Proulx v. Bank of Montreal, [1974] SCR 762

Supreme Court of Canada

Proulx v. Bank of Montreal, [1974] S.C.R. 762

Date: 1973-04-02

Armand Proulx (Defendant) Appellant;

and

Bank of Montreal (Plaintiff) Respondent.

1972: February 23 and 24; 1973: April 2.

Present: Fauteux C.J. and Abbott, Martland, Pigeon and Laskin JJ.

ON APPEAL FROM THE COURT OF QUEEN’S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC

Banks—Notes—Unwarranted deduction from deposit of cheques—Conversion by bank manager—Bank’s books incomplete—Deposit not proved—Civil code, art. 1234.

Respondent bank claims from appellant a balance of $3,000 on a series of notes, namely $2,000 on a demand note signed “Claire Blais” and a balance of $1,000 on a demand note for $2,500 signed “Jacques Proulx”. Appellant was condemned to pay the amount claimed by the Superior Court and the Court of Appeal. On the other hand, a cross-demand in which appellant claimed $16,500 from respondent, namely $8,000 for a deposit allegedly not credited to him by the bank, and $8,500 as part of a deposit made up of three cheques received by respondent for the account of appellant and allegedly not credited to him, was dismissed. Hence the appeal to this Court.

Held (Fauteux C.J. and Abbott J. dissenting): The appeal should be allowed in part.

Per Martland, Pigeon and Laskin JJ.: On October 23, 1964, the Bank received from the appellant three cheques issued by his broker representing the net proceeds of the sale of shares. These cheques were endorsed by the appellant. From the total of $10,065.73 the sum of $8,500 was deducted by the manager and on the back of the deposit slip there is a notation of four amounts which an expert, by examining other documents and records, was able to identify as representing notes signed “Claire Blais”, “Estelle Proulx” and “Jacques Proulx”, made for $2,500 each, and “Doris Poirier”, made for $1,000.

The only possible conclusion in view of the evidence is that the amount of $1,000 received by Doris Poirier, the wife of the bank manager, represents a conversion committed by the latter unknown to appellant.

Concerning the note for $2,500 signed “Jacques Proulx” this cannot be, as the trial judge thought, the

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demand note dated September 29, 1964, the proceeds of which were credited to the appellant because the Bank is claiming by its action a balance of $1,000 owing on that note. If it had been retired on October 23, 1964, the Bank should be debited with the amount. The expert’s report shows that, according to the Bank’s books, it was another Jacques Proulx note payable on the “Family Financing Plan” which was retired with the proceeds of the cheques from the broker. However, the proceeds of this note were not credited to any of appellant’s accounts, nor was the amount paid out in cash. Its date was unknown and there is nothing to indicate that any such other debt was ever owed by appellant. The evidence constituted by the Bank’s books is therefore incomplete with regard to use of the $2,500.

Against the debt of $3,000 based on the notes signed “Claire Blais” and “Jacques Proulx” must be set off a claim for $3,500, in view of the unwarranted charge of the notes of Doris Poirier, $1,000, and Jacques Proulx, “Family Financing Plan”, $2,500, made against the deposit of the broker’s cheques.

As to the alleged deposit of $8,000, on September 9, 1964, the passbook, which was never updated, cannot be regarded as a valid written instrument against which testimonial evidence was inadmissible under art. 1234 C.c. The trial judge’s finding, upheld on appeal, that this was not cash but the proceeds of discounted demand notes, should not be interfered with. As to the sum of $500., being the amount of another “Jacques Proulx” note, the issue does not appear to have been joined in such a way as to permit appellant to claim this amount, nor does there appear to be sufficient evidence for it to be awarded to him.

Per Fauteux C.J. and Abbott J., dissenting: The questions in issue were questions of fact, which involved an appreciation by the trial judge of contradictory evidence as well as complicated questions of accounting and of the imputation of payments made to the Bank extending over a period of at least two years. There is no manifest error in the judgments below as would justify the intervention of this Court.

APPEAL from a judgment of the Court of Queen’s Bench, Appeal Side, province of Quebec, affirming a judgment of the Superior Court. Appeal allowed in part, Fauteux C.J. and Abbott J. dissenting.

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Gérald Allaire, for the defendant, appellant.

Yvon Roberge, for the plaintiff, respondent.

The judgment of Fauteux C.J. and Abbott J. was delivered by

ABBOTT J. (dissenting)—The questions in issue on this appeal are questions of fact. Those facts are fully set out in the judgments below and in the reasons of my brother Pigeon which I have had the advantage of reading.

The claim of the respondent bank is for a balance due in connection with a series of promissory notes and three bank accounts operated by the appellant Proulx, in part at least, in order that he could borrow money from the bank with which to speculate on the stock market.

An order for an expertise was obtained by appellant, under art. 414 of the Code of Civil Procedure, and the expert reported that, according to the records of the bank, Proulx owed the bank $3,000 as the balance due upon two promissory notes totalling $4,500 which were produced with the action.

The learned trial judge accepted the conclusions of that report and found that appellant owed the bank $3,000. That judgment was affirmed by the Court of Appeal, Rinfret J. dissenting.

As I have said, the questions in issue were questions of fact, which involved an appreciation by the trial judge of contradictory evidence as well, as of complicated questions of accounting and of the imputation of payments made to the bank extending over a period of at least two years.

The duty of a second appellate court in these circumstances is well established and, with great respect for the contrary view expressed by my brother Pigeon, I find no such manifest error in the judgments below as would justify the intervention of this Court.

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I would dismiss the appeal with costs.

The judgment of Martland, Pigeon and Laskin JJ. was delivered by

PIGEON J.—This appeal is against a majority decision of the Court of Appeal of Quebec, which upheld a Superior Court judgment condemning Armand Proulx to pay respondent Bank the sum of $3,000, and expressly dismissed his cross-demand in the amount of $16,500, which the trial judge surely did not intend to allow, but on which he failed to pronounce.

The facts at issue are very complex, as they concern a number of banking transactions which involved several irregularities. I will only deal with the essential points.

The Bank brought its action for the following amounts:

(1) A note signed by appellant on November 3, 1965 for a loan of $2,500 on the so-called “Family Financing Plan”, on which it claimed $1,754.13 was still outstanding;

(2) A demand note signed “Claire Blais”, dated February 4, 1965, in the amount of $2,000, due in full; and

(3) A demand note signed “Jacques Proulx”, dated September 29, 1964, in the amount of $2,500, on which was claimed an unpaid balance of $1,000.

The defence originally contended that defendant knew no one named Claire Blais, and had never taken out a loan under that name or the name of Jacques Proulx. Further, it was alleged that in October 1964 defendant had made deposits of about $10,000, which did not appear to have been credited to his account. At his request an expert report was ordered. A retired bank manager was appointed to examine the Bank’s books and vouchers. His report showed that the Bank had in fact received three cheques from Flood, Wittstock & Co., totalling $10,065.73, for the defendant’s account in

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October 1964. He indicated that this amount had been used as follows:

(1) To retire a note signed “Claire Blais”...........................................	$   2,500.00
(2) To retire a note signed “Estelle Proulx”........................................	2,500.00
(3) To retire a note signed “Jacques Proulx”.....................................	2,500.00
(4) To retire a note signed “Doris Poirier”.........................................	1,000.00
(5) Credited to defendant’s savings account, number 2520...........	1,565.73
Total.................................................................................................	$ 10,065.73

The expert further said that [TRANSLATION] “According to the Bank’s records” there remained “an unpaid amount of $3,000 represented by a note signed “Claire Blais” for $2,000 and a note signed “Jacques Proulx” for $1,000”.

After this report was filed defendant submitted an amended plea in which he denied having signed the notes in the name of Claire Blais or of Jacques Proulx, asserted that he had not been credited with the deposit of October 23, 1964, except as regards the sum of $1,565.73 credited to his savings account, number 2520, and further contended that he had not been credited with an amount of $8,000 which he claimed to have deposited in cash in the said account on September 9, 1964. For these reasons Armand Proulx, besides praying for dismissal of the action, made a cross-demand for the amount of $16,500. In reply the Bank maintained that the amount of $8,000 had not been deposited by defendant in cash, but derived from notes signed “Armand Proulx”, “Claire Blais”, “Jacques Proulx” and “Estelle Proulx”.

At the trial the Bank desisted from its claim on the “Family Financing Plan” note. On the remainder, the trial judge was faced with contradictory depositions by the defendant and Donald Poirier, who was manager of the Branch where the operations at issue took place, until December 1965 when he was dismissed. In spite of two glaring contradictions between this last-mentioned testimony and the deposition by the

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same individual at his examination for discovery, the trial judge chose to believe it rather than believe defendant’s testimony and he did so for specifically stated reasons. In my view the Court of Appeal correctly refused to interfere with this finding.

The record shows that appellant’s first loan was on April 16, 1964. On that date Armand Proulx received the sum of $3,200 in cash, which he borrowed on what the Bank calls the “Family financing Plan”. The note given for a loan of this type is payable in monthly instalments covering capital and interest calculated in advance and added to the sum received, so that in this case the amount of the note was $3,528.83. The loan was made for the purchase of an automobile and Donald Poirier stated: [TRANSLATION] “I think it was authorized by head office”. The maximum loan which he was authorized to make without special authorization, his “limit”, was initially $1,00 and later $2,500.

On April 30, 1964 Armand Proulx borrowed $1,325 on a demand note. This was to pay for 50 shares of M. Loeb Ltd. at 26½, which he had purchased through the Bank. On June 30, 1964 a new loan was made on a demand note for $1,070, to pay for Horne & Pitfield shares which he had bought through Flood, Wittstock & Co., and for which the latter had drawn a draft on the Bank. At the beginning of September Armand Proulx had paid nothing on these two notes, since on the 29th he retired them by applying thereto the proceeds of a new demand note in the amount of $3,000.

That was appellant’s situation when he went to see the manager, Donald Poirier, to make arrangements for payment of the margin of 50 percent on a purchase of Loeb Ltd. shares amounting to nearly $16,000 (1,500 shares at 10 3/8). The purchase had been made on September 1 and Armand Proulx was accordingly in default towards his broker. The manager himself made out the two cheques making up the required sum of $7,968.75, which Armand Proulx signed and immediately delivered to the

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broker. Is it credible that Armand Proulx made a deposit of $8,000 in banknotes in order to open the special account (No. 2520) on which the cheques were drawn, when the expert who audited the books and vouchers at the Bank found no slip for this amount?

On the contrary, all indications are that Armand Proulx intended to make the latest share purchase entirely on credit, like those which preceded it, especially as it was clearly a short‑term speculation. There can be no doubt that Poirier irregularly withheld until the 30th the two cheques which he had prepared on September 9, and which Flood, Wittstock & Co. cashed at another bank the same day. Clearly, if the manager did that, it was because savings account No. 2520 was only credited with demand notes as follows (expert’s report, sheet D):

Sept. 23, 1964, Armand Proulx.........................................................	$   500
Sept. 23, 1964, Claire Blais...............................................................	2,500
Sept. 29, 1964, Jacques Proulx........................................................	2,500
Sept. 30, 1964, Estelle Proulx...........................................................	2,500
Total.................................................................................................	$8,000

To this must be added the fact that in his initial plea, filed before the expert’s report, Armand Proulx, who had in his possession the passbook showing a deposit of $8,000 on September 9, 1964, did not breathe a word of it, and only referred to the $10,000 or so deposited in October.

I do not feel that this document can be regarded as a valid written instrument against which testimonial evidence was inadmissible under art. 1234 of the Civil Code. After the first entry was made, Armand Proulx never had his passbook updated, though he signed cheques and did other operations which should have been entered in it. When he sought to make use of it several years later, therefore, it was not a duly kept record, and neither was that of his

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main account, No. 2780, in which the latest entry was on April 20, 1964.

What has just been said does not dispose of the case. In fact, the conclusion of the expert, as stated by him in his testimony at the trial, was as follows:

[TRANSLATION] After liquidating all notes to the bank and establishing a balance, I came up with the amount of THREE THOUSAND dollars ($3,000) which according to the information in the bank’s books had not been paid.

The bank’s books do not make full proof. It remains to be seen whether what they show agrees with the vouchers and other evidence. Excluding the alleged cash deposit of $8,000, for which there is no entry, the remainder of account No. 2520 must be examined. As we have seen, in October 1964 the Bank received from Flood, Wittstock & Co. cheques totalling $10,065.73. These cheques represented in part the net proceeds of the sale of 1,500 Loeb Ltd. shares at 11 5/8. Armand Proulx endorsed these cheques, but he did not sign or make out the deposit slip himself. On its face this document bears only the name “A. Proulx” and the number 2520 indicating the account to be credited with the sum of $1,565.73 written on the last line as the net amount of the deposit. On the back there are figures corresponding to the amount of each of the three cheques, then the total, from which $8,500 are substracted to arrive at the amount shown on the face. Lower down the following figures appear with no other indication:

Only by examining other documents and records was the expert able to discover that these were the amounts of the notes signed Claire Blais, Estelle Proulx, Jacques Proulx and Doris Poirier. As we shall see, according to the

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expert’s report only the first two of these notes correspond to bills credited the previous month to account 2520, which is very unusual considering that the advance of $8,000 had been made specifically to cover the cheques made out at the beginning of September to the broker.

Nor is that all. Donald Poirier, who at his examination for discovery after the expert’s report had been presented had categorically denied that a note for $1,000 signed by his wife had been repaid by Armand Proulx, and stated this was impossible, admitted at the trial that he had lied deliberately, and that his wife had in fact received the $1,000, On this point Mr. Justice Rinfret, dissenting on appeal, said:

[TRANSLATION] It is clear, for example, and this is conformed by the testimony of Poirier, that the proceeds of a note for $1,000.00, signed by Doris Poirier, were given to her, but paid by the appellant.

There is no basis on the record for my endorsing the decision of the trial judge on this matter; it is possible that appellant sought by these means to get into manager’s good graces, but there is not a scintilla of evidence to that effect.

Having read and reread the evidence I have to say that Mr. Justice Rinfret’s statement is absolutely correct. The only possible conclusion in view of the evidence, therefore, is that this amount of $1,000 represents a conversion committed by Donald Poirier unknown to Armand Proulx.

Concerning the note for $2,500 signed “Jacques Proulx”, which was apparently retired by applying the proceeds of the cheques from Flood, Wittstock & Co., it should altogether be noted that, according to the expert’s report, this is not the demand note of September 29 credited to account 2520. That last demand note is the one on which the Bank is claiming a balance of $1,000 in its action, which balance, according to the expert’s report, is apparently still due. Obviously, if that same note had been retired, as would have been normal, by applying the proceeds of the Flood, Wittstock & Co. cheques, the bank should certainly be debited with this

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amount of $2,500 apart from the $1,000 previously mentioned, as Mr. Justice Rinfret says.

It should first be noted that the trial judge unfortunately committed an error regarding this note for $2,500. In fact, in dealing with the expert’s report with respect to the use made of the proceeds of the Flood, Wittstock & Co. cheques, he said:

The expert appointed was Jules H. Fecteau, a retired bank manager who, after examining the books of the bank, rendered a report on January 25th, 1967. This report, as further implemented by the expert’s testimony at the hearing, shows that the October 1964 deposits above referred to and which totalled $10,065.73 (they consisted of three cheques issued by Flood, Wittstock & Co., an investment dealer, payable to the defendant and being the proceeds of the sale of certain securities made in behalf of defendant) were entered by the bank in its records as follows:

1.—To retire a note signed “Claire Blais” and dated September 23rd. 1964 (the proceeds of which note had been credited to the defendant’s account number 2520)......................................................................................	$  2,500.00
2.—To retire a note signed “Jacques Proulx” (the proceeds of which note had been credited to the defendant’s account number 2520)......................	2,500.00
3.—To retire a note signed “Estelle Proulx” and dated September 29th. 1964, (the proceeds of which note had been credited to the defendant’s account number 2520)......................................................................................	2,500.00
4.—Apparently, although this could not actually be traced by the expert, to retire a note signed “Doris Poirier” (the proceeds of which note had not been credited to any of the defendant’s accounts with the bank).................	1,000.00
5.—The balance of this deposit of $10,065.73 was credited to defendant’s account number 2520..................................................................	1,565.73
TOTAL.........................................................................................................	$10,065.73

Now, there is no question that the demand note for $2,500 signed “Jacques Proulx” and dated September 29, 1964, and on which the Bank is claiming a balance of $1,000, is the very same note which was credited to account No. 2520 on that day. The learned trial judge says

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so himself on the preceding page of his judgment, in describing the last of the three notes on which the action is based as follows:

A promissory note signed “Jacques Proulx” and dated September 29th, 1964, for the sum of $2,500.00 on which a balance of $1,000.00 remained due and unpaid and the proceeds of which note had been credited to the defendant’s account number 2520 with the plaintiff bank at the same branch.

If this note signed “Jacques Proulx” has been retired in full on October 23, 1964, defendant clearly cannot be condemned to pay a balance of $1,000 for this item.

Here now is what may be found on this point from a careful perusal of the expert’s report. Firstly, on sheet G, after describing the cheques from Flood, Wittstock & Co. and indicating how he arrived at the total of $10,065.73, the expert states:

[TRANSLATION] The proceeds of these cheques appear to have been disposed of as follows:

Oct. 23, 1964—
Amount credited to savings account No. 2520........................................		$    1,565.73
Oct. 23, 1964—
Payment of note signed “Claire Blais”...............................	$2,500.00
Payment of note signed “Estelle Proulx”...........................	2,500.00
Payment of note signed “Jacques Proulx”........................	2,500.00
Payment of note signed “Doris Poirier”.............................	1,000.00
		8,500.00**
		$  10,065.73

**It was impossible for me to verify the genuineness of these four notes, since they are no longer the property of the bank it would appear, however, from the records of the said bank for October 23, 1964, that this amount was used in settlement of these notes.

On sheet E which shows the details of payment of the loans made to Armand Proulx, there is first a list of the notes debited to account 2780, then of those debited to account 2520, and finally, under the heading “Miscellaneous”, it reads:

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[TRANSLATION]

Payment date                     Signature	Amount
Oct. 23, 1964—Claire Blais....................................................	$2,500.00
Oct. 23, 1964—Estelle Proulx.................................................	2,500.00
Oct. 23, 1964—Jacques Proulx..............................................	2,500.00
(Family Financing Plan)
Oct. 23, 1964—Doris Poirier..................................................	1,000.00
(Family Financing Plan)
	$8,500.00

These four last notes appear to have been settled from the proceeds of the cheques signed Flood, Wittstock & Co. (See sheet G).

Finally, turning to sheet D, which shows the details of the loans made to the account of Armand Proulx or received in other ways, we find under the heading “Miscellaneous”;

Signature	Gross amount	Net proceeds
July 2, 1965—Jacques Proulx...................................	$    500.00	$   500.00*
(Impossible to check original date)—Doris Poirier.	1,000.00	1,000.00*
(Family Financing Plan)
(Impossible to check original date)—Jacques Proulx............................................................................	2,500.00	2,500.00*
(Family Financing Plan)
April 16, 1964—Armand Proulx.................................	3,528.83	3,200.00†
(Family Financing Plan)
	$ 7,528.83	$ 7,200.00

*(It was not possible to check the disposal of the original proceeds of this note).

^†(Received in cash April 16, 1964).

Having read and reread the expert’s testimony, I have found absolutely nothing in it which alters these findings in his report. What clearly emerges from the report, though a rather complex analysis has to be made in order to see this, is that according to the Bank’s books it was not

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the Jacques Proulx demand note credited to account 2520 which was retired with the proceeds of the Flood, Wittstock & Co. cheques. It was another Jacques Proulx note payable on the Family Financing Plan. With regard to this note the expert comments: “It was not possible to check the disposal of the original proceeds of this note”. This shows that the proceeds of this note were not credited to one of Armand Proulx’ accounts, because those accounts were thoroughly checked by the expert. Had this note been so credited, we would know, just as we know that the demand note signed Jacques Proulx was in fact credited to Armand Proulx. But there is more. If the amount of this note had been paid out in cash, the expert should have found a receipt for that sum, as it is established that there must always be such a receipt for any loan made in this manner (see Exhibit P-15, for the loan of April 16, 1964). The evidence is perfectly clear on this point. Now, in spite of all his research, the expert could find nothing to indicate that Armand Proulx received that amount.

The situation is thus quite different, as to this amount of $2,500, from that which exists with respect to the note for $2,000 signed “Claire Blais”. For the latter there is proof that it was credited to one of Armand Proulx’ accounts, account No. 3275. There is also proof that this amount was used to cover a cheque for $2,000 made out to a broker by Armand Proulx and debited to the same account. But for the Jacques Proulx note, on the Family Financing Plan, not even the date is known. There is absolutely nothing to indicate that Armand Proulx received the proceeds of it or assumed it as a debt, nor is there any indication Armand Proulx ever knew such a note to have been retired by the proceeds of the cheques from Flood, Wittstock & Co., instead of the demand note which was used to obtain the funds needed for this successful speculation.

The situation is as follows. What the books of the Bank show for this amount of $2,500 is that it was apparently used not to settle the demand

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note signed “Jacques Proulx” and credited to account 2520, as the trial judge throught, but to settle another note signed “Jacques Proulx”, while there is no indication, moreover, that Armand Proulx owed any such other debt. Further, it is established beyond question that on this occasion the manager converted $1,000 to his wife’s use. In such circumstances, therefore, the regularity of operations is not to be readily assumed. The trial judge was clearly mistaken in confusing the demand note signed “Jacques Proulx” with the “Family Financing Plan” note, which was retired by applying the proceeds of the Flood, Wittstock & Co. cheques. This meant that he concluded that the note for $2,500 retired out of the proceeds of the Flood, Wittstock & Co. cheques was the one which had been credited to the defendant some days previously. In the light of this error, which remained unnoticed on appeal, the trial judge did not really rule on the problem of this amount of $2,500.

Can it be assumed in the circumstances that the books of the Bank sufficiently establish that the sum of $2,500 deducted from the deposit of October 23, 1964 was used to retire, not the demand note for $2,500 signed “Jacques Proulx”, credited the previous month to Armand Proulx, but another note signed “Jacques Proulx”, as to the existence of which there is no proof, the origin of which is unknown and the proceeds of which cannot be traced? It is hardly likely that this was another loan to Armand Proulx for the purchase of stocks, as in that case we would have the cheque made out to the broker, as with the other cases. Nor is it a loan for the purchase of a car, there is another note for that. In short, there is a total lack of any evidence other than the single notation which the expert uncovered in the Bank’s books, and in support of which he could find no voucher, nor is there any indication as to the origin or the date of this note.

The evidence constituted by the Bank’s books is therefore absolutely incomplete. It only

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shows the payment made by deduction from the deposit of $10,000. Even this is incomplete, as the back of the slip only mentions the amount, so that it is only by finding from other sources that an identical amount of $2,500 was applied to the payment of a “Family Financing Plan” note signed “Jacques Proulx” that the expert drew this conclusion, even though he was unable to associate the latter note with Armand Proulx in any other way. In my opinion, this is not sufficient to enable the Bank to maintain that these $2,500 should not be applied to settling the demand note for $2,500 signed “Jacques Proulx”, which was unquestionably owed by Armand Proulx because it was credited to him and it is likely that he signed it.

What is more decisive is that nothing in the Bank’s books indicates that the other note was owned by Armand Proulx. There should normally be, for that other note as for the one included in the record, a document showing the disposal of the proceeds, and containing either a reference to the account to which the amount was credited, or a receipt signed by the debtor. If Armand Proulx had signed such a receipt in the name of Jacques Proulx, this would have been disclosed by the expert’s investigation, in the same way as for the note on record. Here, there is absolutely nothing to indicate that that other note was owed by Armand Proulx. The simple fact remains, therefore, that on its face the note was not his.

Taking everything into consideration, I feel it is impossible to consider that the Bank’s books furnish sufficient evidence that the $2,500 were used to pay another debt of Armand Proulx. The conclusion must be, therefore, that the $2,500 deducted from the deposit made to account 2520 on October 23, 1964, for a note signed “Jacques Proulx”, must in reality be ascribed to the retiring of the demand note credited to that account. Mr. Justice Rinfret is thus correct in finding that this note must be regarded as having been retired as of October 23, 1964. This means not only that the Bank cannot recover the balance of $1,000 which it is

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claiming, but also that some other disposition must be made of an amount of $2,000 deriving from a cheque for $4,454.14 made out to the Bank on November 2, 1965, which amount an inspector credited to the note signed “Jacques Proulx”. Considering that this note was paid in full at that time, this amount of $2,000 should rather be applied to retiring the note for $2,000 signed “Claire Blais”, a note for which Armand Proulx was indubitably indebted, since he received its proceeds, and since in the expert’s opinion it is probable that he is the one who signed it.

I therefore ultimately come to the same conclusion as Mr. Justice Rinfret in the Court of Appeal, except with regard to the amount of $500 for which he finds the Bank liable on account of a note signed “Jacques Proulx”, dated July 2, 1965, which was debited to Armand Proulx on November 2, 1965. The issue does not appear to have been joined in such a way as to permit Armand Proulx to claim this amount, nor does there appear to be sufficient evidence for it to be awarded to him.

On the whole I conclude that against the debt of $3,000 based on the notes signed “Claire Blais” and “Jacques Proulx” must be set off a claim for $3,500, in view of the unwarranted charge of the notes of Doris Poirier, $1,000 and Jacques Proulx, “Family Financing Plan”—$2,500—,made against the deposit of the Flood, Wittstock & Co. cheques on October 23, 1964.

I would accordingly allow the appeal and reverse the judgments of the Court of Appeal and Superior Court, dismiss respondent’s action and allow the cross-demand against it for $500, with interest from May 12, 1967. In view of appellant’s unwarranted allegation of a cash deposit of $8,000 on September 9, 1964, he should only be entitled to costs in the Court of Appeal and in the Superior Court, and only on the principal demand.

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Appeal allowed in part with costs only in the Court of Appeal and in the Superior Court, and only on the principal demand.

Solicitors for the defendant, appellant: Leblanc, Barnard, Leblanc, Allaire, Bédard, Fournier, Rodrigue & Dudemaine, Sherbrooke.

Solicitors for the plaintiff, respondent: Blanchette & Roberge, Sherbrooke.