Young et al. v. Bank of Montreal et al., [1970] SCR 328

Supreme Court of Canada

Young et al. v. Bank of Montreal et al., [1970] S.C.R. 328

Date: 1969-12-17

Sidney Young, Jonas Zalkowitz and Jacob Zalkowitz (Defendants) Appellants;

and

Bank of Montreal (Plaintiff) Respondent.

Sidney Young, Jonas Zalkowitz and Jacob Zalkowitz (Plaintiffs by counterclaim) Appellants;

and

Bank of Montreal and Archibald Robert Burnie (Defendants by counterclaim) Respondents.

1969: October 10, 14; 1969: December 17.

Present: Cartwright C.J. and Martland, Judson, Ritchie and Spence JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA

Banks and banking—Promissory notes—Money loaned by bank loaned, in turn, by clients on manager’s advice—Whether misrepresentation by manager as to security for loan made by clients.

The respondent bank brought action against the appellants Y and Z in respect of separate promissory notes given by each of them, each for $5,000 and each dated September 8, 1958. The respondent also brought action against the appellant JZ in respect of his promissory note for $5,000, dated January 14, 1960, and also against the appellant Z as guarantor of the indebtedness of the former to the bank. The actions were consolidated and judgment at trial was given in favour of the bank. A counterclaim by the appellants was dismissed. An appeal to the Court of Appeal having failed, the appellants appealed further to this Court.

B, a manager of the respondent bank, had advised Y and Z to loan money to C, a customer of the bank, and offered to cause the bank to loan money to them so that they could, in turn, loan it to C. The appellant JZ knew nothing of this transaction and acted simply to accommodate his brother Z.

On the question as to whether B represented to Y and Z on September 8, 1958, that he then held in the possession of the bank an assignment of an

[Page 329]

insurance policy on C’s life which so soon as they made a loan to C would be a security for the repayment of that loan, the trial judge accepted B’s evidence that “he agreed that the life insurance policy was to be assigned, subject to the bank’s interest” to Y and Z. The members of the Court of Appeal were of the view that neither Y nor Z, nor B, nor any combination of these, established that B represented to the appellants that the life insurance was being held for their benefit at the conclusion of the meeting on September 8, 1958.

Held: The appeal should be dismissed.

Per Cartwright C.J. and Martland, Judson and Ritchie JJ.: Agreement was expressed with the reasons given in the Court of Appeal for dismissing the appellants’ appeal from the judgment at trial.

Per Spence J.: The argument of counsel for the appellants failed to upset the concurrent finding by the Courts below with respect to B’s representation to the appellants concerning the insurance policy. On the other hand, there were certain circumstances furnishing strong corroboration of that finding.

APPEAL from a judgment of the Court of Appeal for British Columbia, dismissing an appeal from a judgment of Macdonald J. Appeal dismissed.

Allan D. McEachern, for the defendants, appellants.

P.B.C. Pepper, Q.C., and R.I.A. Smith, for the plaintiff, respondent.

The judgment of Cartwright C.J. and Martland, Judson and Ritchie JJ. was delivered by

MARTLAND J.—I am in agreement with the reasons given in the Court of Appeal, by the Chief Justice and by Robertson J.A., for dismissing the appellants’ appeal from the judgment at trial. Accordingly, I would dismiss their appeal to this Court, with costs.

SPENCE J.—I have had the advantage of reading the reasons of my brother, Mr. Justice Martland, and I concur in the view that the appeal should be dismissed.

It would seem that the crucial question is whether the respondent Burnie did represent

[Page 330]

to the appellants, or more properly the two of them, Sidney Young and Jacob Zalkowitz, on September 8, 1958, that he, Burnie, then held in the possession of the bank, in his filing cabinet in his office, an assignment of the insurance policy on Dr. Caldwell’s life which so soon as they made a loan to Dr. Caldwell would be a security for the repayment of that loan. Had such a representation by Burnie been proved, I would have found great difficulty in determining that the bank was not bound by the action of its servant who was, in my view, then acting within the scope of his employment. It must be remembered that the bank had already, through the agency of Burnie, loaned Dr. Caldwell $15,000, although Burnie admitted that he was only authorized to advance $10,000, and that not only did Burnie advise Young and Jacob Zalkowitz to loan money to Dr. Caldwell but he offered to cause the bank of which he was the manager to loan money to them so that they could, in turn, loan it to Dr. Caldwell. Surely it was the business of the bank manager to increase the bank’s business by making loans. Of course, so far as Jonas Zalkowitz is concerned the learned trial judge has found that he knew nothing about the transaction between Burnie and Young and his brother Jacob, and acted simply to accommodate that brother. Therefore, he could not rely on any representation of Burnie.

However, the learned trial judge has accepted Burnie’s evidence that “he agreed that the life insurance policy was to be assigned, subject to the bank’s interest, to Zalkowitz (referring to Jacob Zalkowitz) and Young.” (The italics are my own). Robertson J.A. in his reasons, concurred in by all members of the Court of Appeal for British Columbia, after a very careful analysis of the evidence, said:

My conclusion on the evidence is that neither Young nor Jacob Zalkowitz, nor Burnie, nor any combination of these, established that Burnie represented to the appellants that the life insurance was being held for their benefit at the conclusion of the meeting on 8th September, 1958.

[Page 331]

I am of the opinion that the very able argument of counsel for the appellants failed to upset that concurrent finding. On the other hand, as did Robertson J.A., I regard three circumstances as furnishing strong corroboration of that finding. Firstly, the action of Burnie on September 18, in obtaining two cheques, left blank as to payee, in the amount of $25,000 each on Caldwell’s bank account in the branch of the bank of which Burnie was manager, and also, Dr. Caldwell’s note, likewise blank as to payee, in the same amount and his evidence that these devices were to enable the debts to Young and Zalkowitz and the Hudsons to have the benefit of the security represented by the insurance policy, are the clearest evidence that ten days after he made the representation, Burnie was attempting to create a situation which would make good his representation, i.e., that the policy was to be assigned to the appellants. Secondly, in 1962, Burnie attempted to have absolute assignments of the policy in favour of the appellants executed by Mrs. Caldwell, the specific beneficiary, and Doctors Kepkay and Gillis, “the owners of the said policy,” but was frustrated by the refusal of these persons to execute the assignments. Again, Burnie indicated that he was attempting to make good his representation that the policy was to be assigned. Thirdly, the appellants’ pleading in para. 8(j) of the amended statement of defence was of the same exact representation of what was to be done in the future.

For these reasons I concur that the appeal should be dismissed with costs.

Appeal dismissed with costs.

Solicitors for the appellants: Russell & Du Moulin, Vancouver.

Solicitors for the respondent, Bank of Montreal: Campney, Owen & Murphy, Vancouver.

Solicitors for the respondent, Archibald Robert Burnie: Freeman, Freeman, Silvers & Koffman, Vancouver.