Dominion Gresham Guarantee & Casualty Co. v. The Bank of Montreal

Dominion Gresham Guarantee & Casualty Co. v. The Bank of Montreal

Majority: Bank not entitled to charge the company for the drafts because Rogers had no actual general authority to direct application of company funds or receive drafts payable to his order; the bank had the 1912 resolution limiting Rogers’ authority and did not act under any belief in a general authority (no ‘holding out’), so the bank is liable. Dissent: Bank acted without negligence in the long-established course of business; cheques were properly drawn and certified and the drafts were sold and delivered to Rogers in exchange for payment, so bank not liable and resolution did not govern requisition notes.

Citation
[1929] SCR 572
Parties
Appellant / Plaintiff: Dominion Gresham Guarantee & Casualty Co.; Respondent / Defendant: The Bank of Montreal
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
27 May 1929
Procedural Posture
Collection; Insurance Subrogation Claim Against Bank / On Appeal to the Supreme Court of Canada From the Court of King’s Bench, Province of Quebec (appeal Side)
Outcome
Appeal allowed by majority; judgment for appellants
Legal Topics
Guarantee, Ostensible (apparent) Authority, Holding Out, Negligence, Defalcation by Employee, Subrogation, Bank Drafts / Foreign Remittances
Source Language
English
Banking Law Insurance Law Agency Law Commercial Law Guarantee Ostensible (apparent) Authority Holding Out Negligence +3 more

Case Brief

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Parties

Dominion Gresham Guarantee & Casualty Co.

Appellant / Plaintiff

The Bank of Montreal

Respondent / Defendant

Procedural Posture

Collection; Insurance Subrogation Claim Against Bank / On Appeal to the Supreme Court of Canada From the Court of King’s Bench, Province of Quebec (appeal Side)

Legal Issues

  1. 1 Whether the bank was entitled to charge Willis Faber & Company’s account with amounts advanced to Rogers in exchange for certified cheques
  2. 2 Whether Rogers had actual or ostensible authority to direct application of company funds and to receive drafts payable to his order
  3. 3 Whether the bank was negligent or misled by the insured’s conduct or by ‘holding out’

Ratio Decidendi

Majority: Bank not entitled to charge the company for the drafts because Rogers had no actual general authority to direct application of company funds or receive drafts payable to his order; the bank had the 1912 resolution limiting Rogers’ authority and did not act under any belief in a general authority (no ‘holding out’), so the bank is liable. Dissent: Bank acted without negligence in the long-established course of business; cheques were properly drawn and certified and the drafts were sold and delivered to Rogers in exchange for payment, so bank not liable and resolution did not govern requisition notes.

Court Disposition

Appeal allowed by majority; judgment for appellants

Orders

  • Judgment entered for the appellants in the sum of CAD 7,565.61
  • Costs awarded to the appellants for the appeal and in the courts below