Toronto Street Rail. Co. v. Toronto Corporation. obtained, which was done by the 16th section of the Act before mentioned, which empowered the corporation to pass any by-law or by-laws for the purpose of carrying the agreement into effect. A by-law for that purpose was passed on the 22nd of July, 1861.

The company having become insolvent, an Act was passed on the 23rd of January, 1869, enabling the mortgagee of the railway to sell it, and enacting that the purchaser should have all the rights, privileges, and franchises granted to or possessed or enjoyed by the company by or under their Act of incorporation. The railway was sold by the mortgagee, and the appellants, who were incorporated by an Act passed on the 29th of March, 1873, became the owners of it, and stand in the place of the original company, and have the same rights and privileges.

On the 23rd of November, 1889, the Corporation of Toronto gave notice to the appellants that they intended, at the expiration of the term of the franchise. granted to Easton by the resolutions and the agreement, and the by-law of the 22nd of July, 1861, and other franchises subsequently granted by the Municipal Council at different times for the said term to the Toronto Street Railway Company, to assume the ownership of the railways of the company, and of all real and personal property in connection with the working thereof, on payment of their value, to be determined by arbitration. Three arbitrators were duly appointed, of whom two made an award on the 15th of April, 1891, in which they found that "the right and privilege to construct, maintain, and operate street railways upon certain streets in the city of Toronto was granted to the said Easton for the period of thirty years from the date" mentioned in the agreement of the 26th of March, 1861, "only, and not in perpetuity, and that all street railways constructed in the city of Toronto by said Easton, or by the Toronto Street Railway Company, have been constructed and operated under privileges for the same term of thirty years, and not in perpetuity," and in valuing the said railways they did not allow anything for the value of any privilege or franchise extending beyond the said period of thirty years.

The first question in this appeal is whether this valuation is right, the appellants contending in the lower Courts and before their Lordships that the Act of 1861 conferred a perpetual franchise or statutory right to use the streets for the purpose of the railway, and that this is property in connection with the working of the railway which should be valued. Their Lordships do not accede to this. Their opinion is well expressed in the judgment of Mr. Justice Burton, who says: "The agreement and the by-law expressly limit the grant of the privilege to thirty years, a definite and certain date; but they contain an additional provision that on notice six months previously to the expiry of that term of the intention of the corporation to assume the ownership of the railway, and all real and personal property in connection with the working thereof, they may do so at a valuation. It is true that the agreement provides that if the corporation should fail to exercise its option of assuming the ownership, the grant shall continue for a further period of five years, and so at the expiration of each succeeding five years; but that contingency never arose. are dealing, therefore, with the licence or consent given for that fixed term of thirty years, at the expiry of which, according to my reading of the agreement, the corporation having elected to exercise its option of purchasing, the privilege or franchise of the railway company ceased." Their Lordships cannot usefully add anything to this opinion.

We

It has been seen that the railway was first made upon three streets only, and is said to have been then only eleven miles in length. It was subsequently extended to other streets, partly by agreements between the city and the company dated the 29th of July, 1881, and the 29th of July, 1884, and partly informally by resolutions of the council requiring an extension, the total length being said to be now sixty miles. Another objection taken by the appellants to the award is that one period of thirty years is applied to all the street railways. The answer to this is, that the Act of 1861 gives power to construct a railway upon and along any of the streets or highways in the city of Toronto and

Toronto Street Rail. Co. v. Toronto Corporation. the adjoining municipalities. All the lines were intended to form part of one system, and must be subject to the same condition as to the termination of the privilege. Any other construction would cause great inconvenience and confusion in the working of the railway. The agreements of 1881 and 1884 expressly provide that the lines then agreed upon shall, when built, be considered as coming to all intents and for all purposes within the operation of the former agreement, by-laws, and statutes, except as therein otherwise expressly provided. It may be presumed that the other extensions, where there was no formal agreement, were made on the same conditions.

Only one other question remains. By the agreement of 1861 Easton was bound to pave or macadamise and keep in repair the roadway between and within at least one foot six inches from and outside of each rail. By an Act passed in 1876 the company were bound to use the same materials and mode of construction as was from time to time adopted for the remainder of the street by the city. By another Act, passed in 1877, this Act was amended, and it was provided by the 4th section that the company should have the option of constructing their portion of the pavement of any street occupied by them, or that, at their request, the corporation should construct it and assess an annual rate upon the company, covering interest and a sinking fund not exceeding 2 dollars and 50 cents per square yard, with power to the corporation to raise such sum by the issue of debentures, and to collect the same in the manner provided under the Municipal Act for the construction of local improvements. The 5th section provided that if the corporation should elect to assume the railway the arbitrators should estimate as an asset of the company the value to the company of any permanent pavement thereafter constructed or paid for by the company "for the balance of the life of the pavement." Debentures were issued by the corporation, and disputes having arisen between it and the company, an agreement was made between them on the 19th of January, 1889. By that it was agreed that from the 31st of December, 1888, the company was to pay

the city, in lieu of all claims on account of debentures maturing after that date, and in lieu of the company's liability for construction, renewal, maintenance, and repair in respect of all portions of the streets occupied by the company's tracks, at the rate of 600 dollars per mile of single track (or 1,200 dollars per mile of double track) per annum so long as the franchise of the company to use the said streets, or any of them, then extended; and that such payments should be accepted by the city in full satisfaction and discharge of all claims upon the company in respect of the construction, renewal, maintenance, and repair, and that thereafter the city should undertake the work in question. The arbitrators have found that the company is not entitled to be paid for permanent pavements constructed by the city subsequently to the 31st of December, 1888, and have not allowed anything in respect of them. The appellants contend that these pavements are within the provisions of the Act of 1877, and that their value should have been estimated as an asset of the company according to that Act. Their Lordships are of opinion that the arbitrators were right in this matter. By the agreement the city undertakes the construction, renewal, maintenance, and repair of the portions of the streets on its own account, and the annual payments are not made for the construction, &c., but for relieving the company from the liability to it. The pavements ceased by the agreement to be constructed, as they were under the Act of 1877, by the corporation at the request of the company. From that time the annual payment must be considered to be made for the use by the company of that which the Corporation constructed and kept in repair.

The result is that, in the opinion of their Lordships, the decision of the Court of Appeal should be affirmed, and they will humbly advise her Majesty to affirm it, and to dismiss this appeal. The appellants will pay the costs of it.

Solicitors-Poole & Robinson, for appellants; Bompas, Bischoff, Dodgson, Coxe & Bompas, for respondents.

London and Canadian Loan and Agency Co. v. Duggan. LORD WATSON delivered the judgment of their Lordships (1):

The controversy between the parties to this appeal, which has occasioned much difference of opinion in the Courts below, relates to 798 shares of the Land Security Company of Toronto, of which 160 were old shares fully paid up, and 638 were new shares, upon which twenty per cent. had been paid.

The capital of the Land Security Company, which was incorporated under statutes of the Province of Ontario, has not been turned into stock, and is not divided into shares of a certain fixed amount. Its shares are neither numbered nor otherwise identified, so that each share simply represents an aliquot part of the concern carried on by the company, which cannot be precisely ascertained except by reference to its stock ledger.

The statutes enact that no transfer of the company's shares shall be valid until entered in its books, according to the forms prescribed from time to time by the directors. They make no provision for the issue of share certificates or any document of title to members of the company, and no such document has ever been issued. The only legal evidence of the ownership of shares which have been transmitted from the original allottee is to be found in the transfer book of the company.

It is not matter of dispute that the 160 old shares at one time belonged to the respondent, Edmund Henry Duggan, who in 1882 transferred them to Scarth & Cochran, a firm of brokers in Toronto, in security of advances. After receiving the transfer that firm proceeded to use the shares in raising loans for their own accommodation, and, as in right of these shares and in the interest of the respondent, they obtained an allotment of the 638 new shares which are now in question. On obtaining the allotment, they dealt with these new shares also for the purpose of obtaining money advances on their own account. In the course of these transactions, which extended over a

(1) The Lord Chancellor (Lord Herschell), Lord Watson, Lord Halsbury, Lord Hobhouse, Lord Macnaghten, Lord Morris, Lord Shand, and Sir Richard Couch.

period of several years, Scarth & Cochran repeatedly paid up the advances made to them by procuring a fresh loan, and on these occasions the shares were transferred to the new lender by the previous holder of them. In the beginning of 1887 their lender was the Federal Bank, to whom they had agreed to convey in security the whole of these 798 shares, and that agreement had been duly carried out by the previous holders executing transfers in the transfer book of the company in favour of "J. O. Buchanan, manager in trust," which were accepted by him under the same designation.

In 1887 Scarth & Cochran arranged with the appellants, the London and Canadian Loan and Agency Company (Limited), for an advance of 14,300 dollars, to enable them to discharge their debt to the Federal Bank, upon condition of the shares held by the bank in name of their manager being transferred as security to the appellants. In pursuance of that arrangement two transfers, one of the 160 old and the other of the 638 new shares, were, on the 7th of September, 1887, duly executed in the transfer book of the Land Security Company, bearing to be granted by "J. O. Buchanan, manager in trust," to the appellant, "James Turnbull, in trust." The said appellant was at that time the manager of the appellant company. Each of these transfers was executed by "J. O. Buchanan, manager in trust," as transferor, per Robert Cochran, his attorney, and was accepted by the appellant, James Turnbull, who added the words "in trust to his signature. The power of attorney by J. O. Buchanan in favour of Cochran was also entered in the transfer book.

The appellant company sold the shares, and after payment of their advance to Scarth & Cochran there remained a balance, for which they have all along been willing to account. In this action, which was brought by the respondent Duggan, before the Chancery Division of the High Court of Justice of the Province of Ontario, he claims payment from the appellants, not of the price received for the shares, but of their full market value, under deduction only of such debt, if any, as he owed to Scarth & Cochran.

London and Canadian Loan and Agency Co. v. Duggan. Alternatively, he claims the balance of the price, after satisfying Scarth & Cochran's debt to the appellant company.

The legal principles involved in this appeal may be of interest to the mercantile community; but, in the circumstances of the case, their Lordships have not found their application to be attended with difficulty.

It is conceded on all hands that, in any question between him and Scarth & Cochran, the respondent would have been entitled to get back his shares, or their proceeds, upon payment of the debt which he owed to the firm. Whether the successive transferees, who held the shares intermediately between Scarth & Cochran and the Federal Bank, were affected by the relations which admittedly subsisted between that firm and the respondent, is a matter upon which their Lordships do not find it necessary to express any opinion. No such trust in favour of the respondent, as has been held to exist in this case, could affect holders of the shares after Scarth & Cochran, unless it was disclosed on the face of their author's title or was otherwise notified to them. The evidence shews, and all the learned Judges in the Courts below assumed, that the appellants had no intimation of the existence of a trust running with the shares, other than was conveyed to them by the terms of their transferor's title as it stood

in the books of the company. They had a right to satisfy themselves, by inspection of the books, that J. O. Buchanan, as representing the bank of which he was manager, was in titulo to transfer to them; and, whether they enquired so far or not, they must be held to have done so. But they had no right, and were under no duty, to trace back the history of the shares in the course of their transmission from the respondent.

The fate of this appeal must therefore depend upon the single issue, whether the words "manager in trust" appended to the designation and signature of J. O. Buchanan in the transfer book indicate that he was trustee for some beneficiary other than the Federal Bank, or merely import that he held the shares for behoof of the bank. Apart from the evidence, their Lordships have no hesitation in

holding that the added words, according to their natural construction, mean that Buchanan, as an official of the bank, held in trust for his employers, and are not calculated to suggest that he stood in a fiduciary relation to any other person.

It was argued that these words, even though they might not clearly indicate a trust for others than the bank, were at least so ambiguous as to cast upon the appellants the duty of making enquiry. Their Lordships are not of opinion that any such ambiguity exists. But the argument, had there been some foundation for it, would have come to nothing, because it is clearly proved that the Federal Bank intended Buchanan to hold for them, and for them only; and it is also proved, and is assumed by the learned Judges who found for the respondent, that the appellants, if they had enquired, would have received a positive assurance to that effect.

Their Lordships will therefore humbly advise her Majesty to reverse the decision of the Supreme Court of Canada; to restore the judgment of the Court of Appeal; and to order the respondent to pay to the appellants the costs incurred by them before the Supreme Court, and to declare that the appellants are to be at liberty to retain the sum of 3,080 dollars mentioned in the certificate of the Court of Appeal in payment pro tanto of their taxed costs in the Supreme Court, as well as of the costs to which they have been found entitled by the judgment of the Court of Appeal. The respondent must also pay to the appellants their costs of this appeal.

Solicitors-Gadsden & Treherne, for appellants; Bompas, Bischoff, Dodgson, Coxe & Bompas, for respondent.