The bank to make an annual return to the Minister of Finance of all drafts or bills of exchange issued and remaining unpaid for over five years, under penalties for failure to make the same (sec. 21).

In the event of suspension of payment by a bank, a curator to be appointed by the "Canadian Bankers' Association" to supervise the affairs of such bank. Provisions as to the curator's powers, duties and remuneration (secs. 24 to 29). Further by-laws, rules and regulations to be made by the said Association, subject to the approval of the Treasury Board, not only on the subject of the curator's powers, duties and remuneration, but also as to, (1) the supervision of the making of the notes of the banks which are intended for circulation and the delivery thereof to the banks; (2) the inspection of the disposition made by the banks of such notes; (3) the destruction of notes of the banks, etc., (secs. 30 to 32).

By another statute of the same year the Canadian Bankers' Association was incorporated, among its powers being that of establishing clearing houses for banks, and of making rules and regulations in regard to them (63-64 Vict. c. 93).

Revised Statutes of Canada, 1906.

In 1906 the Bank Act, 1890, and amending acts were consolidated as c. 29 of the Revised Statutes of Canada, 1906. In the revision the arrangement of the sections has been considerably altered, and many sections have been divided into new sub-sections, and some have been re-drafted. In one or two instances it is not clear that the revisers have not effected some unintentional legislation.

Warehouse Receipts and Bills of Lading.

As noted above, the Act of 1859 was the beginning of the legislation permitting banks to take warehouse receipts and bills of lading as security for advances. By various statutes in subsequent years this privilege was very much amplified. Especially in 1890, important modifications were made in the rights of the banks in regard to this kind of security. As the legislative history of these rights is necessary to a perfect understanding of the reported cases, it has seemed more convenient to review the previous legislation under the sections of the

present act which relate to this branch of the subject. The reader is therefore referred to chapter XVI, infra.

Authorities.

The principal authorities for the foregoing, are, of course, the original statutes, and the reports of parliamentary proceedings. In the writing of the chapter, use has also been made of Dr. R. M. Breckenridge's "Canadian Banking System, 18171890," published in Volume II. of the Journal of the Canadian Bankers' Association at pages 105 et seq., and reviewed in Volume III. at page 100. Another valuable contribution to the history of Canadian Banking is Professor Adam Shortt's History of Canadian Currency, Banking and Exchange (not yet completed), published in instalments, the first of which appeared in Volume V. of the Journal. Reference may be had especially to Volume XII. at page 265, for a discussion of the critical period of 1870-1871 when, under the direction of Sir Francis Hincks, the general banking policy of the government was definitely settled, and to Volume XIV. at page 7, for an account of the revision of 1880.

An instructive discussion of the practical working of the Canadian banking system is contained in a paper by Mr. B. E. Walker, now President of the Canadian Bank of Commerce, read before the Congress of Bankers and Financiers at Chicago in 1893, published in Volume I. of the same journal, page 1, and reprinted as an introduction to Maclaren on Banking, (second edition, 1901). See also a similar paper read at a meeting of the New York State Bankers' Association, held at Saratoga in 1895, and at other meetings of bankers, published in Volume XII. of the Journal, at page 233.

Mr. Walker has also published a useful "History of Banking in Canada," (reprinted, 1899, from "A History of Banking in all Nations," by permission of the publishers, the Journal of Commerce and Commercial Bulletin, New York).

CHAPTER II.

USAGE AND THE LAW MERCHANT.

not Law merchant formerly no t cf. part of the T. Common

Formerly the law merchant or custom of merchants was a part of the Common Law of England as it is now, but a concurrent and co-existent law. Its early history is obscure; Blackburn on Sales, 8th ed., p. 317, and see an article by A. Carter in 17 L.Q.R. 232 (1901).

Law.

Apparently this lex mercatoria comprised, in addition to a Early body of maritime law of international character, a definite body History. of customary mercantile law recognized both in England and on the Continent of Europe, and slightly affected perhaps by local variations. In England this mercantile law was administered in local and popular courts of mercatores and marinarii, these being the two classes of persons whom it concerned. Edward I. was particularly solicitous for the foreign merchant in endeavouring to give him the speedy justice which he demanded, and constituted the King in Council the final court of appeal in mercantile disputes. The Statute of the Staple (27 Edw. III., st. 2), is an epitome of the royal policy in this respect. Subsequently the Admiralty Court with some success struggled to usurp the jurisdiction, and the local mercantile courts fell into desuetude. The common law courts in turn destroyed the admiralty jurisdiction by issuing prohibitions whereever a maritime contract had not actually been made or goods had not actually been supplied on the high seas, and, in order to withdraw a suit from the courts of admiralty, permitting the use of the fiction that a contract really made at sea was made at the Royal Exchange. The administration of the mercantile law in the common law courts was, however, most unsatisfactory, owing doubtless to the fact that this branch of the law had never been made the subject of professional study. But for Lord Mansfield, the merchants, dissatisfied with the illiberal policy of the common law courts, might have resorted to the courts of chancery, whose doctrines and practice were in many respects similar to their own. That great judge employed his learning and his genius, "not only in doing justice to the parties litigating before him, but in settling with precision and

Law merchant not

upon sound principles, general rules afterwards to be quoted and recognized as governing all similar cases" (Lickbarrow v. Mason, 1787, 2 T.R. 63). He may truly be said to be the founder of the commercial law of England.

The law merchant is not fixed and stereotyped, but is capable stereotyped. of being expanded and enlarged so as to meet the wants and requirements of trade in the varying circumstances of commerce. It is neither more nor less than the usages of merchants and traders in the different departments of trade, ratified by the decisions of courts of law, which, upon such usages being proved before them, have adopted them as settled law with a view to the interests of trade and the public convenience. The court proceeded herein on the well-known principle of law that, with reference to transactions in the different departments of trade, courts of law, in giving effect to the contracts and dealings of the parties, will assume that the latter have dealt with one another on the footing of any custom or usage prevailing generally in the particular department. By this process, what before was usage only, unsanctioned by legal decision, has become engrafted upon, or incorporated into, the common law, and may thus be said to form part of it. "When a general usage has been judicially ascertained and established," says Lord Campbell in Brandao v. Barnett, 1846, 12 Cl. & F. at p. 805, 3 R.C. at p. 606, "it becomes a part of the law merchant, which courts of justice are bound to know and recognize" (Goodwin v. Robarts, 1875, L.R. 10 Ex. 337, 346, S.C. 1 App. Cas. 476).

Examples.

Thus when goldsmiths' or bankers' notes came into general use, Lord Mansfield and the Court of King's Bench had no difficulty in holding that the property in such notes passed by delivery on the ground that they "are treated as money, as cash, in the ordinary course and transaction of business, by the general consent of mankind, which gives them the credit and currency of money, to all intents and purposes" (Miller v. Race, 1758, 1 Burr, at p. 457, 3 R.C. at p. 63.

In Goodwin v. Robarts, supra, at p. 351, Cockburn, C.J. notices another very remarkable instance of the efficacy of usage. It is notorious, he says, that with the exception of the Bank of England, the system of banking has recently undergone an entire change. Instead of the banker issuing his own notes in return for the money of the customer deposited with him, he gives credit in account to the depositor, and leaves it

to the latter to draw upon him, to bearer or order, by what is now called a cheque. Upon this state of things the general course of dealing between bankers and their customers has attached incidents previously unknown, and these by the decisions of the courts have become fixed law. Thus, while an ordinary drawee, although in possession of funds of the drawer, is not bound to accept, unless by his own agreement or consent, the banker, if he has funds, is bound to pay on presentation of a cheque on demand. Even admission of funds is not sufficient to bind an ordinary drawee, while it is sufficient with a banker; and money deposited with a banker is not only money lent, but the banker is bound to repay it when called for by the draft of the customer. Besides this, a custom has grown up among bankers themselves of marking cheques as good for the purposes of clearance, by which they become bound to one another.

Bills of lading may also be referred to as an instance of the manner in which general mercantile usage may give effect to a writing which without it would not have had that effect at common law. It is from mercantile usage as proved in evidence, and ratified by judicial decision in the great case of Lickbarrow v. Mason, 1787, 2 T.R. 63, that the efficacy of bills of lading to pass the property in goods is derived.

Again in Brandao v. Barnett, supra, judicial notice was taken of the usage of trade by which bankers are entitled to a general lien on the securities of customers in their hands.

The greater or less time during which a custom has prevailed Evidence of may be material in determining how far it has generally pre- usage.

vailed, but if it is once shewn to be universal, it is none the less entitled to prevail because it may not have formed part of the law merchant as previously recognized and adopted by the courts (Goodwin v. Robarts, supra).

A mercantile custom may be so frequently proved in courts of law that the courts will take judicial notice of it, and it becomes part of the law merchant. It would entail useless expense in such a case to require parties to prove by a large number of witnesses a custom which has been proved over and again. But if the reported cases do not clearly establish a custom it must be proved by evidence as on a question of fact (Ex parte Powell, 1875, 1 Ch. D. 501 at p. 506; Ex parte Hattersley, 1878, 8 Ch. D. 601; Chawcour v. Salter, 1881, 18 Ch.D. 30 at p. 50; Edelstein v. Schuler, [1902] 2 K.B. 144 at p. 155). Evidence to