as aforesaid, and having knowledge of such 
 receipt, bill of lading or security, and without 
 consent of the bank, in writing and before the 
 advance, bill, note or debt thereby secured has 
 been fully paid, wilfully alienates or parts with 
 any such goods, wares, or merchandise, or wil-
 
 BUSINESS AND POWERS OF THE BANK 115 
 
 fully withholds from the bank possession there- 
 of upon demand after default in payment of 
 such advance, bill, note or debt. (New.) 
 
 See further as to criminal offences in connection with 
 warehouse receipts and as to the punishment therefor, sec- 
 tions 376, 377 and 378 of the Criminal Code of 1892, 
 which comes into force on the first day of July 1893. 
 
 The above sections will be found herein printed after the 
 Bank Act. 
 
 76. If goods, wares and merchandise are 
 
 As to oods 
 
 manufactured or produced from the goods, wares 
 and merchandise, or any of them, included in or pled 
 covered by any warehouse receipt, or security 
 given under section seventy-four of this Act, 
 while so covered, the bank holding such ware- 
 house receipt or security shall hold or continue to 
 hold such goods, wares and merchandise, during 
 the process and after the completion of such 
 manufacture or production, with the same right 
 and title and for the same purposes and upon 
 the same conditions as it held or could have 
 held the original goods, wares and merchan- 
 dise. (R.S.C. cap. 120, sec. 56, changed so as 
 to bring all classes of goods within its operation ) 
 
 It was said in the case of Mason vs. Great Western Ry. 
 Co., 31 U.C.Q.B. 73 (1871), that where wheat is delivered 
 to a miller and an equivalent quantity of flour delivered in 
 exchange, the flour should be considered the produce of the 
 wheat by the custom of trade. See also on this same point 
 Coffee vs. The Quebec Bank, 20 U.C.C.P. no (1869) and 
 555 (1870); In re Coleman 36 U.C.Q.B. 559 (1875); Bank 
 of Hamilton vs. Noye, 9 Ont. R.
 
 116 BANKS AND BANKING 
 
 SebDk I over ?? "^ advances made on the security of 
 unpaid vendor any bm of i a( 3i n g or warehouse receipt, or 
 
 security given under section seventy-four of 
 this Act, shall give to the bank making such 
 advances a claim for the repayment of such 
 advances on the goods, wares and merchandise 
 therein mentioned, or into which they have 
 been converted, prior to and by preference over 
 the claim of any unpaid vendor ; but such pre- 
 ference shall not be given over the claim of any 
 unpaid vendor who had a lien upon such goods, 
 wares and merchandise at the time of the 
 acquisition by the bank of such warehouse 
 receipt, bill of lading, or security, unless the 
 same was acquired without knowledge on the 
 part of the bank of such lien. (R.S.C. cap. 120, 
 sec. 57, slightly changed.) 
 
 " OR INTO WHICH THEY HAVE BEEN CONVERTED." 
 
 Where goods covered by a warehouse receipt are manu- 
 factured or converted into something else, this clause recog- 
 nises the right of the holder of the warehouse receipt or 
 security under sec. 74 to a lien on such new product : see 
 also the preceding section. 
 
 It would seem to us that the lien holder would have been 
 entitled to follow the products of the goods covered by this 
 warehouse receipt so long as he could have identified them 
 quite apart from any special legislation on the subject. 
 
 " AND BY PREFERENCE OVER THE CLAIM OF ANY UNPAID 
 VENDOR." 
 
 These words probably have reference to the privilege of 
 the unpaid vendor under sections 1998 to 2000 of the 
 Civil Code of Lower Canada.
 
 BUSINESS AND POWERS OF THE BANK 117 
 
 . In the event of the non-pay inent at ma- sale of goods 
 
 on non-pay- 
 
 turity of any debt secured by a warehouse re- ment ebt 
 ceipt or bill of lading, or security given under 
 section seventy -four of this Act, the bank may sell 
 the goods, wares and merchandise mentioned 
 therein, or so much thereof as will suffice to pay 
 such debt with interest and expenses, returning 
 the overplus, if any, to the person from whom 
 such warehouse receipt, or bill of lading, or se- 
 curity, or the goods, wares and merchandise 
 mentioned therein, as the case may be, were ac- 
 quired; but such power of sale shall be subject 
 to the following provisions, namely : (R.S.C., 
 cap. 120, sec. 55, slightly changed.) 
 
 2. No sale without the consent in writing of Noticetobe 
 the owner of any timber, boards, deals, staves, 
 saw logs or other lumber, shall be made under p 
 this Act until notice of the time and place of 
 such sale has been given by a registered letter, 
 mailed in the post office to the last known ad- 
 dress of the pledger thereof, at least thirty days 
 prior to the sale thereof; and no goods, wares 
 and merchandise, other than timber, boards, 
 deals, staves, saw logs or other lumber, shall be 
 sold by the bank under this Act without the 
 consent of the owner, until notice of the time 
 and place ot sale has been given by a registered 
 letter, mailed in the post office to the last known 
 address of the pledger thereof, at least ten days 
 prior to the sale thereof: (R.S.C., cap. 120, see, 
 78, ss. 2.)
 
 118 BANKS AND BANKING 
 
 sucn sa ^ e f an J article mentioned 
 in this section, without the consent of the owner, 
 shall be made by public auction, after a notice 
 thereof by advertisement, stating the time and 
 place thereof, in at least two newspapers pub- 
 lished in or nearest to the place where the sale 
 is to be made ; and if such sale is in the Pro- 
 vince of Quebec, then at least one of such news- 
 papers shall be a newspaper published in the 
 English language, and one other such newspaper 
 shall be a newspaper published in the French 
 language. (R.S.C., cap. 120, sec. 78, ss. 3.) 
 
 Section 78 and its sub-sections confer on a bank, on de- 
 fault in payment of its debt, power to sell the goods, wares 
 and merchandise pledged to it under a bill of lading, a ware- 
 house receipt, or a security taken under section 74 of this 
 Act, but such power of sale is made subject to certain con- 
 ditions. 
 
 IN THE FIRST PLACE. Without the written consent of the 
 vendor no sale shall be made until the bank has given to the 
 pledger in the manner prescribed, thirty days notice at least 
 in the case of timber, boards, deals, staves, saw logs or other 
 lumber, and ten days notice at least in the case of other 
 goods, wares and merchandise of the time and place of such 
 sale. (See sub-section 2.) 
 
 IN THE NEXT PLACE. The sale must be by public auction 
 and must be advertised as prescribed in sub-section 3. 
 
 Suppose the bank disregarded the provisions of sub- 
 sections 2 and 3, would the sale be void, so as to give no 
 title to a bona fide purchaser of the goods from the bank, or 
 would the sale be good, and the bank liable to an action at 
 the suit of the pledger of the goods ? In other words are 
 the provisions directory or imperative. 
 
 Now section 78. sub-section i, which gives the power to 
 sell, declares that such power shall be subject to the follow-
 
 BUSINESS AND POWERS OF THE BANK 119 
 
 ing provisions; and sub- section 2 declares that no sale shall 
 be made unless notice thereof is given as thereby prescribed. 
 It would seem to us, therefore, that the giving of this notice 
 in the manner prescribed is imperative, and that the power 
 to sell only arises after this requirement has been duly ful- 
 filled. 
 
 It would follow therefore that unless the notices were 
 given as prescribed by the Act the sale would be invalid. 
 
 The requirements of sub-section 3 are couched in affirma- 
 tive language only. They are requirements regulating the 
 conduct of the sale after the power of sale has arisen and, we 
 are inclined to think, are directory only consequently, the 
 failure to observe them would not make the sale invalid, so as 
 to enable the owner of the goods to follow them into the hands 
 of a purchaser. The owner however, would not be without 
 a remedy as the bank would be liable to him for any 
 damages caused by the non-observance of the statutory re- 
 quirements. 
 
 79 Every bank which violates aiiy provision 
 
 , .' ,. ., ,. , , . Penalty for 
 
 contained in any of the sections numbered sixty- contravention, 
 four to. seventy-eight (both inclusive) shall 
 incur for each violation thereof a penalty not 
 exceeding five hundred dollars. (R.S.C. c. 12), 
 sec. 45, ss. 2.) 
 
 Under the repealed Act penalties were only imposed for 
 breaches of some of the sections which correspond to 
 sections 64 to 78 of this Act. 
 
 According to the Bank of Toronto vs. Perkins, 8 S.C.R. 
 603, (1883), discussed in the notes to section 64, the above 
 penalties are cumulative. 
 
 SO. The bank shall not be liable to incur any go p^aity 
 penalty or forfeiture for usury, and may stipu- 
 late for, take, reserve or exact any rate of 
 interest or discount not exceeding seven per W hat interest 
 
 -, j , may be allow- 
 
 cent. per annum, and may receive and take in ed.
 
 120 BANKS AND BANKING 
 
 advance any such rate, but no higher rate Of 
 interest shall be recoverable by the bank ; and 
 the bank may allow any rate of interest what- 
 ever upon money deposited with it. (R.S.C. 
 cap. 120, sec. 61.) 
 
 The general effect of this and the succeeding section is to 
 except contracts of a bank from the operation of the laws 
 relating to usury that may be in force in any of the provinces 
 so that the bank is thereby not only relieved from the 
 pecuniary penalty (if any) mentioned in such laws but the 
 contract and security given for the moneys loaned is saved 
 from forfeiture thereunder. Commercial Bank vs. Cotton, 
 17, U.C.C.P. 214 and 447, (1867). It would appear that a 
 bank on making a loan may stipulate for any rate of interest 
 or discount without invalidating the contract but if com- 
 pelled to sue can only recover from the borrower interest at 
 a rate agreed upon not being more than 7 per cent, per 
 annum, and the collection and agency fees, if any, allowed 
 by sections 82 and 83 ; but in the absence of any agreement 
 for the payment of such interest, the bank if compelled to 
 sue can only recover the interest allowed by the general law 
 on the debt sued on. Royal Canadian Bank vs. Shaw, 21 
 U.C.C.P. 455, (1871), also C.S.C. cap. 127 sec. 2, 
 
 It would appear also that if a bank is actually paid interest 
 in excess of seven per cent, such excess cannot be recovered 
 back by the person who paid the same. See Quinlan vs. 
 Gordon 20 Gr. App. i, (1861), and Hutton vs. Federal 
 Bank, 9 Ont. Pr. R. 568 (1883). 
 
 NO instrument 81. No promissory note, bill of exchange or 
 froundof en other negotiable security, discounted by or in- 
 dorsed or otherwise assigned to the bank, 
 shall be held to be void, usurious or tainted 
 by usury, as regards such bank, or any maker, 
 drawer, acceptor, indorser, or indorsee thereof,
 
 BUSINESS AND POWERS OF THE BANK 121 
 
 or other party thereto, or bona fide holder there- 
 of, nor shall any party thereto be subject to any 
 penalty or forfeiture by reason of any rate of 
 interest taken, stipulated or receive'd by such 
 bank, on or with respect to such promissory note, 
 bill of exchange, or other negotiable security, 
 or paid or allowed by any party thereto to 
 another in compensation for, or in consideration 
 of the rate of interest taken or to be taken 
 thereon by such bank ; but no party thereto, 
 other than the bank, shall be entitled to re- 
 cover or liable to pay more than the lawful rate 
 of iuterest in the Province where the suit is 
 brought, nor shall the bank be entitled to re- 
 cover a higher rate than seven per cent, per 
 annum ; and no innocent holder of or party to . 
 
 r > As to Innocent 
 
 any promissory note, bill of exchange or other holders - 
 negotiable security, shall, in any case, be de- 
 prived of any remedy against any party there- 
 to, or liable to any penalty or forfeiture, by 
 reason of any usury or offence against the laws 
 of any such Province, respecting interest, com- 
 mitted in respect of such note, bill or negotiable 
 security, without the complicity or consent of 
 such innocent holder or party. (R.S.C. cap. 120 
 sec. 62.) 
 
 See notes to preceding section. 
 2. The bank may, in discounting at any of collection 
 
 its places of business, branches, agencies or of- 
 fices of discount and deposit, any note, bill or 
 other negotiable security or paper payable at
 
 122 BANKS AND BANKING 
 
 any other of its own places or seats of business, 
 branches, agencies or offices of discount and de- 
 posit in Canada, receive or retain, in addition to 
 the discount, any amount not exceeding the fol- 
 lowing rates per cent, according to the time it 
 has to run, on the amount of such note, bill or 
 other negotiable security or paper, to defray the 
 expenses attending the collection thereof, that 
 is to say : under thirty days, one-eighth of one 
 per cent ; thirty days or 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, (R.S.C. cap. 120, sec. 63). 
 
 This section authorizes a bank when discounting paper at 
 any of its branches to charge a collection fee at the rate pre- 
 scribed herein in addition to the discount, for collecting such 
 paper when payable at any other of the branches of such 
 bank. 
 
 The next section authorizes a bank, when discounting 
 paper, to charge a similar collection or agency fee at the rate 
 prescribed therein for collecting such paper when payable at 
 places other than one of its own branches and other than the 
 place of discount. 
 
 Agency fees. 83. The bank may, in discounting any note, 
 bill or other negotiable security or paper bond 
 fide payable at any place in Canada different 
 from that at which it is discounted, and other 
 than one of its own places or seats of business, 
 branches, agencies or offices of discount and de- 
 posit in Canada, receive and retain, in addition 
 to the discount thereon, a sum not exceeding
 
 BUSINESS AND POWERS OF THE BANK 123 
 
 one-half of one per cent on the amount thereof, 
 to defray the expences of agency and charges in 
 collecting the same. (R.S,C. cap. 120, sec. 64). 
 
 See notes on preceding clause. 
 
 84 The bank may receive deposits from any 
 
 J l J Deposits may 
 
 person whomsoever, whatever his age, status or 
 
 condition in life, and whether such person istm 
 
 qualified by law to enter into ordinary contracts 
 
 or not ; and, from time to time, may repay any 
 
 or all of the principal thereof, and may pay the 
 
 whole or any part of the interest thereon to 
 
 such person, without the authority, aid, assist- 
 
 ance or intervention of any person or official be- 
 
 ing required, unless before such repayment the 
 
 money so deposited in and repaid by the bank 
 
 is lawfully claimed as the property of some 
 
 other person, in which case it may be paid to 
 
 the depositor with the consent of the claimant, 
 
 or to the claimant with the consent of the de- 
 
 positor : Provided always, that if the person 
 
 making any such deposit could not, under the ^ omt limit " 
 
 law of the Province where the deposit is made, 
 
 deposit and withdraw money in and from a 
 
 bank without this section, the total amount to 
 
 be received from such person on deposit shall 
 
 not, at any time, exceed the sum of five hun- 
 
 dred dollars. (ES.C. cap. 120, sec. 65). 
 
 See also ss. 45, 58, 60 and Schedule D., ss 5 ; and see 
 also the Bills of Exchange Act, sec. 8, ss. 4. 
 
 In re Central Bank Morton and Blocks claims 17 Ont. 
 R. 574 (1889), Boyd, Chancellor (overruling the master) held 
 that under the Bank Act, a bank had power to issue deposit
 
 124 BANKS AND BANKING 
 
 receipts in the following form : " Received from 
 " the sum of $ 
 
 " which this bank will repay to the said 
 " or order, with interest at 4 per cent, per annum on receiv- 
 " ing 15 days' notice. No interest will be allowed unless the 
 " money remains with this bank six months. This receipt 
 " to be given up to the bank when payment of either princi- 
 " pal 01 interest is required. Signed, for the Central Bank 
 " of Canada, A. H. Allen, Cashier." He also stated that he 
 had a very strong opinion that such deposit receipts were 
 negotiable instruments under which the holders were entitled 
 to recover as on a promissory note, but that even if they did 
 not possess all the incidents of promissory notes yet being 
 meant to be transferred by endorsement, they were so far 
 negotiable as to pass a good title to a bonafide purchaser for 
 value, taking without notice of any infirmity of title. 
 
 It will be observed that the deposit receipts above referred 
 to were expressed "which this bank will repay to X or order." 
 Sometimes the expressions used in such receipts are " which 
 will be accounted for by this bank to X," or " which this 
 bank will account for to X." It seems to us that when the 
 question is fairly presented for decision, such receipts ex- 
 pressed in such language will be held to be promissory 
 notes ; and it may be that though they are made payable to 
 X simply, and not expressly " to X or order," they may be 
 still held to be negotiable by virtue of the Bills of Exchange 
 Act, sec. 8, ss. 4, which is as follows : " A bill is payable to 
 " order which is expressed to be so payable or which is ex- 
 " pressed to be payable to a particular person, and does not 
 " contain words prohibiting transfer or indicating an inten- 
 " tion that it should not be transferable ; " so that if it is 
 desired to make deposit receipts " non-negotiable," it is ad- 
 visable to change the present wording of them, so as to indi- 
 cate more clearly the intention that they shall not be trans- 
 ferable. See also Richer v. Voyer L.R. 5 P.C. 461, (1874) 
 but see also Sibree v. Tripp, 15 M. & W., 23 (1846) and 
 Hopkins v. Abbott, L.R. 19 Eq. 222 (1875 ) 
 
 In Saderquist v. Ontario Bank, 14 Ont. R. 586, (1875) I 5 
 A.R. 609, (1889) it was held that when A left his deposit re-
 
 BUSINESS AND POWERS OF THE BANK 125 
 
 ceipt with B for safe keeping and B forged A's name thereto 
 and got the money from the bank and delivered up the 
 receipt, the bank was still liable to A for the amount of the 
 receipt and interest. The bank may allow any rate of 
 interest on deposits. See sec. 80. 
 
 2. The bank shall not be bound to see to the Banknot 
 
 execution of any trust, whether expressed, im-tot re- 
 
 plied or constructive, to which any deposit made deposits. su 
 
 under the authority of this section is subject ; 
 
 and except only in the case of a lawful claim, 
 
 by some other person before repayment, the 
 
 receipt of the person in whose name any such 
 
 deposit stands, or if it stands in the name of 
 
 two persons the receipt of one, or if in the 
 
 names of more than two persons the receipt of 
 
 a majority of such persons, shall be a sufficient 
 
 discharge to all concerned for the payment of 
 
 any money payable in respect of such deposit, 
 
 notwithstanding any trust to which such de- 
 
 posit is then subject, and whether or not the 
 
 bank sought to be charged with such trust (and 
 
 with whom the deposit has been made) had 
 
 notice thereof ; and the bank shall not be bound 
 
 to see to the application of the money paid upon 
 
 such receipt. (R.S.C. cap. 1 20 sec. 65 ss. 2.) 
 
 The law relating to trusts to which shares may be subject 
 is contained in sections 43 and 44. 
 
 This sub-section deals with the question of trusts to which 
 deposits made under the authority of this section, may be 
 subject and appears to confer very extraordinary powers on 
 joint depositors, enabling as it does one joint depositor to 
 draw out of the bank money deposited to the credit of him- 
 self and a co-depositor. In England it has been held that
 
 126 BANKS AND BANKING 
 
 when money is paid into a bank to the joint account of 
 several persons nominatim, it cannot be drawn out by one 
 of them alone, and although generally the rule is that pay- 
 ment of a debt to one of several joint creditors is a good 
 payment to all, it is otherwise under the Law Merchant in 
 cases arising between a banker and his customers making 
 joint deposits with him, Innes vs, Stephenson, i M & Rob. 
 145, (1831) Husband vs. Davis, 10 C.B. 645. (1851) Beyond 
 this the sub-section does not seem to carry the law further than 
 the cases in England have carried it. Thus it has been decided 
 that the relation between a banker and his customer is that 
 of debtor and creditor with the obligation superadded that 
 the banker is bound to repay his debt when called upon so 
 to do by the draft of his customer, Foley vs. Hill, 2 H.L.C. 
 28, (1848) Goodwin vs. Robarts L.R. 10, Ex. 337, (1875) and 
 money paid into an account in a man's own name is prima 
 facie his money and a loan by him to the banker which the 
 banker is bound to repay him. When a man opens an account 
 in his own name with the words " Police account " or " Ex- 
 ecutor of Jones " superadded thereto, this is notice to the 
 banker that the moneys standing to the credit of that account 
 are moneys on which persons other than the customer may 
 have equitable claims. (Ex parte Kingston, L.R. 6 Ch. App. 
 632 (187 1 ) and Bailey vs. Finch L.R. 7 Q.B. 34.) (1871) Still, 
 notwithstanding this notice, it is the duty of the banker to 
 honor the cheque of the customer drawn on such an account, 
 even though the banker suspects, or even knows that the 
 customer intends to commit a breach of trust, and it is only 
 when the banker makes himself a party to the breach of trust 
 e. g. by designedly reaping some benefit from the same, that he 
 renders himself liable to make restitution. Lord Cairns in Grey 
 vc. Johnson L.R, 3 E. & I. App. i, (1868) thus sums up the 
 law, " In order to hold a banker justified in refusing to pay 
 a demand of his customer, the customer being an executor, 
 and drawing a cheque as an executor, there must, in the first 
 place, be some misapplication, some breach of trust, intended 
 by the executor, and there must in the second place, as was 
 said by Sir John Leach, in the well known case of Keane vs. 
 Robarts 4 Madd. 357, (1819) be proof that the bankers are
 
 BUSINESS AND POWERS OF THE BANK 127 
 
 privy to the intent to make this misapplication of the trust 
 funds. And to that I think I may safely add, that if it be shewn 
 that any personal benefit to the bankers themselves is de- 
 signed or stipulated for, that circumstance, above all others, 
 will most readily establish the fact that the bankers are in 
 privity with the breach of trust which is about to be com- 
 mitted." And Lord Westbury in the same case says : 
 " Supposing, therefore, that the banker becomes incidentally 
 aware that the customer, being in a fiduciary or a repre- 
 sentative capacity, meditates a breach of trust, and draws a 
 cheque for that purpose, the banker, not being interested in 
 the transaction, has no right to refuse payment of the cheque, 
 for if he did so he would be making himself a party to an 
 inquiry as between his customer and a third person. He 
 would be setting up a supposed ykr tertii as a reason why he 
 should not perform his own distinct obligation to his 
 customer. But then it has been very well settled that if an 
 executor or a trustee who is indebted to a banker, or to 
 another person, having the legal custody of the assets of a 
 trust estate, applies a portion of them in the payment of his 
 own debt to the individual having that custody, the indi- 
 vidual receiving the debt has at once not only abundant 
 proof of the breach of trust, but participates in it for his own 
 personal benefit." 
 
 See also, Clench vs. Consolidated Bank, 31 U.C.C.P. 
 169 (1880), and M olson's Bank vs. Corporation of Brock- 
 ville, 31 U.C.C.P. 174(1880). 
 
 RETURNS BY THE BANK. 
 85. Monthly returns shall be made by the Monthly re - 
 
 . . turns to Gov- 
 
 bank to the Minister of Finance and Receiver eminent. 
 General in the form set forth in Schedule D 
 to this Act, and shall be made up and sent in 
 within the first fifteen davs of each month, and
 
 128 BANKS AND BANKING 
 
 shall exhibit the condition of the bank on the 
 last juridical day of the month next preceding ; 
 and such monthly returns shall be signed by 
 the chief accountant and by the president, or 
 vice president, or the director or principal part- 
 ner then acting as president, and by the man- 
 ager, cashier or other principal officer of the 
 bank at its chief place of business: (R.S.C. cap. 
 120, sec. 66, slightly changed.) 
 
 Penalty for 2. Every bank which neglects to make up 
 monthly re- and send in, as aforesaid, any monthly return 
 
 turns in due . ' . . . . 
 
 required by this section within the time here- 
 by limited, shall incur a penalty of fifty dollars 
 for each and every day after the expiration of 
 such time during which the bank neglects so to 
 make up and send in such return ; and the 
 date upon which it appears by the post office 
 stamp or mark upon the envelope or wrapper 
 enclosing such return for transmission to the 
 Minister of Finance and Receiver General, that 
 the same was deposited in the post office, shall 
 be taken primd facie, for the purposes of this sec- 
 tion, to be the date upon which such return was 
 made up and sent in. (R.S.C. cap. 120, sec. 66, 
 slightly changed.) 
 
 86. The Minister of Finance and Receiver 
 special returns General may also call for special returns from 
 
 may be called * . , . . 
 
 any bank, whenever, in his judgment, they are 
 necessary to afford a full and complete know- 
 ledge of its condition : (R.S.C. cap. 120, sec. 67.) 
 
 2. Such special returns shall be made and
 
 RETURNS BY THE BANK 129 
 
 signed in the manner and by the persons speci- JSSi,5 r 
 fied in the next preceding section, and every due h tim irr 
 bank which neglects to make and send in any 
 such special return within thirty days from the 
 date of the demand therefor by the Minister of 
 Finance and Receiver General shall incur a pen- 
 alty of five hundred dollars for each and every 
 day such neglect continues ; and the provisions 
 contained in the last preceding section as to the 
 prima facie evidence of the date upon which re- 
 turns are made up and sent in thereunder, shall 
 apply to returns made under this section : Pro- 
 vided always, that the Minister of Finance and 
 Receiver General may extend the time for send- 
 ing in such special returns for such further per- 
 iod, not exceeding thirty days, as he thinks 
 expedient. (New.) 
 
 87. The bank shall, within twenty days after 
 the close of each calendar year, transmit or de- Transmission 
 
 ,.... ,, -,-.. i i- of certified 
 
 liver to the Minister 01 finance and Receiver nsts of share- 
 holders to 
 
 General, to be by him laid before Parliament, a riSSe. 01 
 certified list showing the names of the share- 
 holders of the bank on the last day of such cal- 
 endar year, with their additions and residences, 
 the number of shares then held by them re- 
 spectively, and the value at par of such shares : 
 (R.S.C. cap. 120, sec, 68, slightly changed.) 
 
 2. Such list shall be delivered at the Depart- M ode of trans- 
 men t of Finance, or shall be sent by registered 
 letter posted at such time that, in the \ordinary 
 course of post, it may be delivered at the said 
 
 tr^**
 
 130 
 
 BANKS AND BANKING 
 
 Penalty for 
 neglect to 
 transmit such 
 lists. 
 
 Department within the time above limited : 
 (R.S.C. cap. 120, sec. 68.) 
 
 3. Every bank which neglects to transmit 
 such list in manner aforesaid within the time 
 aforesaid shall incur a penalty of fifty dollars 
 for each and every day during which such neg- 
 lect continues. (R.S.C cap. 120, sec 68, ss. 2.) 
 
 . The bank shall, within twenty days after 
 
 Annual state- ,1-1 t* i i i *_ i 
 
 mentofdivi the close of each calendar year, transmit or de- 
 
 denrts remain- e - TT i T* 
 
 ing unpaid, &c. ] 1V er to the Minister of Finance and Receiver- 
 General, to be by him laid before Parliament, a 
 return of all dividends which have remained 
 unpaid for more than five years, and also of all 
 amounts or balances in respect to which no 
 transactions have taken place or upon which no 
 interest has been paid during the five years 
 prior to the date of such return : Provided 
 always, that in case of moneys deposited for a 
 fixed peiiod, the period of five years above re- 
 ferred to shall be reckoned from the date of the 
 termination of such fixed period : (New.) 
 
 proviso. 
 
 Details of 
 return 
 
 Further de- 
 tails. 
 
 2. Such return shall be signed in the manner 
 required for the monthly returns under section 
 eighty -five of this Act, and shall set forth the 
 name of each shareholder or creditor, his last 
 known address, the amount due, the agency of 
 the bank at which the last transaction took 
 place, and the date thereof; and if such share- 
 holder or creditor is known to the bank to be 
 dead, such return shall show the names and ad-
 
 BETURNS BY THE BANK 131 
 
 dresses of his legal representatives, so far as 
 known to the bank : (New.) 
 
 3. Every bank which neglects to transmit or 
 deliver to the Minister of Finance and Receiver 
 General the return above referred to, within re 
 the time hereinbefore limited, shall incur a pen- 
 alty of fifty dollars for each and every day dur- 
 ing which such neglect continues : (New.) 
 
 4. If, in the event of the winding up of the 
 business of the bank in insolvency, or under unclaimed 
 
 * m moneys. 
 
 any general winding-up Act, or otherwise, any 
 moneys payable by the liquidator, either to 
 shareholders or depositors, remain unclaimed 
 for the period of three years from the date of 
 suspension of payment by the bank, or from the 
 commencement of the winding-up of such busi- 
 ness, or until the final winding-up of such busi- 
 ness if such takes place before the expiration of 
 the said three years, such moneys and all inter- 
 est thereon shall, notwithstanding any statute 
 of limitations or other Act relating to prescrip- 
 tion, be paid to the Minister of Finance and 
 Receiver General, to be held by him subject to 
 all rightful claims on behalf of any person other 
 tnan the bank ; and in case a claim to any 
 moneys so paid as aforesaid is thereafter estab- 
 lished to the satisfaction of the Treasury Board, 
 the Governor in Council shall, on tne report of 
 the Treasury Board, direct payment thereof to 
 be made to the person entitled thereto, to- 
 gether with interest on the principal sum there-
 
 132 BANKS AND BANKING 
 
 of at the rate of three per cent per annum for a 
 period not exceeding six years from the date of 
 payment thereof to the said Minister of Finance 
 and Receiver General as aforesaid : Provided 
 
 Proviso. however, that no such interest shall be paid or 
 payable on such principal sum, unless interest 
 thereon was payable by the bank paying the 
 same to the said Minister of Finance and 
 Receiver General : Provided also, that on pay- 
 
 Proviso. ment to the Minister of Finance and Receiver 
 General as herein provided, the bank and its 
 assets shall be held to be discharged from fur- 
 ther liability for the amounts so paid. (New.) 
 
 Requirements 5. Upon the winding-up of a bank in insol- 
 
 :vs to ontstand . . . 
 
 inp notes in vency or under any general winding up Act, or 
 
 case of insol- J , 
 
 vency. otherwise, the assignees, liquidators, directors 
 
 or other officials in charge of such winding-up, 
 shall, before the final distribution of the assets, 
 or within three years from the commencement 
 of the suspension of payment by the bank, 
 whichever shall first happen, pay over to the 
 Minister of Finance and Receiver General a 
 sum out of the assets of the bank equal to the 
 amount then outstanding of the notes intended 
 for circulation issued by the bank ; and, upon 
 such payment being made, the bank and its 
 assets shall be relieved from all further liability 
 in respect of such outstanding notes. The sum 
 so paid shall be held by the Minister of Finance 
 and Receiver General and applied for the pur- 
 pose of redeeming, whenever presented, such 
 outstanding notes, without interest. (New.)
 
 RETURNS BY THE BANK 133 
 
 This section is entirely new. It provides for giving notice 
 to the public, through the Parliamentary Blue Books, of un- 
 claimed dividends and unclaimed deposits lying in banks. 
 It also provides, in the case of a winding-up of a bank, for 
 the disposition of the unclaimed moneys held by it and for 
 the redemption of its outstanding circulation. 
 
 INSOLVENCY. 
 
 89. In the event of the property and assets 
 of the bank being; insufficient to pay its debts shareholders 
 
 c L * in case of in- 
 
 and liabilities, each shareholder of the bank 
 shall be liable for the deficiency to an amount 
 equal to the par value of the shares held by 
 him, in addition to any amount not paid up on 
 such shares. (R.S.C. cap. 120, sec. 70, slightly 
 changed in language.) 
 
 This is known as the double liability clause and renders 
 every shareholder in a bank liable, not only for the amount 
 unpaid upon his shares, but also for a further amount equal 
 to the nominal value of his shares. To ascertain who are 
 the shareholders thus liable see sees. 30 and 96. 
 
 As to the effect of irregularities in the acquisition of shares 
 see notes to section 35. 
 
 A bill will lie in equity to enforce the double liability 
 of the shareholders of an insolvent bank. But such bill must 
 be on behalf of all the creditors. Brook vs. Bank of Upper 
 Canada, 6 Chy. 249 (1869); 17 Chy. 301 (1870). 
 
 It was decided in Lower Canada that a savings bank, hold- 
 ing bank shares as pledgee, is not the owner thereof within 
 the meaning of this section, and therefore not subject to the 
 double liability. A bank whose shares are transferred to a 
 savings bank is presumed to know that they are held by the 
 latter as collateral security, inasmuch as under 34 V., c. 7, s.
 
 134 BANKS AND BANKING 
 
 1 8, a savings bank cannot acquire bank shares or hold them 
 except as pledgee. The Exchange Bank of Canada vs. The 
 Montreal City and District Savings Bank, 2 Mont. Rep 5 
 (1885). 
 
 See also in re Central Bank, Home and Savings Co. Case 
 18 Ont. App. R. 491 (1891) (where the Home & Savings 
 Co, having advanced money on the security of shares of the 
 Central Bank, which were transferred to and accepted by it 
 in the ordinary absolute form, were held liable as contribu- 
 tories) and notes to section 35. 
 
 As to the priorities given by this act on the assets of the 
 bank see section 53. 
 
 AS TO SET-OFF BY CONTRIBUTORIES. 
 
 A contributory of an insolvent company, who is also a 
 creditor, cannot set off the debt due him by the company 
 against calls made in the course of winding-up proceedings 
 in respect of the double liability imposed by the Bank Act. 
 The obvious reasons for such a conclusion being, as stated 
 by Strong, J. in the Maritime Bank vs. Troop, 16 S.C.R. 
 456 (1889), at page 458, of his judgment, "that the fund 
 " thus constituted being formed expressly to pay debts and 
 " liabilities, it would be in law a fund which the directors 
 " would hold in trust for the creditors of the bank, and there- 
 " fore that mutuality between the cross demands, which is 
 " an essential requisite in all cases of set-off, would be want- 
 " ing. The money which the shareholder would be called 
 " on to pay would, in this case, be payable into the hands of 
 " the bank or its directors, but it would be so paid to them 
 " as trustees for distribution amongst persons who were 
 " under no cross liability whatever to the shareholders, 
 " namely, the body of creditors of the insolvent bank. . . 
 " As I have already shown the debt due by the shareholders 
 " in respect of a call under the double liability clause is, in 
 " equity and in substance, a debt due, not to the bank, but 
 " to the creditors of the bank whilst the debt which the 
 " shareholder seeks to set-off is a debt due, not from the 
 '' creditors of the bank but from the banking corporation
 
 INSOLVENCY 135 
 
 " itself ; consequently they are not in any sense " mutual 
 " debts " ". 
 
 The court in the above case held that there is nothing in 
 the Winding-up Act, R.S.C., cap. 129, which derogates from 
 the principle requiring mutuality between the cross demands 
 in order that they may be the subject of set off. As to set- 
 off generally in winding up proceedings see the Winding-up 
 Act, R.S.C., cap. 129, sec. 57. 
 
 9O. As a condition of the rights and privi- provision * to 
 leges conferred by this Act or by any Act in and 8C statute of 
 
 limitations. 
 
 amendment thereof, the following provision 
 shall have effect : The liability of the bank 
 under any law, custom, or agreement to repay 
 moneys deposited with it and interest (if any) 
 and to pay dividends declared and payable on 
 its capital stock, shall continue notwithstanding 
 any statute of limitations or any enactment or 
 law relating to prescription : 
 
 2. This section applies to moneys heretofore Retroaction. 
 or hereafter deposited, and to dividends hereto- 
 fore or hereafter declared. (New). 
 
 During the course of the passing of this Act, and the dis- 
 cussion that took place as to the policy of compelling the 
 banks to publish, periodically, a list of unclaimed dividends, 
 and of unclaimed balances (see section 88), it became 
 generally known that by the laws of most of the Provinces, 
 after the expiration of a certain prescribed period, a bank 
 could set up the statutes of limitation in answer to a demand 
 for payment of a dividend by a shareholder, or of a deposit 
 balance by a customer. This state of the law was thought 
 to be unfair to the public and ihe above section was inserted 
 in the Act whereby in effect the banks deprive themselves of 
 the right to avail themselves of the law of limitation in such 
 cases.
 
 136 
 
 BANKS AND BANKING 
 
 vency ein 
 
 91. Any suspension by the bank of payment 
 f any of its liabilities as they accrue, in specie 
 or Dominion notes, shall, if it continues for 
 ninety days, consecutively, or at intervals 
 within twelve consecutive months, constitute 
 the bank insolvent and operate a forfeiture of 
 its charter or Act of incorporation, so far as re- 
 gards all further banking operations ; and the 
 charter or Act of incorporation shall remain in 
 force only for the purpose of enabling the 
 directors or other lawful authority to make and 
 enforce the calls mentioned in the next follow 
 ing sections of this Act and to wind up its 
 business. (R.S.C., cap. 120, sec. 71, changed). 
 
 92. If any suspension of pay men 1 in full in 
 5sS. insueh specie or Dominion notes of all or any of the 
 notes or other liabilities of the bank continues 
 for three montlis after the expiration of the 
 time which, under the preceding section, would 
 constitute the bank insolvent, and if no pro- 
 ceedings are taken under any general or special 
 Act for the winding up of the bank, the 
 directors shall make calls on the shareholders 
 thereof, to the amount they deem necessary to 
 pay all the debts and liabilities of the bank, 
 without waiting for the collection of any debts 
 due to it or the sale of any of its assets or 
 property : (R.S.C., cap. 120, sec. 72, slightly 
 changed). 
 
 The time during which the suspension of payment con- 
 tinues, is shortened to three months -instead of six months.
 
 INSOLVENCY 137 
 
 2. Such calls shall be made at intervals of 
 thirty days, and upon notice to be given thirty- 
 days at least prior to the day on which such " 
 call shall be payable, and any number of 
 such calls may be made by one resolution ; 
 any such call shall not exceed twenty per cent 
 on each share ; and payment of such calls may 
 be enforced in like manner as payment of calls 
 on unpaid stock may be enforced ; and the first 
 of such calls may be made within ten days after 
 the expiration of the said three months : 
 
 The words " and any number of such calls may be made 
 by one resolution " were added by the Parliamentary Com- 
 mittee when the revision was going through Parliament. As 
 to necessity for these words, see Robertson v. Banque 
 d'Hochelaga, 4 L. N. 314 (1881) and notes to section 31. 
 A bill will lie in equity at the suit of a creditor to enforce 
 the double liability of the shareholders of an insolvent bank. 
 But such bill must be on behalf of all the creditors. Brooke 
 v. Bank of Upper Canada, 16 Chy. 249 (1869) ; 17 Chy. 301 
 (1870). 
 
 3. Every director who refuses to make or en- 
 
 ' Refusal to 
 
 force, or to concur in making or enforcing any n a j^ this 8 see - 
 call under this section, is guilty of a misde- 
 meanor, and liable to imprisonment for any term 
 not exceeding two years, and shall further be 
 personally responsible for any damages suffered 
 by such default (R S.C. cap. 1 20, sec. 72, ss. 3.) 
 
 93. In the event of proceedings being taken 
 under any general or special winding-up Act, ^nding.up 
 in consequence of the insolvency of the bank, Act 
 the said calls shall be made in the manner pre 
 
 tion a misde- 
 meanor.
 
 138 
 
 BANKS AND BANKING 
 
 scribed for the making of such calls in such 
 general or special winding-up Act. 
 
 See "The Winding up Act" R.S.C., cap. 129, sees. 48 
 and 49, as to making of calls, and sections 42 to 55, thereof 
 inclusive, as to rights and liabilities of contributories. See 
 also R.S.C., chapter 129, sections 97 to 104 inclusive, being 
 the sections of said Act relating to banks only. 
 
 94. Any failure on the part of any share- 
 Forfeiture for holder liable to any such call to pay the same 
 
 non-payment, L > 
 
 when due, shall operate a forfeiture by such 
 shareholder of all claim in or to any part of the 
 assets of the bank, such call and any further 
 call thereafter being nevertheless recoverable 
 from him as if no such forfeiture had been in- 
 curred. 
 
 cHrectorsno 
 
 Liability of 
 shareholders 
 who have 
 transferred 
 their stock. 
 
 Nothing in the six sections next pre- 
 ceeding contained shall be construed to alter or 
 diminish the additional liabilities of the direc- 
 tors as hereinbefore mentioned and declared. 
 
 As to the additional liabilities of directors see sees. 48, 52, 
 97 and 99. 
 
 96. Persons who, having been shareholders 
 of the bank, have only transferred their shares, 
 or any of them, to others, or registered the 
 transfer thereof within sixty days before the 
 commencement of the suspension of payment by 
 the bank, and persons whose subscriptions to 
 the stock of the bank have been cancelled in 
 manner hereinbefore provided within the said 
 period of sixty days before the commencement
 
 INSOLVENCY 139 
 
 of the suspension of payment by the bank, shall 
 be liable to all calls on the shares held or sub- 
 scribed for by them, as if they held such shares 
 at the time of such suspension of payment, sav- 
 ing their recourse against those by whom such 
 shares were then actually held. (R.S C. cap. 
 120, se 
 
 This section deals with the liability of past shareholders. 
 (See also sections 30 and 89.) 
 
 This section has been changed so as to harmonize with 
 the changed language of section 30. The only other impor- 
 tant change in the section is that which makes shareholders 
 liable, who have transferred their shares within sixty days 
 (instead of one calendar month) before the commencement 
 of the suspension of the bank. If A transfers shares to B, 
 and B transfers to C, and C transfers to D all the above 
 transfers being made within sixty days prior to the suspen- 
 sion A, B, C and D must all be put on the list of contribu- 
 tories. In re Central Bank Baine's Case, 16 Ont. R., 293 
 (1888) ; 16 Ont. App. R. 237 (1889) ; Henderson's Case, 17 
 Ont. R. no (1889). 
 
 OFFENCES AND PENALTIES. 
 
 97. Everyone is guilty of a misdemeanor 
 and liable to imprisonment for a term not ex- President. &c., 
 
 givinp undue 
 
 ceeding two years who, being the president, 
 vice-president, director, principal partner en com- 
 mandite, manager, cashier or other officer of the 
 bank, wilfully gives or concurs in giving any 
 creditor of the bank any fraudulent, undue or 
 unfair preference over other creditors, by giving
 
 140 
 
 BANKS AND BANKING 
 
 security to such creditor or by changing the 
 nature of his claim or otherwise howsoever, and 
 shall further be responsible for all damages sus- 
 tained by any person in consequence of such 
 preference. (R.S.C. cap. 120, sec. 80.) 
 
 The defendant was a director and also a creditor of the 
 Exchange Bank to the extent of about $13,000. After a 
 resolution to suspend payment had been passed, the defend- 
 ant withdrew $10,000 from the bank, with the concurrence 
 of the president thereof. It was held that he had conspired 
 with the president to and had thereby obtained an undue 
 preference over the other creditors. Regina vs. Buntin, 7 
 L. N. 228, 395 (1884). 
 
 The amount of all penalties imposed 
 upon a bank for any violation of this Act shall 
 be recoverable and enforceable with costs, at 
 the suit of Her Majesty, instituted by the 
 Attorney General of Canada, or the Minister of 
 Finance and Receiver General, and such penal- 
 ties shall belong to the Crown for the public 
 uses of Canada ; but the Governor in Council, on 
 the report of the Treasury Board, may direct 
 that any portion of any penalty be remitted or 
 paid to any person, or applied in any manner. 
 deemed best adapted to attain the objects of 
 this Act and to secure the due administration 
 thereof. (New). 
 
 Making false *>. The making of any wilfully false or de- 
 reST&c 11 , a ceptive statement in any account, statement, 
 
 inisdemeaiior, . > -, . . , , 
 
 return, report or other document respecting the 
 affairs of the bank is, unless it amounts to a 
 
 &c.
 
 OFFENCES AND PENALTIES 141 
 
 higher offence, a misdemeanor punishable by 
 imprisonment for a term not exceeding five 
 years ; and every president, vice-president, 
 director, principal partner en commandite, audi- 
 tor, manager, cashier or other officer of the 
 bank, who prepares, signs, approves or concurs 
 in such statement, return, report or document, 
 or uses the same with intent to deceive or mis- 
 lead any person, shall be held to have wilfully 
 made such false statement, and shall further be 
 responsible for all damages sustained by any 
 person in consequence thereof. (R.S.C. cap. 
 120, sec. 81.) 
 
 An information under this section may be sworn by a 
 non-shareholder, and even by a citizen, who is a debtor of 
 the bank. See Molleur vs. Loupret, 8 L.N. 305 (1885.) 
 
 The instruction to the jury " that wilful intent to make 
 a false return may be inferred by the jury from all the cir- 
 cumstances of the case proved to their satisfaction," was held 
 to be correct in Regina vs. Hincks, 2 L.N. 422, 24 L.C.J., 
 116 (1879). 
 
 As to destroying or falsifying books, &c., by directors and 
 officers of a corporation. See the Criminal Code, 1892, sees. 
 364 and 365. 
 
 As to stealing by officers of a bank. See the Criminal 
 Code, 1892, sees. 305 and 319. 
 
 As to fraudulent breaches of trust. See the Criminal 
 Code, 1892, sec. 363. 
 
 1OO. Every person assuming or using the 
 title of "bank," "banking company," " bank- 
 ing house," ' banking association/' or '4 banking " Bank >" l 
 institution," without being authorized so to do 
 by this Act, or by some other Act in force in
 
 142 BANKS AND BANKING 
 
 that behalf, is guilty of an offence against this 
 Act. (R.S.C, cap. 120, sec. 82, changed.) 
 
 This clause was passed to prevent persons doing business 
 as bankers from carrying on such business so as to lead the 
 public to believe them an incorporated bank. 
 
 1O1. Every person, committing an offence 
 Penalty for declared to be an offence against this Act, shall 
 
 offence, against . . n 
 
 this Act. be liable to a fine not exceeding one thousand 
 dollars, or to imprisonment for a term not ex- 
 ceeding five years, or to both, in the discretion 
 of the court before which the conviction is had. 
 (New.) 
 
 See preceding section. 
 
 PUBLIC NOTICES. 
 
 1O2. The several public notices by this Act 
 
 HOW notices required to be given shall, unless otherwise speci- 
 
 11 tied, be given by advertisement in one or more 
 
 newspapers published at the place where the 
 
 head office of the bank is situate, and in the 
 
 Canada Gazette. (R.S.C., cap. 120, sec. 84, 
 
 slightly changed). 
 
 DOMINION GOVERNMENT CHEQUES. 
 1O3. The bank shall not charge any discount 
 
 Government , . ~, . , , 
 
 cheques to be or commission for cashing any omcial cheque of 
 
 paid at p:ir. 
 
 the Government of Canada, or of any depart- 
 ment thereof, whether drawn on itself or on 
 another bank. (New).
 
 COMMENCEMENT OF ACT AND REPEAL 143 
 
 COMMENCEMENT OF ACT AND REPEAL. 
 
 1O4. This Act shall come into force on the &> 
 first day of July, in the year one thousand eight AcL 
 hundred and ninety-one ; and from that day 
 chapter one hundred and twenty of the Revised 
 Statutes of Canada, intituled " An Act Respect- c.^ 
 ing Banks and Banking" the Act passed in the to- a'v!,c! I d 
 fifty-first year of Her Majesty's reign, chapter 
 twenty -seven, in amendment thereof, the Act 
 passed in the session held in the thirty-third 
 year of Her Majesty's reign, chapter twelve, 
 intituled " An Act to remove certain restrictions 
 with respect to the issue of bank notes in Nova 
 Scotia" the Act passed in the session held in 
 the fiftieth and fifty -first years of Her Majesty's 
 reign, chapter forty-seven, intituled " An Act 
 respecting the defacing of counterfeit notes, and 
 the use of imitations of notes" and chapter one 
 hundred and twenty of the Revised Statutes of 
 New Brunswick, " Of Banking" and the Act 
 passed by the Legislature of the Province ol 
 New Brunswick in the nineteenth year of Her 
 Majesty's reign, chapter forty-seven, intituled 
 " An Act to explain chapter 120, Title XXXL. 
 of the Revised Statutes, Of Bunking!" shall be Savinf? clause - 
 repealed, except as to rights theretofore 
 acquired or liabilities incurred in regard to any 
 matter or thing done or contract or agreement 
 mac'e or entered into or offences commit' ed 
 under the said chapters or Acts, and nothing in
 
 144 BANKS AND BANKING 
 
 this Act shall effect any action or proceedings 
 then pending under the said chapter or Acts 
 then repealed, but the same shall be decided as 
 if such chapters and Acts had not been re- 
 pealed. 
 
 SCHEDULE A. 
 
 BANKS WHOSE CHARTERS ARE CONTINUED bY THIS ACT. 
 
 1. The Bank of Montreal. 
 
 2. The Quebec Bank. 
 
 3. La Banque du Peuple. 
 
 4. The Molsons Bank. 
 
 5. The Bank of Toronto. 
 
 6. The Ontario Bank. 
 
 7. The Eastern Townships Bank. 
 
 8. La Banque Nationale. 
 
 9. La Banque Jacques Cartier. 
 
 10. The Merchants' Bank of Canada. 
 
 1 1. The Union Bank of Canada. 
 
 12. The Canadian Bank of Commerce. 
 
 13. The Dominion Bank. 
 
 14. The Merchants' Bank of Halifax. 
 
 15. The Bank of Nova Scotia. 
 
 1 6. The Bank of Yarmouth. 
 
 17. La Banque Ville Marie. 
 
 1 8. The Standard Bank of Canada. 
 
 19. The Bank of Hamilton. 
 
 20. The Halifax Banking Company. 
 
 21. La Banque d'Hochelaga. 
 
 22. The Imperial Bank of Canada. 
 
 23. La Banque de St. Hyacinthe. 
 
 24. The Bank of Ottawa. 
 
 25. The Bank of New Brunswick. 
 
 26. The Exchange Bank of Yarmouth.
 
 FORMS 145 
 
 27. The Union Bank of Halifax. 
 
 28. The People's Bank of Halifax. 
 
 29. La Banque de St. Jean. 
 
 30. The Commercial Bank of Windsor. 
 
 31. The Western Bank of Canada. 
 
 32. The Commercial Bank of Manitoba. 
 
 33. The Traders' Bank of Canada. 
 
 34. The People's Bank of New Brunswick. 
 
 35. The St. Stephen's Bank. 
 
 36. The Summerside Bank. 
 
 SCHEDULE B. 
 
 FORM OF ACT OF INCORPORATION OF NEW BANKS. 
 
 An Act to incorporate the Bank. 
 
 Whereas the persons hereinafter named have, by their 
 petition, prayed that an Act be passed for the purpose of 
 establishing a bank in , and it is expedient to 
 
 grant the prayer of the said petition : 
 
 Therefore Her Majesty, by and with the advice and con- 
 sent of the Senate and House of Commons of Canada, enacts 
 as follows : 
 
 1. The persons hereinafter named, together with such 
 others as become shareholders in the corporation by this 
 Act' created, are hereby constituted a corporation by the 
 name of , hereinafter called " the Bank." 
 
 2. The capital stock of the bank shall be 
 dollars. 
 
 3. The chief office of the bank shall be at 
 
 4. shall be the provisional 
 directors of the bank. 
 
 5. This Act shall, subject to the provisions of section six- 
 teen of " The Bank Act," remain in force until the first day 
 of July, in the year one thousand nine hundred and one.
 
 146 BANKS AND BANKING 
 
 SCHEDULE C. 
 
 FORM OF SECURITY UNDER SECTION SEVENTY-FOUR. 
 
 In consideration of an advance of dollars, 
 
 made by the (name of bank} to A. B., for which the said 
 bank holds the following bills or notes (describe fully the lulls 
 or notes held if any), the goods, wares and merchandise men- 
 tioned below are hereby assigned to the said bank as secur- 
 ity for the payment, on or before the day of 
 of the said advance, together with interest thereon at the 
 rate of per cent per annum from the 
 da) of (or, of the said bills and notes, or renewals 
 thereof, or substitutions therefor, and interest thereon, or as 
 the case may be. ) 
 
 This security is given under the provisions of section 
 seventy-four of " The Bank Act," and is subject to all the 
 provisions of the said Act. 
 
 The said goods, wares and merchandise are now owned 
 by and are now in possession, and are free from any 
 mortgage, lien or charge thereon, (or as the case may be\ and 
 are in (place or places where goods are\ and are the following. 
 (particular description of goods assigned). 
 
 Dated at 18 
 
 SCHEDULE D. 
 
 Return of the liabilities and assets of the bank 
 
 on the day of , A. D. 
 
 Capital authorized $ 
 
 Capital subscribed . . $ 
 
 Capital paid up $ 
 
 Amount of rest or reserve fund $ 
 
 Rate per certt of last dividend declared. per cent. 
 
 LIABILITIES. 
 
 1. Notes in circulation $ 
 
 2. Balance due to Dominion Govern-
 
 FORMS 14" 
 
 rnent, after deducting advances 
 for credits, pay-lists, &c 
 
 3. Balance due to Provincial Govern- 
 
 ments 
 
 4. Deposits by the public, payable on 
 
 demand 
 
 5. Deposits by the public, payable after 
 
 notice or on a fixed day 
 
 6. Loans from other banks in Canada, 
 
 secured 
 
 7. Deposits, payable on demand or 
 
 after notice or on a fixed day, 
 made by other banks in Canada . 
 
 8. Balances due to other banks in 
 
 Canada in daily exchanges 
 
 9. Balances due to agencies of the 
 
 bank, or to other banks or agen- 
 cies in foreign countries 
 
 10. Balances due to agencies of the 
 bank, or to other banks or agen- 
 cies in the United Kingdom .... 
 
 n. Liabilities not included under fore- 
 going heads 
 
 ASSETS. 
 
 1. Specie !j 
 
 2. Dominion notes 
 
 3. Deposits with Dominion Govern- 
 
 ment for security of note circula- 
 tion 
 
 4. Notes and cheques on other banks. . 
 5 Loans to other banks in Canada, 
 
 secured 
 
 6. Deposits, payable on demand or 
 after notice or on a fixed day, 
 made with other banks in Canada.
 
 148 BANKS AND BANKING 
 
 7. Balances due from other banks in 
 
 Canada in daily exchanges 
 
 8. Balances due from agencies of the 
 
 bank, or from other banks or 
 agencies in foreign countries . . . 
 
 9. Balances due from agencies of the 
 
 bank, or from other banks or 
 agencies in the United Kingdom. 
 
 10. Dominion Government debentures 
 
 or stocks 
 
 11. Canadian municipal securities, and 
 
 British, Provincial, or foreign, or 
 colonial public securities, (other 
 than Dominion) 
 
 12. Canadian. British and other rail- 
 
 way securities 
 
 13. Call loans on bonr^s and stocks 
 
 14. Current loans 
 
 15. Loans to the Government of Canada 
 
 1 6. Loans to Provincial Governments. . . 
 
 17. Overdue debts 
 
 1 8. Real estate, the properly of the bank 
 
 (other than the bank premises). . . 
 
 19. Mortgages on real estate sold by the 
 
 bank 
 
 20. Bank premises 
 
 21. Other assets not included under the 
 
 foregoing heads 
 
 Aggregate amount of loans to directors, and firms of which 
 they are partners, $ 
 
 Average amount of specie held during the month, $ 
 
 Average amount of Dominion Notes held during the 
 month, $ 
 
 Greatest amount of notes in circulation at any time'during 
 the month, $
 
 FORMS 149 
 
 I declare that the above return has been prepared under 
 my direction and is correct according to the books of the 
 bank. 
 
 E. F.. 
 
 Chief Accountant. 
 
 We declare that the foregoing return is made up from the 
 books of the bank, and that to the best of our knowledge and 
 belief it is correct, and shows truly and clearly the financial 
 position of the bank ; and we further declare that the bank 
 has never, at any time during the period to which the said 
 return relates, held less than forty per cent of its cash 
 reserves in Dominion notes. 
 (Place) this day of 
 
 A. B., President. 
 
 C. P. , General Manager.
 
 150 
 
 BANKS AND BANKING 
 
 EXTRACTS FROM "THE CRIMINAL CODE OF 1892" WHICH 
 COMES INTO FORCE ON 
 
 The ist Dav of July, 1893, 
 
 AND WHICH ARE OF SPECIAL IMPORTANCE TO BANKS AND 
 BANKERS. 
 
 AN ACT RESPECTING THE CRIMINAL LAW. 
 
 Short title. 
 
 Commence- 
 in ent of Act. 
 
 PRELIMINARY. 
 
 1. This Act may be cited for all purposes as "The 
 Criminal Code of 1892." 
 
 2. This Act shall come into force on the first day of 
 July, 1893. 
 
 Explanation of 3- ^ n ^ ls ^ ct ^ e '^ ow i n g expressions have the mean- 
 terms j n g s assigned to them in this section unless the context 
 requires otherwise. 
 
 (c,) The expression " Banker " includes any director of 
 any incorporated bank or banking company ; R,S.C., c. 
 164, s. 2 (). 
 
 (g.) The expression " Document of title to goods" includes 
 any bill of lading, India warrant, dock warrant, warehouse- 
 keeper's certificate, warrant or order for the delivery or 
 transfer of any goods or valuable thing, bought and sold note, 
 or any other document used in the ordinary course of busi- 
 ness as proof of the possession or control of goods, 
 authorizing or purporting to authorize, either by indorsement 
 or by delivery, the possessor of such document to transfer or 
 receive any goods thereby represented or therein mentioned 
 or referred to; R.S.C., c. 164, s. 2. (a). 
 
 (bb.} The expression " trustee " means a trustee on some 
 express trust created by some deed, will or instrument in 
 writing, or by parol, or otherwise, and includes the heir or 
 personal representative of any such trustee, and every other
 
 EXTRACTS FROM CRIMINAL CODE 151 
 
 person upon or to whom the duty of such trust has devolved 
 or come, whether by appointment of a court or otherwise, 
 and also an executor and administrator, and an official 
 manager, assignee, liquidator or other like officer acting 
 under any Act relating to joint stock companies, bankruptcy 
 or insolvency, and any person who is, by the law of the 
 Province of Quebec, an " administrates " or u fidicom- 
 missaire " ; and the expression " trust " includes whatever 
 is by that law an " administration " or " fidicommission : ' 
 R.S.C., c. 164, s. 2 (c). 
 
 (a.} The expression "valuable security" includes any order, 
 exchequer acquittance or other security entitling or evi- 
 dencing the title of any person to any share or interest 
 in any public stock or fund, whether of Canada or of any 
 Province thereof, or of the United Kingdom, or of Great 
 Britain or Ireland, or any British colony or possession, or of 
 any foreign state, or in any fund of any tjody corporate, 
 company or society, whether within Canada or the United 
 Kingdom, or any British colony or possession, or in any 
 foreign state or country, or to any deposit in any savings' 
 bank or other bank, and also includes any debenture, deed, 
 bond, bill, note, warrant, order or other security for money 
 or for payment of money, whether of Canada or of any 
 Province thereof, or of the United Kingdom or of any 
 British colony or possession, or of any foreign state, and 
 any document of title to landc or goods as hereinbefore de- 
 fined wheresoever such lands or goods are situate, and any 
 stamp or writing which secures or evidences title to or 
 interest in any chattel personal, or any release, receipt, dis- 
 charge or other instrument, evidencing payment of money, 
 or the delivery of any chattel personal ; and every such 
 valuable security shall, where value is material, be deemed 
 to be of value equal to that of such unsatisfied money, 
 chattel personal, share, interest or deposit, for the securing 
 or payment of which, or delivery or transfer or sale of which, 
 or for the entitling or evidencing title to which, such valu- 
 able security is applicable, or to that of such money or 
 chattel personal, the payment or delivery of which is evi- 
 denced by such valuable security ; 53 V., c. 37, s. 20.
 
 152 
 
 BANKS AND BANKING 
 
 Sp 
 
 M 
 
 false news. 
 
 Gaming in 
 stocks and 
 merchandise 
 
 126. Every one is guilty of an indictable offence and liable 
 to one year's imprisonment who wilfully and knowingly 
 publishes any false news or tale whereby injury or mischief 
 is or is likely to be occasioned to any public interest. 
 
 201. Every one is guilty of an indictable offence and 
 liable to five years' imprisonment, and to a fine of five hun- 
 dred dollars, who, with the intent to make gain or profit by 
 the rise or fall in price of any stock of any incorporated or 
 unincorporated company or undertaking, either in Canada or 
 elsewhere, or of any goods, wares or merchandise, 
 
 (a.) without the bona fide intention of acquiring any such 
 shares, goods, wares or merchandise, or offsetting the same, 
 as the case may be, makes or signs, or authorises to be made 
 or signed, any contract or agreement, oral 'or written, pur- 
 porting to be for the sale or purchase of any such shares of 
 stock, goods, wares or merchandise ; or 
 
 (/.) makes or signs, or authorizes to be made or signed, 
 any contract or agreement, oral or written, purporting to be 
 for the sale or purchase of any such shares of stock, goods, 
 wares or merchandise in respect of which no delivery of the 
 thing sold or purchased is made or received, and without 
 the bona fide intention to make or receive such delivery. 
 
 2. But it is not an offence if the broker of the purchaser 
 receives delivery, on his behalf, of the article sold, notwith- 
 standing that such broker retains or pledges the same as 
 security for the advance of the purchase money or any part 
 thereof. 
 
 3. Every office or place of business wherein is carried on - 
 the business of making or signing, or procuring to be made 
 or signed, or negotiating or bargaining for the making or 
 signing of such contracts of sale or purchase as are prohibit- 
 ed in this section is a common gaming house, and every one 
 who as principal or agent occupies, uses, manages or main- 
 tains the same is the keeper of a common gaming house. 
 51 V., c. 42, ss. i & 3. 
 
 Theft defined. 35- Theft or stealing is the act of fraudulently and with- 
 out colour of right taking, or fraudulently and without colour
 
 EXTRACTS FROM CRIMINAL CODE 153 
 
 of right converting to the use of any person, anything cap- 
 able of being stolen, with intent 
 
 (a) to deprive the owner, or any person having any special 
 property or interest therein, temporarily or absolutely of such 
 thing or of such property or interest ; or 
 
 (/>) to pledge the same or deposit it as security ; or 
 
 (c) to part with it under a condition as to its return which 
 the person parting with it may be unable to perform ; or 
 
 (d) to deal with it in such a manner that it cannot be re- 
 stored in the condition in which it was at the time of such 
 taking and conversion. 
 
 2. The taking or conversion may be fraudulent, although 
 effected without secrecy or attempt at concealment. 
 
 3. It is immaterial whether the thing converted was taken 
 for the purpose of conversion, or whether it was, at the time 
 of the conversion, in the lawful possession of the person 
 converting. . 
 
 4. Theft is committed when the offender moves the thing 
 or causes it to move or to be moved, or begins to cause it to 
 become moveable, with intent to steal it. 
 
 5. Provided, that no factor or agent shall be guilty of 
 theft by pledging or giving a lien on any goods or docu- 
 ment of title to goods intrusted to him for the purpose of 
 sale or otherwise, for any sum of money not greater than the 
 amount due to him from his principal at the time of pledg- 
 ing or giving a lien on the same, together with the amount 
 of any bill of exchange accepted by him for or on account of 
 his principal. 
 
 6. Provided, that if any servant, contrary to the orders of 
 his master, takes from his possession any food for the pur- 
 pose of giving the same or having the same given to any 
 horse or other animal belonging to or in the possession of 
 his master, the servant so offending shall not, by reason 
 thereof, be guilty of theft. R.S.C., c. 164, s. 63. 
 
 309. Every one commits theft who, being entrusted, either _ f 
 s ilely or jointly with any other person, with any power of 80n holding a 
 
 ' ' power of attor- 
 
 attorney for the sale, mortgage, pledge or other disposition ey. 
 of any property, real or personal, whether capable of being
 
 154 
 
 BAXKS AND BANKING 
 
 Theft by mis 
 appropriating 
 
 proceeds held 
 under dir.-c- 
 tion. 
 
 Clerks and 
 
 servants 
 
 stolen or not, fraudulently sells, mortgages, pledges or other- 
 wise disposes of the same or any part thereof, or fraudulently 
 converts the proceeds of any sale, mortgage, pledge or other 
 disposition of such property, or any part of such proceeds, 
 to some purpose other than that for which he was intrusted 
 with such power of attorney. R.S.C, c. 164, s. 62. 
 
 310. Every one commits theft who, having received, either 
 solely or jointly with any other person, any money or valu- 
 able security or any power of attorney for the sale of any 
 property, real or personal, with a direction that such money, 
 or any part thereof, or the proceeds, or any part of the pro- 
 ceeds of such security, or such property, shall be applied to 
 any purpose or paid to any person specified in such direction, 
 in violation of good faith and contrary to such direction, 
 fraudulently applies to any other purpose or pays to any 
 other person such money or proceeds, or any part thereof. 
 
 2. Provided, that where the person receiving such money, 
 security or power of attorney, and the person from whom he 
 receives it, deal with each other on such terms that all 
 money paid to the former would, in the absence of any such 
 direction, be properly treated as an item in a debtor and 
 creditor account between them, this section shall not apply 
 unless such direction is in writing. 
 
 319. Every one is guilty of an indictable offence and liable 
 to fourteen years' imprisonment who, 
 
 (a.) being a clerk or servant, or being employed for the 
 purpose or in the capacity of a clerk or servant, steals any- 
 thing belonging to or in the possession of his master or em- 
 ployer ; or 
 
 (<$.) being a cashier, assistant cashier, manager, officer, 
 clerk or servant of any bank, or savings bank, steals any 
 bond, obligation, bill obligatory or of credit, or other bill or 
 note, or any security for money, or any money or effects of 
 such bank or lodged or deposited with any such bank ; 
 
 (c.) being employed in the service of Her Majesty, or of 
 the Government of Canada or the Government of any pro- 
 vince of Canada, or of any municipality, steals anything in
 
 EXTRACTS FROM CRIMINAL CODE 155 
 
 his possession by virtue of his employment. R.S.C., c. 164, 
 ss - 5 1 . 5 2 , 53, 54 and 59. 
 
 320. Every one is guilty of an indictable offence and liable 
 
 . . Agents ami 
 
 to fourteen years' imprisonment who steals anything by an) attorneys. 
 act or omission amounting to theft under the provisions of 
 sections 308, 309 and 310. 
 
 363. Every one is guilty of an indictable offence and 
 
 . J ' Criminal 
 
 liable to seven years' imprisonment who, being a trustee o; breach of trust, 
 any property for the use or benefit, either in whole or in 
 part, of some other person, or for any public or charitable 
 purpose, with intent to defraud, and in violation of his trust, 
 converts anything of which he is trustee to any use not 
 authorized by the trust. 
 
 547 No proceeding or prosecution against a trustee for n ^ 
 
 criminal breach of trust, as defined in section 361, shall be ulently dispos- 
 ing of money, 
 commenced without the sanction of the Attorney General. 
 
 R.S.C., c. 164, s. 65. 
 
 364. Every one is guilty of an indictable offence and liable p ^ account . 
 to seven years'" imprisonment who, being a director, manager, ins? by official, 
 public officer or member of any body corporate or public 
 company, with intent to defraud 
 
 (a.) destroys, alters, mutilates or falsifies any book, paper, 
 writing or valuable security belonging to the body corporate 
 or public company ; or 
 
 (/>.) makes, or concurs in making, any false entry, or omits 
 or concurs in omitting to enter any material particular, in 
 any book of account or other document. R.S.C., c. 164, s. 
 68. 
 
 365. Every one is guilty of an indictable offence and liable 
 
 - . , , . ,. False state- 
 
 to five years imprisonment who, being a promoter, director, ment by official 
 
 public officer or manager of any body corporate or public 
 company, either existing or intended to be formed, makes, 
 circulates or publishes, or concurs in makirg, circulating or 
 publishing, any prospectus, statement or account which he 
 knows to be false in any material particular, with intent to 
 induce persons (whether ascertained or not) to become 
 shareholders or partners, or with intent to deceive or defraud 
 the members, shareholders or creditors, or any of them
 
 156 
 
 BANKS AND BANKING 
 
 (whether ascertained or not) of such body corporate or 
 public company, or with intent to induce any person to 
 entrust or advance any property to such body corporate or 
 public company, or to enter into any security for the benefit 
 thereof. R.S.C., c. 164, s. 69. 
 
 366. Every one is guilty of an indictable offence and liable 
 
 False account- ... , , . , 
 
 ing by clerk, to seven years imprisonment who, being or acting in the 
 capacity of an officer, clerk or servant, with intent to 
 defraud 
 
 (rt.) destroys, alters, mutilates or falsifies any book, paper 
 writing, valuable security or document which belongs to or 
 is in the possession of his employer, or has been received by 
 him for or on behalf of his employer, or concurs in so doing ; 
 or 
 
 (b ) makes, or concurs in making, any false entry in, or 
 omits or alters, or concurs in omitting or altering, any mate- 
 rial particular from, any such book, paper writing, valuable 
 security or document. 
 
 Warehouse- 
 men, ete.. 
 jnvinjf false 
 receipts ; 
 knowingly 
 using 1 the 
 same. 
 
 376 Every one is guilty of an indictable offence and liable 
 to three years' imprisonment who, 
 
 (a. } being the keeper of any warehouse, or a forwarder, 
 miller, master of a vessel, wharfinger, keeper of a cove, yard, 
 harbour or other place for storing timber, deals, staves, boards, 
 or lumber, curer or packer of pork, or dealer in wood, carrier, 
 factor, agent or other person, or a clerk or other person in 
 his employ, knowingly and wilfully gives to any person a 
 writing purporting to be a receipt for, or an acknowledge- 
 ment of, any goods or other property as having been received 
 into his warehouse, vessel, cove, wharf, or other place, or in 
 any such place about which he is employed, or in any other 
 manner received by him, or by the person in or about whose 
 business he is employed before the goods or other property 
 named in such receipt, acknowledgment or writing have 
 been actually delivered to or received by him as aforesaid, 
 with intent to mislead, deceive, injure or defraud any person, 
 although such person is then unknown to him ; or 
 
 (/>. ) knowingly and wilfully accepts, transmits or uses any
 
 EXTRACTS FROM CRIMINAL CODE 157 
 
 such false receipt or acknowledgment or writing. R.S.C., c. 
 164, s 73. 
 
 377. Every one is guilty of an indictable offence and liable 
 
 . , . , Owners Of 
 
 to three years imprisonment, who merchandise 
 
 (a.) having, in his name, shipped or delivered to the keepei 
 of any warehouse, or to any other factor, agent or carrier, to e 
 be shipped or carried, any merchandise upon which the con 
 signee has advanced any money or given any valuable secu- 
 rity afterwards, with intent to deceive, defraud or injure such 
 consignee, in violation of good faith, and without the consent 
 of such consignee, makes any disposition of such merchan- 
 dise different from and inconsistent with the agreement made 
 in that behalf between him and such consignee at the time 
 of or before such money was so advanced or such negotiable 
 security so given ; or 
 
 (6.) knowingly and wilfully aids and assists in making 
 such disposition for the purpose of deceiving, defrauding or 
 injuring such consignee. 
 
 2. No person commits an offence under this section who, 
 before making such disposition of such merchandise, pays or 
 tenders to the consignee the full amount of any advance 
 made thereon. R.S.C., c. 164, s. 74. 
 
 378. Every person is guilty of an indictable offence and 
 liable to three years' imprisonment who, - 
 
 (a.) wilfully makes any false statement in any receipt, 
 certificate or acknowledgment for grain, timber or other 
 goods or property which can be used for any of the purposes 
 
 mentioned in The Bank Act ; or dealing with 
 
 property to 
 (b ) having given, or after any clerk or person in his em whh-h such 
 
 J receipt - refer. 
 
 ploy has, to his knowledge, given, as having been received 
 by him in any mill, warehouse, vessel, cove or other place, 
 any such receipt, certificate or acknowledgment for any such 
 grain, timber or other goods or property, or having obtained 
 any such receipt, certificate or acknowledgment, and after 
 having endorsed or assigned it to any bank or person, after 
 wards, and without the consent of the holder 01 
 endorsee in writing, or the production and delivery of the 
 receipt, certificate or acknowledgment, wilfully alienates or
 
 158 
 
 BANKS AND BANKING 
 
 Innocent 
 partners. 
 
 Conspiracy 
 to defraud. 
 
 parts with, or does not deliver to such holder or owner of 
 such receipt, certificate or acknowledgment, the grain, timber, 
 goods or other property therein mentioned. R.S.C., c. 164, 
 s- 75- 
 
 379. If any offence mentioned in any of the three sections 
 next preceding is committed by the doing of anything in the 
 name of any firm, company or co-partnership of persons the 
 person by whom such thing is actually done, or who con- 
 nives at the doing thereof, is guilty of the offence, and not 
 any other person. R.S.C., c. 164, s. 76. 
 
 394. Every one is guilty of an indictable offence and 
 liable to seven years' imprisonment who conspires with any 
 other person, by deceit or falsehood or other fraudulent 
 means, to defraud the public or any person, ascertained or 
 unascertained, or to aftect the public market price of stocks, 
 shares, merchandise or anything else publicly sold, whether 
 such deceit or falsehood or other fraudulent means would or 
 would not amount to a false pretence as hereinbefore 
 defined. 
 
 Document 
 defined. 
 
 " Bank note' 
 and " exche- 
 quer bill ", 
 defined. 
 
 FORGERY. 
 
 419. A document means in this part any paper, parch- 
 ment, or other material used for writing or printing, marked 
 with matter capable of being read, but does not include 
 trade marks on articles of commerce, or inscriptions on stone 
 or metal or other like material. 
 
 420. "Banknote" includes all negotiable instruments issued 
 by or on behalf of any person, body corporate, or company' 
 carrying on the business of banking in any part of the world, 
 or. issued by the authority of the Parliament of Canada or of 
 any foreign prince, or state, or government, or any governor 
 or other authority lawfully authorized thereto in any of Her 
 Majesty's dominions, and intended to be used as equivalent 
 to money, either immediately upon their issue or at some 
 time subsequent thereto, and all bank bills and bank post 
 bills ; 
 
 (a) "Exchequer bill'' includes Exchequer bonds, notes, de
 
 EXTRACTS FROM CRIMINAL CODE 159 
 
 bentures and other securities issued under the authority of 
 the Parliament of Canada, or under the' authority of any 
 Legislature of any Province forming part of Canada, whether 
 before or after such Province so became a part of Canada. 
 
 421. The expression " false document " means 
 
 (a) a document the whole or some material part of which 
 purports to be made by or on behalf of any person who did 
 not make or authorize the making thereof, or which, though 
 made by, or by the authority of, the person who purports to 
 make it is falsely dated as to time or place of making, where 
 either is material ; or 
 
 (b} a document the whole or some material part of which, 
 purports to he made by or on behalf of some person who 
 did not in fact exist ; or 
 
 (c) a document which is made in the name of an existing 
 person, either by that person or by his authority, with the 
 fraudulent intention that the document should pass as being 
 made by some person, real or fictitious, other than the 
 person who makes or authorizes it. 
 
 2. It is not necessary that the fraudulent intention should 
 appear on the face of the document, but it may be proved 
 by external evidence. 
 
 422. Forgery is the making of a false document, knowing 
 it to be false, with the intention that it shall in any way be forgery 
 
 J J defined. 
 
 used or acted upon as genuine, to the prejudice of any one 
 whether within Canada or not, or that some person should 
 be induced, by the belief that it is genuine, to do or refrain 
 from doing anything, whether within Canada or not. 
 
 2. Making a false document includes altering a genuine 
 document in any material part, and making any material 
 addition to it or adding to it any false date, attestation, seal 
 or other thing which is material, or by making any material 
 alteration in it, either by erasure, obliteration, removal or 
 otherwise. 
 
 3. Forgery is complete as soon as the document is made 
 with such knowledge and intent as aforesaid, though the 
 offender may not have intended that any particular person 
 shuuld use or act upon it as genuine, or be induced, by the
 
 160 BANKS AND BANKING 
 
 belief that it is genuine, to do or refrain from doing any- 
 thing. 
 
 4. Forgery is complete although the false document may 
 be incomplete, or may not purport to be such a document as 
 would be binding in law, if it be so made as, and is such as 
 to indicate that it was intended, to be acted on as genuine. 
 
 423. Every one who conmits forgery of the documents 
 Punishment hereinafter mentioned is guilty of an indictable offence and 
 
 ot torjrery. ... 
 
 liable to the following punishment : 
 
 (A.) to imprisonment for' life if the document forged pur- 
 ports to be, or was intended by the offender to be understood 
 to be or to be used as 
 
 (/>.) any entry in any book or register, or any certificate, 
 coupon, share, warrant or other document which by any law 
 or any recognized practice is evidence of the title of any 
 person to any such stock, interest or share, or to any divi- 
 dend or interest payable in respect thereof ; R.S.C., c. 165, 
 s. 1 1 ; or 
 
 (r) any bank note or bill of exchange, promissory note or 
 cheque, or any acceptance, endorsement or assignment 
 thereof; R.S.C., c. 165, ss. 18, 25 and 28 ; or 
 
 (?/.) any deed, bond, debenture, or writing obligatory, or 
 any warrant, order, or other security for money or payment 
 of money, whether negotiable or not, or endorsement or as- 
 signment thereof; R.5.C., c. 165, ss. 26 and 32 ; or 
 
 (v.) any accountable receipt or acknowledement of the 
 deposit, receipt, or delivery of money or goods, or endorse- 
 ment or assignment thereof; R.S.C., c. 165, s. 29 ; or 
 
 ('.) any bill of lading, charter-party, policy of insurance,' 
 or any shipping document accompanying a bill of lading, o r 
 any endorsement or assignment thereof; or 
 
 (x.) any warehouse receipt, dock warrant, dock-keeper's 
 certificate, delivery order, or warrant for the delivery of 
 goods, or of any valuable thing, or any endorsement or 
 assignment thereof ; or 
 
 (y.) any other document used in the ordinary course of 
 business as proof of the possession or control of goods, or as 
 authorizing, either on endorsement or delivery, the possessor 
 of such document to transfer or receive any goods.
 
 EXTRACTS FROM CRIMINAL CODE 161 
 
 424. Every one is guilty of an indictable offence who, 
 knowing a document to be forged, uses, deals with, or acts forgd nB 
 upon it, or attempts to use, deal with, or act upon it, or (looui " e 
 causes or attempts to cause any person to use, deal with, or 
 act upon it, as if it were genuine, and is liable to the same 
 punishment as if he had forged the document. 
 
 2. It is immaterial where the document was forged. 
 
 428. Every one is guilty of an indictable offence who, 
 
 with intent to defraud, causes or procures any telegram to ^rams"iii C fais 
 be sent or delivered as being sent by the authority of any mill 'es. 
 person, knowing that it is not sent by such authority, with 
 intent that such telegram should be acted on as being sent 
 by that person's authority, and is liable, upon conviction 
 thereof, to the same punishment as if he had forged a docu- 
 ment to the same effect as that of the telegram. 
 
 429. Every one is guilty of an indictable offence and liable sending false 
 to two yeais' imprisonment who, with intent to injure or telcf - rranis - 
 alarm any person, sends, causes, or procures to be sent, any 
 telegram or letter or other message containing matter which 
 
 he knows to be false. 
 
 430. Every one is guilty of an indictable offence and liable 
 to fourteen years' imprisoment who, without lawful athority 
 or excuse (the proof whereof shall lie on him), purchases or nc 
 receives from any person, or has in his custody or possession, 
 any forged bank note, or forged blank bank note, whether 
 complete or not, knowing it to be forged. R.S.C., c. 165, s. 
 19. 
 
 431. Every one is guilty of an indictable offence who, with 
 
 intent to defraud and without lawful authority or excuse, Drawing doeu 
 
 , j j . , incut without 
 
 makes or executes, draws, signs, accepts or indorses, in the authority. 
 name or on the account of another person, by procuration 
 or otherwise, any document, or makes use of or utters any 
 such document knowing it to be so made, executed, signed, 
 accepted or endorsed, and is liable to the same punishment 
 as if he had forged such document. R.S.C., c. 165, s. 30. 
 
 434. Every one is guilty of an indictable offence and liable 
 
 ... . . . Instruments 
 
 to fourteen years imprisonment who, without lawful authority of forgery. 
 or excuse (the proof whereof shall lie on him)
 
 162 BANKS AND BANKING 
 
 (a) makes, begins to make, uses or knowingly has in his 
 possession, any machinery or instrument or material for 
 making Exchequer bill paper, revenue paper or paper in- 
 tended to resemble the bill paper of any firm or body corpo- 
 rate, or person carrying on the business of banking ; R.S.C., 
 c. 165, ss. 14, 16, 20 & 24 ; or 
 
 (b) engraves or makes upon any plate or material any- 
 thing purporting to be, or apparently intended to resemble, 
 the whole or any part of any Exchequer bill or bank note ; 
 R.S.C., c. 165, ss. 20, 22 & 24 ; or 
 
 (.) uses any such plate or material for printing any part 
 of any such Exchequer bill or bank note; R.S.C., c. 165, 
 ss. 22 & 23 ; or 
 
 (d) knowingly has in his possession any such plate or 
 material as aforesaid ; R.S.C., c. 165, ss. 22 & 23 ; or 
 
 (e) makes, uses or knowingly has in his possession any 
 Exchequer bill paper, revenue paper, or any paper in- 
 tended to resemble any bill paper of any firm, body corpo- 
 rate, company, or person, carrying on the business of bank- 
 ing, pr any paper upon which is written or printed the whole 
 or any part of an Exchequer bill, or of any bank note ; R. 
 S.C., c. 165, ss. 15, 16, 20 & 24 ; or 
 
 (/) engraves or makes upon any plate or material any- 
 thing intended to resemble the whole or any distinguishing 
 part of any bond or undertaking for the payment of money 
 used by any dominion, colony or possession of Her Majesty, 
 or by any foreign prince or state, or by any body corporate, 
 or other body of the like nature, whether within Her 
 Majesty's dominions or without; R.S.C., c. 165, s. 25 ; or 
 
 (g) uses any such plate or other material for printing the 
 whole or any part of such bond or undertaking; R.S.C., c. 
 165, s 25 ; or 
 
 (^) knowingly offers, disposes of or has in his possession 
 any paper upon which such bond or undertaking, or any 
 part thereof, has been printed. R.S.C., c. 165, s. 25. 
 
 Making laise 44- Every one is guilty of an indictable offence and 
 bookTreiatinj? liable to fourteen years' imprisonment who, with intent to 
 to public funds" defraud,
 
 EXTRACTS FROM CRIMINAL CODK 163 
 
 (a.) makes an untrue entry or any alteration in any book 
 of account kept by the Government of Canada, or of any 
 Province of Canada, or by any bank for any such Govern- 
 ment, in which books are kept the accounts of the owners of 
 any stock, annuity or other public fund transferable for the 
 time being in any such books, or who, in any matter, wilfully 
 falsifies any of the said books ; or 
 
 (b.) makes any transfer of any share or interest of or in 
 any stock, annuity or public fund, transferable for the time 
 being at any of the said banks, in the name of any person 
 other than the owner of such share or interest. R.S.C., c. 
 165, s. ii. 
 
 441. Every one is guilty of an indictable offence and 
 
 liable to seven years' imprisonment who, being in the em- Clerks issuing 
 
 } false dividend 
 
 ployment of the Government of Canada, or of any Province warrants, 
 of Canada, or of any bank in which any books of account 
 mentioned in the last preceding section are kept, with intent 
 to defraud, makes out or delivers any dividend warrant, or 
 any warrant for the payment of any annuity, interest or 
 money payable at any of the said banks, for an amount 
 greater or less than that to which the person on whose 
 account such warrant is made out is entitled. R.S.C., c. 
 165, s. 12. 
 
 442. Every one is guilty of an offence and liable, on sum- 
 
 , Printing cir- 
 mary conviction before two justices of the peace, to a fine of cuiars, etc., in 
 
 .... .. likeness of 
 
 one hundred dollars or three months imprisonment, or both, notes, 
 who designs, engraves, prints or in any manner makes, 
 executes, utters, issues, distributes, circulates or uses any 
 business or professional card, notice, placard, circular, hand- 
 bill or advertisement in the likeness or similitude of any 
 bank note, or any obligation or security of any Government 
 or any bank. 50 and 51 V., c. 47, s. 2, ; 53 V., c. 31, s. 3. 
 
 458. Every one is guilty of an indictable offence and 
 
 } ' Personation of 
 
 liable to fourteen years' imprisonment who falsely and de- certain per- 
 sons, 
 ceitfully personates 
 
 (a.) any owner of any share or interest of or in any stock, 
 annuity, or other public fund transferable in any book of 
 account kept by the Government of Canada or of any Pro-
 
 164 BANKS AND BANKING 
 
 vince thereof, or by any bank for any such Government ; or 
 
 (b.) any owner of any share or interest of or in the debt of 
 any public body, or of or in the debt or capital stock of any 
 body corporate, company, or society ; or 
 
 (c.) any owner of any dividend, coupon, certificate or mo- 
 ney payable in respect of any such share or interest as afore- 
 said ; or 
 
 (d.} any owner of any share or interest in any claim for a 
 grant of land from the Crown, or for any scrip or other pay- 
 ment or allowance in lieu of such grant of land ; or 
 
 (e.) any person duly authorised by any power of attorney 
 to transfer any such share, or interest, or to receive any divi- 
 dend, coupon, certificate or money, on behalf of the person 
 entitled thereto 
 
 and thereby transfers or endeavours to transfer any s.hare or 
 interest belonging to such owner, or thereby obtains or 
 endeavours to obtain, as if he were the true and lawful owner 
 or were the person so authorized by such power of attorney, 
 any money due to any such owner or payable to the person 
 so authorized, or any certificate, coupon, or share warrant, 
 grant of land, or scrip, or allowance in lieu thereof, or other 
 document which, by any law in force, or any usage existing 
 at the time, is deliverable to the owner of any such stock or 
 fund, or to the person authorized by any such power of 
 attorney. R.S.C., c. 165, s. 9.
 
 ID IE 
 
 I'AUK 
 
 ACTS REPEALED ............................... 143 
 
 ACT RESPECTING BANKS 
 
 Application of ....... ......................... 3 
 
 Act of Incorporation, what to contain .............. 7 
 
 Form of ................ . .......... . . . . 7, 145 
 
 Commencement of ........................... 143 
 
 ADMINISTRATOR 
 
 When not personally liable as a shareholder ...... 44, 45 
 
 When so liable ................................. 44 
 
 AGENCY FEES ................................. 122 
 
 AGENT 
 
 Effect of notice that person pledging is an .......... 106 
 
 Who is an, under Bank Act ............... 102 10107 
 
 ALLOTMENT OF STOCK ............................ 24 
 
 ANNUAL MEETING 
 
 Date of, when determined ......................... 8 
 
 Statement to be laid before ..................... 45 
 
 What it must show .......................... 45, 46 
 
 ANNUAL STATEMENT to be prepared .................. 45 
 
 ASSETS 
 
 Debts due to Dominion, second charge on .......... 53 
 
 Debts due to Provinces, third charge on .......... 53 
 
 Notes, a first charge on .......................... 53 
 
 Penalties, not a charge in case of insolvency until 
 
 other liabilities paid .................... 54 
 
 BALLOT 
 
 Voting to be by .............................. 21 
 
 BANKS 
 
 Advances by, for building ships .................. 92 
 
 Agency fees may be charged by ........... . . . . 122 
 
 Agencies may be opened by ...................... 65 
 
 Benefit of a security accrues to ................... 85
 
 166 BANKS AND BANKING 
 
 Banks Continued. 
 
 Bills of lading may be taken by, as collateral security. 92, 96 
 
 Claim under, prior to unpaid Vendor 116 
 
 How goods should be described in in 
 
 May be exchanged for warehouse receipt 113 
 
 Bonds of, by whom to be signed 61 
 
 How assignable 61 
 
 Officers may be deputed to sign 62 
 
 Branches may be opened by 65 
 
 Business of, defined 65 
 
 Certain, not to be transacted by 65 
 
 Charters of certain, continued 41 
 
 Collateral security, bill of lading as, 92, 96 
 
 Dominion, &c.. and foreign public securities, 
 
 stock, bonds and debentures as. 65 to 67 
 
 How, may be dealt with, by 77 
 
 Mortgages as 79 
 
 Waiver of rights as to, by ... 78 
 
 Warehouse receipt as 92, 94 to 96 
 
 Collection fees, may be charged by . . . .- 121 
 
 Conditions previous to commencement of business 
 
 by new 9 
 
 Deposits, interest allowable on 120 
 
 Joint 125, 127 
 
 Not bound to see to trusts as to 125 
 
 Receivable from persons unable to contract 123 
 
 And payable to such depositors 123 
 
 Proviso as to amount to be received from such 
 
 depositors 123 
 
 Right to repayment of, not barred by prescription . . 135 
 
 Deposit by, with Minister of Finance 54, 55 
 
 Amount of, how determined 54, 55 
 
 Dividends of, not to impair paid up capital 47 
 
 Effect on, if business powers exceeded by 71 
 
 Insolvency of, what constitutes 136 
 
 Calls in such case 136 
 
 Disposal of unclaimed moneys on 131 
 
 Interest at not more than 7 per cent, may be 
 
 recovered by 119
 
 INDEX. 167 
 
 Banks Continued. 
 
 On deposits 120 
 
 Lien of, on goods covered by warehouse receipt, when 
 
 prior to that of unpaid vendor 1 1 6 
 
 On shares and unpaid dividends, for debts and 
 
 liabilities 34, 35, 36, 75 
 
 Loans not to be made by, on security of their own 
 
 stock or that of other banks 66, 70 
 
 Mortgages may be taken by, as additional security 
 
 for debts contracted 79 
 
 Loans to wholesale manufacturers 107 
 
 Loans to wholesale purchasers or shippers 107 
 
 Form of security in such case 107, 109, 146 
 
 Effect of secu ity 1 1 o to 1 1 3 
 
 Effect of conversion 115 
 
 Notes as collateral security, obligations respecting ... .85 
 
 Notes for circulation, to be issued only by 63 
 
 Payable at par 60, 6 1 
 
 Penalty on, for exceeding business powers 71 
 
 Holding land longer than seven years 87 1091 
 
 Powers of 65 
 
 Limitations on 65, 68 to 74 
 
 Personal property, rights over when mortgaged to 84 
 
 Real estate may be held by, for actual occupation .... 79 
 If mortgaged to, may be acquired absolutely. .87 to 91 
 May only be held for 7 years unless in actual 
 
 occupation 87, 91 
 
 May be sold by, under power of sale 91 
 
 Mortgaged to, purchaseable under execution, &c. . . .86 
 
 Returns to Government 127, 129, 130 
 
 Form of 127, 130, 146 to 149 
 
 Penalty for not making 128, 131 
 
 Special may be required 128 
 
 Rights of, over goods manufactured from articles 
 
 pledged 115 
 
 Sale of goods by, on non-payment of debt 116 
 
 Notice to be given 1 1 6 
 
 Ships, &c., advances by, for building 92
 
 168 BANKS AND BANKING 
 
 Banks Continued. 
 
 Stock, not to lend or discount on security of their 
 
 own or that of other banks 66, 70 
 
 Not to deal in their own or other banks' 66, 70 
 
 Except when necessary to realize for advances ... 76 
 Lien on for debts and liabilities for debts. . .34, 35, 36 
 
 Trusts, not bound to see to 42, 43, 1 25 
 
 Unauthorized use of title a misdemeanor 141 
 
 Usury, not liable to penalty for 119 
 
 Warehouse receipt may be taken by, as collateral 
 
 security 92,97 
 
 Claim under, prior to unpaid vendor 1 16 
 
 May be exchanged for bill of lading 113 
 
 How goods should be described in in 
 
 Warranty whether liable on 69 
 
 BANK CIRCULATION REDEMPTION FUND 54 to 60 
 
 Notes not redeemed on insolvency to be payable out of 58 
 Payment from, to be made without regard to amount 
 
 contributed 58 
 
 Repayment of amount contributed on insolvency ... .59 
 Rules may be made by Treasury Board as to payment 
 
 out of 60 
 
 To bear interest 56 
 
 Sums due by bank to, may be collected by action ... 60 
 BANK OF BRITISH COLUMBIA 
 
 Chief place of business of 6 
 
 Sections applicable to ... 5 
 
 BANK OF BRITISH NORTH AMERICA 
 
 Chief place of business of 6 
 
 Note issue of 50 
 
 Sections applicable to ,5 
 
 BANQUE Du PEUPLE 
 
 Note issue of 50 
 
 Sections applicable to 5 
 
 Sections not applicable to 13 
 
 BANK NOTES 
 
 Amount and denomination of 50 
 
 Average circulation of, how determined 57
 
 INDKX. 1 69 
 
 Bank Notes Continued. 
 
 Counterfeit 64 
 
 Defacing, penalty for 64 
 
 First charge on assets 53 
 
 How and by whom to be signed 61 
 
 In case of insolvency, to bear interest in certain cases 
 
 until redeemed 57 
 
 When such interest to cease 132 
 
 May be signed by machinery 62 
 
 Not to exceed unimpaired capital 50 
 
 No, for less than $5.00 to be issued or re-issued 50 
 
 One signature at least to be written 63 
 
 Payable at par 60, 6 r 
 
 Penalty if issue exceeds unimpaired capital 51 
 
 Penalty for unauthorized issue of 63 
 
 Penalty for pledging 52 
 
 Penalty for improper issue, &c 52 
 
 Pledging of, prohibited 51 
 
 Power to sign may be deputed 62 
 
 Redemption of 61 
 
 Under $5.00 to be called in 51 
 
 What shall be deemed notes 63 
 
 Where payable 61 
 
 BONDS, Provisions for sale of, held as collateral security 
 
 for advances 77 
 
 BRANCHES may be opened 65 
 
 BY-LAWS 
 
 Certain continued in force 13, 18 
 
 Matters that may be regulated by 11,12 
 
 May be made by shareholders 1 1 
 
 May be made by directors 17 
 
 CALLS 
 
 Amount and intervals of 30 
 
 How enforced by action 31, 33 
 
 By forfeiture 31 
 
 Forfeiture may be remitted 31 
 
 In case of insolvency 136 
 
 How made and enforced 137
 
 170 BANKS AND BANKING 
 
 Calls Continued* 
 
 Refusal to make, a misdemeanor 137 
 
 Under winding up act 137 
 
 Who qualified to make 30 
 
 CAPITAL STOCK 
 
 Allotment of 24 
 
 Amount of 7 
 
 How increased 23 
 
 How reduced 24, 25 
 
 Conditions to be complied with if legislation 
 
 sought for reduction 26 
 
 Limit of reduction 26 
 
 Reduction not to affect liability of shareholders .... 26 
 
 If any lost, calls to be made 47 
 
 Loss of, to be mentioned in next return 47 
 
 Profits to be applied to make good loss of 48 
 
 Must be taken up within a certain time 24 
 
 What amount to be paid up 8 
 
 CERTIFCATE 
 
 Treasury Board must grant, before commencing 
 
 business 9 
 
 CHAIRMAN to have casting vote 17, 21 
 
 CHARTERS 
 
 Certain continued 4 
 
 Lapse of 10 
 
 CIRCULATION 
 
 Penalty for excessive 51 
 
 Redemption of 6.1 
 
 COLLATERAL SECURITY 
 
 Bills of lading as 92, 96 
 
 Dominion, &c., and foreign securities stock, bonds 
 
 and debentures as 65, 67 
 
 How may be dealt with 77 
 
 Mortgages as 79 
 
 Waiver of rights as to 78 
 
 Warehouse receipts as 92, 94 to 96 
 
 COLLECTION FEES . . 121
 
 INDEX. 171 
 
 DEFINITIONS 
 
 " Agent " 102 to 107 
 
 " Bank " i 
 
 " Banker " 150 
 
 " Bank note " 158 
 
 ' Bill of lading " 3) 96 
 
 "Collateral" 97 
 
 " Debts contracted " 83, 97 
 
 " Discount " 67 
 
 " Document of title to goods " 150 
 
 " Document " -. .. 158 
 
 " Exchequer bill " 158 
 
 " False document ''...., 159 
 
 " Forgery " 159 
 
 " Goods, wares and merchandise " 2, 96 
 
 "Manufacturer'' 3,108 
 
 " Negotiate " in 
 
 "Theft" 152 
 
 " Treasury Board " 2 
 
 " Trustee " 150 
 
 " Valuable security" 151 
 
 " Warehouse receipt " 2, 94 
 
 DEPOSITS 
 
 How and to whom joint payable 125 to 127 
 
 Interest allowable on 120 
 
 Not bound to see to trusts as to 125 
 
 Receivable from persons unable to contract 123 
 
 And payable to such depositors 123 
 
 Proviso as to amount receiveable from such 
 
 depositors 123 
 
 Right to repayment of, not barred by prescription .... 135 
 
 DIRECTORS PROVISIONAL 7 
 
 Number of 7 
 
 May open stock books 7 
 
 When powers cease 7 
 
 DIRECTORS 
 
 Annual election of 14 
 
 Board of 14
 
 172 BANKS AND BANKING 
 
 Directors Continued. 
 
 Vacancies in, how filled 16 
 
 Chairman at meetings of 17 
 
 To have casting vote 17 
 
 Discounts to 1 1 
 
 Election of, by ballot 21 
 
 Notice of 15 
 
 Provision in case of failure in election of 17 
 
 Equality of votes for 1 6 
 
 When and where to take place 8, 15 
 
 General powers of 14, 1 7 
 
 To appoint officers, clerks, &c 18 
 
 To call special general meetings of shareholders .... 19 
 
 To close transfer books 47 
 
 To declare dividends 47 
 
 To declare stock forfeited for non-payment of calls. .31 
 
 To elect president and vice-president 16 
 
 To enforce calls by action. . . 32 
 
 To inspect books, &c 46 
 
 To make by-laws 17 
 
 To make calls 20 
 
 To regulate affairs of bank 17 
 
 To require security from cashiers, &c 18 
 
 Giving undue preference, guilty of misdemeanor 139 
 
 Liability of, for breaches of trust by co-directors 14 
 
 Loans to 1 1 
 
 Making false statements in returns, guilty of misde- 
 meanor 140 
 
 Notice of holding of election of 15 
 
 Number of 8, 1 1 
 
 President and vice-president, when to be elected by. . . 16 
 Punishment of, for making false statement in returns. 140 
 
 Qualification of 14 
 
 Must be natural born or naturalized subjects 15 
 
 Must continue 13 
 
 Quorum of 1 1 
 
 Refusing to make calls on insolvency, guilty of misde- 
 meanor 137
 
 INDEX. 173 
 
 Directors Continued. 
 
 Removing and replacing, at special general meeting. . .10 
 
 Remuneration of n 
 
 Vacancies in board how filled 16 
 
 Who shall be 15 
 
 DIVIDENDS 
 
 Declared by directors 47 
 
 Lien on for any debt or liability for any debt 75 
 
 Notice of 47 
 
 Not to impair paid up capital 47 
 
 Capital lost by, to be made up by calls on unpaid 
 
 stock 47 
 
 Net profits to be applied to make good such loss 48 
 
 Not to exceed 8 p. c. unless a certain reserve fund 
 
 exists 48 
 
 May be made payable in United Kingdom 27 
 
 DOMINION CHEQUES 
 
 To be cashed at par 142 
 
 DOMINION NOTES 
 
 Arrangements for supplying 49 
 
 Payments in 61 
 
 ELECTION See Directors. 
 
 EXECUTOR See Administrator. 
 
 FALSE STATEMENTS in returns 
 
 A misdemeanor 142 
 
 FORMS 
 
 Act of incorporation 7, 145 
 
 Security under section 74 107, 199, 146 
 
 Returns 127, 130, 146 to 149 
 
 GUARANTEE FUND 
 
 May be established 13 
 
 GUARDIAN 
 
 When not personally liable as a shareholder 44, 45 
 
 When so liable 44 
 
 INSOLVENCY 
 
 Calls on 136 
 
 How made 137
 
 174 BANKS AND BANKING 
 
 Insolvency Continued. 
 
 If not paid, forfeiture incurred 138 
 
 Refusal to make, a misdemeanor 137 
 
 Disposal of unclaimed moneys on 131 
 
 Notes to bear interest until redeemed in certain cases . . 57 
 
 When such interest ceases 132 
 
 Penalties in case of 54 
 
 Shareholders liability on 133 
 
 If shares transferred within sixty days of 36, 138 
 
 What constitutes 136 
 
 INTEREST 
 
 When taken by banks limited to 7 per cent. 119 
 
 If more paid, excess not recoverable. . . 120 
 
 LOANS 
 
 On bank stock prohibited 66, 70 
 
 Penalty in respect < f 119 
 
 To directors 1 1 
 
 MEETINGS annual. See Annual Meetings 
 
 Notice of, what should contain 20 
 
 Proxies may vote at 22 
 
 Renewal of 22 
 
 Who may hold 22 
 
 Special general, how called 19 
 
 Voting at, to be by ballot 21 
 
 If an equality of votes 16,21 
 
 MERCHANTS BANK OF P.E.I. 
 
 Provisions of Act extended to 6 
 
 Deposit by, with Minister of Finance 55 
 
 Amount of how determined 55- 
 
 MORTGAGES 
 
 As additional security for debts contracted 22 
 
 As continuing security 83 
 
 NOTES 
 
 Advertisements not to be issued in form of 65 
 
 Chartered banks only to issue 63 
 
 Counterfeit 64 
 
 May be signed by machinery 62 
 
 One signature at least to be written 63
 
 INDEX. 175 
 
 Notes Continued. 
 
 Penalty lor unauthorized issue of 63 
 
 To be payable at par 60, 61 
 
 NOTICES -how to be given 142 
 
 OFFENCES against Bank Act 9, 37, 141 
 
 How punishable 142 
 
 OFFENCES UNDER THE CRIMINAL CODE 
 
 "'Banker " defined 158 
 
 " Bank note " defined 158 
 
 Conspiracy to defraud, how punished 158 
 
 Clerks issuing false dividend warrants, how punished. 163 
 
 Criminal breach of trust, how punished 155 
 
 Procedure in such case 155 
 
 " Document " defined 158 
 
 " Document of title to goods "defined 158 
 
 Drawing document without authority 161 
 
 " Exchequer bill " defined 158 
 
 False accounting by official, how punished 155 
 
 False accounting by clerk, how punished 156 
 
 " False document " defined 159 
 
 False statement by official, how punished 155 
 
 ' Forgery " defined 159 
 
 Punishment for 1 60 
 
 Gaming in stocks and merchandise, how punished. . . 152 
 Innocent partners not liable for offences committed 
 
 in name of firm 158 
 
 Instruments of forgery, making, possessing or using, 
 
 how punished 161 
 
 Making false statements in receipts for property that 
 can be dealt with under The Bank Act, 
 
 how punished 157 
 
 Fraudulently dealing with property to which such 
 
 receipts refer, how punished 157 
 
 Making false entries in books relating to public funds , . 162 
 Owners of merchandize disposing thereof contrary to 
 agreements with consignees who have made 
 
 advances thereon, how punished 157 
 
 Personation of certain persons 163
 
 17tf BANKS AND BANKING 
 
 Offences under the Criminal Code Continued. 
 
 Possessing forged bank notes. . 161 
 
 Printing circulars in likeness of notes 163 
 
 Sending telegrams in false names 161 
 
 Sending talse telegrams 161 
 
 Spreading false news, how punished 152 
 
 "Theft defined" 152 
 
 Theft by agent and attorney, how punished 155 
 
 Thef by a person holding a power of attorney 153 
 
 Theft by clerks and servants, how punished 154 
 
 Theft by misappropriating proceeds held under a 
 
 direction 154 
 
 "Trustee" denned 158 
 
 Uttering forged documents 161 
 
 " Valuable Security " defined 159 
 
 Warehouseman, &c., giving false receipts, how 
 
 punished 156 
 
 Knowingly using the same -156 
 
 OFFICERS 
 
 Appointed by directors 1 8 
 
 Certain, must give security 18 
 
 Effect of alteration of duties of, on liability of surety. . . 19 
 Giving undue preference, guilty of a misdemeanor. . . 139 
 Making false statements in returns, guilty of a mis- 
 demeanor . . . 140 
 
 PENSION funds may be established 13 
 
 PENALTIES 49, 51, 52, 63, 64, 65, 114, 119, 128, 129, 
 
 130, 131, 124 
 How recovered 140 
 
 PRESIDENT 
 
 Election of 16 
 
 Hew removed at special general meeting 20 
 
 How replaced 1 6 
 
 PRESUMPTION in favor of validity of transaction 83 
 
 PROCEDURE 
 
 To effect forfeiture of stock 31 
 
 Sale -of lumber, goods, &c., held in pledge 117 
 
 Sale of stock for debt of owner 76
 
 INDEX. 177 
 
 PROFITS 
 
 To be applied in making good loss of capital 48 
 
 PROXIES 
 
 Renewal of 22 
 
 Who may vote on 22 
 
 QUORUM of directors 1 1 
 
 REAL ESTATE 
 
 For actual occupation 79 
 
 Mortgaged to bank may be acquired absolutely.. . .87, 91 
 
 May be purchased if sold under execution 86 
 
 May only be held for 7 years, unless in actual occupation 88 
 
 May be sold under power of sale 91 
 
 RECEIPTS False statements in, a misdemeanor 114 
 
 RESERVES part of, to be in Dominion notes 49 
 
 RETURNS 
 
 Annual, to be made to Minister of Finance 129, 130 
 
 Form of 130 
 
 Penalty for not making 131 
 
 Monthly, to be made to the Minister of Finance 127 
 
 Form of 127 
 
 Penalty for not making 128 
 
 Special, may be called for by the Minister of Finance. 128 
 SALE OF GOODS 
 
 On non-payment of debt 116 
 
 Notice of, to be given 1 1 6 
 
 Effect of want of notice ..117 
 
 Without owner's consent, must be by public auction. .116 
 
 SALE OF STOCK for debts and liabilities for debts 76 
 
 SECURITIES Bank may hold certain as collateral 65 
 
 Sale of 77 
 
 SHARES Amount of 7 
 
 Amount payable on, in 30 days from subscription .... 29 
 
 Are personal estate 27 
 
 Books of subscription for, may be opened in the 
 
 United Kingdom and elsewhere 27 
 
 Calls on 30 
 
 Dividends on, may be made payable in United 
 
 Kingdom and elsewhere 27
 
 178 BANKS AND BANKING 
 
 Shares Continued. 
 
 Forfeiture of, for non-payment of calls 32 
 
 How and when paid 28, 29 
 
 Lien on for debts and liabilities for debts to the 
 
 bank 34, 35, 36, 75 
 
 Sale of, to enforce lien 76 
 
 List of transfers of, to be made up daily 36 
 
 To be open to shareholders . 36 
 
 No fractional part of, transferable 34 
 
 Sale of, on execution 28, 37 
 
 Who to transfer 37 
 
 Sale of, on forfeiture for non-payment of calls 32 
 
 How transferred in such case 32 
 
 Surrender of certificate of, on transfer 28 
 
 Trafficking in, effect of on liability of shareholders .... 74 
 
 Transferable at will of holder 27 
 
 Transfer of, when valid 34> 36 
 
 Can only be made by registered owner 36 
 
 In case of sale by bank for debts or liabilities for 
 
 debts 76 
 
 Transmission of, otheJwise than by transfer 38 
 
 How proved 38 
 
 How authenticated if made out of Canada 39 
 
 On marriage of female shareholder 39, 40 
 
 On death of shareholder 40 
 
 Further provisions in such case 41 
 
 Votes on 21 
 
 SHAREHOLDERS 
 
 All calls on, to be paid before voting 22 
 
 General powers of. u, 12 
 
 May authorize establishment of guarantee and 
 
 pension funds 13 
 
 May call special general meetings 19 
 
 May remove president for mal-administration 20 
 
 May increase capital stock 20 
 
 May reduce capital stock 24 
 
 Infant, may repudiate 3c 
 
 Liability of, on insolvency 35
 
 INDEX. 179 
 
 Shareholders Continued. 
 
 Calls to meet such liability 136 
 
 Forfeiture for non-payment of such calls 138 
 
 Who have transferred stock within sixty days 
 
 before insolvency 36, 1 38 
 
 List of, to be transmitted yearly to Minister of Finance. 129 
 
 Penalty for omission 130 
 
 May regulate certain matters by by-law 1 1 
 
 Vote by proxy 22 
 
 Not allowed to inspect books, &c 46 
 
 To vote by ballot 21 
 
 SHIPS Advances for building 92 
 
 STATEMENT Annual to be prepared 45 
 
 What it must show 45, 46 
 
 False in returns, a misdemeanor 140 
 
 STOCK See capital stock- 
 
 TRANSFER BOOK, closing of 47 
 
 TREASURY BOARD, defined 2 
 
 Certificate of, to be obtained 9 
 
 Rules may be made by, as to payment of money out 
 
 of redemption fund 60 
 
 TRUSTEE 
 
 When not liable as a shareholder 44, 45 
 
 When so liable 44 
 
 TRUSTS Bank not bound to see to 42, 43, 125 
 
 USURY 
 
 Bank not liable to penalty for 119 
 
 Instruments not void on account of 120 
 
 Not to render innocent party liable to penalty for. . . . 121 
 Not to render innocent party liable to loss of remedy. 121 
 
 Provisions as to 1 1 9 to 121 
 
 VENDOR UNPAID 
 
 Has no lien over bank in certain cases 116 
 
 VESSEL see ships. 
 VICE-PRESIDENT 
 
 Election of 16 
 
 How removed and replaced at special general meeting. 20
 
 180 . BANKS AND BANKING 
 
 VOTES , 
 
 If a tie, chairman to have casting vote except at elec- 
 tion of directors ._^^< 21 
 
 Majority of, to determine question . . , . ...'...'. % 21 
 
 Of joint holders of shares 21 
 
 On shares 21 
 
 To be by ballot . . . .21 
 
 WAREHOUSE RECEIPT CLAUSES, constitutionality of. . . . .93 
 WAREHOUSE RECEiPT-^as collateral security 92, 94 to 96, 97 
 
 How goods should be described in /. 100 
 
 Are substituted goods covered by 100 
 
 Effect of conversion 100, 115 
 
 Effect of acquisition thereof 99, 102 
 
 Meaning of 2 
 
 Penalty for making false statement in 114 
 
 May be exchanged for bill of lading 113 
 
 Transfer of, by agent of owner 102 
 
 Who may give 98
 
 THE PROPERTY OF 
 
 ~"^ LAW
 
 A 000 696 401 9 
 
 THE PROPERTY OF 
 .-. SOCIETY,