Statement to be laid be CHAPTER XI. ANNUAL STATEMENT AND INSPECTION. The sub-heading of the Act which precedes sec. 54 is "Annual Statement and Inspection." The collocation of words is a misleading one, and would indicate that some provision was made for an inspection of the affairs of the bank. The inspection referred to is merely the right of inspection of the books, etc., which the directors have at all times. See sec. 56. The sections included in this chapter do not apply to the Bank of British North America (sec. 6.) 54. At every annual meeting of the shareholders for the fore annual election of directors, the out-going directors shall submit a clear meeting. and full statement of the affairs of the bank, 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. Liabilities. Assets. 2. The statement shall show, on the one part, (a) the amount of the capital stock paid in; (b) the amount of the notes of the bank in circulation; (c) the net profits made; (d) the balances due to other banks; and, (e) the cash deposited in the bank, distinguishing deposits bearing interest from those not bearing interest. 3. The statement shall show, on the other part,— (a) the amount of the current coin, the gold and silver bul- (b) the balances due to the bank from other banks; (d) the amount of debts owing to the bank, including and 4. The statement shall also exhibit, Sec. 54. (a) the rate and amount of the last dividend declared by Other parthe directors; (b) the amount of reserved profits at the date of such statement; and, (c) the amount of debts due to the bank, overdue and not paid, with an estimate of the loss which will probably accrue thereon. 53 V., c. 31, s. 45. As to the annual and other meetings of the shareholders, see Chapter VI. on Internal Regulations. See sec. 153 as to the liability for the making of a false statement. ticulars. 55. The directors shall also submit to the shareholders such Further statements further statement of the affairs of the bank, other than state- as required ments with reference to the account of any person dealing with by by-law. the bank, as the shareholders require by by-law passed at the annual general meeting, or at any special general meeting of the shareholders called for the purpose. 2. The statements so required shall be submitted at the When to be submitted. annual general meeting, or at any special general meeting called for the purpose, or at such time and in such manner as is set forth in the by-law of the shareholders requiring such statements. 63-64 V., c. 26, s. 9. This section was added to the act in 1900 as a sub-section of section 54. It provides in effect that whenever the shareholders by by-law require the directors to give any particular class of information at the annual or any special general meeting, the same is to be furnished in accordance with such by-law, provided, however, that the shareholders shall not be entitled to information with regard to the accounts, of the customers of the bank, these accounts being guarded from inspection by sec. 56. Cf. sec. 113, conferring power on the Minister of Finance to call for special returns in addition to the regular monthly returns required by sec. 112. See sec. 153, as to the liability for the making of a false state ment. Sec. 56. Inspection of books. Customer's accounts. No privilege at common law. 56. The books, correspondence and funds of the bank shall, at all times, be subject to the inspection of the directors. 2. No person, who is not a director, shall be allowed to inspect the account of any person dealing with the bank. 53 V., c. 31, s. 46. Bank cannot refuse to disclose transactions with customer in court proceedings. At an early date it was held in Upper Canada that a shareholder of a bank, merely as such, has no right to inspect the stock books or other books of the bank. (In re The Bank of Upper Canada v. Baldwin, 1829, Draper 55.) Any right that he might possibly have asserted to inspect the account of any person dealing with the bank has been done away with by this section which dates from 1871. The section does not, however, create any privilege so as to enable a bank to refuse to disclose its transactions with one of its customers, when the propriety of those transactions is in question in a court of law between the bank and another customer who attacks them and shews good cause for requiring the information he seeks. (Re Chatham Banner Co., Bank of Montreal's Claim, 1901, 2 O.L.R. 672.) The evidence as to a customer's account is not privileged at common law, and this section amounts only to a prohibition against the bank's voluntarily permitting any examination of its customers' accounts save by a director. An officer of a bank, when served with a subpoena duces tecum to attend as a witness in an action, is bound, whether the bank is a party or not, to produce the bank books specified in the subpoena which are in his custody and control, and which contain any entry relevant to the matters in question in the action. He must also give evidence as to such entries. The books of a branch bank are primâ facie deemed to be in the custody and control of the local manager and their production within the scope of his authority. (Hannum v. McRae, 1898, 18 P.R. 185.) Inconvenience to the bank is no ground for refusing production. There is no statute in force in Canada corresponding to the English Bankers' Books Evidence Act, which was passed to remedy the inconvenience of producing the original books, and which allows examined copies of entries to be produced in their place. Even in England, however, a banker remains bound at common law Sec. 56. to produce his books, except in so far as the inconvenience may be modified by statute. (Ibid. pp. 187, 196.) The question of the legal duty of a bank to keep its cus- Duty to keep custtomers' affairs secret is not clear. The balance of judicial opin- omer's ion seems to favour the view that there is an implied undertak- affairs secret. ing in the contract between bank and customer that the bank will not unreasonably disclose the state of its customer's account, the damages for breach being confined to actual damage sustained by the customer. (Foster v. Bank of London, 1862, 3 F. & F. 214; Tassel v. Cooper, 1850, 9 C.B. 509; Hardy v. Veasey, 1868, L.R. 3 Ex. 107; Hart on Banking, 2nd. ed., 1906, p. 214.) Probably if a cheque is presented for an amount greater than the amount to the credit of the drawer's account, the bank ought not to state the amount of the deficiency, or say more than "not sufficient funds." (Foster v. Bank of London, supra.) A director is not bound to examine entries in any of the Director's company's books, nor is constructive notice to be so extended as liability. to impute to him a knowledge of the contents of the books. In re Denham & Co., 1883, 25 Ch. D. 752, and see Chapter VI., supra, as to Liability of Directors.) CHAPTER XII. DIVIDENDS. Sec. 57 authorizes the payment of dividends out of profits, sec. 58 prohibits their payment so as to impair the paid-up capital, and sec. 59 forbids their being paid to an amount exceeding 8 per cent. per annum unless a certain rest or reserve fund is maintained. The provisions of secs. 58 and 59 expressly apply to bonuses as well as dividends. A bonus is merely an extra dividend or allowance to the shareholders, and the power to declare a bonus is covered by the power to declare a dividend given to the directors by sec. 57. As to liability of directors see notes to sec. 39 and also Chapter VI., supra. Sections 57 and 58 were divided into their present sub-sections in 1906. Quarterly or 57. The directors of the bank shall, subject to the provihalf-yearly. sions of this Act, declare quarterly or half yearly dividends of so much of the profits of the bank as to the majority of them seems advisable. Notice. Books closed. Declaration 2. The directors shall give at least thirty days' public notice of the payment of such dividends previously to the date fixed for such payment. 3. The directors may close the transfer books during a certain time, not exceeding fifteen days, before the payment of each dividend. 53 V., c. 31, s. 47. Public notice.-The nature of this is prescribed by sec. 2, sub-sec. 2. Section 77 gives the bank a lien on unpaid dividends for any indebtedness or liability of the shareholder. The practice of paying dividends quarterly instead of halfyearly is now becoming general. Whether the whole or any part of the profits should be diof dividends vided, or what portion should be divided and what portion re discretion ary. |