Supreme Court of Canada
Peoples Bank of Halifax v. Estey (1904) 34 SCR 429
Date: 1904-03-10
The Peoples Bank of Halifax (Plaintiff)
Appellant
And
Richard A. Estey (Defendant)
Respondent
1904: Feb. 26, 27; 1904: March 10.
Present: —Sir Elzéar Taschereau C.J. and Girouard, Davies, Nesbitt and Killam JJ.
ON APPEAL FROM THE SUPREME COURT OF NEW BRUNSWICK.
Sale of goods—Owner not in possession—Authority to sell—Secret agreement—Estoppel.
The owner of logs, by contract in writing, agreed to sell and deliver them to McK. the title not to pass until they were paid for. The logs being in custody of a boom company, orders were given to deliver them as agreed. e., a dealer in lumber, telephoned the owner asking if he had them for sale and was answered "No, i have sold them to McK." e. then purchased a portion of them from McK. who did not pay the owner therefor and he brought an action of trover against E.
Held, affirming the judgment under appeal (36 N. B. Rep. 169) Nesbitt and Killam JJ. dissenting, that the owner having induced e. to believe that he could safely purchase from McK. could not afterwards deny the authority of the latter to sell.
Held per Nesbitt and Killam JJ. that as there was no evidence that the owner knew the indentity of the person making the inquiry by telephone, and nothing was said by the latter to indicate that he would not make further inquiry as to McK.'s authority to sell there was no estoppel.
Held per Taschereau C.J. that as the owner had given McK. an apparent authority to sell, and knew that he had agreed to buy for that purpose a sale by him to a bond fide purchaser was valid.
Appeal from a decision of the Supreme Court of New Brunswick reversing the judgment at the trial in favour of the plaintiffs.
[Page 430]
The facts of the case are stated by Mr. Justice Barker in his judgment on the motion before the Supreme Court of New Brunswick as follows:
"This case was tried before Mr. Justice Landry without a jury and a verdict entered in favour of the plaintiff, for $2766.63. This is an action of trover brought to recover the value of a quantity of logs sold and delivered by one McKendrick to the defendant, and of which the plaintiff claimed to be the owner. It appears that, in the autumn of 1899, the bank made certain advances to one George W. Upham to enable him to carry on his lumbering operations during the following winter. Upham got out a quantity of logs which in pursuance of an agreement made by Upham with the bank, when obtaining the advances, were hypothecated to the bank under section 74 of the Bank Act. This hypothecating is dated April 20th, 1900, and it assigns to the bank as a security for their advances, which amounted in all to some $18,000, upwards of three millions of spruce logs free of all lien except stumpage which logs were to be driven by Upham to the Fredericton Boom in that spring. There were some further advances made later on but that fact is not important in this ease. By a memo on the hypothecation agreement, Upham authorized the bank to sell the logs to any corporation, person or persons, either at private sale or public auction as to the bank might seem meet. The logs were driven into the boom as agreed and the bank, acting under the authority of the Bank Act and Upham's consent, on the sixteenth day of July, 1900, entered into an agreement of sale of all these logs with McKendrick, who was a lumber manufacturer residing at Fredericton and is so described in the agreement. By the terms of this sale the bank agreed to sell and deliver all these Upham logs to McKendrick for the sum of $8.60 per M. sup. feet,
[Page 431]
delivered through the boom and at the boom scale. McKendrick, on his part, agreed to purchase at this price and to pay for the logs as they were delivered. The property in the logs was to remain in the bank until the same were paid for, and the contract only extended to and covered such of the logs as might pass through the Fredericton Boom.
"On the 18th day of July, 1900, the bank sent to the boom company a written order as follows: 'Please deliver to C. F. McKendrick all the George W. Upham logs passing through your boom during the season of 1901.' A similar notice was given by the bank to Sewell, who has charge of the delivery of logs after they have been rafted in the boom, to the various owners. Acting under these instructions the boom company and Sewell delivered these Upham logs to McKendrick. For many years previous to this time McKendrick had been in the business of buying, selling and manufacturing lumber and, when this sale was made, he was operating two mills in the vicinity of Fredericton, all of which the bank seemed to be fully aware of. All of these logs were disposed of by McKendrick but, out of the proceeds, he only paid to the bank $10,000. The logs in question in this suit are a portion of the Upham logs which the defendant bought from McKendrick, and paid for. The purchase was made in August, 1900, but, before making it, the defendant communicated with Mr. White, the bank's manager at Woodstock, who had the entire management of this whole matter, both with Upham and McKendrick. The defendant says that some three months before he purchased, he, by telephone, asked Mr. White if he had the Upham logs for sale and he replied 'No, he had sold them to McKendrick.' The defendant says that having received this answer from Mr. White he purchased from Mr. McKendrick. Mr.
[Page 432]
White does not deny this conversation though he says he does not recollect it. The defendant had been engaged in the lumber business all his life and was thoroughly conversant with the method of getting lumber to. the booms, its rafting there and its delivery to the owners afterwards. He heard nothing of the bank having any claim on this lumber until some eighteen months after he had purchased, when they made a demand upon him for it."
The action was tried by Mr. Justice Landry without a jury and resulted in judgment for the plaintiffs for the value of the logs purchased by defendant from McKendrick. A motion to the full court to have the judgment set aside and judgment entered for defendant or a new trial granted was successful and a judgment was entered for defendant.
Connell K.C. and Carvell for the appellants. No property passed to McKendrick until the logs were paid for. Ex parte Crawcour; Farguharson Bros. & Co. v. King; Forristal v. McDonald; 6 Am. & Eng. Ency. of Law 2 Ed. pp. 440-1, 453
White did not wilfully mislead defendant even assuming, of which there is no evidence, that he knew it was defendant who made the inquiry by telephone; there can, therefore, be no estoppel. Pickard v. Sears; Freeman v. Cooke; Bell v. Marsh; Carr v. London & North Western Railway Co.; Andrews v. Lyons; 11 Am. & Eng. Ency. of Law 2 Ed. p. 431.
Pugsley K. C. and Gregory K. C. for the respondent. The bank having delivered the logs to McKendrick without exacting payment in advance must be held to have waived their right especially as they
[Page 433]
subsequently shewed a willingness to accept payment from time to time as sales were made. Cole v. North Western Bank; Pickering v. Busk; 6 Am. & Eng. Ency. of Law 2 Ed. pp. 275-6.
The bank are estopped by their representation to defendant. West v. O'Leary; Spooner v. Gummings.
THE CHIEF JUSTICE.—The facts of this case appear at full length in the opinions delivered by the learned judges of the court a quo, now reported at page 169, volume 36, New Brunswick Reports.
Either upon the ground taken by the Chief Justice of New Brunswick, that McKendrick had full authority to sell under the circumstances of the case, or, if he had not, upon the ground taken by the other judges that the bank is estopped from now invoking his want of authority, the bank's action must, in my opinion, fail, and this appeal be dismissed. The dealings by the bank were such as to clothe McKendrick with an apparent authority to sell and convey a good title to a bonâ fide purchaser, subject to the condition that the purchaser, or McKendrick himself, should pay to the bank whatever amount of the price of sale was sufficient to satisfy its advances, the bank relying upon McKendrick for the fulfilment of that condition. They knew that he bought to resell. And White's answer that he had not the logs for sale, because he had sold them to McKendrick, or in other words, because McKendrick had bought them, completes the evidence that McKendrick had full authority to sell. When the bank put McKendrick in possession for the very purpose that he should resell, surely they cannot say that he had no power to sell to Estey.
[Page 434]
But, assuming that McKendrick had not that power, the bank is estopped from now availing itself of it. The bank would now claim the benefit of a suppressio veri by its manager, White, that would have misled any reasonable man, as it misled Estey, McKendrick, the bank's debtor, is insolvent and, if the bank could recover against Estey, it would be only because he was not justified in believing that when White said that he had sold to McKendrick, he, White, gave him to understand that McKendrick had bought the whole interest.
Now, in common parlance, for any one to say that he has sold his property, without adding a word more, means that he has parted with all his interest in it. The unfairness of mental reservations in the transactions of ordinary business is so apparent that the courts do not view them with favour.
This case is one, I might say, of res ipsa loquitur. Estey was undoubtedly, in fact, misled by White. There is no room for questioning his good faith in purchasing from and paying McKendrick. It is by wilfully not telling him the whole truth that White induced him to buy from McKendrick. White, it is true, was not obliged to speak at all, but, when he did speak, he had no right to mislead Estey by telling him what would reasonably induce any intending purchaser to believe that if he wanted to buy he had to go to McKendrick. The question put by Estey to White was one that he, White, must necessarily, under the circumstances, as a fair inference of fact, have known to be from an intending purchaser, whoever he was. The maxim memo plus juris transferre potest quam se ipse habet, has no application where the owner of goods has so lent himself to accredit the title to another person.
In fact, I am strongly inclined to think that White, in answering Estey as he did, was prompted by his
[Page 435]
desire to get, in the interest of the bank, a purchaser for these logs, expecting the bank's advances to be repaid out of the price of sale and trusting McKendrick for it. Now that McKendrick has abused the confidence White reposed in him, the bank would have their loss fall upon Estey and make him pay a second time the large amount he, bonâ fide, paid to McKendrick. Their contention, to my mind, is untenable.
GIROUARD J. concurred in the judgment dismissing the appeal with costs.
DAVIES J.—This was an action brought by the plaintiff bank against Estey to recover from him the value of a quantity of lumber or logs purchased by the latter from one McKendrick some two years before the action was brought. Judgment had been entered by the trial judge in plaintiff's favour for $2,766.63, being the value of the logs, and this judgment, on appeal to the Supreme Court of New Brunswick, was reversed and judgment entered for the defendant. From the latter judgment the plaintiff bank appeals to this court.
On some of the important questions involved in the case the evidence is regrettably meagre, the parties at the trial having assumed much which does not distinctly appear upon the record. The facts however which, in my opinion, are sufficiently proved, and, if proved, determine the issues in defendant's favour, are as follows:
The bank, which was carrying on business in New Brunswick and had an agency at Woodstock managed by Mr. George White, became through its business operations the owner of a quantity of logs known as the Upham logs, on the St. John river. The defendant Estey was and had been for a great many years a
[Page 436]
lumberman carrying on business on the said river buying and selling logs and sawing the same into deals and boards, etc. One McKendrick to whom the bank sold the logs (conditionally) was also a lumberman on the St. John River, residing at Fredericton, and engaged before and at the time he bought the logs from the bank in dealing and trading in lumber and logs, and known to the bank manager to be engaged, as stated by him in his evidence,"in buying and selling lumber" and had a very short time before leased a small saw mill from the bank, on the bank of the river. At the time of the sale by the bank to McKendrick, nothing was said one way or the other as to the use he should put the logs to, whether saw them up or sell them. A day or two after the sale of the logs, White, the bank manager, sent the boom company, in whose custody the logs were, a written order to deliver to McKendrick
all the Upham logs passing through your boom during the season of 1900
and also sent a similar order to one Sewell, who had charge of the delivery of the logs to their various owners after they had been rafted in the boom. One of the conditions contained in the contract of sale between the bank and McKendrick was as follows:
The property in the said logs to remain in the Peoples Bank of Halifax until the same be paid for.
Shortly after the sale to McKendrick was made, Estey, who resided at Fredericton, on the St. John river, telephoned to White, the bank manager at Woodstock, with respect to these logs. The evidence with respect to this vital conversation is exceedingly meagre. White has no recollection of it at all and Estey's version of it is as follows:
Q. Before purchasing from Mr. McKendrick did you have any communication with Mr. White in respect of these logs?—A. I did.
[Page 437]
Q. Will you state what the nature of that communication was?—A. It was over the telephone. I asked Mr. White if he had the Upham logs for sale, and he said, No, he had sold them to Mr. McKendrick.
Q. That is Mr. White, the Manager of the People's Bank at Woodstock?—A. Yes.
Q. That was before you bought from Mr. McKendrick?—A. Oh yes, sometime before.
Q. Approximately how long before?—A. I would think no less than three weeks before.
Q. Having received this answer from Mr. White did you then purchase the logs from Mr. McKendrick?—A., I did.
A question was incidentally raised during the argument on the absence of any direct and positive evidence that it was White who was at the other end of the telephone when Estey asked the question. But I think, as no such doubt was raised at the trial when it could have been at once either confirmed or removed, or in the court below, and as all the arguments had treated the conversation as having taken place between the real parties, White and Estey, who were known to each other, that weight should not now be attached to the question raised. I think the only fair and legitimate inference to be drawn from the evidence of Estey, above quoted, and from his cross-examination on the conversation, is that both parties knew to whom they were speaking.
At the time Estey purchased the logs in question from McKendrick, he gave him his acceptance for the purchase money, $3,000, which on maturity was duly paid- He was an innocent purchaser for value and did not learn until long after payment that the bank had any claim to the logs. The bank had given its orders to the boom master, and Sewell, the tug master, to deliver possession of the logs to McKendrick who was able to satisfy his purchaser, Estey, on that point. It seems to me therefore that the legal question is reduced to the construction which, under the circumstances of the case, and bearing
[Page 438]
in mind the nature and character of the business carried on by the several parties concerned, and the relations in which they respectively stood to each other, ought to be put upon the telephone conversation. When Estey asked White, the bank manager, the question whether he had the Upham logs for sale the latter knew he was being asked it by a man who was and had been for years engaged in the lumber business in buying and selling logs and other lumber on the St. John River. It was not therefore to be assumed to be a question asked from mere idle curiosity but a business question asked by a business man for business purposes; and it seems to have been answered in the same spirit by Mr. White, who not only gave a categorical answer that he had not the logs for sale but went further and volunteered the information that he had sold them to McKendrick. Now here is a bank dealing with two lumber merchants, both buyers and sellers of logs and other lumber, and known to its Manager as such. The latter tells one of these merchants, who asks whether he has certain logs for sale, that he has not, that he has already sold them to the other merchant. He was not asked to whom, he had sold them. He volunteered that information. What reasonable conclusion ought Estey to have reached on receiving that answer? Certainly, in my opinion, the one that McKendrick was the real as well as the apparent vendee possessing the ordinary power of sale which attaches to an ordinary purchaser. It seems to me that having volunteered to give Estey, a probable purchaser, the information he did, White was bound if he intended to act upon his strict rights to have warned Estey of the secret reservation of property in the bank. When he told him he had sold to McKendrick he only told part of the truth He must be taken to have known what construction a reasonable business man, trading
[Page 439]
in lumber, would put upon such an answer, and impliedly at the very least to have held out McKendrick as a purchaser with power to resell. If the latter had not been a buyer and seller of lumber; if he was merely a mill owner engaged in sawing logs into deals and boards, such an implication would not necessarily perhaps arise. But considering McKendrick's known business I cannot doubt that such an answer, followed by the orders to the boom master to give him possession of the logs, amply justified the implication by Estey that McKendrick had the property in as well as the possession of the logs.
I do not think any difference of opinion exists as to the law governing the case although there are differences as to its application to the admitted facts and the legal inferences to be drawn from them.
In The London Joint Stock Bank v. Simmons, Lord Herschell says:
The general rule of the law is that where a person has obtained the property of another, from one who is dealing with it without the authority of the true owner, no title is acquired as against that owner, even though full value be given and the property be taken in the belief that an unquestionable title thereto is being obtained, unless the person taking it can shew that the true owner his so acted as to mislead him into the belief that the person dealing with the property had authority to do so. If this can be shewn a good title is acquired by personal estoppel against the true owner.
This is after all only an elaboration of the doctrine laid down by Ashhurst J. in the well known case of Lickbanow v. Mason, where he says:
We may lay it down as a broad general principle that wherever one of two innocent persons must suffer by the acts of a third he who enables such third person to occasion the loss must sustain it.
And see 6 Am. & Eng. Enc, p. 482. In Henderson & Co. v. Williams, the present Lord Chancellor,
[Page 440]
Halsbury, adopts the language of Savage C. J. in Root v. French, who in speaking of a bona fide purchaser who has purchased property from a fraudulent vendee and given value for it, says:
He is protected in doing so upon the principle just stated that when one of two innocent persons must suffer from the fraud of a third he shall suffer who by his indiscretion has enabled such third person to commit the fraud. A contrary principle would endanger the security of commercial transactions and destroy that confidence upon which what is called the usual course of trade materially rests.
In the later case of Farquharson Bros. & Co. v. King & Co., the same learned chancellor reaffirms his adherence to the proposition of law as formulated above by Chief Justice Savage, and remarks on page 332, in reply to those who challenge the accuracy of the language used:
These words "who by his indiscretion" appear not to have made much impression upon those who were commenting upon this matter;
and later on
of course it depends on the sense in which you are to understand the word "enabled,"
and then he goes on to illustrate the difference between the conduct and language of one who acts and speaks towards those to whom he owes a duty and towards others to whom he owes none.
With the greatest possible deference to those of my brethren who take a contrary view from that which I have stated, I have gone over the evidence most carefully and have reached the conclusion tersely expressed by Mr. Justice Barker in his judgment in the court below
that it would be little less than a fraud to permit the plaintiff to set up a title to the property purchased superior to that of the defendant.
The appeal should be dismissed with costs.
Since writing the foregoing, I have had the advantage of reading the judgment prepared by my Brother
[Page 441]
Nesbitt and I am glad to find that we agree as to the law and differ only as to our appreciation of the facts, and the legal inferences which should be drawn from the evidence.
NESBITT J. (dissenting)—The plaintiffs had made advances to one Upham and obtained security under section 74 of the Bank Act on a quantity of logs stored in a boom at Fredericton, N.B.
Subsequently Upham released all his interest in the logs to the bank and it became known that the bank had for sale the Upham logs. One McKendrick, on the 16th July, 1900, became the purchaser of these logs under an agreement in the following language:
MEMORANDUM OF CONTRACT made this 16th day of July, A.D. 1900, between the People's Bank of Halifax, of the one part, and Cyrus P. McKendrick, of the City of Fredericton, Lumber Manufacturer, of the other part.
The said People's Bank of Halifax, having the right to sell hereby contracts and agrees with the said Cyrus F. McKendrick to sell and deliver to him in the Fredericton Boom, all the logs cut, gotten or purchased by George W. Upham, during the logging season of 18991900, which logs are now chiefly in the limits of the Fredericton Boom and the balance are in the course of transit and bear the several marks following:—XUX, MXU, GGU, 'U'; this sale to include all of the said George W. Upham's logs whatever marks the same may bear, and all logs marked with any of the marks rendered, entered or recorded with the said Fredericton Boom Co. by the said George W. Upham for the season of A.D. 1900, at and for the sum of eight dollars and sixty cents per thousand superficial feet, delivered through the boom, boomage paid, regardless of size of logs, boom scale to be accepted. And the said Cyrus F. McKendrick hereby purchases from the said People's Bank of Halifax all the said logs hereinbefore mentioned to be delivered at the said Fredericton Boom at the price aforesaid of eight dollars and sixty cents per thousand superficial feet, and agrees to pay therefor as the same may be delivered.
The property in the said logs to remain in the People's Bank of Halifax until the same be paid for, and this contract only to extend to
[Page 442]
and cover such of the said Upham logs as may pass through the said boom.
(Signed,) PEOPLE'S BANK OF HALIFAX,
By G. A. White, Manager,
Woodstock, N.B.
(Signed.) C. F. McKendrick.
McKendrick at the same time leased from the bank a mill which Upham had been using intending apparently to manufacture the logs into sawn lumber. McKendrick also had another mill where he was manufacturing lumber. On the 18th July, 1900, the manager of the bank at Woodstock gave an order to the Fredericton Boom Co. as follows:
Woodstock Agency, July 18th, 1900.
The Fredericton Boom Co., Fredericton.
Please deliver to C. F. McKendrick all of the Geo. W. Upham logs passing through your booms during the season of 1900.
(Signed,) PEOPLE'S BANK OF HALIFAX,
By G. A. White, Manager,
Woodstock.
And on the 13th of August McKendrick gave the bank a cheque for $10,000 and the bank gave him a release of 1,162,790 feet in the words and figures following:
Woolstock, N.B., August 13th, 1900.
Received from C. F. McKendrick the sum of ten thousand dollars ($10,000) in full payment for one million one hundred and sixty-two thousand seven hundred and ninety superficial feet of logs delivered to him under the contract of sale of the Geo. W. Upham logs to him by the People's Bank of Halifax, which said number of feet of unsawed logs are hereby released to him and become his property, the first one million one hundred and sixty-two thousand seven hundred and ninety superficial feet of unsawed logs sawn by the said McKendrick to be considered as the logs hereby released.
(Signed,) PEOPLE'S BANK OF HALIFAX,
G. A. White, Manager.
Mr. McKendrick was asked:
Q. You admitted and recognized to Mr. White that you could not sell these logs without his release, didn't you?—A. Well, I asked for a release, yes.
[Page 443]
On the 9th August, Mr. Estey, defendant, purchased from McKendrick 321,702 feet of logs and apparently about the time that the Upham logs were for sale by the bank Mr. Estey says:
Q. Before purchasing from Mr. McKendrick did you have any communication with Mr. White in respect of these logs !—A. I did.
Q. Will you state what the nature of that communication was?—
A. It was over the telephone. I asked Mr. White if he had the Upham logs for sale, and he said no, he had sold them to Mr. McKendrick.
Q. That is Mr. White, Manager of the People's Bank at Woodstock?—A. Yes.
Q. That was before you bought from McKendrick?—A. Oh yes, sometime before.
Q. Approximately how long before?—A. I would think not less than three weeks before.
Q. Having received this answer from Mr. White did you then purchase the logs from Mr. McKendrick?—A. I did.
And Mr. White in his examination says:
Q. Did you also inform Mr. Estey by telephone to the same effect that the logs were sold to McKendrick?—A. I don't remember.
Q. You have no recollection one way or the other upon the subject?—A. My impression is that I did not, because I don't remember him telephoning me about it.
Q. What you say is that your mind is a blank upon the subject of his telephoning you at all?—A. Yes; I have no recollection.
Q. Therefore if we are able to prove that he did telephone you what you say is you do not remember?—A. If you prove he did, it must be so; but I have no recollection of it.
Q. But if it so your memory might be at fault?—A. Yes.
The respondent referred particularly to a letter of the 22nd September, 1900.
Woodstock, N.B., Sept. 22nd, 1900.
C. F. McKendrick, Esq,
Fredercton.
Dear Sir—Yours of 21st received, and contents noted.
It would appear from your letter that you consider the matter of payment to us of very secondary importance. I do not view it in that light. If you have not disposed of more deals than we released we may see our way clear not to demand payment before the 30th inst.
[Page 444]
Please let me know by return mail the quantity sold and also the amount you will agree to pay to us on September 30th.
Yours truly,
(Signed,) Q. A. WHITE,
Manager.
And a further letter of September 29th:
Woodstock, N.B., Sept. 29th, 1900.
C. F. McKendrick, Esq.,
Fredericton.
Dear Sir,—You have again failed to make payment on Upham logs as agreed. You must make payment not later than the 3rd. I regret exceedingly having sold the logs to you. It seems very strange that you would buy that quantity of logs and agree to pay' cash as delivered without having any idea where the money was coming from to pay with.
As I have to go out of town on the 4th or 5th for several days I must have payment made before that time.
Yours truly,
(Signed,) G. A. WHITE,
Manager.
And on November 16th:
Woodstock, N.B., November 16th, 1900.
C. F. McKendrick, Esq.,
Fredericton.
Dear Sir,—After seeing Mr. Richey of the B. of M. yesterday afternoon, I did not have time to see you before taking the train.
As you have doubtless been informed we decided to let matters stand until such time as you are able to get around and prepare a full statement of your affairs, and that in the meantime if the deals, boards and scantlings can be loaded and sent to St. John and there held, to have that done.
What few logs are left, if you cannot get them sawed I hope you will be able to place them where they will not be lost in the spring. I forgot to get from you the name of owner of woodboat that took deals to St. John, who deals were intended for, and where they likely are at the present time. Please let me know.
I trust that you are continuing to improve and that when you get around matters will be so arranged that you will be able to continue your business. I am informed that Dibbles cannot do anything until the 4th December, and as I understand it the B. of M. have no right to dispose of the mill at the present time.
Yours truly,
(Signed,) G. A. WHITE,
Manager.
[Page 445]
And on November 20th:
Woodstock, N.B., November 20th, 1900.
C. F. McKendrick, Esq.,
Fredericton.
Dear Sir,—I am in receipt of yours of the 19th inst., and note contents. I trust you may continue to improve.
I have just received a telegram from Ruddick which reads as follows: "Cushing stole from wharf scow J. S. G. 4 States Bank of Montreal owns deals. McKean replevins deals for advances made on same to McKendrick October 9th." You will understand the deals replevined by McKeans are not the same as referred to in re Cushing.
I may go to St. John to-night and if so will be at the Victoria to-morrow. In reference to the deals claimed by McKean I would like if possible to get the name of scows, date of shipment, etc., and when these deals were sawed.
You will understand that if these scows were loaded out of the first 1,162 M. that you sawed out of the Upham logs we cannot hold them. If they were not we can.
Will you try and be ready to give me the information to-morrow in case I should ask you for it to-morrow from St. John. If I do not please write me to-morrow afternoon, so that I will get it next day. If I go to St. John will send you a p. c. If I do not and you have any important information write me at Victoria.
Yours truly,
(Signed,) G. A. WHITE,
Manager.
Mr. White in examination of these letters says:
Q. You were willing to wait until he did dispose of the deals so as to pay you?—A. I thought when the deals were there we were comparatively safe and good for the money and a short delay wouldn't make much difference.
Q. Mr. McKendrick had two mills had he not?—A. I believe he was running two mills that summer.
Q. One was called the Upham mill and a mill across the river called the Robinson mill?—A, I believe so.
Q. And these logs he was sawing at both mills?—A. Yes I discovered afterwards. I didn't know it at the time. I didn't know it along in the summer.
Q. Can you tell me about what time in October you were there?—
A. It would be late in October.
Q. And you say that then the logs were substantially all disposed of?—A. Yes, I say they were most all gone, and the deals were there he said were gone too.
[Page 446]
And again he says:
I took it that he was disposing of what we had released, and he distinctly told me—
Witness: I was not aware that he was disposing of any except what we had released. * * * I was afraid that possibly he was. He repeatedly told me previous to that that it was not being shipped.
The case was tried before Mr. Justice Landry and apparently was adjourned for argument, and practically all the cases which were submitted to this court were discussed before the trial judge whose judgment is as follows:
After the attention and care I have given this case, and I feel I have given it all the attention and care I can reasonably give it, I have had some time to look at the evidence, which has been on my mind since I heard it. I have arrived at the conclusion that I will have to find for the plaintiff on both counts of the declaration and assess the damages for the value of the lumber that was received by the defendant, Mr. Estey, from the boom-master, or whoever represented the boom-master, by the order of McKendrick, which would be $2,766.63.
I do not announce that decision, however, without expressing some regret that an innocent person like Mr. Estey should be made to suffer; but still I find that the law of our country is such with circumstances and facts existing as I find them to exist in this case, I have to give the verdict against him. In point of fact if my decision had been the other way I would have said the same thing in reference to the bank—regret the bank suffering, which would also be an innocent party, the damages; but under the law as I find it the plaintiffs protected themselves better than Mr. Estey did, and therefore the damages fall on him after he has already paid for the logs. I find the law to be that and I find the facts such that I will direct the clerk to enter a verdict on both counts for $2,766.63 for the plaintiff.
An appeal was taken to the Supreme Court of New Brunswick and subsequently four propositions were argued:
1. That the appellant bank by the statement of its agent, Mr. White, to the defendant that he had sold the Upham logs to McKendrick, and by its conduct, is estopped from denying McKendrick's right to dispose of the logs and for claiming property in the logs on the bank.
2. The appellant bank waived its right to be paid for the logs on delivery.
[Page 447]
3. The appellant bank knew the logs were purchased by McKendrick for the purpose of re-sale, and having delivered the logs to McKendrick and clothed him with the possession and ostensible right to sell, any secret reservation of title or property in the bank would be fraudulent and void as against an innocent purchaser for value.
4. That the logs sold by McKendrick to the respondent were included in or were part of the logs released by the bank upon payment of the $10,000.
Judgment was delivered by the court composed of Tuck C..J., Hanington, Barker, McLeod, Gregory and Landry JJ. All were in favour of the defendants with the exception of Mr. Justice Landry.
I have stated the facts at some length because the case seems to me to be one of considerable importance. I have examined all the authorities cited and many others, and it seems to me that the court below has erred in its application of the decisions.
I think the better plan is to see what were the rights as between the parties themselves and then see how far the rights of the bank had been displaced by anything that occurred. I think it is clear on the facts that I have stated, that the intention of the parties was that the logs should be delivered to McKendrick without the bank insisting upon payment as a condition precedent to the delivery, but that it was intended that McKendrick should get possession of the logs, the property of the logs to remain in the bank until payment was received. Such a transaction is, in the absence of statutory enactment, a perfectly valid and binding one. It is quite competent for parties to make such an agreement as that an unpaid vendor may reserve property in goods sold, the passing of the property being in either case a matter of intention which can be controlled by the contract of the parties, and it is equally law, now too well settled to admit of dispute, that upon a sale and delivery of personal estate on condition that the title is not vested in the
[Page 448]
vendee until the purchase money is paid, the vendor may recover the property from an innocent third person obtaining title from such a vendee, assuming the vendor is guilty of no conduct which as between him and the bonâ fide purchaser disentitles him to enforce his remedy. It is equally well settled that, apart from statute, entrusting a person with possession of goods does not constitute a holding of such person out as entitled to dispose of them, and that at common law no man can give a better title to his personal property than he himself has, with the engrafted exceptions that if the sale was a sale in market overt, or if it was a sale made to one engaged in the daily traffic of goods in small quantities, such as a shopkeeper who resold, then the sale to a bonâ fide purchaser was good, the principle apparently being that if one puts another in the possession of goods for the very purpose as the vendor must be aware of the vendee retailing them to the general public then such a disposition is repugnant to the retention in good faith of a property in the goods, and the vendor can not claim as against a bonâ fide purchaser of the goods in such case that the property has not passed. Such also are cases of giving possession and apparent title to sale agents or factors. Can it be pretended here that this transaction comes within such an exception? As between the parties clearly it was not so intended., McKendrick admits that the parties to the document assumed that if he proposed making any sale of sawn lumber obtained from the logs that he should get that quantity released and the draft or cheque received in payment handed to the bank in exchange for the release. I cannot see that this transaction differs at all in principle from the daily transactions under section 74 of the Bank Act and which are well known throughout this country. It has been deemed in the public interest that banks
[Page 449]
should be allowed to make advances to their customers to enable them to get out logs, and when the logs were gotten out that the bank should receive security. It is not necessary to register and under such security the bank retained a title in the logs and any lumber manufactured therefrom, and the practice has grown up to the extent of millions of dollars per annum. The lumberman making a sale of the lumber ships same to the order of the bank, and the bill of lading is held by the bank until it receives either a draft or cheque in payment. It is perfectly apparent, not only from McKendrick's evidence but the letter from the bank relied on by the defendant, which I quoted above, that the intention was to send deals, boards and scantlings to St. John, there to be held, meaning, to be held to the order of the bank, otherwise the letter would have no meaning.
I think this entirely disposes of the second and third contentions of the plaintiff, and but for the telephone conversation, to be hereafter referred to, the bank would have had a perfect right to follow the goods as has been done in numerous cases in the reports and recover them from a party who had not the title; in other words, that Estey could receive no better nor higher title than McKendrick had.
I do not think there is anything in the fourth contention as it is perfectly plain that what was intended was that a certain quantity of deals, to the extent of about 1,000,000 feet, were to be released, and that whatever, lumber was first cut from the logs should be applicable to this, and that no other property was intended to be released.
This brings us now to the consideration of the so-called estoppel by the telephone conversation. In my opinion this question must be found in favour of the bank. In the first place there is no evidence to shew
[Page 450]
that White was aware who the person was who was asking the question, and while it may be said that it is fair to assume upon the evidence that White did probably understand that it was the defendant who was asking the question, I think the surrounding circumstances must determine the question of an estoppel. The bank had the Upham logs for sale. Various parties had been inquiring as to the purchase. Two or three days before the bank had disposed of them to McKendrick, giving him at the same time a lease of a mill, as I pointed out, with the apparent intention that they should be sawn into lumber. At any rate all this shows is that a person called up to know if "the bank" had the logs for sale. It is not shown that White had any reason to suppose that the question was directed to anything more than that point, and his answer, "No, the logs have been sold to McKendrick" to my mind only points to a statement of fact that the bank had put it out of its power to sell the logs. There is no suggestion that the person inquiring gave any indication that he was making any inquiry except for the purpose of ascertaining whether the bank was still in a position to make a sale. There was nothing in such a simple inquiry to lead any reasonable man to suppose that under the circumstances McKendrick was likely to be applied to for the purchase of the logs, or, as I have before pointed out, that McKendrick, if he was applied to, would in any sense attempt to deal with the logs without obtaining a release from the bank as he did in the case of a sale to the Bank of Montreal. Had anything been said by Estey to indicate to manager of the bank that he was likely to pursue the inquiry further and to go to the person to whom the logs had been stated to be sold, I think then and then only would an estoppel have arisen had the manager failed to point out that although
[Page 451]
he had said that he had sold them to McKendrick that he still retained an interest in them by way of vendor's lien. The very nature of estoppel means that a person has misled another; that he in good faith ought to be precluded from setting up that a certain state of facts existed because he has asserted by his language or conduct the contrary to a person who, he had reason to suppose or believe, would act upon his statement or conduct, or that the person could reasonably believe that it was meant to be acted upon. I think the best statement of the law that I have seen is to be found in 11 Am. & Eng. Ency., (2 ed.) at page 431. It is stated that
to constitute an estoppel it must be shewn that the person sought to be estopped has made an admission or done an act with the intention of influencing the conduct of another, or which he had reason to believe would influence his conduct, inconsistent with the evidence he proposes to give, or the title he proposes to set up. It appears however to be the prevailing rule that it is not essential that the conduct creating the estoppel should be characterized by an actual intention to mislead and deceive. If, whatever a man's real intention may be, he so conducts himself that a reasonable man would take the act or representation to be true, and believe that it was meant that he should act upon it, and he did act upon it as true, the party making the representation will be precluded from contesting its truth.
I may say that this goes further in favour of the defendant than any of three celebrated rules laid down by Brett J. in Carr v. London and Northwestern Railway Co. at pages 316-317, which are as follows:
One such proposition is, if a man by his words or conduct wilfully endeavours to cause another to believe in a certain state of thing which the first knows to be false, and if the second believes in such state of things, and acts upon his belief, he who knowingly made the false statement is estopped from averring afterwards that such a state of things did not in fact exist. * * * * * *
Another recognized proposition seems to be that if a man, either in express terms or conduct, makes a representation to another of the existence of a certain state of facts which he intends to be acted upon
[Page 452]
in a certain way, and it be acted upon in that way, in the belief of the existence of such a state of facts, to the damage of him who so believes and acts, the first is estopped from denying the existence of such a state of facts.
And another proposition is that if a man, whatever his real meaning may be, so conducts himself that a reasonable man would take his conduct to mean a certain representation of facts and that it was a true representation, and that the latter was intended to act upon it in a particular way, and he with such belief does act in that way to his damage, the first is estopped from denying that the facts were as represented.
I think the evidence fails as to both "knowledge and intent" which are essentials to estoppel. I quote as most applicable the observation of Parke B. to counsel in Freeman v. Cooke.
You do not mean to argue, that, if a person makes a misstatement, without any intention that another party should act upon it, and when he could not expect that another party would act upon it, that, in such a case, he is bound?
I think that the defendant has failed to bring himself within the rule and that the plaintiff bank is entitled to recover the sum found by the trial judge together with costs in all the courts.
KILLAM J. also dissented from the judgment of the majority of the court for the reasons stated by Nesbitt J.
Appeal dismissed with costs.
Solicitor for the appellant: A. B. Connell.
Solicitor for the respondent: A. J. Gregory.
Email this Content