Cox v. Canadian Bank of Commerce

Cox v. Canadian Bank of Commerce

Because the bank took the indorsed note in good faith without notice of any restriction and the company manager had ostensible authority to pledge it as collateral for the company’s general indebtedness, the bank furnished fresh advances for valuable consideration and repayment of specific discounted paper did not discharge the general liability secured by the note; therefore the bank, as holder in due course, was entitled to enforce the note and recover the remaining indebtedness.

Citation
(1912) 46 SCR 564
Parties
Appellant (plaintiff/director): F. J. X. Cox; Appellant (plaintiff/director): J. Brockest; Appellant (plaintiff/director): D. Mclean; Appellant (plaintiff/director and Managing Director): D. E. Finch; Respondent (defendant/bank): The Canadian Bank of Commerce
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
4 June 1912
Procedural Posture
Appeal / On Appeal to the Supreme Court of Canada From the Court of Appeal for Manitoba
Outcome
Appeal dismissed with costs; judgment of the Court of Appeal for Manitoba affirmed.
Legal Topics
Promissory Note, Special Indorsement, Collateral Security, Holder in Due Course, Ostensible Authority, Satisfaction of Debt, Current Account Liability
Source Language
English
Banking Commercial Law Negotiable Instruments Agency Law Contract Promissory Note Special Indorsement Collateral Security +4 more

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Parties

F. J. X. Cox

Appellant (plaintiff/director)

J. Brockest

Appellant (plaintiff/director)

D. Mclean

Appellant (plaintiff/director)

D. E. Finch

Appellant (plaintiff/director and Managing Director)

The Canadian Bank of Commerce

Respondent (defendant/bank)

Procedural Posture

Appeal / On Appeal to the Supreme Court of Canada From the Court of Appeal for Manitoba

Legal Issues

  1. 1 Whether the bank could enforce the indorsed promissory note as holder in due course for valuable consideration
  2. 2 Whether the company manager had actual or ostensible authority to pledge the note as collateral for the company’s general indebtedness
  3. 3 Whether repayment of specific discounted trade paper and overdrafts satisfied the debt secured by the pledged note

Ratio Decidendi

Because the bank took the indorsed note in good faith without notice of any restriction and the company manager had ostensible authority to pledge it as collateral for the company’s general indebtedness, the bank furnished fresh advances for valuable consideration and repayment of specific discounted paper did not discharge the general liability secured by the note; therefore the bank, as holder in due course, was entitled to enforce the note and recover the remaining indebtedness.

Court Disposition

Appeal dismissed with costs; judgment of the Court of Appeal for Manitoba affirmed.

Orders

  • Appeal dismissed with costs.
  • Plaintiffs' action for return of the note dismissed.