The capacities and powers of trading and other corporations are limited in degree, according to the business or functions of such corporations; and the measure of a corporation's liability in respect of its contracts must be co-extensive with its power to make them: Re Central Bank, 26 Can. L. J. 335. As a general rule the contracts of corporations must be under the corporate seal; but the rule admits of some exceptions in the cases of contracts where the charter, or the purpose incidental to the business of the corporation, authorizes the making of bills and notes; and in the cases of contracts specially authorized by statute to be made without the corporate seal: also in the cases of contracts where the corporation is estopped from disputing its liability. A non-trading partnership (such as solicitors) may ratify a bill not binding on the partnership; but a bill or note ultra vires of a corporation, cannot be ratified. Corporaations are mentioned in the statute of 3 & 4 Anne, c. 9, respecting promissory notes, as persons who may make and indorse negotiable notes. ILLUSTRATIONS. The mention of a corporation not having power to take notes, in the body of a note payable to the corporation or bearer, does not put the bearer of such note on a worse footing than if the name of a fictitious payee had been inserted: Hammond v. Small, 16 U. C. Q. B. 374. A departure from the style of the corporation, will not avoid a note made to it, if it substantially appears that the particular corporation was intended: Bank of Tennessee v. Burk, 1 Cold. (Tenn.) 623. A company incorporated for trading and other purposes may bind itself by a contract made in furtherance of the purpose of its incorporation, though not under seal: Henderson v. Australian Steam Navigation Co., 5 E. & B. 409. Where a company is established for trading purposes, the business of which requires that it should have the power of issuing bills of exchange and promissory notes, as in banking and trading companies, such a company has impliedly that power: Church v. Imperial Gas Light Co., 6 A. & E. 861. So where the power appears to exist under the articles of association, though it could not be inferred from the nature of the business of the company, such company may issue negotiable instruments: Peruvian R. Co. v. Thames Marine Insurance Co., L. R. 2 Ch. 618. A promissory note signed on behalf of a company by its manager, but which was not necessary for the company's trading, and not authorized, is not binding on the company: Re Cunningham & Co., 36 Ch. D. 532. Where any application of the funds of a company would not be warranted by its charter, the Court cannot declare the company's property or funds liable therefor; as such a declaration would be giving judicial sanction to a liability ultra vires of the company: North American Life Insurance Co.'s Case, 20 Can. L. J. 335. A railway company not having been authorized by its charter, or the general Railway Act of 1851, to draw bills or give notes, cannot so contract: Topping v. Buffalo &c., R. Co., 6 U. C. C. P. 141. A railway company incorporated by a special act of the Imperial Parliament containing the usual clauses inserted in such statutes, cannot accept bills of exchange: Bateman v. Mid Wales R. Co., L. R. 1 C. P. 499. Sec. 22. Sec. 22. A company incorporated for repairing steamboats and other vessels, and having power to transact business of a commercial character, may give and take notes in the course of its business: Kingston Marine R. Co. v. Gunn, 3 U. C. Q. B. 368. See as to a salvage company, Thompson v. Universal Salvage Co., 1 Ex. 694. A mining company incorporated under C. S. C. c. 63, has not as a necessary incident to its business the right, to draw bills or give notes: Gilbert v. McAnnany, 28 U. C. Q. B. 384, s. p. Dickinson v. Valpy, 10 B. & C. 128. Commissioners for a turnpike road trust, appointed under a statute limiting their powers, took a note from the tenant of the road for the amount of rent;-Held, that the commissioners had no power, to give time by note for payment of rent already due: Ireland v. Guess, 3 U. C. Q. B. 220. A promissory note signed on behalf of a municipal corporation in settlement of a judgment against the municipality is void, no power to give promissory notes being implied as necessary to the business of the corporation; and besides the legislature having empowered municipalities to raise money in a different way: Pacaud v. Corporation of Halifax South, 17 L. C. R. 56. Where no denial of the capacity of a corporation to draw a bill or make a note is pleaded, the Court will presume that the corporation is capable in law of making negotiable paper: Farrell v. Oshawa Manufacturing Co., 9 U. C. C. P. 239. Where a municipal corporation had allowed judgment to be obtained ex parte, on a promissory note signed by its mayor and secretary-treasurer, and then appealed on the ground that the note was void for want of authorization in the signers, the appeal was dismissed on the ground that the note being apparently regular, and the corporation not having objected in the Court below to the want of authority to make such note, could not raise such defence in appeal: Corporation of Grantham v. Conture, 10 Rev. Leg. 186; s. c. 2 Leg. News 350. The secretary-treasurer of a municipal corporation has no power to sign notes and accept drafts: Martin v. Corporation of Hull, 9 Rev. Leg. 512; and 10 Rev. Leg. 232. A negotiable promissory note made by building society or other corporate body, not specially authorized by its charter to make promissory notes, is a promise held out to the public that it will pay the amount to the order of the person named therein, and will be held good as an acknowledgment of indebtedness; and in the absence of a plea specially denying the existence of the debt or the authority of the officers to make the note, the indorsee of such note may recover the amount from the corporation, on the mere production of the note: Societe de Construction du Canada v. Banque Nationale, 3 Leg. News 130, and 24 L. C. J. 226. A note given by a building society as collateral security for an advance to the society, is not an ordinary negotiable note: Cooley v. Dominion Building Society, 1 Leg. News 495. By the provisions of several statutes it was enacted, that "it shall not be lawful for any body corporate to borrow, owe, or take up any money on their bills or notes payable on demand, or at any less time than six months from the borrowing thereof ";-Held, that a corporation not established for trading purposes could not become acceptors of a bill payable at a less period than six months from the date: Broughton v. Manchester Waterworks, 3 B. & A. 1. Directors of a cemetery company were by their act of incorporation Sec. 22. empowered to make contracts and bargains touching the undertaking, and to do and transact all other matters and things requisite to be done and transacted for the direction and managment of the affairs of the company ;-Held, that they had no power to accept or indorse bills: Steele v. Harmer, 14 M. & W. 831; 4 Ex. 1. See also Brown v. Byers, 16 M. & W. 252. If a bill is drawn on behalf of a company for any purpose not within the scope of the business of the company, and not such as the directors have power by the deed of settlement to bind the company in respect of, it does not bind the company, and is not available in the hands even of a bona fide holder: Balfour v. Ernest, 5 C. B. N. S. 601. See also Bramah v. Roberts, 3 Bing. N. C. 963; and Butt v. Worrell, 12 A. & E. 745. See also, note 1 to s. 17, and the notes to s. 26. * An infant is in the eye of the law infans, that is speechless, or in other words, one that cannot speak for himself in the ordinary matters of contract: Golding's Petition, 57 N. H. 149. The law does not consider an infant is capable of making an accurate computation: Truman v. Hurst, 1 T. R. 40. An infant may bind himself to pay for his necessary meat, drink, apparel, necessary physic, and such other necessaries; and likewise for his good teaching or instruction, whereby he may profit himself afterwards : 1 Co. Litt. 172. This is benignity to infants, for if they were not allowed to bind themselves for necessaries, no person would trust them, in which case they would be in worse circumstances than persons of full age: 3 Bacon's Abridgement 593. ILLUSTRATIONS. An infant is not liable on a bill of exchange accepted by him for necessaries: Williamson v. Watts, 1 Camp. 553. But see Russell v. Lee, 1 Lev. 86, and the reporter's note to this case, in 1 Camp. 553. An action cannot be maintained against an infant upon his promissory note as it is, but it can be maintained for the necessaries for which such note was given: McCroillis v. How, 3 N. H. 348, s. p. Swasey v. Vanderheyden, 10 Johns. (N. Y.) 33. An action is maintainable by an indorsee for value against an acceptor of a bill, accepted while such acceptor was an infant for a debt contracted during infancy, though not for necessaries : Belfast Banking Co. v. Doherty, 4 L. R. Ir. 124. A note executed by an infant as surety for another, is void: Maples v. Wightman, 4 Conn. 376. A note given by an infant who is the father of a bastard child, on a settlement with the mother, is valid: Gavin v. Burton, 8 Md. 69. An infant who has traded while under age, and who has, while so trading, committed an act of bankruptcy, may be adjudicated a bankrupt after he has arrived at full age: Ex parte Lynch, 2 Ch. D. 227. Action was brought on a promissory note made by the defendant, a minor, and indorsed by the payees to the plaintiffs before maturity. Defendant pleaded his minority; but, held, that as the evidence proved Sec. 22. that the defendant was a trader, and that as the note was given for goods purchased for the use of his business as such, he was liable: City Bank v. Lafleur, 20 L. C. J. 131. Signature essential to liability. Four promissory notes were made by the defendant and one H., payable to the plaintiff for the purchase of the plaintiff's interest in certain homestead lands in the state of Michigan, H. being the purchaser of the lands, and defendant signing as surety. Under the laws of Michigan only persons over twenty-one years could locate homestead lands; and the plaintiff was under that age. There was no representation that the plaintiff was of age, and H. obtained from the plaintiff a surrender of his interest in the land, whereby he was enabled to have himself located in his stead, which he otherwise might have had difficulty in doing, and he got the same rights which he would have got if the plaintiff had been of full age :-Held, that it could not be said that there was no consideration for the notes, nor any misrepresentation; and the plaintiff was therefore entitled to recover: Fletcher v. Noble, 8 Ont. R. 122. J., an infant gave to M. a promissory note for the purchase money of a buggy, indorsed by his father, who was of unsound mind, and unable to understand what he was doing. The father received no consideration, and M. was not aware of his condition; -Held, that the father's estate was not liable: Re James, 9 Ont. P. R. 88. 5 The title, but not any contract of liability on the bill, passes from the person or corporation having no capacity to contract, to the holder, with all rights to enforce it against the other parties, and is equivalent to an indorsement "without recourse." In ordinary cases a corporation which has no capacity to draw a bill or make a note, incurs no liability by indorsing a bill or note. The question has been mooted whether corporations having no such capacity, can draw a cheque on a bank; such cheques being defined by s. 72 to be bills of exchange drawn on a banker payable on demand. But it was held in the case of a mining company (which companies have no power to draw bills; see note 3, to s. 22), that cheques drawn by the de facto directors of such a company, and paid by a bank, discharge the bank from liability in respect of the moneys of such company : Mahony v. East Holyford Mining Co., L. R. 7 H. L. 869. The signature for a corporation is a procuration signature. ILLUSTRATIONS. A note made payable to the treasurer of, and indorsed by him to, a municipal corporation, to secure a balance due the corporation on a past transaction, is not void under the Municipal Acts: Corporation of Belleville v. Fahey, 5 U. C. L. J. N. S. 73. In an action against an acceptor by an indorsee, it is no defence that the drawers who had drawn the bill payable to themselves, and indorsed it, were infants when it was drawn: Taylor v. Croker, 4 Esp. 187. An indorsement by an infant, though he is not capable of making a new contract, transfers the property in the bill; his indorsement being a condition of the contract: Lebel v. Tucker, B. & S. 833; s. p. Nightingale v. Withington, 15 Mass. 272. 23. No person is liable as drawer, indorser, or acceptor of a bill who has not signed it as such:1 Provided that (a) Where a person signs a bill in a trade or assumed Sec. 23. name, he is liable thereon as if he had signed it in his own Trade name name; 2 binds. binds. (b) The signature of the name of a firm is equivalent to Firm's name the signature by the person so signing of the names of all persons liable as partners in that firm. 3 1 By the rules of the law-merchant, no one is liable on a bill unless he is a party to it in one of the characters above named. But there has been a conflict of decisions as to how far the signature of a stranger to a bill or note, creates a liability or not. In some cases it has been held that it is not absolutely essential to the liability of the party signing, that the claim of liability on, or title to, the bill should have come through him ; nor that he should have signed his name on the back of the bill where an indorser usually signs. But in other cases such a signature when placed above the indorsement of the payee, has been held to create no liability; while in other cases, such a signature has been held to make the party liable as maker. In both classes of cases the signature had been made by a party who had agreed to become a surety for the payment of the bill or note. This conflict of decisions, and the absolute terms of this section, would seem to be moderated by s. 56. In actions on bills or notes, it is not admissible to give evidence that the bill or note sued upon, is the contract or liability of an undisclosed principal: 2 Taylor on Evidence, 933. See notes to ss. 6, 30 and 56. ILLUSTRATIONS. A note was drawn by L. & E. payable to P., and was indorsed by G., and then by P. who signed his name lengthwise on the back of the note, P. signed it cross-wise ;-Held, that G. by indorsing the note and giving it to P., allowed him to transfer it to whom he pleased; and that he was liable as an indorser: McLean v. Garnier, 2 Russ. & Gel. 432. A. made his note payable to B. or bearer; before delivery to B., D. indorsed it ;-Held, that D., the indorser, was liable to B. as holder of the note: Vanleuven v. Vandusen, 7 U. C. Q. B. 176. Where A. made a note payable to B. or order, and C. wrote his name on the back, without B.'s first indorsement ;-Held, that C. could not be considered as a new maker; and therefore not liable: Steer v. Adams, 6 U. C. O. S. 60. See Wilcocks v. Tinning, 7 U. C. Q. B. 372. A., an indorser who became a party to a note for the accommodation of the maker, on condition that B. should also become an indorser, but B. having refused;-Held, that A. was not liable, even at the suit of a holder for value: Ontario Bank v. Gibson, 4 Man. R. 440. W. made a note not negotiable, for money lent to W., and A. and B. signed on the back of the note as sureties; one of them had paid interest on it, and both promised to pay the note, when spoken to;— Held, that they were not liable upon the note: Skilbeck v. Porter, 14 U. C. Q. B. 430. See also, Leaf v. Gibbs, 4 C. & P. 466. |