Sec. 39.

Returns to mention.

Recovery of calls.

Forfeiture.

calls upon the shareholders to an amount equivalent to the loss: Provided that all net profits shall be applied to make good such loss.

2. Any such loss of capital and the calls, if any made in respect thereof, shall be mentioned in the next return made by the bank to the Minister. 53 V., c. 31, s. 48.

In the Act of 1890 this section and section 58 constituted one section. Sec. 58 provides that no dividend or bonus shall ever be declared so as to impair the paid-up capital of the bank. The separation of the two sections makes it quite clear that the recoupment, as directed by sec. 39, of paid-up capital lost, is not confined to the impairment of capital by reason of the declaration of dividends or bonuses.

40. In case of the non-payment of any call, the directors may, in the corporate name of the bank, sue for, recover, collect and get in any such call, or may cause and declare the shares in respect of which any such call is made to be forfeited to the bank. 53 V., c. 31, s. 32.

Shares declared forfeited under this section must under sec. 41 be sold by the bank within six months. Sec. 41 also provides for a money penalty for non-payment of calls, the amount of such penalty to be deducted from the proceeds of the sale of the shares. See sec. 42 as to what the declaration or statement of claim in an action for calls shall contain.

See sec. 128 as to forfeiture resulting from non-payment of a call when the bank is insolvent.

There must be properly appointed directors to declare a forfeiture. (Garden, Gully, etc. v. McLister, 1875, 1 App. Cas. 39, but see notes to sec. 12.)

No forfeiture can be effected unless every condition precedent has been strictly and literally complied with. (Johnson v. Lyttle, 1877, 5 Ch. D. at p. 694; In re New Chile Gold Mining Co., 1890, 45 Ch. D. 598.)

The power to sue or to declare a forfeiture is in the alternative. After threatening suit the directors cannot declare a forfeiture without giving an express notice that they intend to (Robertson v. Banque d'Hochelaga, 1881, 4 L.N. 314.)

do so.

failure to

41. If any shareholder refuses or neglects to pay any in- Sec. 41. stalment upon his shares of the capital stock at the time appoint- Fine for ed therefor, such shareholder shall incur a penalty, to the use pay call. of the bank, of a sum of money equal to ten per centum of the amount of such shares.

2. If the directors declare any shares to be forfeited to the Sale of forfeited shares. bank they shall, within six months thereafter, without any previous formality, other than thirty days' public notice of their intention so to do, sell at public auction the said shares, or so many of the said shares as shall, after deducting the reasonable expenses of the sale, yield a sum of money sufficient to pay the unpaid instalments due on the remainder of the said shares, and the amount of penalties incurred upon the whole.

3. The president or vice-president, manager or cashier of Transfer, the bank shall execute the transfer to the purchaser of the how executshares so sold; and such transfer shall be as valid and effectual

in law as if it had been executed by the original holder of the shares thereby transferred.

ed.

4. The directors, or the shareholders at a general meeting, Remission of forfeiture or may, notwithstanding anything in this section contained, penalty. remit, either in whole or in part, and conditionally or unconditionally, any forfeiture or penalty incurred by the non-payment of instalments as aforesaid. 53 V., c. 31, s. 33.

This section makes a shareholder who fails to pay a call liable to pay a money penalty to the use of the bank amounting to 10 per cent. of the amount of his shares. The penalty is in addition to the liability to forfeiture of the shares. The penalty or forfeiture may be remitted, or the bank instead of declaring the shares forfeited, may enforce payment of calls by suit, the forfeiture and suit being alternative not cumulative remedies.

The power to declare shares to be forfeited is given by sec. 40.

If the bank acquires shares by forfeiture it must within six months sell them, or a sufficient part thereof to pay the amount of penalties incurred for non-payment of the whole and the

Sec. 41.

Recovery by action.

unpaid instalments due on the part not sold. This is in accordance with the policy of sec. 76 of the Act, which forbids a bank to deal in shares of its own capital stock.

42. In any action brought to recover any money due on any call, it shall not be necessary to set forth the special matter in the declaration or statement of claim, but it shall be sufficient Allegations. to allege that the defendant is the holder of one share or more, as the case may be, in the capital stock of the bank, and that he is indebted to the bank for a call or calls upon such share or shares, in the sum to which the call or calls amount, as the case may be, stating the amount and number of the calls.

Proof.

2. It shall not be necessary, in any such action, to prove the appointment of the directors. 53 V., c. 31, s. 34.

This section dates from 1871, and is useful in practice. The jurisdiction of the Dominion Parliament has been questioned on the ground that procedure in an action for money due on a call is not properly part of the law relating to banking, and is not within the principle of Cushing v. Dupuy, 1880, 5 App. Cas. 409. In that case it was laid down that procedure even though it affected civil rights in the province necessarily forms an essential part of any law dealing with insolvency. The section, however, makes for the convenient operation of the Bank Act, and would seem to be intra vires of Parliament within the principle of Tennant v. Union Bank, [1894] A.C. 31.

CHAPTER IX.

TRANSFER AND TRANSMISSION OF SHARES.

The sections included in this chapter, with the exception of sec. 45, do not apply to the Bank of British North America (sec. 6).

Shares have been held to be choses in action (Colonial Bank Assignability v. Whinney, 1886, 11 App. Cas. 426, at p. 439). They may be of shares. assigned in any legal manner. (Bank of Montreal v. Henderson, 1870, 14 L.C.J. 169, 20 R.J.R.Q. 98.) Sec. 36 expressly declares them to be personal estate and also assignable and transferable in the place and in the manner, and subject to the rules and regulations, prescribed by the directors. The following sections contain additional limitations and provisions as to the transfer and transmission of shares.

TRANSFER AND TRANSMISSION OF SHARES.

43. No assignment or transfer of the shares of the capital Conditions stock of the bank shall be valid unless,

(a) made, registered and accepted by the person to whom the transfer is made in a book or books kept for that purpose; and,

(b) the person making the assignment or transfer has, if required by the bank, previously discharged all his debts or liabilities to the bank which exceed in amount the remaining stock, if any, belonging to such person, valued at the then current rate.

for transfer of shares.

2. No fractional part of a share, or less than a whole share, Fraction of shall be assignable or transferable. 53 V., c. 31, s. 35.

This section was divided into its present sub-sections in 1906. In other respects it dates from 1890.

Its predecessor (R.S.C. 1886, c. 120, sec. 29), constituted one section with sub-sec. 1 and 3 of the present sec. 36.

share not transferable.

Sec. 43.

ister trans

fer.

Sub-sec. 3 of sec. 36 is out of place where it now is, and belongs more properly to the subject of this chapter.

Obligation of The shares being by the express provisions of the Act transbank to reg-ferable (sec. 36), at the will of the holder, the directors are bound to register a transfer, transfer, unless some express provision of the act gives them the authority to refuse to do so, as in the two cases mentioned in section 43, namely, (1) if the transfer is not made, registered and accepted by the transferee in the books kept for that purpose, or (2) if the transferor, although required by the bank to do so, has not previously discharged all his debts or liabilities to the bank which exceed in amount the remaining stock, if any, belonging to him valued at the then current rate. (Smith v. Bank of Nova Scotia, 1883, 8 S.C.R. 558; cf. Barss v. Bank of Nova Scotia, 1885, 6 C.L.T. 443, 6 R. & G. (N.S.) 245.

Mode of transfer.

Two cases are mentioned in which a transfer shall not be valid, and the rule expressio unius exclusio alterius applies (In re Smith, Knight & Co., Weston's Case, 1868, L.R. 4 Ch. 20, at p. 30.)

As illustrating the proposition that the directors have no discretionary power to refuse to register a transfer except in the cases in which they are expressly authorized to do so, see In re McKain and Canadian Birkbeck, 1904, 7 O.L.R. 241; In re Panton and the Cramp Steel Co., 1904, 9 O.L.R. 3.

As to the rights and obligations of the bank in regard to transfer of shares which are subject to trusts, see Chapter X., infra.

As to the obligation to register a transmission of shares upon proper proof of the fact of transmission, see sec. 50.

If registration of the transfer is wrongfully refused, the transferee has a right of action-the measure of damages being the value of the shares at the time of the refusal to register. In re Ottos Kopje Diamond Mines, [1893] 1 Ch. 618.)

The foregoing must be read subject to the power of the directors under sec. 36 to regulate the form and conditions of transfers in general.

In practice the transferor does not usually attend in person to execute the transfer in the books of the bank, but executes a power of attorney by virtue of which some officer of the bank executes the transfer and registers the same in the books of the