mortgage on the property of the company by which it is issued, or some part of it, or secured by such a mortgage, and the addition of the word "land appears to me to be indicative of the nature of the property on which the mortgage is represented to exist.

What then is the meaning fairly to be attributed to the words added at the foot of the instrument, "the payment of this debenture and the interest thereon is guaranteed by the capital and assets of the company invested in mortgages upon approved real estate in the Dominion of Canada?"

The position which the provision occupies in the instrument is, I think, immaterial, as it forms an integral part of the debenture. The words "guaranteed by " are, or at least may be, the equivalent of the words "secured upon," and had that form of expression been used, there would be no room for doubt, I think, that the words would amount, if not to a direct charge on the capital and assets of the company, to a representation that the debentures were secured in that manner, and a contract with the payee of the debenture that he should have that security for the payment of the debenture money and interest.

It is unnecessary to refer to all of the authorities which were cited on the argument to support the proposition that such language as I have indicated will create a floating charge on the company's property. It will suffice to refer to three of them.

In In re Panama, New Zealand, and Australian Royal Mail Co., the debenture was headed "mortgage debenture," and by it the company charged its "undertaking, and all sums of money arising therefrom, and all the estate, right, title, and interest of the company therein," with the repayment of the money borrowed and interest thereon, and it was held by the Court of Appeal, affirming the judgment of Vice-Chancellor Malins, that the debenture holders acquired a charge upon all the property of the company, past and future, and that they were entitled to be paid out of the property of the company in priority to the general creditors.

In In re Florence Land and Public Works Co.-Ex. p. Moor, the instrument, which was called an "obligation," was expressed to be made under the power of the company's articles, which gave to the directors power to borrow money by mortgage on any part of the company's property, or by bonds, debentures, or mortgage debentures, which should entitle the holders to be paid out of the moneys, property, and effects of the company pari passu, and by the obligation the company bound themselves, their successors and assigns, and all their estate, property, and effects, to repay the sums mentioned therein at a future date. It was held that the obligation constituted a charge on the property of the company, subject to the power of the directors to dispose of

any part of it in the ordinary course of their business; the Master of the Rolls (Sir George Jessel) came to this conclusion, reading the obligation with reference to the articles of association, but Lord Justice James was of opinion that upon the construction of the obligation itself, without reference to the articles, except as to whether the obligation was intra vires, there was sufficient to constitute a charge upon the property of the company, and Lord Justice Thesiger agreed in the result without expressing any opinion as to the latter point.

In In re Colonial Trusts Corporation, the debenture was in the form of a bond, and by it the company "obligated" for payment of the debenture and interest the real and personal estate of the company. It was held that this created a floating security covering the company's property as it stood at the moment when the business was put an end to, but did not cover the uncalled capital of the company, as that was not "property" of the company.

Had the language in question in this case been used in a prospectus and not found a place in the debenture, there would be more room for the argument that it was intended merely to convey information to those who were invited to deal with the company by lending money to it upon its debentures, as to the nature of the securities in which the company invested its capital and assets, and to the "moral" security that was thus afforded for the payment of the debentures and interest; but found as the provision is on the face of the debenture itself, it cannot, I think, be so treated, and must be taken to have been intended to be, as I have said, at least a representation by the company that the payment of the debenture and interest thereon was secured upon the capital and assets of the company, and a contract that it should be so secured.

Assuming, however, that the language of the debenture is not such as in terms to create a charge on the capital and assets of the company, the case of In re Strand Music Hall Company (Limited), is an authority for my last proposition. In that case the directors of the company borrowed £5,000, under a written agreement with the lender, one of the terms of which was that two hundred mortgage bonds of £50 each, forming part of £25,000 of mortgage bonds constituting a first charge on the property of the company," should be deposited with the lender as collateral security for the loan, which was secured by two promissory notes of £2,500 each, and it was held that, as the directors had power to charge the property of the company, and the intention to create the charge appeared from the agreement, a valid charge was created, though the mortgage bonds were invalid through incompleteness.

The principle of this decision is, I think, clearly applicable to the present case, if I am right in the view that the debenture contains a contract with the debenture holder that he shall have, as security for the payment of his debenture and interest, the capital and assets of the company.

The same principle was applied in Town of Dundas v. Desjardins Canal Company, to the case of a canal company which had executed a bond which did not contain direct words of charge, but stated that the receiver was "entitled to such security therefor (i.e., money lent) as is mentioned in the said recited Act." The Act which authorized the borrowing provided that "all such bonds or mortgages * * shall take precedence and have priority of lien on the said canal and the tolls thereon, and other property of the company over all claims," etc., and it was held that, beyond doubt, the holders of the bonds were entitled to a charge on the canal and tolls and to the appointment of a receiver therefor.

So also in Ross v. Army and Navy Hotel Co., where the debentures were issued with a condition annexed that the holders of the debenture bonds of that issue were entitled pari passu to the benefit of a "covering deed" to secure the payment of all moneys payable on the debenture bonds, it was held that, assuming the covering deed to be void for want of registration under the Bills of Sale Act, the intention to give the debenture holders a valid charge on the property comprised in the deed was manifest on the face of the debentures, read in conjunction with the annexed condition, and amounted to an equitable contract which would be carried into effect to give a charge upon all the property of the company; and, accordingly, that the chattels intended to be charged with the money due on the debentures were subject to an equitable charge in favour of the holders of those debentures.

I refer also upon this point to In re New Durham Salt Co., Brice on Ultra Vires.

If the language of the instrument were more ambiguous than I think it is, the case is, in my opinion, one for a liberal application of the principle of taking words "fortius contra proferentem."

The ruling of the Master in Ordinary should, therefore, in my opinion, be reversed, and there be substituted for it a declaration that the debenture holders are entitled to be paid out of the assets of the company in priority to the depositors and other creditors. The costs of the appeal should, I think, be paid out of the moneys in the hands of the liquidator.

$147.343,000 132,676,000

Total imports other than bullion and coin....$125,142,000
Total exports other than bullion and coin.... 139,402,000

Excess....

Net imports bullion and coin

(Exp.) $14,260,000(Imp)$14,667,000

243,000

667,000

STATEMENT OF BANKS acting under Dominion Government charter for July and August, 1899, and comparison with August,

the months of June,

1898 :

316,330,478

319.172,045

322,704,010

$284,162,483

Total liabilities.