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Supreme Court of Canada

Drummond v. Baylie, (1877) 2 SCR 61

Date: 1877-06-28

Bonds—Collateral security—Replevin.

B., as trustee for H. C & Co deposited with. D. twelve bonds of the M. C. & S. Railway Company, as collateral security, to be availed of only subsequent to the failure of the Government to pay $10,000 subsidy previously transferred to D., and obtained a receipt from D. that on the subsidy being paid D. would return these bonds to B. The subsidy was paid and B. sued D. to recover back the twelve bonds. H. C. & Co. did not intervene.

Held: That B., being a party personally liable on the bills held by D, which the Government subsidy of $10000 transferred was intended to pay, and having complied with all the conditions mentioned in the receipt entitling him to recover possession of the bonds, was, as against ., the legal owner of the bonds.

THIS was an action to recover back twelve bonds delivered by Respondent to Appellant tinder the conditions set forth in the following receipt:—

"Montreal, September 4, 1874.

"Received of James Baylis, Esq., twelve bonds of the Montreal, Chambly and Sorel Railway Company, for $1000 each Nos. 0316 to 03277 consecutive and inclusive, say 0,316, 0,317, 0,318, 0,319, 0,320, 0,321, 0,322, 0,323, 0,324, 0,325, 0,326, 0,327, held in trust by me for him for Messrs. Hibbard, Cameron & Co., in accordance with letter 80th May last, which bonds I agree

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to deposit with the Ontario Bank, until arrangements for traffic guaranty have been completed or the Government subsidy transferred to me is paid, and upon payment of said subsidy I agree to return these bonds to said J. Baylis. They are to be regarded as security to be availed of only subsequent to the failure of the Government $10,000, transferred to me in March last, being paid by 1st January next, or there being a definite agreement to pay it. It being understood that these arrangements for traffic guarantee are now in progress, and will be completed in a reasonable time.

"(Signed)," "A. T. DRUMMOND."

The declaration alleged in effect:

That prior to the 31st March, 1874, the Defendant, Drummond, at the request and on the credit of the Plaintiff, undertook to buy and did buy on commission large quantities of iron girders, and iron rails, &c, for the Montreal, Chambly & Sorel Railway Company, of which Hibbard Cameron & Co. were the contractors, and furnished invoices to Plaintiff for the goods so purchased, charging them against Plaintiff, and undertook to receive payment by means of drafts of Hibbard Came ron & Co. indorsed by Baylis.

That a transfer to Defendant was passed before Lisrht-hail, N. P. of date the 31st March, 1874, made by the contractors, declared to be represented by Baylis, as their Attorney. The thing transferred, and the consideration and objects of the transfer are in the transfer stated in the following terms as being " a transfer of the sums of ten thousand dollars currency of Canada, of the Government subsidy, funds, or debentures to be had and taken by the transferee out of the first or by preference out of such subsidy, funds, or debentures granted by the Provincial Government of

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Quebec, and by the Legislature in favor of the Montreal chambly & Sorel Railway Company, which this Company is obliged to pay to the said Ashley Hibbard, under contract and agreement passed before the undersigned Notary, this 31st day of March, 1874 which is additional and supplementary to that between said Hibbard, Cameron & Co., passed before J. S Hunter Notary Public, of Montreal, the 16th day of October 1872. This transfer is thus made in consideration and in payment of certain drafts or bills granted by the said Hibbard, Cameron & Co. upon said James Baylis and accepted by him, payable to the order of the said Andrew T. Drummond, dated the 26th (should be the 28th) day of March inst, 1874, payable two months after date thereof, as follows, to wit: First, one for fourteen hundred dollars s a second, for twenty-two hundred and sixty-nine dollars and thirty-nine cents: a third, for forty-two hundred and twenty-five dollars fifteen cents; and a fourth for twenty-one hundred and four dollars and twelve cents thus forming the sum of nine thousand nine hundred and ninety-eight dollars and sixty-six cents currency in all, it being understood. that should the drawers or acceptors take up or pay any or any part of said drafts or any of them before or after falling due, said Andrew T. Drummond, his heirs or assigns shall be bound to retransfer sufficient of said sum so transferred as shall repay such amount or amounts as may be so paid."

That this sum of $9998.66 was the amount due the Defendant on the said iron &c. so purchased and for all interest and commission to the date of the drafts.

That the Railway Company intervened and became parties to the transfer; that the four drafts mentioned in the transfer were all renewed by four other drafts payable at four months, dated 31st May, 1874, for a like amount of $9998.66, all falling due on the 4th Sept.

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1874; also the payment by Plaintiff to the Defendant of all the interest charges, stamps, &c, on the renewals of the drafts, namely, $266.74 and $235.30.

That on the 4th September, 1874, the Plaintiff, in order further to secure payment of the drafts so renewed, delivered to the Plaintiff twelve bonds or debentures of the said Railway Company on the terms set forth in the above receipt.

The declaration also sets up Defendant's undertaking and liability in law to return to the Plaintiff the four paid drafts or Bills to secure the payment of which the Government subsidy of $10,000 had been transferred, and the 12 debentures delivered to Defendant also defendants refusal to return either the bonds or bills. Conclusion, that Defendant be condemned so to do, or to pay $15,000.

Defendant pleaded that the twelve bonds or debentures of the Montreal, Chambly and Sorel Railway Company, referred to in Plaintiffs declaration, are not now, and never were the property of the said Plaintiff and the Plaintiff had not at the time of the institution of this action any interest in said bonds or any right of action to recover the same from the Defendant.

That the said bonds were received by Defendant from the said Hibbard Cameron & Co. mentioned in the Plaintiff's declaration, through the hands of the Plaintiff, who only had them in his possession as Attorney of said Hibbard, Cameron & Co.

That said Plaintiff previous to the institution of this action, became insolvent, and was not then, and had long ceased to be, Attorney of the said Hibbard Cameron & Co.

That the said bonds were so received from the said Hibbard Cameron &c Co. as collateral security for the payment of the drafts of said Hibbard, Cameron

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& Co., mentioned in Plaintiff's declaration, and all renewals thereof, and the costs and charges in connection with said drafts due the defendant by said Hibbard, Cameron &c Co., and as security for Defendant's charges as a commission merchant in buying the goods mentioned in Plaintiff's declaration and for commissions in renewing said drafts, and for interest on the same, and for monies paid and expended in and about the same.

That the Defendant, as such commission merchant, had a lien on the said bonds for the payment of his said charges, amounting to $1,599.80, as per detailed statement thereof fyled as Defendants exhibit number one and had a right to retain the same until payment of said sum.

The judgment of the Superior Court dismissed Plaintiff's action upon the ground that in the dealings and transactions mentioned in his declaration he acted in the capacity of Attorney of Hibbard, Cameron & Co., who paid the drafts and bills, and who were owners of the bonds claimed by said Plaintiff and that said Plaintiff hath no right to recover the same from Defendant."

The judgment of the Court of Queen's Bench reversed the judgment of the Superior Court.

The question submitted to the Supreme Court was whether the Plaintiff Bayiis had a right to the twelve bonds referred to ?

Mr. John L. Morris for the Appellant:

These bonds did not belong to Respondent, but to Hibbard, Cameron & Co.

The receipt discloses the fact that Baylis received and delivered the bonds to Drummond, in his then capacity of agent for Hibbard, Cameron &c Co., and Drummond only agrees to hand them back to Baylis in that capacity. This is the only fair and reasonable way in which

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to read the receipt. It must be taken as a whole in order to get at its signification.

The agreement is one with the principal and not with the agent.

There is no proof that there was ever any money due by Hibbard, Cameron &c Co. to Baylis, for his evidence is not admissible under Article 251 Code of Civil Proc. L.C.

The action should have been instituted by Baylis as agent and not otherwise. But Bayiis admits that he had ceased to be the agent of Hibbard, Cameron & Co. long before he brought this action.

The powers of factors or agents is determined by their revocation. Vide Story on agency ([1]). The judgment of the Superior Court was in accordance with the evidence, and well founded in law.

Mr. A. Robertson, Q.C., for Respondent: —

The first dealing was between Bayiis and Drummond. The payment, given at first in the shape of notes, was endorsed by him and afterwards bills were accepted by him. Baylis had a possession, presumably legal, 01 the bonds in question, and by the receipt Drummond is justified in returning the bonds. Hibbard, Cameron & Co. have not intervened, nor has Appellant called them into the case to protect any rights they had.

The extent of Baylis interest in the bonds, or his right as against the contractors, not being in issue, it was not necessary for Baylis to prove what these rights were, or the agreements under which Baylis bought the iron, and became liable for so large sums for the contractors. Vide Pothier Nantissement ([2]); Story on Bailments ([3]); Jarvis v. Rodger ([4]); Addison on con-tracts ([5]).

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The Defendant Drummond, by the agreement and receipt, undertook to deposit the bonds sued for with the Ontario Bank until * * * * the Government subsidy transferred to him was paid and upon payment of said subsidy, he agreed to return these bonds to said Baylis the Plaintiff. This further statement was also included in the memorandum signed by the Defendant:

They are to be regarded as a security to be availed of only subsequent to the failure of the Government subsidy of $10000 transferred to me in March last, being paid by January next, or there being a definite agreement of the Government to pay it.

The bonds were deposited with Defendant and were to be returned to Plaintiff on payment of the subsidy. It is admitted the subsidy was paid, and, therefore, the Plaintiff has made out a prima facie case to have the bonds returned to him. The Defendant contends that the Plaintiff was acting as agent for Hibbard, Cameron & Co., that they owned the bonds and that he is not bound to return to Plaintiff, but holds them as the property of Hibbard Cameron & Co. who alone can sue him for them.

If Baylis were the mere agent or servant of Hibbard Cameron &c Co. and the contract was in truth their contract, and the agreement to return to him was meant and understood only as an agreement to return to them through Baylis as their servant or agent there might be some force in their contention. But it appears that Baylis was a party personally liable on the bills or notes which the Government subsidy of $10,000 transferred to Drummond was intended to pay and these bonds were deposited to secure payment of that subsidy. They came from Baylis possession, and the reasonable inference from the evidence is that he had a lien on them to

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guarantee the payment of his own liabilities for Hibbard, Cameron & Co., which were very large. If he paid he was entitled to their possession, even against Hibbard Cameron & Co. But if he held them as a trustee for Hibbard, Cameron & Co. only, and stipulated they should be returned to him on the payment of the $10,000 subsidy, he, as against this Defendant, would have the right to recover them from him.

If Hibbard Cameron & Co. had notified Defendant that the bonds were theirs and not to return them to Plaintiff, then Plaintiff might have been called on to shew that he had a right to them against Hibbard, Gameron & Co., but in the absence of any such claim on the part of Hibbard, Cameron & Co., there can be no right in Defendant to retain them. If he anticipated difficulty because as he says, Baylis ceased to be Hibbard, Cameron & Co. 's Agent he could have notified them of the claim of Baylis to the possession of the bonds and called on them to intervene, but in the absence of any such proceedings I fail to see what right Defendant has to keep these bonds. If Hibbard, Cameron & Co. are content to let Baylis have them and set up no claim or right to keep them from him, I fail to see what right the Defendant has to set up a claim on their behalf, which they do not desire to advance, and which, as between them they are satisfied it would be unjust for them to set up.


By the action in this cause the Appellant was called upon to return to the Respondent twelve bonds of the Montreal, Sorel and Chambly Railroad Company, transferred to him and held by him as collateral security for drafts accepted by the Respondent for Hibbard, Cameron & Co., contractors for the building of the said Railroad,

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and which., according to the Respondent, he undertook to return to him as well as the paid drafts (four in number) accepted by Respondent.

In the Superior Court of the District of Montreal, where the action originated, the Respondent's action was dismissed on the ground that he had not shewn an interest in the bonds or in the drafts and that he acted simply as the Attorney of Hibbard, Cameron & C., owners of the bonds. But in appeal, in the Court of Queen's Bench at Montreal, the judgment was reversed, and hence the present appeal by A. T. Drummond.

It is evident from the whole transaction that the Appellant's contract and undertaking was purely with the Respondent to restore to the latter the bonds in question or pay him $10000, as soon as a certain condition should have been fulfilled, to wit: the payment of the Government subsidy, and certain arrangements for traffic guarantee. The condition has been fulfilled in its entirety, and therefore the Appellant is bound to restore bonds given as security only till the performance of the condition.

Appellant contends also, that he has a right to retain these bonds as a security for certain commissions due him for Hibbard, Cameron & Co. by Respondent. He has, in my opinion, no such right, for his contract with the Respondent was, that he should return the bonds on a certain and specific condition, which has been complied with, and no mention of such a thing as commission was made so as to give him a lien on the bonds.

I think the appeal should be dismissed with costs.


Appeal dismissed with costs.

Solicitor for Appellant: John L Morris.

Solicitors for Respondent: A. & W. Robertson.

[1] Nos. 470, 473, and also No. 225. "

[2] No. 7. .

[3] No. 291, p. 250

[4] 13 Mass. Rep. 105.

[5] 4th edtn., p. 467.

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