Royal Bank of Canada v. Mack, [1932] SCR 488

Supreme Court of Canada

Royal Bank of Canada v. Mack, [1932] S.C.R. 488

Date: 1932-03-01

The Royal Bank of Canada (Defendant) Appellant;

and

William Mack (Plaintiff) Respondent

1931: October 14, 15. 1932: March 1

Present at hearing of the appeal: Duff, Newcombe, Rinfret, Lamont and Smith JJ. Newcombe J. took no part in the judgment, as he died before the delivery thereof.

ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA

Banks and banking—Moneys handed by bank's customer to branch bank manager for investment at latter's discretion, and used by latter for his own purposes—Liability of bank—Authority of the branch manager—Scope of his employment—Scope of business of a bank—Bank Act, R.S.C., 1927, c. 12, s. 75 (1) (c) (d).

R., a branch manager of defendant bank, suggested to plaintiff that some part of plaintiff's moneys on deposit with the bank should be invested, stating that an investment could be found which would return interest at 8%. For the purpose of such an investment, plaintiff handed to R.

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two cheques, one payable to cash or bearer, and the other payable to self or bearer and endorsed by plaintiff. R. used the money for his own purposes. Plaintiff sought to recover the amount from the bank. This Court found on the evidence: that plaintiff believed, and R. intended him to believe, that R., in making the proposal, was acting as agent of the bank; that plaintiff believed he was placing his money at the disposal of the bank, and R. was fully aware of this; that unrestricted discretion was committed by plaintiff to R. as to the nature of the investment.

Held: The bank was not liable. In this transaction R. was not doing something of a kind that, as agent of the bank, he was authorized to do, in the sense that such a transaction would fall within the general scope of his employment. It could not be said that an undertaking of the duty to invest a customer's money for him at the bank's discretion falls within the scope of the business of a bank, according to the intendment of the Bank Act. There was no evidence justifying or even pointing to the conclusion that the business of an investment agent or trustee is one which " appertains to the business of banking" (s. 75[1] (d) ); nor did the transaction in question fall under any class of transactions comprehended within the dealings authorized by s. 75[2] (c) of the Act.

Judgment of the Court of Appeal for British Columbia, 44 B.C.R. 81, reversed.

APPEAL by the defendant from the judgment of the Court of Appeal for British Columbia[3], dismissing (Macdonald C.J.B.C., and McPhillips J.A., dissenting) its appeal from the judgment of W. A. Macdonald J.[4], holding that the plaintiff was entitled to recover from the defendant the sum of $2,500, as claimed.

The material facts of the case (as found by this Court) are sufficiently stated in the judgment now reported, and are indicated in the above head-note. The appeal was allowed and the plaintiff's action dismissed, with costs throughout.

A. J. Mann K.C. for the appellant.

T. G. Norris for the respondent.

The judgment of the court was delivered by

DUFF J.—The agent of the appellant bank at Kelowna, one H. F. Rees, obtained from the respondent, who was a customer of the bank, the sum of $2,500, which he used for his own purposes; and, in the action upon which this appeal arises, the respondent seeks to recover that sum

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from the bank. There is no real controversy as to the facts. Rees suggested to the respondent that some part of a sum of $3,000, which the respondent had on deposit with the bank, should be invested.The respondent was told that an investment could be found which would return interest at eight per cent. There is no dispute that the respondent believed, nor do I in the least doubt that Rees intended him to believe, that in making this proposal, he (Rees) was acting as the agent of the bank. It is equally clear that in handing over the sum of $2,500, for which he gave two cheques (one payable to cash or bearer, and the other payable to self or bearer and endorsed by him), the. respondent believed he was placing his money at the disposal of the bank, and that Rees was fully aware of this. I should have had no difficulty in holding the bank liable if there were grounds upon which it could be affirmed that, in this transaction, Rees was doing something of a kind that, as agent of the bank, he was authorized to do, in the sense that such a transaction would fall within the general scope of his employment.

I am constrained to the conclusion that the agent had no such authority, and for this reason. As I understand the evidence of the respondent, he was entrusting his money to Rees to invest it for him, at Rees' discretion, in some security of some description which would yield interest at eight per cent. It is plain, I think, that unrestricted discretion was committed to Rees as to the nature of the investment. I find myself in disagreement with the view expressed by one of the judges in the court below, that there was an implied representation by Rees that the subject matter of the undertaking was something within the bank's powers under the Bank Act. I have no doubt whatever that the respondent never thought of the Bank Act or of the powers of the bank. Fairly interpreting the language and conduct of the parties, as disclosed in the evidence, the discretion committed to Rees cannot be held to be limited in such a way as to bring the transaction within the scope of the Bank Act, unless an undertaking of the duty to invest for a customer, the customer's money, at the discretion of the bank, is something which falls within the scope of the business of a bank, according to the intendment of the provisions of the Act. There, is no

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evidence before us justifying, or, indeed, pointing to the conclusion that the business of an investment agent or trustee is one which " appertains to the business of banking "; nor, in my opinion, does the transaction with which we are concerned fall under any class of transactions that is comprehended within the dealings authorized by sec. 75 (1) (c).

The appeal must, in my opinion, be allowed and the action dismissed with costs.

Appeal allowed with costs.

Solicitors for the appellant: Walsh, Bull, Housser, Tupper & Molson.

Solicitor for the respondent: T. G. Norris.