REPORTS AND NOTES OF CASES.

Dominion of Canada.

SUPREME COURT.

B.C.]

[April 6.

MILNE V. YORKSHIRE GUARANTEE AND SECURITIES CORPORATION. Suretyship Collateral deposit-Ear marked fund-Appropriation of proceeds-Set-off-Release of principal debtor-Constructive fraud-Discharge of surety-Right of action.

K. owed the corporation $33,527.94 on two judgments recovered on notes for $10,000 given by him to R., and a subsequent loan to him and R. for $20,000. M., at the request of and for the accommodation of, R. had indorsed the notes for $10,000 and deposited certain shares and debentures as collateral security on his indorsement. K. and R. deposited further collateral security on negotiating the second loan, but K. remained in ignorance of M.'s indorsements and collateral deposit until long after the release hereinafter mentioned. These judgments remained unsatisfied for over six years, but, in the meantime, the corporation had sold all the shares deposited as collateral security, and placed the money received for them to the credit of a suspense account, without making any distinction between funds realized from M.'s shares and the proceeds of the other securities and without making any appropriation of any of the funds towards either of the debts. On 28th February, 1900, after negotiations with K. to compromise the claims against him, the agent of the corporation wrote him a letter offering to compromise the whole indebtedness for $15,000, provided payment was made some time in March or April following. This offer was not acted upon until November, 1901, when the corporation carried out the offer and received the $15,000, having a few days previously appropriated the funds in the suspense account, applying the proceeds of M.'s shares to the credit of the notes he had indorsed. These negotiations for compromise and the final settlement with K. took place without the knowledge of M., and

K. was not informed of his remaining liability towards M. as surety.

Held, per SEDGEWICK, GIROUARD, DAVIES and IDINGTON, JJ., reversing the judgment appealed from (11 B.C. Rep. 402) that the secret dealings by the corporation with K. and with respect to the debts and securities were, constructively, a fraud against both K. and M.; that the release of the principal debtor discharged M. as surety, and that he was entitled to recover the surplus of what the corporation received applicable to the notes indorsed by him as money had and received by the corporation to and for his use.

Per MACLENNAN, J., reversing the judgment appealed from (11 B.C. Rep. 402) that, on proper application of all the money received, the corporation had got more than sufficient to satisfy the amount for which M. was surety and that the surplus received in excess of what was due upon the notes was, in equity, received for the use of M. and could be recovered by him on equitable principles or as money had and received in an action at law.

Appeal allowed with costs.

Aylesworth, K.C., and Deacon, for appellant. Davis, K.C., for respondents.

Man.]

GILMOUR v. SIMON.

[April 14.

Principal and agent-Sale of land-Authority to make contract

-Specific performance.

The defendant gave a real estate agent the exclusive right within a stipulated time, to sell, on commission, a lot of land for $4,270 (the price being calculated at the rate of $40 per acre on its supposed area), an instalment of $1,000 to be paid in cash and the balance, secured by mortgage, payable in four annual instalments. The agent entered into a contract for sale of the lot to the plaintiff at $40 per acre, $50 being deposited on account of the price, the balance of the cash to be paid "on acceptance of title," the remainder of the purchase money payable in four consecutive yearly instalments and with the privilege of "paying off the mortgage at any time." This contract was in the form of a receipt for the deposit and signed by the broker as agent for the defendant.

Held, affirming the judgment appealed from (15 Man. Rep.

205) that the agent had not the clear and express authority necessary to confer the power of entering into a contract for sale binding upon his principal.

Held, affirming the judgment appealed from (15 Man. Rep. ing off the mortgage at any time." This contract was in the not be enforced against the defendant. Appeal dismissed with costs.

Nesbitt, K.C., and Coutlee, K.C., for appellant. Aylesworth, K.C., and Affleck, for respondent.

Burbidge, J.]

EXCHEQUER COURT.

[Oct. 23, 1905.

INDIANA MANUFACTURING Co. v. SMITH.

Patent for invention-Pneumatic straw stackers-Combination -Assignment-Right of assignor to impeach validity of patent-Right to limit construction-Estoppel.

Held, that the assignor of a patent, sued as an infringer by his assignees is estopped from saying that the patent is not good; but he is not estopped from shewing what it is good for, i.e., he can shew the state of the art or manufacture at the time of the invention with a view to limiting the construction of the patent.

In an action for infringement against the assignor of a patent for improvements in pneumatic straw stackers, it appeared that an earlier patent assigned by the defendant to the plaintiff excluded everything but the narrowest possible construction of the claims of the second patent. In the latter speaking generally, the combination was old, each element was old, and on new result was produced; but in respect of one of the elements of the combination there was a change of form that was said to possess some merit. Beyond that there was no substantial difference between the earlier and later patents.

Held, that while as between the plaintiff and anyone at liberty to dispute the validity of the later patent, it might be impossible on these facts to sustain the patent, as against the assignor who was estopped from impeaching it, it must be taken to

be good for a combination of which the element mentioned was a feature.

W. Cassels, K.C., and W. D. Hogg, K.C. for plaintiffs. Lynch-Staunton, K.C., and Masten, for defendant.

Burbidge, J.]

[Oct. 25, 1905.

THE ACTIESELSKABET BORGESTAD V. THE THRIFT. Shipping-Collision-Interlocutory application for consolidation of two actions-Appeal from local judge.

An action for damages against the defendant ship for collision was taken in the Nova Scotia Admiralty District by the owner of the injured ship on the 15th of September, 1905. The following day a similar action was taken by the charterer and owner of the cargo of such injured ship. On the 28th of September an application was made by the defendant to the local judge for an order to consolidate the two actions, or in the alternative for an order that the defendant ship be released upon tendering bail to the amount of her appraised value, and that a commission of appraisement be issued, to ascertain her value. in her then condition. On the 3rd of October the local judge made an order that a commission of appraisement issue, and that upon bail being given for the amount of such appraised value in each of the actions, the ship be discharged from arrest, and that the two actions be tried together. An appeal from such order was taken to the Exchequer Court. Upon the appeal no objection was taken to the order, so far as it directed an appraisement or to the direction that the two actions be tried together except so far as that direction might be held to affect the question of the amount of bail to be given-it only being necessary to give bail to the amount of her appraised value to secure the release of the ship if the actions were consolidated. It was however urged that the local judge should have ordered the consolidation of the two actions, and that the ship should be released in respect of both upon giving bail to the amount of her appraised value.

Held, 1. It was a matter within the discretion of the local judge to grant or refuse an order for consolidation, and as such, ought not to be interfered with on appeal.

2. The order should be varied to allow in the alternative the ship to be released in respect of both actions and claims

made upon payment into Court of her appraised value and the amount of her freight, if any.

3. This relief not having been asked before the local judge, the Court on appeal declined to allow the costs of appeal to either party.

Newcombe, K.C., for appellant. Borden, K.C., for respon

dent.

Burbidge, J.]

THE KING v. DUGAS. [Dec. 9, 1905. Public officer-Judge of Yukon Court-Living expenses-"Appointee of Dominion"-Recovery of money paid.

The defendant was appointed a judge of the Supreme Court of the Yukon Territory, Sept. 12th, 1898. By s. 5 of the Yukon Territorial Act, 1898, 61 Vict. c. 6, s. 5 (3), he became as such judge a member of the council constituted to aid the commissioner in his administration of the territory. An order-in-council was passed Oct. 7, 1898, appointing him "to aid the commissioner in the administration of the territory," and since that time up to action brought he had continued to act as a member of the council. In addition to the salary paid to him as such judge, certain provision for living expenses was made from time to time by Parliament in his behalf. By orders-in-council of July 7, 1898, and Sept. 5, 1899, relating to officers for the administration of the Yukon District, it was provided that such officers were, in addition to their salaries, to be furnished with "quarters and such living allowance as may from time to time be fixed by the Minister of the Interior;" and it was further provided therein that the provision mentioned should apply to "all appointees of the Dominion" who had been or might be appointed to the staff for the administration of the Yukon Territory.

From Oct. 19, 1900, until June 30, 1902, the defendant was furnished with a residence at Dawson City and supplied with light and fuel, the bills for rent and for light and fuel, and for certain other domestic requirements being paid by or under the authority of the commissioner of the Yukon Territory. The payments so made were fully reported to the Minister of Public Works, who was responsible for the administraton of the appropriation, and vouchers, shewing on the face of them the service for which the moneys were expended and giving full