Eisenberg (formerly Walton) v. Bank of Nova Scotia and Ridout et al.

Eisenberg (formerly Walton) v. Bank of Nova Scotia and Ridout et al.

Where a transaction is intra vires, unanimous assent of all shareholders—given informally or by conduct—is effective to bind the company; here the sole beneficial shareholder instigated and assented to the transactions, therefore the company could not repudiate them and the bank's receipts stand.

Citation
[1965] SCR 681
Parties
Plaintiff Appellant: William Eisenberg (formerly William L. Walton), Trustee of the Estate of Ridout Real Estate Limited; Defendant Respondent: The Bank of Nova Scotia; Third Parties Respondents: George H. Ridout and George H. Ridout and The Canada Permanent Trust Company, Executors of the Estate of Ernest Ridout, deceased
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
25 May 1965
Procedural Posture
Civil Appeal (commercial/company Law) / Supreme Court of Canada on Appeal From the Court of Appeal for Ontario; Final Disposition on Merits
Outcome
Appeal dismissed; judgment of the Court of Appeal for Ontario affirmed
Legal Topics
Unanimous Shareholder Assent, Ratification by Shareholders, Intra Vires Transactions, Indoor Management Rule (turquand), Estoppel, Authority of Directors and Officers
Source Language
English
Company Law Commercial Law Banking Law Bankruptcy Law Unanimous Shareholder Assent Ratification by Shareholders Intra Vires Transactions Indoor Management Rule (turquand) +2 more

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Parties

William Eisenberg (formerly William L. Walton), Trustee of the Estate of Ridout Real Estate Limited

Plaintiff Appellant

The Bank of Nova Scotia

Defendant Respondent

George H. Ridout and George H. Ridout and The Canada Permanent Trust Company, Executors of the Estate of Ernest Ridout, deceased

Third Parties Respondents

Procedural Posture

Civil Appeal (commercial/company Law) / Supreme Court of Canada on Appeal From the Court of Appeal for Ontario; Final Disposition on Merits

Legal Issues

  1. 1 Whether informal or separate unanimous assent of all shareholders binds a company in respect of an intra vires transaction
  2. 2 Whether a third party bank can rely alternatively on the indoor management rule or on unanimous shareholder assent/estoppel
  3. 3 Whether transaction was ultra vires or incapable of validation by shareholder assent

Ratio Decidendi

Where a transaction is intra vires, unanimous assent of all shareholders—given informally or by conduct—is effective to bind the company; here the sole beneficial shareholder instigated and assented to the transactions, therefore the company could not repudiate them and the bank's receipts stand.

Court Disposition

Appeal dismissed; judgment of the Court of Appeal for Ontario affirmed

Orders

  • Appeal dismissed
  • Appellant to pay costs of the respondent Bank of Nova Scotia