The St. Stephen Branch Railway Co. v. Black.

If

purpose of obtaining funds for the construction of the Railway. This is entirely defeated by the acceptance of a promissory note, payable in a year. If after that note had been given, the directors had gone out of office, and their successors had repudiated it as ultra vires, could they not have pleaded or shown its invalidity, in any proceeding adopted by the defendant to make it available against their immediate demand for the assessment it was made to secure? It appears to us that they could, and this is a fair mode of testing its validity; for if the obligation is not equally binding on both parties, it will not avail either. There is another branch of the subject to which I have not referred, and which in my opinion has an important bearing upon this question. The capital stock of the Corporation consists of $300,000, divided into shares of $100 each. one portion of the shareholders paid their stock in notes, as in this case, and the other portion in cash, the whole sum would not make the required capital, and it would be a fraud upon the stockholders who paid cash. It appears to me that it comes within the principle stated in the judgment of Montague Smith, J. and Keating & Lush, J. J., in Taylor v. The Chichester & Midhurst Railway Company (L. R. 2 Ex. 370.) "If a contract made by a company incorporated by Act of Parliament for defined and limited objects, discloses on the face of it a covenant, which if enforced, would cause the funds of the Company to be appropriated to purposes other than those to which the Act says they shall be applied, such an agreement cannot be made the foundation of an action." By reference to 27 Vict. cap. 3, an Act in aid of the construction of railways, it appears that the subsidies are granted to certain railways on the condition of the bona fide expenditure of certain specified sums in dollars, so that the whole railway legislation of the Province is founded upon that principle.

For these reasons I am of opinion that authority to take a promissory note for calls, cannot be implied as a usual and appropriate means to accomplish the object and purpose of the Charter; and as there is no express authority, that the plaintiffs cannot recover.

Per Curiam. Rule discharged.

SMITH V. FLEMING & HUMBERT.

JUNE 21, 1870.

In an action by the holder against the maker of a promissory note, the defence was want of consideration, and that the note came into the possession of the plaintiff by fraud. Held, That whether there was fraud or not, was a question for the jury. This was an action against the defendants as makers of two promissory notes for $300 and $200 respectively. The notes were made payable three months after date to Ennis & Gardiner, or order, and endorsed by Ennis & Gardiner. At the trial before WELDON, J., at the St. John August Circuit, it appeared that the defendants and Ennis & Gardiner had been in the habit of accommodating each other with notes, and that the notes for which the action was brought, had been given to Ennis & Gardiner to be sold by Hardy their confidential clerk, and the proceeds handed to the defendants. The notes where not sold but retained by Hardy, and money which he had obtained improperly from Ennis & Gardiner used. The notes had never been discounted; they were deposited with D. J. McLaughlan to put into the Commercial Bank in his name for collection. Hardy soon after absconded. The defendants gave notice to McLaughlan to withhold the notes. Gardiner on getting back his notes to Fleming & Humbert, gave the following order to Hardy on McLaughlan:

D. J. MCLAUGHLAN, Esq.

SIR,-Please arrange with Mr. Hardy for the three notes you hold, as my interest in them has been transferred to him.

S. GARDINER.

After this, McLaughlan gave up the notes to Hardy, and after he left they were placed in the Commercial Bank for collection; Ennis & Gardiner had given no consideration for the notes.

The notes were not paid; and after Hardy had left the country, his wife sold the notes for $9 to her brother the plaintiff in the present suit. The defence was, that the notes were given without consideration, and that the transaction by which they came into the possession of Hardy, which was known by him, and the manner in which they came into possession of the plaintiff, was fraudulent. The learned Judge told the jury that there was such fraud in the case, and absence of consideration, as would preclude the plaintiff from recovering, and directed them to find for defendant.

Skinner, Q. C., in Michaelmas Term last obtained a rule nisi for a new trial, on the ground of misdirection in the learned Judge in withdrawing the case from the jury and directing them to find for the defendant. He contended that the question whether there was fraud or not, should have been left to the jury, Chitty on Bills, p.

Smith v. Fleming & Humbert.

76; Peacock v. Rhodes (25 L. & E. 533); Chitty on Contracts, 180, and Story on Agency, Sec. 7, were cited.

A. L. Palmer, Q. C., showed cause in Easter Term. There was clearly fraud and deceit in this case, and therefore it is impossible for the plaintiff to recover. Under the circumstances, as proved in this case, even Ennis & Gardiner could not have recovered, for there was no consideration given for the notes, and Hardy could not, for the transaction by which he became possessed of the notes was a fraud. Even supposing Hardy to have become the owner of the notes properly, there was no transfer by Hardy to plaintiff, to make the latter a holder. Hardy never transferred the notes, nor assented to the plaintiff bringing an action on them; for he was absent from the Province, and his wife had no right to sell the notes.

Skinner, Q. C., contra. I contend that the question whether there was fraud in this transaction or not, should have been left to the jury, which was not done. After the plaintiff gave his evidence, the learned Judge requested me to abandon the case. This I refused to do, and he then directed the jury to find for the defendant. When Hardy left Ennis & Gardiner, there was a conflict between them as to who owned these notes; McLaughlan in consequence would not givo them up until Ennis & Gardener wrote to him directing him to arrange them with Hardy, as their interest in them had been transferred to him. They were therefore properly in Hardy's possession; and I contend that being endorsed by Ennis & Gardiner, and then passing from hand to hand, they became the same as notes payable to bearer, and can be recovered on by the party holding them; therefore the plaintiff was entitled to recover.

Cur, adv. vult.

ALLEN, J., now delivered the juugment of the Court.

The learned Judge directed the jury that there was such fraud shown in this case as would preclude the plaintiff from recovering, and therefore directed a verdict for defendant. We think that if the case turned on the question of fraud, it was a question for the jury, under the circumstances, rather than the Judge, and should have been submitted to them. The rule must be made absolute for a new trial.

INCHES v. FOGG & DOWLING.

JUNE 21, 1870.

D. who resided at Fredericton, had dealings in lumber with F., who resided at Providence, R, I. D. wrote to F. asking him to join with him in the purchase at a price named, on joint account, of certain laths to be manufactured by M. F. telegraphed in reply, "Take the laths." M. was unable to manufacture without supplies; and I. at a meeting of E. M. and I., agreed to supply M., the laths cut by M. to belong to I. from the time they left the saw. I. being shown the contents of the letter and telegram, agreed to furnish the laths to D. at the price named therein. The laths were delivered to D. and shipped by him to F., who sold them on joint account. Held, Fisher, J. dissentiente, in an action against D. and F. for the price of the laths, that D. had authority from F. to purchase from I. on joint account, the laths purchased being those cut by M. and referred to in the letter.

That the authority being in writing, whether D. had authority to purchase or not was a question of law for the Judge to determine, and not for the jury.

This was an action to recover damages for the non-acceptance of a quantity of laths bargained and sold by the plaintiff to the defendants, with a count for goods sold and delivered, and for money had and received. At the trial before FISHER, J., at the York sittings, it appeared that Dowling, one of the defendants, who resided at Fredericton and carried on business under the style of McLean & Dowling, had certain transactions in lumber and shingles with the other defendant, Fogg, who resided at Providence, Rhode Island. A large amount of correspondence between Dowling and Fogg was put in evidence, from which it appeared that Dowling desired Fogg to engage with him on joint account in a transaction for the purchase of certain laths to be cut by Morrison, who had a mill near Fredericton. On the 9th February, 1867, Dowling wrote to Fogg as follows: "Morrison was in to-day to see us; he is anxious to fix a price say for four or five millions of his laths. Parties from St. John have made him offers of $1.25 delivered there; will cost eleven or twelve cents to freight them to St. John. We are afraid if we don't close with him at a figure, we will not get all his first month's cutting. Will you go in on joint account with us for his first five millions at $1.13 gold? If we cannot get them at that, go two or three cents more. Better make a beginning on the joint business; telegraph us on receipt of this if you will." In reply to this, Fogg on the 17th February telegraphed to Dowling, "Take the laths." Morrison it appeared was unable to manufacture the laths without supplies, and communicated this fact to Dowling; and at the meeting of Dowling, Morrison, and the plaintiff, it was agreed that the plaintiff should make the necessary advances to Morrison to enable him to manufacture the laths, and that in consideration of such supplies, the laths should be the property of the plaintiff from the time they left the saw. Dowling communicated to plaintiff the contents of the letter he had written to Fogg on the 9th February,

Inches v. Fogg & Dowling.

and the telegram in answer thereto from Fogg to Dowling, of the 17th February, and plaintiff agreed to furnish the stipulated quantity of laths at the price named. Fogg was not communicated with at that time in regard to the connection of the plaintiff with the transaction, and the first intimation he had of it was in October, 1867, when the plaintiff rendered him an account of the price of the laths. The laths were manufactured by Morrison, and over three millions delivered to Dowling, and shipped by him to Fogg, who disposed of them on joint account. The balance of the five millions sold were not delivered to Dowling, because he said he was unable to pay for them.

On the part of the defendant, (Fogg,) it was contended that Dowling's letter and Fogg's telegram referred only to a transaction with Morrison, and did not authorize Dowling to purchase laths from Inches; and even if it did, in either case the contract was between Dowling and Inches, and Fogg was not liable on it. It was also shown that prior to the making of the contract, Dowling was indebted to Fogg in a large amount, and that Morrison was indebted to Dowling.

The learned Judge left to the jury to find from the evidence whether the defendant (Dowling) had authority from Fogg to purchase the laths from Inches; but expressed the opinion that in the view he took of the case, Dowling only had authority to purchase from Morrison. The jury found for the defendants.

A. L. Palmer, Q. C., in Hilary term last obtained a rule nisi for a new trial, on the ground (inter alia) of misdirection, in that the learned Judge should have directed the jury that Dowling had authority from Fogg to make a contract with Inches for the purchase of the Morrison laths.

W. Jack, Q. C. and S. R. Thomson, Q. C., showed cause in Easter term. We contend that Dowling was never authorized by Fogg to pledge his credit; Dowling was neither his agent nor his partner, to pledge his credit. [RITCHIE, C. J.: Taking the letter of the 9th February and the telegram of the 17th, can you say that Fogg would not be liable as a partner?] These two papers would not make out a partnership without extrinsic evidence. [RITCHIE, C. J.: When the laths were bought, was not Fogg a joint purchaser?] No, for the phrase "joint account" is merely a term of trade capable of being explained. [RITCHIE, C. J.: I should say the moment the laths were bought on joint account, Fogg and Dowling became partners as to that transaction.] [ALLEN, J.: I think we cannot hold otherwise, without doing violence to the meaning of the words.] Unless our contention is right, there could be no joint account trans