Hébert v. La Banque Nationale, (1908) 40 SCR 458

Supreme Court of Canada

Hébert v. La Banque Nationale, (1908) 40 S.C.R. 458

Date: 1908-06-16

J. Emilien Hebert (Defendant) Appellant;

and

La Banque Nationale (Plaintiff) Respondent

1908: March 3; 1908: June 16.

Present: Sir Charles Fitzpatrick C.J. and Davies, Idington, Maclennan and Duff JJ.

ON APPEAL FROM THE COURT OF KING'S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC.

Bills and notes—Material alterations—Forgery—Partnership—Mandate—Assent of parties—Liability of indorser—Construction of statute—"Bills of Exchange Act."

R. induced H. to become a party to and indorser of a demand note for the purpose of raising funds and agreed to give warehouse receipts as security to the bank on discounting the note. It was arranged that the goods covered by the warehouse receipts were to be held and sold on joint account, each sharing equally in the profits or losses on the transaction. Subsequently R. altered the note, without the knowledge or consent of H., by adding thereto the words "avec intérêt à sept par cent. par an," and falsely represented to the bank that H. held the warehouse receipts as collateral security for his indorsement. A couple of months later H., for the first time, became aware that the goods had never been purchased or placed in warehouse, that no warehouse receipt had been assigned to the bank and did not, until some months later, know that the alteration had been made in the note. There was some evidence that H. had asked for time to make a settlement of the amount due to the bank upon the note after he had become aware of the fraud and the alteration so made.

Held, by Idington, Maclennan and Duff JJ. that the instrument was a forgery and could . not be ratified by an ex post facto assent. The Merchants Bank v. Lucas (18 Can. S.C.R. 704; Cam. Cas. 275), and Brook v. Hook (L.R. 6 Ex'. 89), followed.

Per Idington J.—The circumstances of the case did not shew that there had been any assent to the alteration within the meaning of section 145 of the "Bills of Exchange Act."

Per Maclennan J.—The assent* required to bring an altered bill within the exception provided by section 145 of the "Bills of Ex-

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change Act," R.S.C. (1906), ch. 119, must be given by the party sought to be bound at the time or of before the making of the alteration.

Held, also, the Chief Justice and. Davies J. contra, that, in" the special circumstances of the case, there was no partnership relation between the parties to the note for the purposes of the transaction in question and there could be no implied authorisation for the making of the alteration in the note.

Per Fitzpatrick C.J.—The. transaction in question was a joint venture or particular partnership for the enterprise in contemplation of the parties and, consequently, R. had a mandate to make whatever agreement was necessary with the bank to obtain the funds and to provide for the payment of interest on the advances . required to carry out the. business.

Judgment appealed from (Q.R. 16 K.B. 191) reversed, the Chief Justice and Davies J. dissenting.

APPEAL from the judgment of the Court of King's Bench, appeal side[1], affirming the judgment of the Superior Court, District of Iberville (Paradis J.), which maintained the plaintiff's action with costs.

The circumstances of the case and questions raised on this appeal are stated in the judgments now reported.

Bisaillon K.C. and Aimé Geoffrion K.C. for the appellant.

Laurendeau K.C. for the respondent.

The Chief Justice (dissenting).—In September, 1903, the appellant entered into an agreement with one Roy to buy on joint account butter to be warehoused and held for a rise in the market. Roy was a manufacturer of and dealer in that article and Hébert, the appellant, was a merchant tailor; they both resided at and carried on business in the Town of St. Johns, in the Province of Quebec, and were apparently on friendly terms. It was at the same time agreed

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that the money required to carry on the venture would be borrowed from the respondents on the credit of Roy and Hébert, the warehouse receipts for the butter to be given as collateral security for the loan, and Roy was authorized to make the necessary financial arrangements with the bank. . It was finally settled that the money would be advanced on their joint demand note. Roy represented to the bank agent when the note was discounted that the warehouse receipts which the bank was to receive and hold as collateral were in the possession of the appellant Hébert, whereas the latter assumed that they were transferred to the bank in pursuance of his agreement with Roy. At, that time Roy pretended that he had in his warehouse about 10,000 pounds of butter: The proceeds of the note were put to Roy's personal credit.

The controversy here arises out of the fact that, when Roy came to the bank with the demand note signed by himself and Hébert, Audet, the bank agent, said that, as the loan was being made for an indefinite period, it was necessary to provide for the bank interest by adding to the note the words "avec'intérêt à sept par cent. par an" Roy was then asked to see Hébert and get his consent to the necessary addition and he immediately left the bank, ostensibly for that purpose, and returned In a few minutes professing untruly, as found by the trial judge, to have seen Hébert and obtained the required assent and he then and there altered the note by adding; the words "avec intérêt à sept par cent, par an." Subsequently, it was ascertained that a fraud had been perpetrated by Roy, that he had no butter in warehouse as he represented, that he did not use the money borrowed from the bank to purchase butter, and that in a word he had grossly

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deceived both Hébert and the bank. In the interval, and before that discovery was made, another note for $1,000, made in the same way and for the same purpose had been discounted under similar circumstances with the same bank, and altered by the addition of the same words. That note, however, was paid to the extent of f 900 by the appellant with a cheque received in payment of a sale of butter to one Bryce and as to the balance of $100, by Roy; and when fully paid the note was sent by the bank through the mail to Hébert, who destroyed it after having kept it in his possession for some days without a word of protest. I am of opinion that Hébert then knew of the alteration made in that note by Roy with respect to the interest and acquiesced in what had been done.

When some months later Hébert discovered the fraud practised on him by Roy in connection with the warehouse receipts, he obtained from the bank a copy of the note now sued on, and, without objecting in any way to the alteration by addition of the words as to interest though his attention was specially drawn to it, he consulted his counsel and instituted criminal proceedings against Roy not for forgery, but for having obtained his signature to the note on the false representation that he then had in warehouse 10,000 lbs. of butter. The respondent asserts that Hébert did not then object to the alteration, but, on the contrary, formally approved and ratified what had been done by Roy with respect to the addition of the necessary words to provide for the interest (as he had done impliedly with respect to the note for $1,000) and undertook to pay the note now sued on. Subsequently, however, Hébert repudiated all liability on the ground that the note was forged, having been,

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altered in a material part without his authority or consent and he denied that he ever authorized, ratified, approved or confirmed what had been done by Roy to provide for the interest; hence this suit.

In my view the purchase of the butter was a joint venture, or a particular partnership contracted for a single enterprise; (art. 1862 C.C.) and Roy had a mandate to make an agreement with the bank to provide for the interest on the money which he was authorized to borrow and which could not be got otherwise to carry on the venture; (art. 1851 C.C.). If instead of adding the words, which were inserted in the note, Roy had simply given a joint undertaking verbally or in writing to pay the interest on the loan at 7%, can it be doubted that Hébert would have been bound? Hébert explains the negotiations with the bank with respect to the loan and the arrangement as to division of the profit or loss on the venture; interest, insurance, warehouse and other charges having first been provided for I make this extract from his evidence:

Q. Veuillez donc dire dans quelles circonstances et pour quelles raisons vous avez ainsi signé et endossé ce billet?

R. Le 10 septembre dernier M. Roy est venu chez moi dans l'après-midi me dire que si je voulais enmagasiner du beurre, comme il en avait été question avant avec lui, que c'était le temps. Il m'a fait la déclaration qu'il avait à cette époque-là pour $2,000.00 de beurre qu'il pouvait expédier à Montréal et toucher l'argent immédiatement.

Q. Où avait-il ce beurre-là? L'a-t-il dit?

R. Dans ses entrepôts, à St.-Jean, dans sa manufacture de beurre, à ce qu'il m'a dit. En même temps, M. Roy m'a présenté un billet rempli au montant de $2,000.00 pour que je l'endosse. J'ai refusé carrément, en dis       ant à M. Roy que ce n'était pas de cette manière que j'entendais faire de l'entrepôt. Je lui ai dit qu'il fallait voir d'abord si la banque avancerait les fonds; que je croyais que cela se faisait autrement que cela. M. Roy m'a dit: "J'ai été à la banque et ils sont prêts à nous avancer les fonds pour enmagasiner le beurre de septembre et d'octobre." J'ai dit à M. Roy: "Retournez à la banque et vous reviendrez demain; renseignez-vous

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davantage. Mon impression est que la banque va vouloir avoir d'abord les reçus d'entrepôt, c'est une chose qu'ils exigent, et un billet additionnel, pour les garantir davantage, au cas où le beurre perdrait de la valeur pour se rattrapper sur le billet dans c€ cas-là." J'ai dit que c'était là les conditions que j'entendais suivre. * * * Le lendemain, après-dîner, M. Roy est revenu et m'a présenté ce billet-ci, exhibit A, en blanc, me disant que c'était dans le sens que j'avais compris la chose, que la banque voulait que ça se passe. Il m'a dit qu'il avait été à la banque et j'en ai conclu qu'il avait vu le gérant, et il m'a demandé de remplir le billet.

Q. Dites-vous qu'il vous a dit que la banque voulait que ce soit comme vous aviez indiqué la veille?

R. Oui, que c'était comme cela que ça devait se faire et que ça devait être rempli comme je l'avais suggéré la veille. J'ai dit à M. Roy: "Comme cela vous avez pour $2,000.00 de beurre?" Il a dit: "Oui." J'ai dit: "Vous avez par conséquent 10,000 livres de beurre en entrepôt?" M. Roy a dit: "Oui."

Q. Où cela?

R. Toujours à son entrepôt, à St.-Jean. Sur cette réponse affirmative de M. Roy, j'ai dit: "Il faut maintenant s'entendre quant aux profits ou aux pertes' s'il y en a. D'abord il va falloir assurer le beurre." M. Roy a dit: "Pour cette quantité-ci ce n'est pas nécessaire." Il a dit qu'il avait suffisamment d'assurance pour le couvrir; mais que si on en enmagasinait d'autre par la suite on prendrait de l'assurance. J'ai dit: "Combien allez-vous' me charger pour le loyer de votre entrepôt? Je n'entends pas me servir de votre entrepôt sans rémunérer. Sera-ce au pied ou au mois ou au mille livres? Je ne connais pas ces conditions-là." M. Roy m'a dit: "J'irai à Montréal; et je m'informerai; je chargerai à peu près comme ils chargent à Montréal mais ce ne sera pas grand'chose dans tous les cas." J'ai dit: "Maintenant, c'est bien entendu que vous allez donner les reçus d'entrepôt à la banque, et une fois les intérêts payés ainsi que l'assurance et les frais d'entrepôt, s'il y en a, une fois' toutes les dépenses en rapport avec cette transaction payées, les pertes ou les profits devront être divisés également entre nous." C'est à cette condition-là que j'ai rempli ce billet-là à demande. Je l'ai signé et je l'ai endossé. M. Roy l'a signé et endossé aussi devant moi. Mais je me suis aperçu quand M. Girard, mon avocat, m'a dit d'aller chercher une copie de ce billet, qu'après que je l'eusse signé, et hors de ma connaissance, il y a eu d'ajouté sur le billet "avec intérêt au taux de sept pour cent." Je n'ai pas eu connaissance de cela, je n'ai pas été 'consulté à ce sujet non plus et ce n'est pas moi qui l'ai écrit."

And again at page 21:

Q. Vous deviez être de moitié dans les profits?

R. Profits ou pertes.

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And at page 22:

Etant donné la société que vous avez faite avec M. Roy, vous' avez signé ce billet-là pour participer dans les profits qui pouvaient être réalisés sur l'enmagasinage du beurre?

R. S'il y avait pertes ou profits, après que toutes les dépenses étaient payées, on divisait également dans l'une ou l'autre. Le beurre pouvait être vendu le lendemain si on voulait, à la première occasion favorable qu'on aurait trouvé.

From this I conclude that Roy and Hébert were undoubtedly partners in the purchase of this butter and there was undoubtedly an agreement to share the losses or profits of the venture which was to be financed by money obtained from the bank by Roy on their joint credit. To get the loan, under the circumstances, for an indefinite period, Hébert knew that interest must be provided for, and Roy had authority to bind both with respect to the payment of this interest and an alteration of the note by the addition of words to provide for the payment of interest on money advanced for the benefit of the partnership is not under the special circumstances a fraudulent alteration which constitutes forgery.

Now as to subsequent adoption and ratification. The fact that a note for $1,000 was given under similar circumstances and altered in the same way is very material. That note was paid in part by Hébert and it subsequently came into his possession; so it is impossible to believe that he did not see the alteration by the addition of the words as to interest. When he called at the bank to make a copy of the note now sued upon, Hébert saw "the similar alteration in this note and without protest undertook to pay it. Here are his words, as given by witness Camaraire:

P. 83: M. Hébert a dit:. "C'est mon.billet,, je-le reconnais; je vous paierai mais M. Roy en paiera la façon. Je vais le faire

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arrêter aujourd'hui même." M. Hébert a ajouté: "La banque ne perdra pas un sou; je vais le payer, et je vais faire arrêter M. Roy aujourd'hui même."

P. 84: Il a dit: "Que sert-il à la banque de me faire faire les frais d'emprunter sur ma propriété pour un mois ou un mois et demi; lorsque je vous assure que le premier juin je paierai mon billet." J'ai dit à M. Plébert que j'allais en parler à M. Dorais, le gérant, et que j'étais convaincu que la chose allait lui être accordée; que c'était raisonnable. Il a ajouté que sa femme était peinée de voir qu'il était obligé de payer $2,000.00; qu'il avait une nombreuse famille; qu'il n'était pas riche, et qu'il connaissait ce que c'était que de gagner de l'argent. Il a dit: "J'ai dit à ma femme: 'Tu ne penses pas qu'on a $2,000.00 à retirer; de sorte que notre position se trouvera la même."'

I would confirm because, in my opinion, there is sufficient evidence to shew that the alteration by addition of the words necessary to provide for the payment of interest on the loan made for the joint benefit of Roy and Hébert was made with authority and to eon-form to the original intention of the parties and that the joint maker subsequently agreed to it. .

Davies J. (dissenting).—I agree with the Chief Justice that this appeal should be dismissed. I prefer, however, not to rest my judgment upon the ground of the existence of an implied authority on Roy's part arising out of his special partnership relations with Hébert to make the alteration in the note, but upon the ground that when Roy took the note to the respondent bank to have it discounted and added the words "avec intérêt à sept par cent. par an" he did so claiming to have had the authority of his co-maker, Hébert, to add these words and that Hébert subsequently assented to the alteration and so confirmed Roy's representation of authority.

If subsequent assent to an alteration of a note made with full knowledge of the facts is sufficient to

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hold the person so assenting to his liability on the bill, I am of opinion that the evidence is amply sufficient in this case to find such assent and I concur in the Chief Justice's reasoning on this point.

Then, with respect to the law of the case, I think the case of Merchants Bank v. Lucas[2] relied on by the appellant, does not govern or apply to the facts before us. That was the case of a simple forgery of a man's name to a note and an attempt to hold the person whose name was forged liable because of a subsequent promise to pay it. Here we have a note admittedly signed by the party sought to be charged but alleged to have been altered by his co-maker, but, so far as the holder is concerned, altered professedly by Roy under the authority of the party sought to be charged. As is said in appellant's own factum, in stating the circumstances under which the respondent's manager discounted the note:

Looking over the note he, the bank manager, noticed that there was no mention of interest on it. So he asked Hoy to call upon Mr. Hébert, the appellant, in order to have the interest mentioned on the note. Roy left the bank to go to Hébert's, apparently, and came back 15 or 20 minutes later with the same note with the words "avec intérêt à sept par cent. par an" added to the wording of the note and without any possible doubt most evidently of the handwriting of Roy himself.

Upon Roy's declaration that the appellant had acquiesced to the addition on the note, the manager, Mr. Audet, accepted his word as to this, just as' he had accepted his word concerning the warehouse receipts.

The ratification or assent relied upon here is that of an act done by a person professing himself to have been for the purpose the agent of the person subsequently ratifying it. The distinction between such an act and that of a mere forgery is distinctly pointed out

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in the case of Merchants Bank v. Lucas[3], above referred to, in the report of the reasons for their judgment given by the learned judges of the Court of Appeal for Ontario and to be found in 15 Ontario Appeal Reports, at page 600, and affirmed in this court on appeal (1).

In the case of Brook v. Hook[4], cited and relied upon in the Lucas's Case3, the Chief Baron Kelly, in delivering the judgment of the court, at page 100, says:

In all the cases cited for the plaintiff the act ratified was an act pretended to have been done for or under the authority of the party sought to be charged; and such would have been the case here, if Jones had pretended to have had the authority of the defendant to put his name to the note, and that he had signed the note for the defendant accordingly, and had thus induced the plaintiff to take it. In that case, although there had been no previous authority, it would have been competent to the defendant to ratify the act, and the maxim before mentioned would have applied.

Apart from authority respecting the law as it stood before the codification of the law on bills and notes, I am of opinion that the subsequent assent of the defendant to the alteration is sufficient to bind him under the "Bills of Exchange Act of 1890," now chapter 119 of the Revised Statutes of Canada, 1906. Section 49 of this revised Act deals with a forged signature to a bill or note and provides that nothing therein

shall affect the ratification of an authorized signature not amounting to a forgery;

while section 145 deals with material alterations made in such an instrument. In this latter section it is declared with respect to patent material alterations that

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where a bill or acceptance, is materially altered without the assent of all parties liable on the bill the bill is voided, except against a party who has himself made, authorized or assented to the alteration, and subsequent indorsers.

Now, here are three specified and distinct exceptions from the conditions under which a material alteration is declared to avoid the bill. First; Where the party sought to be charged has himself made it; Secondly; Where he has authorized it to be made; and, Thirdly; Where he has assented to it having been made.

It has been argued that the assent must be an assent given previous to the alteration, or at any rate previous to the issue of the bill or note.

I do not see any reason or justification for putting such a limitation upon the meaning of the phrase used in the section. The first two exceptions may well relate to an alteration made before the issue of the note but are not necessarily confined to such an antecedent period; the last exception, it seems to me, was, introduced for the very purpose of covering a subsequent assent to a previous alteration.

In section 49, relating to the simple forgery of a naine to a bill or note, a proviso is introduced saying that

nothing in this section shall affect the ratification of an unauthorized signature not amounting to a forgery.

It may be argued that section 145 is to be construed as only applying to alterations under the circumstances mentioned by the learned judges who de livered the judgment in Merchants Bank v. Lucas[5], and in Brook v. Hook[6], that is, where the alteration was

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an act pretended to have been done for, or under the authority of the party sought to be charged.

Even if limited to such cases (as to which. I express no opinion), it is clear to my mind that it at least covers them and that this case is one of them.

I think the appeal should be dismissed.

Idington J.—The appellant says he was asked by one Roy in September, 1903, to indorse for him a note of two thousand dollars to be discounted with respondents at St. John's, in Quebec, where the parties live, and to be secured by warehouse receipts covering ten thousand pounds of butter estimated worth at least twenty cents a pound.

He says the arrangement was finally agreed to between him and Roy on this basis and the further understanding that he should be compensated for his indorsement by getting half the profits on the butter when it might be realized on later and he also suffer half the loss if any.

This made it a joint venture, but nothing like a general partnership was thought of, though possibly future similar speculations may have been contemplated by appellant as possible.

He drew up a demand note and signed it jointly and also indorsed it jointly with Roy, whom he entrusted with it, and also the carrying out of the giving to the bank the promised warehouse receipts. He saw no more of Roy on the subject and always supposed until the following November that the bank had got and held the warehouse receipts. Then the bank agent surprised him by calling upon him for the warehouse receipts and explaining that Roy had put the transaction through with the bank by representing that

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Hébert was to get and hold the warehouse receipts as security for both himself and the bank. Roy was enabled by this double fraud to get the money without the security of warehouse receipts.

His story is that Hébert signed merely for accomodation, never demanded security, never asked compensation for indorsement or joining in the note, and that the bank never asked for nor were offered any security but that of Hébert signing.

He says future possibilities of speculation may have been spoken of between him and Hébert, but they had no relation to this business.

The line of reasoning upon which the courts below proceed renders it necessary the foregoing evidence should be prominently borne in mind.

The note as made in Hébert's handwriting was found by him in the following April to have been altered by Roy adding the words "with interest at seven per cent. per annum."

This alteration, the bank agent and Roy agree, came about by reason of the suggestion of the agent that as it was a demand note it should bear interest on the face of it.

The agent says Roy at once acceded to the suggestion when made and left the bank to get Hébert's sanction to it .and returned in fifteen minutes or half an hour with the note thus altered. In one way be puts it as if Roy had reported on his return that Hébert had expressly assented to this particular alteration, but in another, and, when repeating the words that passed, he puts it as if he had simply taken Roy's word that the bill was all right now.

In my view there is no difference under the' circumstances in question here.

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The appellant swears Roy never saw him on the subject or spoke to him on the subject of alteration.

Roy says that on the occasion of presenting the note to be discounted the appellant was at the bank and had left before the agent had observed the omission to provide in this way for the interest, but instantly it was mentioned he followed and caught Hébert as or before reaching the pavement, just outside the bank, and explained what the agent had said as to interest, got Hébert's instant assent to the change being made, returned inside and, in the agent's private office and his presence, wrote the alteration.

All this circumstantial but somewhat improbable story of getting and acting on the authority of Hébert in the manner just related is denied by both the agent and Hébert.

The courts below seem to have discredited Roy. The learned trial judge proceeded on the assumption that the business being a joint one Roy had an implied authority and that Hébert, after he had knowledge of the alteration, acquiesced therein and recognized his responsibility and promised the respondent to pay the bill. The only judge in appeal who gives reasons does not hold that he consented, but that the whole question was, had he acquiesced? And he finds he did.

These several positions are taken by respondent here, and also that Roy professing to act as an agent or on behalf of Hébert, as agent his acts could be and were ratified.

The bank never looked upon appellant in any other light than that of a mere surety as Roy had represented and still represents him.

How can we impute to the parties for the purposes of this case that relation which is denied by him whose act is being enquired into?

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How can we find he in truth acted or represented he acted as an agent in making the alteration? In the first place he in reality only said "tout correct" and the agent accepted his word. That did not imply he had the authority to write the alteration. It rather implied in the face of what had proceeded that" Hébert had finished the writing.

In the next place he was doing nothing but simply completing the fraud which is the essence of every forgery either of making or altering, and implies a representation that it is the act of another or done by the express or implied authority of another.

To adopt such a refinement as suggested and is required in order to impute to the act in question the nature of agency, in order that the rules relative to the ratification of an act of supposed agency might apply and thus escape the consequences of holding this to be a forgery, would be to go beyond any case I have seen or principle of any case that exists, and do much to break down the useful rigour of the law maintained so long for the protection of business men.

No doubt Roy was afraid to disturb appellant again lest doing so would lead to inconvenient inquiries or a possible meeting of the agent and Hébert. Let us now see exactly what the appellant did thereafter and try to assign to it only its true legal weight, in shewing the question of his liability.

The appellant had under consideration the prosecution of Roy for the fraud alleged in relation to the representations as to the warehouse receipts and desired a copy of the note.

He went to the bank and got a copy there. On this occasion the accountant of the bank tells that the appellant, even after he had as the account-

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ant infers, seen the alteration, used expressions indicating his intention to pay the note.

No court, I should hope, would hold him liable upon that evidence alone even if it stood quite unimpeached, but here it is absolutely contradicted, and as it stands does not seem at all the probable result of a man who appreciated the discovery he had made and understandingly intended to give that effect to the words imputed to him that is now claimed ought to be given. Acquiescence and ratification must be founded on a full knowledge of the facts.

This was on the 4th April or thereabout.

The same witness relates that ten days later, as he and appellant returned from court where Roy had been up for examination on the charge" of false pretences laid by the appellant, he asked him (the accountant) if he would be good enough to ask Mr. Dorais (meaning the then agent of the bank) if he would wait until the first of June for payment. He alleges appellant referred to some life policies he had as falling in then.

There was no assent or promise surely in this interrogative conditional remark. The utmost that can be said is he may have had by that time a recognition of the facts. This witness says he reported this query and more as to the policies, and explained to Mr. Dorais he had better see appellant for himself as the time asked would not be long to wait.

Dorais, the agent, pursuant to this went next day and saw appellant at his shop, and as what he relates is the strongest thing which appears to be relied upon as indicative of an assent by appellant; after he had seen or known of the alteration, I copy here, from this agent's evidence, its material parts:

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Le soir même, ou le lendemain je suis allé voir monsieur Hébert dans son magasin, dans la ville de St. Jean, et là monsieur Hébert m'a dit qu'il avait une police d'assurance qui devanait due dans le mois de juin. Il m'a dit: "Si la banque voulait m'attendre jusqu'à ce temps-là, cela m'éviterait les dépenses d'une hypothèque ainsi que les dépenses d'une quittance." Il m'a alors dit que si la banque voulait lui donner une chance et l'attendre jusqu'alors il nous paierait;'là-dessus je-ne lui ai pas donné de réponse affirmative.

Q. Avez-vous eu d'autres conversations avec le défendeur Hébert au sujet de ce billet-là, après cette date-là, ainsi qu'au cours des procès que M. Hébert a eu avec M. Roy, alors qu'il a fait arrêter ce dernier.

R. Non, mais j'ai vu M. Hébert plusieurs fois au bureau avant l'arrestation de M. Roy. A partir du mois de janvier ou du mois de février, j'ai eu plusieurs visites de la part de M. Hébert. Il a même été question dans le temps d'acheter les garanties que nous avions. M. Hébert m'a dit en differentes circonstances "quand la banque voudra être payée elle sera payée."

All these promises preceding the arrest of Roy of course go for nothing, as no one pretends now, except possibly Roy, that Hébert had the slightest knowledge of the alteration before April.

The respondents are thus reduced to depend on a proposal made subject to a condition and never accepted or assented to.

I am at a loss to know how these expressions can be twisted into any assent such as the Act requires or even if ratification was permissible to render a void instrument valid.

Suppose such a proposition had been made to Roy by appellant after the agent had required an alteration and suppose Roy had before altering reported it to him as a condition of this appellant's consent, could the agent take from Roy and hold a bill altered in his presence by virtue of no greater authority than implied in such a question without first yielding an acceptance of these conditional terms? Surely no one could venture to claim so. Yet this is that in substance.

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Calvert v. Baker[7]is a case of a defendant whose acceptance had been so altered as to place of payment from being at his house to some place else. His solicitor wrote for him after it was due and he fully realized the change and ended

he has been prepared far payment and the party may have his money by calling at Bulbrook.

It was held this was not such an acknowledgment as would support either the bill or a claim for account stated, but was a mere conditional proposal. That case illustrates what I mean as to a conditional offer.

The case of Perring v. Hone[8], in 1826, is valuable here by reason of its having arisen out of a note given for a partnership liability and which was intended to have been joint and several but was written only as joint when defendant signed, and altered to conform to words used in one of which it was part renewal, and which was joint and several. The defendant on its falling due was asked by letter to pay his joint and several note.

He replied that the communication should have his earliest attention.

The court held that the defendant was not liable. Best C. J., in his judgment, remarks,

giving attention to a matter is a very different thing from giving assent.

There was no question of forgery for all was done apparently in good faith, in short a case where ratification could legally have been given.

I might well rest here, but the case suggests the desirability of a full examination of the law respecting "assent," which with great respect I submit has been quite misapprehended.

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The court below so far as appears relied solely on an American text book. Daniel shews that English and American cases differ. Certainly American cases exist widely different from the results this court has reached heretofore on the subject of ratifying forged bills of exchange.

Moreover, our law resting on English and Canadian authorities has been codified in language appropriate thereto, which as a rule is not identical with such codification as arrived at in some of the United States. We must be guided by ours, now known as "The Bills of Exchange Act," R.S.C. 1906, ch. 119, of which sections 49 and 145 are identical with sections 24 and 63 of the former Act under which this case falls. For convenience I will refer to the sections as they now stand.

The first, and for this case material, part of section 145 is as follows:

145. Where a bill or acceptance is materially altered without the assent] of all parties liable on the bill, the bill is voided, except as against a party who has himself made, authorized, or assented to the alteration and subsequent indorsers.

It is upon getting us to give the words "assented to"' therein such an extensive meaning as they have not yet been given in England or Canada that the hope of respondent lies.

Some formidable difficulties stand in the way. In the first place for the reasons already stated there was no assent and none in the way at all events of consent which is to be implied in what I will for the present and as a convenience call the primary meaning of assent which the law required or had in View.

In the next place, if the word "assent" is to be given a wider and I will call secondary meaning such as

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involved in ratification, then this was clearly a forgery and incapable of ratification.

I will deal with the primary meaning first and later take up the secondary.

This quotation from section 145 is but a declaration of the law as it had existed for at least a hundred years prior to the "Bills of Exchange Act."

The case of Master v. Miller[9], put beyond all doubt that a material alteration of a bill of exchange after acceptance rendered it void.

This rule extended to or had been extended long before this legislation to all written instruments. It was not confined to an alteration made before issue of the bill or the coming into operation of the contract or instrument.

The case of Davidson v. Cooper[10], where no explanation was offered, leaves us to infer the like results if alteration take place after the due date or right of action had accrued.

It was not necessary that it should alter the contract.

Each of these propositions is, I submit, supported by the decision in Suffell v. Bank of England[11], 1882, in the Court of Appeal, which was a case in regard to the erasure of a number on a Bank of England note.

The statement of Chief Justice Dallas in the case of Bander son v. Symonds[12], that

the original rule was not intended so much to guard against fraud as to insure the identity of the instrument and prevent

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the substitution of another without the privity of the party concerned,

is quoted with approval in that case by Cotton L.J.

Unless we can infer, for which we have no warrant, that a radical change of the law was intended by the Act, such a decision as Suffell v. Bank of England[13] by the Court of Appeal, about four months before the passage of the "Bills of Exchange Act, 1882," from which ours is taken, sheds a flood of light on the meaning to be attached to the words "altered" and "alteration" in section 84 of that Act, which is identical with section 145 of our Act as above quoted.

Can there be any question but that the meaning of these words, set in the context as they are, was intended to be the law that had thus recently been declared?

Then we find in the several opinions of the eminent judges who agreed in that decision no fault found with the rule there quoted from Pigot's Case[14], and Which was in fact the modern root of the law and, as said by Jessel M.R., in his judgment, never had been doubted.

The quotation thus both explicitly and tacitly affirmed is as follows:

That when any deed is altered in a point material by the plaintiff himself or by any stranger without the privity of the obligee, be it by interlineation, addition, raising or by drawing of a pen through a line or through the midst of any material word, the deed thereby becomes void.

We find moreover in the plea used, to set up this defence of alteration, that the allegation in the approved forms was invariably that it was so altered "without the consent of the defendant."

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We find text-writers such as Mr. Leake treat of it under the head of discharge, and we find the "Bills of Exchange Act, 1882/' classify it under the head of discharge and our own Act treat of it under the head of discharge of the bill.

In face of all that, must we not say this note was void and appellant as a maker of it discharged at least from the 11th of September, 1903, until 4th April, 1904.

And how could he then become bound again by something then said or done unless it came up to the full meaning of a ratification?

Then in this application of what I have called a secondary meaning or that of ratification if, as I will for the present assume, such a thing is within the intended scope of the words "assented to" in this section, the respondent is face to face with the rule of law that forgery cannot be ratified.

The case of the Merchants Bank v. Lucas[15] binds this court. There the defendant's firm name had been forged by a brother of a member of the firm who recognized it as a forgery and at last promised to send next day a cheque for the amount.

The Court of Appeal for Ontario held that the defendants there were not liable, that a forgery could not be ratified, and that there was not enough shewn to create an estoppel, and thereby the defendants were discharged and this court upheld that.

The case here is as against the appellant infinitely weaker than that case was against the defendants unless we distinguish forgery by alteration as different in effect in this regard from a forging of the sig-

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nature. Is there in principle room for such a distinction? I cannot see how, if due regard be had to the essential nature of the things dealt with. Why discriminate so between things, so essentially requiring the same treatment, in laying down rules for the guidance of men?

At common law forgery was defined to be the fraudulent making or alteration of a writing to the prejudice of another man's right.

This remains good law though supplemented by statute and is applicable to the making or alteration of bills falling respectively within sections 49 and 145 above referred to.

Moreover, we have to bear in mind that, when the English "-Bills of Exchange Act, 1882," from which ours is taken was passed, the case of Brook v. Hook[16], in 1871, had declared that forgery could not be ratified.

This court in like manner had, immediately preceding our "Bills of Exchange Act, 1890," decided the case of the Merchants Bank v. Lucas[17].

Now let us consider both sections together and see if there is any room for distinction in this regard. Each of these sections respectively declares the forgery or alteration void.

The language is just as strong in law in the one case as the other. The subject about which it is used being different makes all the difference there is.

In both cases there are exceptions to the absolute operation of the voiding words and these exceptions when examined in detail and viewed in light of history

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of the law on the subject have the same general purposes in view.

In section 49 the exception turns upon the word "precluded" which Chalmers in his comment on it tells us was substituted in the passing through committee of the English Act, from which ours is taken, for the word "estopped" which had not in Scotch as in English law a technical meaning.

Have we not thus a key to the secondary meaning to be put upon the words "assented to" in the section 145?

There are also provisos following the main part of each section. These seem to have for a common purpose the protection of the innocent holder and to rest upon what is essentially at bottom but a recognition of that which is akin to the principle of estoppel and in truth, in many cases, but that principle itself and a statutory declaration defining certain limits of application thereof which mercantile experience had developed as found necessary in the business world.

It is to be observed that there is not in regard to alteration an express provision in section 145 like unto that which there is in section 49 in regard to a forged signature, for preserving rights springing from "ratification of an unauthorized signature not amounting to a forgery." Why is this so? Is there no substitute for it?

It seems to me that the words "assented to" are apt words to expressly cover not only the use or meaning of the words "consented to" which imply a privity to the act itself, but also the cases of ratification of an alteration made by an agent or one professing to act as an agent, in any innocent way. I say in any innocent

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way, because we find in the section relative to a cognate subject this expressed, and we cannot impute to the legislature an intention to carry into such words as we are interpreting what was regarded up to that moment as. utterly repugnant to the policy of the law. Giving the. words "assented to" this application we harmonize the otherwise apparently discrepant purposes of the two sections when dealing with that which in either case is void and is so declared.

There can be no more reason for rehabilitating the one void act than the other. Nor can there be any reason for making that rehabilitation more extensive or comprehensive in the one case than in the other.

The principle of acquiescence relied on below and running through many cases has never been effective of itself when attempted to be applied to validating a forgery. What has been and, short of a new agreement, has alone been made effective in such cases, is where the acts or words, or either, of the party having a right to repudiate the forgery, have led another party to rely on such acts or words and act on the faith thereof.

Unless such estoppel could be shewn there could be, before the "Bills of Exchange Act," no dependence put upon ratification of a forgery and certainly it never was intended thereby to imply differently by using the words "assented to" therein.

The fraudulent purpose which is the essence of forgery is here only too apparent.

It has long been laid down that there cannot be in law the ratification of a forgery. The reasons assigned therefor have varied. The existence of the rule has even been questioned.

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It has been determined in this court affirmatively. To apply that affirmation to one form of forgery and deny it to another would seem like making a travesty of legal principles.

In any form this case presents or in which it can be presented to escape this rule, we must either ignore the forgery, self-confessed as it stands, or find that an alleged promise not relied upon, not accepted, nor shewn to have been acted upon, is an estoppel that bars the right to appeal to the rule.

I would for a clear statement of the rule and reasons of or for the same refer to Daniel on Negotiable Securities (5 ed.), sec. 1352(5), which follows a review of English and American cases.

I think the appeal should be allowed and the judgments in the courts below reversed with costs in all and here to the appellant.

MaClbnnan J.—I think this appeal should be allowed. The first question is whether the addition made to the note was a forgery.

I think it was. The addition made was material. Originally the note contained no stipulation for the payment of interest, and was payable on demand. The alteration was the addition of the words "avec intérêt à sept par cent. par an."

The relations of the parties were not such as to authorize Roy to make the alteration without express authority. They were not partners. The appellant was merely an accommodation maker, for which it was agreed he should share the profit or loss on the sale of certain goods of Roy. Roy did not pretend to have authority to make the alteration. He pretended to go and get authority, and then pretended he had obtained it, and I agree with the learned judges below

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that it was not true that he had, as he pretended, obtained authority.

The banker discounted the note, and nothing further happened until the beginning of April, more than six months afterwards, when the appellant went to the bank to obtain a copy of the note. During all that time the note was, in my opinion, an undoubted forgery, and, on the authority of The Merchants Bank, v. Lucas[18], affirmed in this court[19], incapable of ratification.

But it is argued that section 145 of the "Bills of Exchange Act, 1906," is applicable, and that certain alleged promises of the appellant, after he became aware of the alteration, have made him liable. That section, so far as applicable, is as follows:

Where a bill or acceptance is materially altered, without the assent of all parties liable on the bill, the bill is voided, except as against a party who has himself made, authorized or assented to the alteration, and subsequent indorsers.

In what sense is this word alteration here used? The word itself is ambiguous. It may mean the doing of the act or it may mean the act done. The statute speaks of an assent to an alteration. Does that mean assent to the making of the alteration, or does it mean an assent to it after it is made? A bill to which three or more persons are parties is altered. One of the parties made the alteration, that is, did the act. He is not discharged, he remains liable. Another authorized it, that is, as before, authorized the doing of the act. Then comes another who has neither done the act nor authorized the doing of it, but has assented to it. Assented to what?. Plainly, as before, to the doing of the act. The. word alteration must have the

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same meaning in all three cases, that is, the doing of the act, the making of the alteration.

The statute says, in effect, voided except as against a party who has himself made, who has himself authorized or who has himself assented to the making of the alteration.

The use of the perfect tense also favours the same construction. The bill which the legislature declares to be voided, is a bill materially altered without the assent of all the parties. Then it says that any party who has assented to that alteration is still to be bound. It is not any party who assents, but who has assented,

The statute, in effect, declares that a bill altered without assent is voided, but, if altered with assent it is binding on him who has so assented.

The appeal should be allowed with costs here and below.

Duff J.—The construction of section 145 of the "Bills of Exchange Act" presents considerable difficulty. Read grammatically, the section would seem to enact that a material alteration of a bill has the effect of nullifying it, as against all parties except the party who made the alteration and such as, at the time of or before the making of it, had authorized or assented to it. But I do not think it necessary for the purpose of this appeal to decide whether that is or is not the true effect of the enactment. Assuming that, under it, an assent may in some circumstances take effect, though given after the alteration is a completed act, it by no means follows that such an assent would give validity to an alteration amounting to a pure forgery. The legislature appears (section 49) to have

[Page 486]

adopted the view of the majority of the Court of Exchequer in Brook v. Hook[20], that à forgery consisting in the false making of a bill is incapable of ratification —a view acted upon by this court in Lucas v. The Merchants Bank[21]. Having regard to the legislature's manifestation (in the section last mentioned), of this view of the policy of the law, it would, I think, involve an unwarranted expansion of the strict grammatical sense of section 145 to hold that a simple ex post facto assent can by the force of that section give legal effect to a fraudulent alteration amounting to forgery and, apart from the enactment in that section, incapable of ratification.

With great respect for the opinions of those who take a contrary view, I am unable to escape the conclusion that the alteration in question here was simple forgery and (within the principle of the decisions referred to), legally incapable of adoption by the appellant as his act. Neither in making the alteration nor in negotiating the promissory note did Roy intend or profess to act on behalf of the appellant. On this point the whole of the evidence is in a very narrow compass, and it shews plainly that, in negotiating the notes, Roy presented himself to the respondent bank as a borrower on the security of the appellant's indorsement—representing, at the same time, that the appellant held certain warehouse receipts as security against his liability as accommodation indorser. There was, at the time, no suggestion that Roy and the appellant stood to one another in the relation of partners or in any other relation implying that in the transaction Roy bore a representative character. The agent

[Page 487]

who acted for the bank in the business does not say that he received any such impression; nor, I think, could anything that Roy said or did—as related in the agent's testimony—convey such an impression. According to that testimony, Roy's conduct would, I think, appear in this light only, that, on his own behalf with a view to the negotiation of the promissory note for his own purposes, he had made the alteration required by the agent and that the appellant, as his accommodation indorser, had assented to it; or that he had procured the appellant himself to make it. That was a very different thing from professing that what he had done was done for the appellant and as the appellant's act, or for the joint behoof of himself and the appellant and as their joint act.

It seems equally clear, moreover, that Roy did not in fact, in making the alteration or in negotiating the instrument, intend to act for the behoof of the appellant or of the appellant and himself jointly. The appellant had, it is true, lent his indorsement on the understanding that the bank should be secured by a deposit of warehouse receipts in furtherance of an adventure which Roy had proposed, and in which he supposed himself to be engaged as the associate of Roy. But the substratum of this adventure—the merchandise which was to stand as security for the loan, and which was to be held and sold for their joint benefit—was a pure myth; and this proposal, a mere device on the part of Roy, to enable him, by the use of the appellant's indorsement, to obtain an advance from the bank for his own benefit.

Everything which Roy did—including the making of the alteration in question—from the time of his interview with the appellant, was done in furtherance

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of this fraudulent design; and not, of course, at all in furtherance of the mythical speculation in which Hébert supposed himself to be a party.

Roy's act in making the alteration in these circumstances, without Hébert's consent, and with the intent, moreover, of tendering it to the agent of the bank as made by Hébert or with his assent, bears all the characters of a forgery; and, in the view I have expressed, the subsequent sanction of it in fact by Hébert could not give it legal validity either as an assent within the meaning of the statute or as ratification apart from the statute.

Appeal allowed with costs.

Solicitors for the appellant: Bisaillou & Brossard.

Solicitor for the respondent: J. S. Messier.