tled to a sale of the railway, Rev. Stat. Can., c. 109, ss. 101-3; H. M. Howell, Q. C., and J. S. Tupper, Q. C., for defendants. As to multifariousness, plaintiffs seek to succeed under a judgment of their own, and they cannot in that respect represent the other bondholders. Harrison v. Hogg, 2 Ves. 325; Campbell v. McKay, 2 My. & Cr. 31; Ward v. Northumberland, 2 Ans. 469. Pledgee of chattels, cannot use them after default, Stearns v. Marsh, 4 Denio, 227. There is no distinction between "physical chattels " and choses in action with reference to the pledgee's rights. France v. Clark, 22 Ch. D. 833. The rights of a pledgee of short date negotiable securities differs from those of a pledgee of long date ones. Also between a pledgee of a note and a pledgee of a mortgage, in which the legal estate would not pass to the pledgee. Plaintiffs are pledgees only. Re Hall, 14 Q. B. D. 386; Donald v. Suckling, L. R. 1 Q. B. 585. The presumption is in favor of a pledge, Jones on Chattel Mortgages, 7; Barron on Chattel Mortgages, 29; 3 Myers Fed. Dec., p. 49, $ 64. As to the word "deposit," Re Hubbard, 17 Q. B. D. 690; Franklin v. Neate, 13 M. & W. 480. Defendants had power to pledge and not to mortgage the bonds, by their charter. Plaintiffs could not foreclose defendant's right of redemption, Carter v. Wake, 4 Ch. D. 605; General Credit v. Glegg, 22 Ch. D. 552. Wheeler v. Newbould has been questioned, see Story on Bailments, § 322 (n.) A railway company cannot make a pro-note. Bateman v. Mid-Wales, L. R. 1 C. P. 499. As a railway may be sold under execution, the court will not appoint a receiver. Peto v. Welland Ry., 9 Gr. 455; Galt v. Erie, 14 Gr. 499; King v. Alford, 9 Ont. R. 643. No allegation that Company has anything that a receiver can take, and so no receiver. Smith v. Port Dover Ry., 12 Ont. App. R. 288. For the duties of a receiver, Simpson v. Ottawa & P. Ry., 1 Ch. Ch. R. 126; Ames v. Birkenhead, 20 Beav. 332. J. S. Ewart, Q. C., in reply. All the American cases are in our favor, and there is no English case to show that the holder of collaterals cannot sue upon them. (8th March, 1890.) KILLAM, J., delivered the judgment of the court. (a) The whole question involved upon this demurrer appears to arise upon the interpretation of the agreement between the two companies and to be whether, under that agreement, the bonds referred to were to be issued to the plaintiff company so that it would be the holder of them and the obligee or promisee in respect of them, or were, while in their hands, to be merely inchoate instruments which would only come into full force as the bonds of the defendant company upon their sale by the plaintiff company. Although so much was said in argument of the law relating to pledges of personal property and although the decision of my learned brother Bain appears to be based upon an application of that law, I must say, with all respect, that I am unable to consider it at all applicable. It is not a question of the property in the pieces of paper on which the instruments are written, which would be originally in the Railway Company and of which it might make a legal pledge. In the hands of the Railway Company there was no other property in respect of them. It could be only when issued to another party as obligee or promisee in respect thereof, that the instruments could take effect as the obligations of the Railway Company or that there could be said to be any property in the obligations to be pledged by a pledge of the papers containing them. There is, then, no possibility of treating the transaction as one of pledge of the obligations, for, unless the plaintiff company became the obligees or promisees so as to possess the legal title to the choses in action which the instrument purported to represent, there was no obligation or chose in action to be pledged. I apprehend, however, that it was quite competent for the Railway Company, by its officers, to sign and seal such instruments and deposit them as security with a party making advances to it, upon the terms that such party should not be the holder of (a) Present: Taylor, C.J., Dubuc, Killam, JJ. them, that they should create no obligation to him, but that his only right should be to sell them, as the Railway Company might, and repay himself from the proceeds, he making them, thus, the obligations of the Company to the purchasers. This, it appears to me, was the very transaction to which the parties sought to bind themselves by the agreement set out in the bill. By the 3rd clause of that agreement, it is provided that, “As collateral security for the payment of the said acceptances at maturity, the Winnipeg Company shall issue and, on production of the respective bills of lading, shall deposit with the West Cumberland Company, or their bankers, Lloyds, Barnetts & Bosanquets Banking Company, Limited, Colmore Row, Birmingham, bonds of the Winnipeg Company, to an amount double that of the said acceptances." At first sight the word "issue" seems to imply the complete execution and delivery of the instruments to the plaintiff Company, so as to make them the holders of the obligations thereby represented, but I think that the word may be considered to be used in a somewhat less proper sense to signify the preparation, signing and sealing of the documents, and the placing of them absolutely out of the possession and control of the Railway Company. The word is similarly used by Brett, L.J., in Baxendale v. Bennet, 3 Q. B. D. 525, in speaking of a blank acceptance handed to a party to be filled up and negotiated. In fact, the "issue" there was less complete as it was without consideration, and could be recalled at any time before use of the bill. The word used in this agreement to specify the transmission to the plaintiff Company is "deposit.' 'deposit." The instruments were to be "deposited" with that Company or its bankers. This is not an apt word to denote a completion of the execution by delivery. It appears rather to indicate the physical transfer of the pieces of paper unaccompanied by the mental intention involved in the word "deliver" when technically used. I agree with the view of my brother Bain that the word would be properly applied to a transaction of pledge, rather than to one of mortgage, which is what the plaintiff's bill really assumes this to have been. In fact, it represents a bailment rather than a transfer of property or creation of an obligation, though often of another kind than the naked bailment known as depositum. Looking at the other portions of the agreement and the circumstances, it appears more clear that this is the proper view of the intention of the parties. As is usual with such undertakings, it is evident that the intention was to obtain the necessary funds by disposing of or "floating" bonds or obligations payable at long dates, with interest payable in the interval half yearly. The rails referred to in this agreement were purchased on one year's credit, probably because it was expected that that period would be necessary for the completion of these financial arrangements. No interest was payable upon this debt until the expiration of the year, but the bonds deposited bore interest payable half yearly. The bonds were for double the amount of the debt and bore interest at the rate of six per cent. per annum, while the debt bore interest at the same rate. Upon default in payment of the bonds or interest, the bond holders had under the Act 40 Vic. c. 59, S. 14, D., the right to register them in their own names, whereupon they became entitled to "the same rights, privileges and qualifications for directors, and for voting at general meetings as would be attached to them as shareholders if they had fully paid up shares of the Company to a corresponding amount." Thus, if the contention of the plaintiff be correct, it had the right on default of payment of the first instalment of interest to the position of a holder of shares to double the amount of its debt, when, perhaps, the bonds would realize upon a sale much more than the debt. It may be that a court of equity would restrain it from so acting until its own debt should mature, but, even so, there would, after twelve months, be that position of affairs. It may be said that the Railway Company could dispose of the bonds, if worth so much, but it is difficult to tell how embarrassing it might be under some circumstances to have these powers exercised to this extent even temporarily. Then, the terms show that the parties contemplated an early return of the instruments to the Railway Company, either together or in proportion to payments. This seems more consistent with an arrangement by which they were not to be completely delivered as the obligations of the Company than with that for which the plaintiff now contends. A reason for the form which the transaction appears to have been given, may be suggested by the circumstance that the statute 46 Vic. c. 59, s. 13, as amended by 47 Vic. c. 70, s. 3, D., in its terms authorized a sale or pledge of the bonds only “for the purpose of raising money for the prosecution of the undertaking." It may be that, as claimed, a purchase for a price in money of the iron or steel rails absolutely necessary for the construction of the work, would come within the Act, and that the bonds could be handed over directly in payment without the necessity of making two transactions of one, by a sale of the bonds for money to the vendors of the rails and the application of the money in payment for the rails, but the wording of the statute may have led the parties into an arrangement by which the vendors of the rails were made the attorneys irrevocable of the Railway Company for sale of its bonds on default in payment for the rails, with the protection given by the covenants against the issue of such securities to more than a certain amount. It is true that these bonds are, by the statute, made assignable and transferable by delivery so as to vest in the holder for the time being, a right of action upon them and to make him a mortgagee pro tanto of the Company's assets. It may not follow that there must attach to them all the incidents ascribed by the law merchant to negotiable bills of exchange. However this may be, we have now to consider only the construction of the written contract between the parties, and whether it provided for a completion of these instruments as the obligations of the Railway Company in the hands of the plaintiff Company. Under that agreement I cannot find the plaintiff to be in the position of the plaintiff in The General Credit & Discount Co. v. Clegg, 22 Ch. D. 549, or the petitioner in In re Olathe Silver Mining Co., 27 Ch. D. 278. In the former case the debentures had been transferred into the names of trustees for the plaintiff, and in the latter the report distinctly states that the petitioner had become the holder of the debentures. Here, the very question is whether the plaintiff became such holder under the agreement. While the bill alleged that it did, it does so by such reference to the agreement as to amount merely to an allegation of the effect of the agreement. It is clear that no delivery other the "deposit" according to the agreement is asserted. I am, therefore, of opinion that the order allowing the demurrer should be affirmed with costs. Order allowing demurrer affirmed with costs. |