Sec. 96. A "lawful claim" means one which is primâ facie substantial. (In re Bank of Toronto & Dickinson, 1906, 8 O.W.R. 323.) Lawful In this case money had been deposited to the credit of "the claim. executors of the estate of the late J.D." One of the executors subsequently served formal written notice on the bank, forbidding it to pay out money except on cheques signed by all three executors. It was held that the case came within the exception to sub-sec. 2, and an order was made for payment of the money into court, unless the parties would agree that it should be retained as if it were in court. Cf. Dominion Bank & Kennedy, 1906, 8 0.W.R. 755, 834. execution of So far as the obligation to see to the execution of any trust No obligais concerned, this section is in the same terms as sec. 52, and tion to see to the notes to that section may usefully be consulted in regard to trust. this section. As there pointed out, the provision seems to be directly applicable to trusts of which the bank has notice, for it would require no legislative provision to free the bank from responsibility for not seeing to the execution of a trust, the existence of which has not in some way been brought to its knowledge. A bank is liable if it knowingly participates in a breach of trust. (Cf. Gray v. Johnston, 1868, L.R. 3 H.L. 1.) Where it is proposed by the customer of the bank to apply a balance standing to the credit of the customer on a trust account or other trust moneys in discharge or reduction of a debt due from the customer upon his private account, the bank, ex hypothesi, knows the intended application of the trust moneys, and therefore may readily be held to have known that the transaction. was a breach of trust. But, although the bank knows that the money with which the customer repays an overdraft on his private account is derived from the funds of a third party, it does not necessarily follow that it knows of a misapplication. The circumstances of the case may be consistent with a right on the part of the customer to make the transfer or application in question. Cf. Hart on Banking, 2nd ed., 1906, p. 161; and see cases cited in next paragraph. The bank may treat all a customer's personal accounts as one (In re European Bank, 1872, L.R. 8 Ch. 41), but may not use the balance of an account, as to which it has notice that it is not a personal account, to meet a deficiency on a personal Sec. 96. account (Ex parte Kingston, 1871, L.R. 6 Ch. 632; cf. Union No obliga- Bank of Australia v. Murray-Aynsley, [1898] A.C. 693; Shields tion to see to v Bank of Ireland, [1901] 1 Ir. R. 222, and Bank of N.S.W. v. Goulburn, [1902] A.C. 543.) execution of trust. If depositor If, however, the bank receives money in good faith as money belonging to an estate of which it is a creditor, without notice of any trust, it may retain the same as against an alleged cestui que trust of such money. (Giraldi v. Banque Jacques-Cartier, 1883, 9 S.C.R. 597.) Where, however, a customer, who is a trustee, draws a cheque upon a trust account in favour of a third party, the bank will have its attention drawn to the object or purpose of the payment only under exceptional circumstances. It is under no obligation to enquire as to the purpose for which a cheque is drawn, and as it is not likely that the customer will voluntarily explain that he is about to misapply trust funds, it will obviously be very seldom that the bank will have notice of the breach intended. Hart, p. 163. In order to hold a bank justified in refusing to pay a demand of a customer, the customer being a trustee and drawing a cheque as trustee, there must, in the first place, be some misapplication, some breach of trust, intended by the trustee, and there must be, in the second place, proof that the bank is privy to the intent to make this misapplication of the trust funds. (Gray v. Johnston, supra; Bailey v. Jephcott, 1884, 9 A.R. 187; Clench v. Consolidated Bank, 1880, 31 C.P. 169.) The fact that the bank is personally interested in the misapplication may be very good evidence of notice, but in point of law the personal interest is immaterial, and actual notice of, and participation in, the breach of trust is sufficient ground of liability. Hart, p. 165. 97. If a person dies, having a deposit with the bank not dies, claim not exceed exceeding the sum of five hundred dollars, the production to ing $500, how the bank and deposit with it of,proved. (a) any authenticated copy of the probate of the will of the deceased depositor, 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 author- (b) an authentic notarial copy of the will of the deceased (c) if the deceased depositor died out of His Majesty's dominions, 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 justification and authority to the directors for paying such deposit, in pursuance of and in conformity to such probate, letters of administration, or other document as aforesaid. 63-64 V., c. 26, s. 20. This section dates from 1900 except for some re-arrangement of the wording in 1906. Letters of administration are valid so long as they are unrevoked, even though their grant was based upon fraud or forgery, and a bank paying money in good faith to an administrator who, by the law of the province where the money is payable, is entitled to receive it, is protected from liability to pay a second time. (Irwin v. Bank of Montreal, 1876, 38 U.C.R. 375.) By this section special provision is made authorizing the bank to pay the amount of a deposit, not exceeding $500, upon the production and deposit with it of an authentic notarial copy of the will, or an authenticated copy of the probate of the will or of letters of administration, etc., granted by a court of competent jurisdiction. This provision dispenses with the necessity of having letters of a foreign court resealed, or of obtaining grant of letters to a representative resident within the province where the debt is situate. Even if the deposit exceeds $500, and a representative of the deceased depositor is appointed in another province where the bank has an office, the bank might pay such representative at the latter place (cf. notes to sec. 76, supra, pp. 138-9. Sec. 97. Sec. 98. To be paid at par. DOMINION GOVERNMENT CHEQUES. 98. The bank shall not charge any discount or commission for the cashing of any official cheque of the Government of Canada or of any department thereof, whether drawn on the bank cashing the cheque or on any other bank. 53 V., c. 31, s. 103. Cf. secs. 93 and 94 as to agency and collection charges in other cases. CHAPTER XIX. THE PURCHASE OF THE ASSETS OF A BANK. The sections included in this chapter were first enacted by the Bank Act Amendment Act, 1900, and the Act amending the same (63 Vict., c. 27.) They are intended to provide a convenient method whereby a bank, which desires to dispose of its business, may be able to do so without applying to Parliament. The first Order in Council passed under the provisions of the Act was that of the 31st of December, 1900, approving an agreement, dated the 15th day of December, 1900, between the Bank of British Columbia and the Canadian Bank of Commerce, and a proposed increase of the capital stock of the latter bank from $6,000,000 to $8,000,000 in order to provide for the payment to the former bank of $2,000,000 of fully paid-up shares of the latter bank as provided in the said agreement. See Dominion Statutes, 1902, p. LV. THE PURCHASE OF THE ASSETS OF A BANK. sell assets to 99. Any bank may sell the whole or any portion of its Bank may assets to any other bank which may purchase such assets; and another the selling and purchasing banks may, for such purposes, enter bank. into an agreement of sale and purchase, which agreement shall contain all the terms and conditions connected with the sale and purchase of such assets. 63-64 V., c. 26, s. 33. 100. The consideration for any such sale and purchase may considerabe as agreed upon between the selling and purchasing banks. 2. If the consideration, or any portion thereof, is shares of the capital stock of the purchasing bank, the agreement shall provide for the amount of the shares of the purchasing bank to be paid to the selling bank. tion. If in shares of capital stock. 3. Until such shares so paid to the selling bank have been Not considsold by such bank, or have been distributed among and accepted until sold or ered issued distributed. |