1901. should inquire for authority. To create an estoppel the Argument. Company should be shown to have knowledge of circum

stances creating an estoppel. The directors contend that there was no liability for which the note could be given. The transaction did not come to the directors' knowledge until after the notes matured. It is not usual to give notes before the delivery of goods. The Bank knew Crighton was paying the notes as they charged them to his account and credited him with renewals. Power to give notes cannot be presumed from a power to buy. There was here no real purchase. Daniel on Negotiable Instruments, 362.

It

KILLAM, C. J.-The Company was incorporated under The Manitoba Joint Stock Companies Act, R.S.M., c. 25, for the purpose of carrying on a trading business. deals chiefly in agricultural implements, vehicles, binder twine and tea. Its place of business is in the town of Portage la Prairie. There are four directors, three of whom are farmers residing at some distance from the town. The fourth is Mr. G. A. J. A. Marshall, who personally conducted and managed the business. In July, 1897, Mr. Marshall was appointed secretary of the company, and in January, 1898, the directors passed a resolution" that Mr. Marshall's position be defined as managing director of the Company."

A by-law provided for the secretary keeping minutes of meetings and having the custody of the corporate seal, books and papers of the company. There was no by-law, resolution or other act expressly defining the powers or duties of the managing director.

A by-law provided that cheques were to be signed by the president or vice-president and countersigned by the managing director or secretary.

Another by-law authorized the directors to borrow money from a bank and empowered the president and the

managing director or secretary to sign promissory notes therefor on behalf of the Company.

1901.

Judgment.

There was no by-law or other act authorizing the mak- KILLAM, C.J. ing, acceptance or indorsement of notes, bills or cheques,

except as just mentioned.

On the 2nd January, 1900, an agreement was made between one Arthur J. Crighton and Marshall acting for the Company, by which the Company ordered of Crighton certain specified quantities of tea of different kinds. at specified prices for future delivery, and Crighton agreed to accept the Company's promissory notes for the aggregate amount of the order, less ten per cent. thereof, payable in three months from the 2nd January, 1900. The notes were given, signed "For the Farmers' Trading Company, Ltd., G. A. J. A. Marshall, Managing Director." The notes sued on are part renewals of these and were signed in the same way. No tea was ever delivered under the order and the Company never received any consideration for the notes except Crighton's acceptance of the order for the tea.

On account of the distance at which the three directors resided, it was impossible for them to oversee or be consulted about the details of the business and the specific transactions. Marshall managed both buying and selling. He states that he never told them of the course of business, and that they left all to him.

From the year 1895 the Company was in the habit of buying tea from Crighton, and from the time of Marshall's appointment as managing director he was accustomed to give Crighton promissory notes, similarly signed, for tea, and also to make notes and accept bills in the same form, on behalf of the Company, for goods purchased. Many of these were retired by the Company's cheques.

The words "For the Farmers' Trading Company, Ltd.," and "Managing Director," were impressed on

1901. such notes and bills by one rubber stamp kept in the office Judgment. of the Company, which was used also for the purpose of Different stamps were used for signing

KILLAM, C.J.

indorsements.

cheques.

The cheques were usually signed by the president in blank and left for Marshall to fill up and sign. The counterfoils showed what they were given for.

Notes made and bills accepted were usually entered in a book kept in the Company's office for the purpose of showing bills payable by the Company.

According to Marshall's evidence, auditors were from time to time appointed by the directors, and these or any other person examining the books would see that Marshall was in the habit of giving notes for the Company. There was no direct evidence of knowledge on the part of the shareholders or directors, other than Marshall, of his course in these matters. Marshall professed himself unable to say whether they had such knowledge or not. The question is whether, under these circumstances, the Company can be held liable upon the notes.

By section 62 of The Manitoba Joint Stock Companies Act, R. S. M., c. 25, a promissory note made by an agent or officer of a company " in general accordance with his powers as such officer under the by-laws of the company or otherwise" is binding upon the Company.

It is clear, then, that the power may be conferred without by-law. The powers and duties of the managing director were not expressly defined in any way; but it is evident that he was to exercise large and important funetions, otherwise the business of the Company could not go on. His powers, whatever they were, can be gathered only by inference from the nature and course of the business.

It is unnecessary to cite authority to show that the powers of officers or agents of corporations can be inferred. The books are full of cases in which the Courts

1901.

have drawn inferences as to the extent of their powers for the purpose of rendering corporations liable in con- Judgment.. tract or in tort.

In Lord Justice Lindley's work on Partnership, 6th ed., p. 135, referring to the case of Hawtayne v. Bourne, 7 M. & W. 595, it is said, "It will be observed that what is necessary to carry on the partnership business in the ordinary way is made the test of authority where no actual authority or ratification can be proved. .

. .

What is necessary for carrying on the business of the firm
under ordinary circumstances and in the usual way is the
test. . .
The question whether a given act can or
cannot be said to be necessary to the transaction of a busi-
ness in the way in which it is usually carried on, must
evidently be determined by the nature of the business
and by the practice of persons engaged in it. Evidence
on both of these points is, therefore, necessarily admis-
sible; and, as may readily be conceived, an act which is
necessary for the prosecution of one kind of business may
be wholly unnecessary for carrying on another in the
ordinary way."

Of course, there are many powers which a partner has to bind his firm that are not presumed in an agent or manager of an incorporated company from the mere relation. But in In re Cunningham & Co., Limited, 36 Ch. D. 532, North, J., adopted the principles thus laid down as applicable for determining the authority of a manager of a branch of the business of a joint stock company. And, in considering the question of the authority of the manager in that case to make a promissory note for the Company, he referred to the fact that it was not in the ordinary course of the business of that Company, because it was a newly-formed company and had not yet any ordinary course of business.

In the present case there is no evidence of the ordinary practice of persons engaged in the particular kinds of

KILLAM, C.J.

1901.

business in which the defendant Company was engaged. Judgment. It is, however, well known that it is very common for KILLAM,C.J. dealers buying from larger dealers or from manufactur

ers to give promissory notes or accept bills of exchange for the goods purchased, and I think that very slight evidence should be required to prove such a practice as would involve the inference that this course was necessary for carrying on the business of this Company under ordinary circumstances and in the usual way.

Here the manager made notes and accepted bills for goods purchased, and he did so in the most open way. The transactions appeared in the books of the Company, its cheques were used-and this too appeared in the booksto retire such bills and notes, and the Company's books were audited and the transactions passed. This course extended over a period of more than two years.

I think that it may properly be inferred from this that the manager was intended to have this among his other powers.

If he had the power to give the Company's notes at all, it is unnecessary to inquire into his authority to enter into the particular transaction out of which the notes in question arose. Crighton was a dealer in tea from whom the Company was accustomed to buy, and there does not appear to have been anything to indicate to the Bank that the transaction was out of the ordinary course: See Bryant, Powis and Bryant, Limited, v. Quebec Bank, [1893] A. C. 179.

There will be judgment for the plaintiff for the full amount of the notes, interest and charges, with costs.

Judgment for plaintiff.