Riou v. Banque Nationale / Riou v. Martin

Riou v. Banque Nationale / Riou v. Martin

The Supreme Court held the promissory note and the interim debenture signed without authority were void; proceeds of the debenture loan were diverted within the meaning of s.5956(t) and the mayor and secretary-treasurer who participated in the diversion are personally liable, jointly and severally, to pay the sum of $9,005.31 to the municipality to extinguish the balance owed to the bank; separately the bank retains contractual claims for advances and interest to the extent those advances were not extinguished by debenture proceeds deposited pursuant to the parties' arrangement.

Citation
[1925] SCR 422
Parties
Appellant / Plaintiff: Joseph M. Riou; Defendant / Municipal Corporation: Town of Trois-Pistoles; Respondent / Mise En Cause: La Banque Nationale; Appellant / Plaintiff: Joseph Riou; Defendants / Respondents (mayor, Secretary Treasurer and Councillors): H. Martin and Others
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
18 June 1924
Procedural Posture
Appeal to the Supreme Court of Canada From Court of King's Bench, Quebec (civil Municipal Matters) / Final Appeal; Judgment on Merits
Outcome
Appeals allowed with costs; securities (promissory note and interim debenture) declared null and void; mayor and secretary-treasurer held jointly and severally liable to repay $9,005.31 to the municipality; bank entitled to repayment of advances with contractual interest to the extent not extinguished by debenture...
Legal Topics
By Law Validity, Debenture Loan and Application of Proceeds, Unauthorized Signature / Ultra Vires Acts by Municipal Officers, Diversion of Municipal Loan Proceeds, Personal Liability of Municipal Officers, Ratepayer's Right to Sue
Source Language
English
Municipal Law Public Finance Contract Law Banking Law By Law Validity Debenture Loan and Application of Proceeds Unauthorized Signature / Ultra Vires Acts by Municipal Officers Diversion of Municipal Loan Proceeds +2 more

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Parties

Joseph M. Riou

Appellant / Plaintiff

Town of Trois-Pistoles

Defendant / Municipal Corporation

La Banque Nationale

Respondent / Mise En Cause

Joseph Riou

Appellant / Plaintiff

H. Martin and Others

Defendants / Respondents (mayor, Secretary Treasurer and Councillors)

Procedural Posture

Appeal to the Supreme Court of Canada From Court of King's Bench, Quebec (civil Municipal Matters) / Final Appeal; Judgment on Merits

Legal Issues

  1. 1 Whether promissory note and interim debenture signed by mayor and secretary-treasurer without authority were valid or void
  2. 2 Whether proceeds of the debenture loan were diverted from their statutory purpose under s.5956(t) of the Cities and Towns Act (Que.)
  3. 3 Whether municipal officers (mayor and secretary-treasurer) are personally liable, jointly and severally, for sums diverted

Ratio Decidendi

The Supreme Court held the promissory note and the interim debenture signed without authority were void; proceeds of the debenture loan were diverted within the meaning of s.5956(t) and the mayor and secretary-treasurer who participated in the diversion are personally liable, jointly and severally, to pay the sum of $9,005.31 to the municipality to extinguish the balance owed to the bank; separately the bank retains contractual claims for advances and interest to the extent those advances were not extinguished by debenture proceeds deposited pursuant to the parties' arrangement.

Court Disposition

Appeals allowed with costs; securities (promissory note and interim debenture) declared null and void; mayor and secretary-treasurer held jointly and severally liable to repay $9,005.31 to the municipality; bank entitled to repayment of advances with contractual interest to the extent not extinguished by debenture...

Orders

  • Declare promissory note dated 30 April 1920 and interim debenture void
  • Declare renewal note of 30 July 1921 void to extent appropriate and annul same