BOOK REVIEWS
BANKING AND BILLS OF EXCHANGE
By JOHN DELATRE FALCONBRIDGE, SIXTH EDITION, TORONTO: CANADA
LAW BOOK COMPANY LIMITED, 1956, Pp. XX, 987. $27.00
For students of comparative law there can be few subjects of greater in-
terest in Canada then the application of the federal Bills of Exchange Act
with its common-law concepts and terminology in the civil law province of
Quebec. To a lesser degree the operation in Quebec of the federal Bank Act
also presents interesting material for comparative legal analysis. An increased
emphasis on this aspect of his subject is a prominent feature of the sixth
edition of Falconbridge’s Banking and Bills of Exchange, for a long time now
the leading Canadian work in these two fields. There are, of course, reasons
of more general importance for welcoming a new edition of this valuable
work. Apart from the need to bring the case references up to date (the author
cites about forty new cases under banking and at least fifty under bills of
exchange), there have been two decennial revisions of the Bank Act since
the fifth edition was published in 1935. But while there has been no com-
parable change in the Bills of Exchange Act –
only the amendment in 1951
permitting banks to close on Saturday –
some very important writing
on the subject of bills of exchange in relation to the civil law has come out of
Quebec since 1935, and Falconbridge’s commentary on these Quebec studies
represents a substantial part of the additional material to be found in his
sixth edition.
The Quebec work which Falconbridge discusses consists of Nicholls’ ad-
mirable articles on prescription and novation in relation to the Bills of Ex-
change Act’ which appeared soon after the fifth edition of Falconbridge’s
book, as well as a case comment by Nicholls on consideration in 1947,2 and
the late Antonio Perrault’s comprehensive study of negotiable instruments
which came out in 19403 and was the third, and as it turned out, the last
volume in an ambitious project on the commercial law of Quebec. Perrault’s
book contained some rather controversial discussion of the opinions ex-
pressed by Nicholls on certain points and was reviewed by Falconbridge,
with particular reference to ,Nicholls’ articles, in a long piece in the Canadian
Bar Review entitled, “The Bills of Exchange Act in the Province of Quebec”. 4
Some of the argument contained in this review article is reproduced in the
i”The Bills of Exchange Act and Prescription in the Province of Quebec” (1936-37),
15 Revue du Droit 396, 459, 539, 608, and (1937-38), 16 Revue du Droit 26; “The Bills
of Exchange Act and Novation in the Province of Quebec”, (1938), 16 Can. Bar Rev.
602, 706.
2(1947), 25 Can. Bar Rev. 397.
3 Antonio Perrault, Traiti de Droit Commercial, v. 3, 1940.
4(1942), 20 Can. Bar Rev. 723.
McGILL LAW JOURNAL
[Vol. 3
sixth edition, but the article remains an important supplementary source of
Falconbridge’s thinking (some of it admittedly in a transitional stage of
development) on several of the issues raised by Nicholls and Perrault. The
general problem on which these authors concentrate is the field of operation
which has been left by the Bills of Exchange Act to the civil law in Quebec.
Falconbridge found much matter for criticism in Perrault’s vigorous and
provocative analysis of the Bills of Exchange Act from a civilian point of
view, but he confessed that his own thinking had been greatly stimulated
by it. However one may disagree with Perrault’s arguments on particular
and at times he goes very far in his claims on behalf of the civil
points –
law –
lawyers in Quebec are deeply indebted to him for his detailed and
pioneering work on a very difficult subject.
Perrault’s chief preoccupation in his series on the commercial law of Quebec,
particularly the first two volumes, was the distinction in Quebec between
commercial and civil matters to which important consequences attach. Fal-
conbridge has revised the section on Quebec commercial law in his introductory
chapter entitled “Custom and the ‘Law Merchant” by removing the discussion
of the extent to which common law decisions may be applicable as well as
the list of important differences between the two legal systems on matters
of special concern to banks. He has substituted for this material a short
paragraph emphasizing that the system of law which governs “commercial
matters” and “traders” in Qiebec is a “peculiar” one, unlike either the
French or common-law approach. He does not point out the particular relev-
ance of the distinction between commercial and civil matters for his own
subject of banking and bills of exchange.
Nicholls and Perrault disagree as to whether the bill of exchange and the
contract arising out of a bank deposit are always commercial for both parties
to them. Nicholls’ opinion that the contract formed by the bank deposit is
always commercial for both banker and customer,5 even where the customer
is a non-trader, appears to have some judicial opinion to support it.6 Per-
rault’s opinion7 is that the contract, while always commercial for the banker.
may be either civil or commercial for the customer depending on the circum-
stances. This is an application of the “actes mixtes” theory, which Perrault
would apply to all transactions (except where the Code clearly indicates
otherwise), even those which might be called commercial by nature in the
sense that they are objectively so for the party who is a trader and not merely
commercial for him by virtue of the accessory theory because carried out in
the interests of his business. However illogical
the results of the mixed
contract theory may appear (the benefit of the commercial rules, e.g. proof
‘ature of Bank Deposits in Quebec”, (1935), 13 Can. Bar Rev.
5Nicholls, “The Legal
635, 720 at 723.
6Dame Reimnitz v. La Banque de Montrial (1928), 66 Que. S.C. 315, at p. 319.
7Perrault, Traiti de Droit Commercial, v. 2, no. 940 and p. 385, note (1).
No. 1]
BOOK REVIEWS
by testimony, may be claimed against the party for whom the transaction is
deemed commercial but not by him) it has been applied to other transactions
on many occasions by Quebec courts. Unless one is prepared to recognize
some theoretical limit to the application of the mixed contract theory as, for
example, that it should only apply where the contract is commercial for the
trader in virtue of the accessory theory, it would seem to be consistent to
apply it to the bank deposit as well as to other contracts. While the contract
which is classified as commercial by nature, in the sense that it is always
commercial for both parties, is much to be preferred from a practical point of
view in its simplicity and uniformity of result to the complicated and in some
respects illogical mixed contract theory,$ the difficulty is to determine, in the
absence of express legislation, when a contract is one which is always com-
mercial for both parties. On one occasion it was said in the Supreme Court
of Canada?
that there was no reason for applying the mixed contract
theory in Quebec. The case involved an action on a loan by a non-trader to a
trader and the question was whether the prescription governing civil or com-
mercial matters should apply. Since the lender was a non-trader and the
transaction for her one of investment rather than commercial profit the court
held the loan to be civil in nature and the prescription governing civil matters
to apply. The same result would have been obtained in this case had the
mixed contract theory been applied. If in determining what- the nature of the
contract is to be for both parties we must, in the case of loan, look at it from
the point of view of the lender,a then, logically it would be possible to argue
in a given case that a bank deposit, which is a loan for consumption, was civil
for both parties.
When Perrault wrote in 1940 he conceded that the weight of the Quebec
doctrine and jurisprudence was against his view that the nature of the bill of
exchange depended on the nature of the underlying transaction out of which
it arose as well as the status or occupation of the persons involved.10 If, for
81t is difficult to reconcile Perrault’s recommendation that there be a fusion of com-
mercial and civil law by extending the application of certain rules now reserved for com-
mercial operations to all transactions (see Perrault, “Le Droit Commercial qu~becois:
1923-1947”, (1948), 26 Can. Bar Rev. 137) with his insistence, so long as the distinction
remains, that the mixed contract theory be applied to all transactions.
9Darling v. Brown (1876-77), 1 S.C.R. 360.
9aCf. Roch & Pare, Vol. 13 (Trudel Series) p. 217.
1OPerrault’s opinion is found in Trait6 de Droit Commercial, v. 1, nos. 343, 478 and
479; v. II, nos 1130-1132; v. III, nos. 398-422; 768, 815. Quebec authors holding the
contrary view that the bill of exchange, cheque and promissory note are always com-
mercial in nature for all parties to them: Mignault, Droit civil canadien, v. 5, p. 480,
v. 6, p. 64, note (e), v. 9, p. 526; Langelier, Cours de droit civil, v. 4, pp. 30, 223;
Nicholls, “The Bills of Exchange Act and Novation”, (1938), 16 Can. Bar Rev. 602, at p.
614; “The Bills of Exchange Act and Prescription in the Province of Quebec”, (1936-
37), 15 Revue du Droit at p. 606, note (93). See also his review of Perrault’s first two
volumes: (1937), 15 Can. Bar Rev. 733. Among the more important of the recent
McGILL LAW JO URNAL
[Vol. 3
example, the underlying transaction be a loan and commercial in nature for
the lender, but civil for the borrower, the promissory note to which it gives
rise will likewise, according to Perrault’s theory, be deemed to be a mixed
contract for the parties to it. Perrault felt very strongly that the general
tendency of the codrts to treat the bill of exchange as always commercial for
all parties to it was a serious error, and he appealed to a new generation of
lawyers and judges to correct the error. In his review of Perrault’s book,
Falconbridge noted the disagreement between Perrault and Nicholls on this
point (Nicholls took the view that a bill of exchange was commercial by
natures) and without expressing a firm opinion himself; rather left the im-
pression that Nicholls had come off better in the controversy.12 It is interest-
ing to note that in a case decided a few years ago the Superior Court applied
Perrault’s theory, holding in an action on two promissory notes, that verbal
evidence could not be introduced against the plaintiff, payee of the notes, for
whom the underlying transaction was civil in nature.’ 3 In Banque Canadienne
Nationale v. Labonti,14 an important case on the application of the Bills of
Exchange Act in Quebec which Falconbridge does not cite, the Quebec court
of appeal held that a promissory note, though given for a debt which was
civil for both the maker and payee, was presumed to be commercial for all
parties when negotiated to a holder in due course04a There is a suggestion
in some of the reasoning in this case of a compromise solution to the con-
troversy: between the original and immediate parties a bill is presumed to be a
commercial inatter, but this presumption may be rebutted by proof that the
underlying transaction
is civil: negotiated, however, the bill becomes a
commercial matter regardless of the original transaction out of which it arose.
Those who favour Perrault’s view cnuld argue, perhaps. that the difference
should follow the distinction between immediate and remote parties throughout
the life of the bill. Where the issue is between immediate parties, whether
original or subsequent, the nature of the bill would depend on the nature of
the underlying transaction, if any: between remote parties it would always
be commercial for both.
decisions: Bergeron v. Lindsay 1940 S.C.R. 534 per Taschereau J. at p. 540. Levesque v.
Bergeron (1939) 66 Que. K. B. 213, at p. 922 and 223; Banque Canadienne Nationale v.
Turcotte (1942) Que. K.B. 393, at p. 391. Although the language of the judges at the
places cited in these three cases strongly suggests a view contrary to Perrault’s, on the
particular facts of the cases the instruments could be held to be commercial by any test.
1lSee note (10), supra.
12(1942) 20 Can. Bar Rev. 723, at pp. 736-737.
13Mendel v. Torontour 1953 Que. S.C. 409
14(1947) Que. K.B. 415. The appeal to the Supreme Court of Canada in this case was
abandoned.
14aBissonnette J., whose reasoning on the general issue was adopted by the other
judges, did not in principle exclude the right to rebut this presumption (p. 428).
No. 1]
BOOK REVIEWS
The chapter entitled “Legislative Power and Conflict of Laws” has been
entirely re-written by Falconbridge. It is now exclusively concerned with the
subject of legislative jurisdiction, although the original title has been retained.
The former material on conflict of laws is now found elsewhere, partly in the
commentary on the conflict sections of the Bills of Exchange Act, but mainly
in the author’s Essays on the Conflict of Laws. An important feature of the
revised chapter is the discussion of legislative jurisdiction in relation to
limitation of actions or prescription. In the light of the Supreme Court decision
in the Winstanley case, 15 Falconbridge has altered the opinion he expressed in
the fifth edition that the prescription of bills and notes falls under provincial
legislative jurisdiction.’ 6 He now contends that, apart altogether from conflict
with specific provisions of the Bills of Exchange Act, such as section 74,
inasmuch as the holder’s right of action is part of the law of bills and notes
in a strict sense, “it is beyond the scope of provincial legislative power to im-
pose a time limit on the right to sue on a bill or note.”‘1 On the assumption
that the reference in section 10 of the Bills of Exchange Act to the common law
of England does not include statutory provisions such as the Statute of Limit-
ations, provincial legislation on prescription of bills and notes which was in
force at Confederation, like article 2260(4) of the Civil Code, remains in
force until repealed by federal legislation. Falconbridge points out, however,
that since the Winstanley case there have been two decisions of provincial
courts holding provincial statutes of limitations passed since Confederation to
be intra s4res the provinces as regards actions on bills and notes.’ 8
The question of prescription raises in a particularly interesting form not
only the whole problem of legislative jurisdiction as it affects bills and notes
but the proper interpretation of section 10 of the Bills of Exchange Act as
well. This section reads: “The rules of the common law of England, including
the law merchant save in so far as they are inconsistent with the express
provisions of the Act, apply to bills of exchange, promissory notes and
cheques.” In terms of the approach which the courts have so far adopted
toward the subject of legislative jurisdiction, it can be said that Parliament
has exclusive jurisdiction to legislate in relation to matters coming within the
subject of bills of exchange and promissory notes and may also legislate on
matters which would otherwise be within provincial legislative jurisdiction
but are ancillary or necessarily incidental to the effective exercise of its ex-
15Attorney-General for Alberta and Winstanley v. Atlas Lumber Co. (1941) 1 D.L.R.
625; (1941) S.C.R. 87.
16Fifth edition at p. 514. This change of opinion was foreshadowed in his review of
Perrault’s third volume in 1942.
‘TSixth edition at p. 51.
18Dorfer v. Winchell (1941) 2 D.L.R. 772, (1941) 1 W.W.R. 541; Attorney-General
for Saskatchewan and Costley v. Allen (1942) 3 D.L.R. 76, (1942) 2 W.W.R_ 239. See
also Weingarden v. Moss (1955) 4 D.L.R. 63. mentioned by Falconbridge in Addenda
and Corrigenda.
McGILL LAW JOURNAL
[Vol. 3
clusive jurisdiction. On this second class of matter the provincial legislatures
have jurisdiction so long as the matter comes within any of the classes of
subject assigned to them by section 92 of the BNA Act and there is no con-
flicting federal legislation. The line between the exclusive federal jurisdiction
in regards to bills and notes and what may be called the occupiable field is a
difficult one to draw. Can the same criterion apply here as that which governs,
in the opinion of Falconbridge, the interpretation of section 10 of the Bills
of Exchange Act?
There is a strong suggestion- in the sixth edition that Falconbridge would
adopt essentially the same criterion for both problems? 9 He holds the effect of
the cases with regard to section 10 to be that in the absence of an express
provision in the Act the English common law will apply to matters which
come within the limits of “the law of bills and notes in the strict sense”, but
that matters outside these limits may be governed by provincial law. It
appears reasonable to take the view that the exclusive federal jurisdiction
over bills and notes covers the law of bills and notes in the strict sense, and
that beyond these limits lies the occupiable field. If any matters affecting
bills and notes fall to be regulated by provincial law it is clearly not in virtue
of section 10, which in its terms, far from mentioning provincial law, makes
a sweeping reference to the English common law, but because provincial law
on these matters is valid in virtue of section 92 of the BNA Act. Nicholls
has said, “The proper interpretation of section 10 is in the final analysis a
constitutional question. The Dominion in enacting it cannot be presumed to
have intended to interfere improperly with the right of the provinces to
legislate on property and civil rights, as it would be doing if the section were
given its broadest, and perhaps most obvious meaning. ’20 Technically the
question is one of statutory interpretation, but in searching for that will-o-
the-wisp “the intention of the legislature” and making what is in the final
analysis a decision of policy, one is naturally influenced by the current dis-
tinctions of constitutional law. Did Parliament in enacting section 10 intend
to cover only those matters not covered by express provision in the Act
which fall within its exclusive legislative jurisdiction or did it intend as
well to occupy the occupiable field? As far as this reviewer is aware, the
courts have not formulated any rule of interpretation to deal with this problem.
There is presumably no reason in principle why the occupiable field should
not be occupied in this wholesale fashion –
and there is nothing on the face
of section 10 to justify any restriction or qualification –
but as a matter of
policy, in view of the obvious impropriety of introducing a whole body of
English common law in this way into a provincial legal system, particularly
the civil law system of Quebec, without a careful consideration of the detailed
implications, it is probably reasonable to hold as most of the cases and com-
l9Sixth edition at pp. 48-47. See also (1942), 20 Can. Bar Rev. 723, at 731.
20(1938) 16 Can. Bar Rev. 602, at pp. 602-603.
No. 1]
BOOK REVIEWS
mentators have in effect done, that this cannot be presumed to have been
the intention of Parliament. This interpretation is not at open variance with
the language of section 10; it merely gives it a restricted application. Parlia-
ment may in fact have thought that it was providing a uniform system of
law to cover every aspect of bills and notes but there are practical limits to
the extent to which this can be carried out in a bi-legal country. So long as
we frankly acknowledge that this is ultimately a decision of policy and do not
try to dress it up in a pseudo-legal proposition, we avoid argument at cross-
purposes.
Of course the mere adoption of the criterion stated by Falconbridge does
not solve all problems. Nicholls has called the criterion “inadequate and on
occasion positively misleading”. 2 1 It is inadequate, or “not particularly helpful”,
as he puts it in another place, 22 because it still leaves us with the difficult
task of determining what falls within the law of bills and notes in a strict
sense. (,Examples usually given are the form, issue, negotiation and dis-
charge of bills and notes.) It is misleading because a matter like prescription,
which Nicholls also considers to come within the law of bills and notes in a
strict sense, is governed by provincial law.23 In his review of Perrault’s book
Falconbridge conceded that in the light of the Quebec cases on prescription
there might be some force in ,Nicholls’ criticism of the criterion 2 4 In the
sixth edition, however, he retains the criterion without qualification, although
he does not go on as formerly to give examples of matters which are governed
by provincial law. It is wiser not to attempt to formulate in positive terms a
21(1937-38), 16 Revue du Droit 26, at pp. 42-43.
22(1938), 16 Can. Bar Rev. 602, at p. 603. Cf. Nicholls, (1947) 25 Can. Bar Rev. 397,
at p. 939.
“From all of Nicholls’ statements on the right to legislate with regard to the pre-
scription of bills and notes (some of these statements are found in the article on nova-
it would appear, as Falconbridge suggests in
tion as well as the one on prescription)
his review of Perrault’s book, that Nicholls, while he speaks of prescription as being a
matter of the law of bills and notes in a strict sense, would justify federal legislation on
the subject as being ancillary or necessarily incidental to the effective exercise of
Parliament’s exclusive jurisdiction in relation to bills and notes. But his precise meaning
is not too clear, because at one point (16 Revue du Droit at p. 41) he says, “With the
exception of matters relating to evidence, the Dominion would probabiy have the power
to legislate on this prescription as part of the exclusive jurisdiction granted it by section
91-18 of the British North America Act over bills of exchange and promissory notes”.
(Italics mine). In a word, does Nicholls contend that in the absence of federal legislation
the province has the right to amend its civil code provisions governing the prescription
of bills and notes, or does he merely mean that the pre-Confederation provisions apply
until repealed by Parliament? If the latter, Falconbridge (sixth edition, p. 52) would
agree with this, on the ground apparently that the English statute law on limitations
cannot be made to apply in virtue of section 10. Nicholls emphasizes the apparent
intent of Parliament in not including the provisions of the civil code governing prescrip-
tion nf bills and notes among those expressly declared to be repealed.
, 2). 20 C1. Par 3e7. 7Y. f-.t P_
‘Out
-le
‘a be,”
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a
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-ad
-hs
McGILL LAW JOURNAL
[Vol. 3
general statement of what is governed by provincial law. It
is submitted
that the expression “the consequences of the contracts entered into by the
parties to the instrument”, which Nicholls seems to treat as the accepted
description of what is excluded from the application of section 10,25 is too
vague to be of much use, nor is it at all clear that this is precisely the way
in which Falconbridge uses it. What Falconbridge can be interpreted as
saying is that the law of bills and notes in the strict sense does not include
all the consequences of, or all the rights and liabilities resulting from, the
contracts entered into by the parties to bills or notes.26 The safest statement
that has ever been made about section 10 is Nicholls’ own: “No a priori rule
can be given for the proper interpiretation of section 10 of the Bills of Ex-
change Act. All that can be done is to examine the civil law in all its pos-
sible applications to bills of exchange, cheques and promissory notes, to weigh
the propriety of applying the civil law or the common law in each instance,
and to evolve from that examination a series of particularized rules-of-thumb
to cover the most common situations that might arise.”21
Although it is not always easy to determine what comes within the law of
bills and notes in the strict sense, if anything would appear at first sight to
fall into this category, apart from such obvious matters as the form and
negotiation of the instrument, it is the classification’ of defences and the
determination of where a particular defence stands in the classification, for
this goes to the very essence of negotiability. It is what makes the rights of the
holder in due course what they are, as distinct, for example, from those of
the ordinary civil law assignee. Falconbridge states this view of the subject
of defences for the first time, in his book, in the new edition.28 (It was ad-
vanced first in his review of Perrault’s book –
a good example of the stim-
ulating effect of some of Perrault’s arguments on the development of his own
thinking). Yet here too there is disagreement and a few rather good ex-
amples of the type of comparative law question which is thrown up by the
application of the Bills of Exchange Act in Quebec.
One such question is the defence of non est factum. A person signs a
negotiable instrument under the impression that it is some other contract or
cases have gone so far as to bold that the province has legislative jurisdiction over
the subject, at least in the absence of the conflicting federal legislation (and it is not
known that any have gone this far) there is no contradiction between Falconbridge’s
criterion for the application of section 10 and the present application of provincial law
on prescription of bills and notes.
25(1947), 25 Can. Bar Rev. 397, at 399. See also (1936-37), 15 Revue du Droit 396,
at 398.
26Sixth edition, p. 435. (Italics mine.) Cf. fifth edition, p. 511, and fourth edition, p.
509, where he says, “These, as a general rule, are governed by provincial law .., “.
Cf. also Lusher v. Lacroix (1947) 23 R.L. n.s. 212, at p. 214 –
“toutes les autres con-
sSluences civiles de ce contrat”.
27(1938) 16 Can. Bar Rev. 602, at p. 603.
28Sixth edition, at p. 672. See also (1942), 20 Can. Bar Rev. 723, at p. 750.
No. 1]
BOOK REVIEWS
document. On common law authority since Foster v. Mackinnon2 this is a
real defence, good in the absence of negligence against a holder in due course.
In practice the case may be rare where there will not be a finding of negligence,
but an interesting difference of opinion has arisen between Perrault and
Falconbridge as to whether this defence should be characterized in Quebec
as a real defence or at most a defect a title.30 At common law it appears to
have been treated as a real defence because there is an absence of consent
which renders the contract void rather than merely voidable. The tendency
of the common-law commentators has been to refer to the case as one of
fraud, but although fraud is frequently if not usually present in the non est
factum situation, the distinguishing feature of the situation in civil law terms
is error as to the nature of the contract. Perrault expresses the opinion that
error as to the nature of the contract in Quebec is a cause of relative rather
than absolute nullity, a vice de consentement rather than an absence de con-
sentement, which amounts to no more than a defect of title, good against a
remote holder for value but not against a holder in due course. Falconbridge
believes that in the silence of the Act the defence to which the non est factum
situation gives rise must be determined in Quebec by the common law of
England, because such a determination falls within the law of bills and
notes in a strict sense. There is much force in this argument. The Quebec
jurisprudence on this question has been far from uniform.31 Most of the cases
have held that the contract was non-existent and an absolute nullity and
therefore a holder in due course could not recover,3 2 but it is only in the later
cases that the judges have begun to cite Foster v. Mackinnon.3 3 If one takes
Falconbridge’s view of the problem there is no need to consider the Quebec
civil law on error as to the nature of the contract. But from a civilian’s point
of view the issue raised by Perrault is an interesting one, and one may be
forgiven for pursuing it further in view of Falconbridge’s own statement
that even looking at the matter from the point of view of civil law, he would
be inclined to attach more weight than Perrault does to the “implications”
of the judgement of the Supreme Court of Canada in W. T. Rawleigh Co. v.
29(1869), L.R. 4 C.P. 704.
30 See Perrault, op. cit. vol III, nos. 620 ff; Falconbridge, sixth edition, pp. 669 ff,
also (1942), 20 Can. Bar Rev. 723, at pp. 748 ff.
3t There are two conflicting judgments of the court of appeal on cases governed by the
provincial law prior to the federal act: La Ban que Jacques-Cartier v. Leblanc (1892)
1 Q.B. 128, holding that it was not a good defence against a holder in due course;
Banque Jacques Cartier v. Lescard (1887) 13 L.C.R. 39 (C.A.), holding that it was.
32Tn addition to the Lescard case above see L’Abbi v. Normandin & Hickman (1888),
11 L.N. 123 (C.C.); Banque Jacques-Cartier v. Lalande (1901) 20 Que. S.C. 43 (Lan-
gelier J.) .
33Cote v. Brunelle (1917), 51 Que. S. C. 35 (Demers J.); Bank of Montreal v.
Amireault (1937) 75 Que. S.C. 406 (Chase-Casgrain J.), (1938) 65 Que. K.B. 1.
McGILL LAW JOURNAL
[Vol. 3
Dumoulin.3 4 Moreover, in Bank of Montreal v. Amireault, 35 which appears
to be the last reported decision in Quebec on the defence of non est factum
in a bills of exchange action, there was considerable difference of opinion
among the judges of the Court of Appeal. The question is therefore one which
invites some comment.
Perrault supports his conclusion chiefly by reference to article 1000 of the
Civil Code and to the well-known comments of the Codifiers upon the part
of the Code dealing with the requsites to the validity of contracts and causes
of nullity in them. Article 1000 reads: “Error, fraud, and violence or fear are
not causes of absolute nullity in contracts. They only give a right of action,
or exception, to annul or rescind them.” The Codifiers’ statement is: ” .
. . the
Commissioners have avoided, as subtle and useless, the questions so much
discussed by civilians, whether a consent which is surprised or constrained be
a consent at all, and whether error, fraud and violence vitiate contracts direct-
ly, because they destroy the consent, or indirectly because it would be im-
moral to sustain contracts made under their influence. Those questions and
the cognate one, whether the effect of these vices be that they prevent the
formation of the contract, or merely that they render the contract bad, are
absolutely without practical consequence. The result is always the same in
giving to the parties interested and to no other, a right of action to avoid
liability under the contract. The duty of the Commissioners is to prepare a
series of articles expressing the practical rules by which civil rights are
regulated and determined, and not to theorize upon nice and unprofitable
distinctions, however logical they may seem to be.””6
This statement and the text of the Code, which does not make any dis-
tinction with respect to nullity between error as to the nature of the contract
and other kinds of error,3 7 provide a strong foundation for Perrault’s opinion.
Yet the majority of the commentators38 hold that such a distinction must of
necessity be read into the Code; that when there is error as to the nature of
the contract (some of them also include error as to the object of the contract)
there is absence of consent, no contract at all, and therefore absolute nullity.
There is a considerable amount of judicial opinion to support this view. In
Rawleigh Company Ltd. v. Latraverse”9 (not the case to which Falconbridge
refers), the defendant had signed a contract of suretyship believing it, as a
result of the fraudulent representations of the debtor, to be a mere character
34(1926) S.C.R. 551.
35See note (33), suPra.
36Cod. 1st Rep. p. 10.
3TSee also arts. 991 and 992 C.C. Cf. arts. 1109, 1117 C.N. Planiol & Ripert, v. 6,
no. 176.
38Mignault, Le droit civil canadien, v. 5, pp. 212, 235, 236-237; Trudel, Trait6 de
droit civil du Quebec, v. 7, pp. 154, 164, 208; Baudouin, Le Droit civil de la province
de Quebec, pp. 673-674, 675.
39(1924) 36 Que. K.B. 334.
No. 11
BOOK REVIEWS
reference. In maintaining the judgment dismissing the creditor’s action to
enforce the contract, the Quebec court of appeal held that error as to the
nature of the contract rendered it non-existent or absolutely null. In effect
the decision was that there was no lien de droit between the parties. The
court cited Mignault and certain French authors without specific reference
to the terms of the Quebec Code.40
In Rawleigh v. Dumoulin, the case to which Falconbridge refers, the facts
were almost identical. From some of the language used by Mignault J., who
delivered the judgment of the Supreme Court, one might infer that he would
regard the contract as never having been formed and the nullity as an absolute
one. 41 (In any event, it may be assumed that he still held the opinion expressed
in his doctrinal work on the subject). But apart from this it is difficult to
see the “implications”
in this decision which have a bearing on the issue
raised by Perrault. In neither of these cases was it strictly necessary to find
that there was an absolute nullity. The nullity was being invoked by the
parties who had been led into error. The plaintiff was a party to the contract
which the defendants were seeking to have annulled. The precise nature, of
the nullity might have been in issue had the plaintiff company been a third
party, stranger to the contract.42 In attaching special importance to Rawleigh
v. Duinoulin Falconbridge appears to have been influenced by what was said
about the case by Hall J. dissenting in Bank of Montreal v. ,Amireault.43 This
judge’s references to the case appear, however, to be concerned chiefly with
two points: whether the nullity can be invoked against the other party when
it was not his fraud which was responsible for the error, and whether
negligence by the party signing the instrument bars him from invoking the
nullity.
The case of Bank of Montreal v. Armireault reveals a wide range of opinion
on the defence of non est factum in Quebec. The trial judge held that error as
to the nature of the contract was a good defence against a holder in due course
and that negligence was no bar or fin de non recevoir. On this last point he
relied on Rawleigh v. Dumoulin as well as on the fact that negligence had not
been alleged by the plaintiff. All of the judges in the Court of Appeal, except
Hall J., agreed that the defendant could not succeed because of her negligence,
Barclay J. stating that the burden was on her to prove that she had not been
negligent. Barclay J. makes a careful study of the conflict of common-law
40Hall J. dissenting, held that the defendants should not be allowed to succeed because
of their negligence. In addition to this case there are the bill of exchange cases in which
error as to the nature of the contract has been held to render the contract non-existent
and absolutely null. See notes (31) and (32), supra.
4 1 “L’erreur quant i la nature rnme du contrat est alors cause de nulliti aux termes
(p. 555) and
de l’article 992 C.C., car alors il n’y a pas eu de consentement .
” . . cette erreur suffit pour rendre le contrat non avenu . .
42Cf. Trudel, op. cit. p. 215.
43(1938), 65 Que. K.B. 1, at pp. 35-36.
.
. ”
. ” (p. 557).
McGILL LAW JOURNAL
[Vol. 3
opinion on the subject of negligence, but unlike Hall J., he concludes that
the weight of it is to the effect that negligence estops a party from raising
the defence of non est factum against a holder in due course. Two of the
judges, Bernier and St. Jacques JJ., were of the opinion that even in the
absence of negligence, error as to the nature of the contract was not a real
defence. They do not appear to base themselves, however, on the civil law as
Perrault does, but on the terms of the Bills of Exchange Act, in particular
section 56, which says that “the title of a person who negotiates a bill is
defective within the meaning of this Act when he obtained the bill . . . by
fraud.. .”. There is no mention of “error” in this section, as Bernier J. at one
point seems to assume.44 Moreover, there is a distinction between non est
factum, which is essentially a question of error, and the case where a party has
been induced by fraud to sign or deliver a negotiable instrument knowing
it to be such. As to whether the Bills of Exchange Act did away with the rule
in Foster v. Mackinnon, it is generally agreed that the better opinion is such
common law authority as Lewis v. Clay45 holding that it did not.
The conclusion that common law decisions should apply to non est factum
in Quebec promotes uniformity which is obviously desirable in the field of
bills and notes. On the other hand one may logically ask whether the theory
that the classification and determination of defences is a matter of the law
of bills and notes in a strict sense should go so far as to apply common law
criteria to the fact situation itself or merely to the fact situation as legally
characterized by the proper provincial law of contract. The distinction in the
non est factum case is that if we adopted Perrault’s view of the Quebec civil
law of error as to the nature of the contract as the starting point, we would
still be obliged to turn to the provisions of the Act. and in the silence of the
act to the English common law, for the criteria by which to classify the legal
result under provincial law as a defence within the law of bills of exchange.
Assuming that, with reference to non est factum, the basis in common law
of the distinction between a real defence and a defect of title is the difference
between a void and voidable contract, we conclude that a relative nullity is
merely a defect of title.
The defence of compensation affords a good illustration of this distinction
between characterization of the fact situation by provincial contract law and
classification of the legal result as a bills of exchange defence. The statutory
right of set-off in common law jurisdictions and the civil law legal compensa-
tion,4 6 (that which takes place by sole operation of law) are different things,
and it would clearly be wrong to apply the common law classification of set-
off as a bills of exchange defence to legal compensation merely because a
fact situation which at civil law would result in legal compensation would at
Ibid., p. 21.
45(1897), 67 L.J.Q.B. 224.
46Art. 1188 C.C.
No. 1]
BOOK REVIEWS
common law give a right of set-off. Whereas the right of set-off is not a defect
of title but a mere personal defence available to prior parties among them-
selves, to use the language of the act,4 7 legal compensation taking place by mere
operation of law at or after maturity between, for example, the maker and
payee of a note, should be a good defence pro tanto against a remote holder
for value to whom the payee negotiates the note after it is overdue. Turning
to the act, we may regard such compensation as a form of discharge, equivalent
to partial or full payment Turning to the common law, we find that an
agreement to set-off, which may be compared in its effect to legal compensa-
tion, has been treated by the courts as a defect of title.4 8
The application of the Bills of Exchange Act in Quebec, as discussed by
Falconbridge in his sixth edition as well as in his review of Perrault’s book,
raises many other questions of considerable interest but limitations of space
forbid serious discussion of them. For the first time (perhaps encouraged by
a similar opinion expressed by Nicholls in his case comment in 1947) Fal-
conbridge comes out squarely in the sixth edition in favour of the view that
consideration falls within the law of bills and notes in a strict sense.49 He
still concedes, however, that sections 53 of the act “does not by its terms
exclude the application of the rules of law of a particular province or country
as to what amounts to consideration.5” For those who do not agree that con-
sideration is a matter of the law of bills and notes in the strict sense, this
appears to be a better rationale of the Quebec cases which recognize a natural
or moral obligation as sufficient consideration for a bill or note than Perrault’s
opinion that the term “simple contract” is to be understood in Quebec as simply
“a contract”.51
There are some changes of interest in Falconbridge’s discussion of the
holder in due course. In the fifth edition he admitted as a possible inter-
pretation of the Act that a holder could be a holder in due course without
having given value himself so long as he was a holder for value within the
meaning of section 54.52 This statement is omitted from the sixth edition.
The question is important, particularly in view of the opinion of such com-
mentators as Jacobs 53 and Cowen 54 that to be a holder in due course a
holder must himself have given value. The context and spirit of the act tend
to support this view, particularly section 57, which allows a holder “whether
47Oulds v. Harrison (1854), 10 Ex. 572.
4aChing v. Jeffrey (1885-86), 12 O.A.R. 432.
49Sixth edition, p. 600.
5OIbid. p. 599. Italics mine.
510p. cit. v. 3, no. 254.
52Fifth edition, p. 668.
,3Jacobs, The Law of Bills and Exchange, 3rd ed. p. 188. See also Britton, Handbook
on the Law of Bills and Notes, 1943, p. 390.
54Cowen, The Law of Negotiable Instruments in South Africa, 3rd. ed., 1955, pp. 251-
252. Cowen refers to Falconbridge’s statement in the fifth edition.
McGILL LAW JOURNAL
[Vol. 3
for value or not” to have all the rights of the holder in due course through
whom he derives his title.
The author has revised and expanded his discussion of the burden of proof
placed on the holder by the terms of section 58(2). He discusses the com-
mentary on this section which is found in some recent cases, chiefly the
decision of the Quebec court of appeal in Vincent v. Bellhumeur.” His
criticism of the concluding words in section 58(2) –
“unless and until he
proves that, subsequent to the alleged fraud or illegality, value has in good
faith been given for the bill by some other holder in due course”56 –
is re-
peated with some qualification, as is his recommendation that the last seven
words be struck from the act. With great respect, this reviewer has never
been able to appreciate the author’s objection to these words. It would appear
that upon proof of the defect of title the burden is on the holder to prove that
he is a holder in due course and this burden remains on him until he proves
one of two things: either (1) that he is a holder in due course, or (2) that
he derives his title through a holder in due course so that he takes the benefit
of section 57. ‘This view of the section seems to be the one taken by Gagni
and Martineau JJ. in Vincent v. Bellhutreur, but in his discussion of the
case Falconbridge does not make this as clear as he might. It is difficult to
concede his claim that the words used by him in commenting on this section in
the fifth edition do not lend themselves to the interpretation placed on them
by. the trial judge.
The author has taken advantage of the opportunity afforded by a new
edition to improve the format, typography and arrangement of his book and
to make it generally a more convenient work to consult. The sections of the
Bank Act and the Bills of Exchange Act, which in the former edition were
typographically indistinguishable from the commentary, have been set apart
clearly in bold print, and there is a reference at the top of each page to the
section of the act which is being discussed. Long quotations have also been
put into distinctive print and the titles of cases italicized. There is a more
complete or detailed table of contents than the one in the fifth edition, and
there is an even greater use made of the very helpful table of contents at the
beginning of long or important chapters. In some cases the chapter divisions
and sub-headings have been altered, and the changes seem generally to be
beneficial ones. The discussion of the complex subject of security under
sections 86 and 88 of the Bank Act, which was formerly contained in one
long chapter of about seventy-five pages, has been broken up and a separate
chapter devoted to sections 86, 87, 88, 89 and 90. They are preceded by a
new chapter on “Bills of Lading and Sale of Goods.” Similarly, the long
chapter in the fifth edition on incapacity, forgery and want of authority has
been divided up, with some considerable revisions and expansion, into four
55(1955) Q.B. 443.
6Italcs mine.
No. 1]
BOOK REVIEWS
127
chapters. In particular the author has revised and expanded his discussion
of the capacity of the insane person and the right of a bank to recover money
paid out on a forged endorsement or material alteration. In connection with
the latter subject the author’s bibliography on unjustified enrichment at page
558 would, in view of its inclusion of a comparative law article on the subject,
have been made more complete by reference to the Honourable Mr. Justice
Challies’ book on the Quebec law. 57
GR.D E. LEDAiN*
57Challies, The Doctrine of Unjustified Enrichment in the Law of the Province of
Quebec, 2nd ed., 1952.
*Associate Professor of Law, McGill University.
McGILL LAW JOURNAL
[Vol. 3
MALPRACTICE LIABILITY OF DOCTORS AND HOSPITALS
(Common Law and Quebec Law)
By W. C. J. MEREDITH, Q.C., THE CARSWELL Co. LTD. 1956.
Pp. xv 300. $7.75.
Previous to the publication of this very useful work, the only book published
in Canada was a brief treatment in 1947 of the subject-by K. G. Gray1 which
was recently expanded into a larger volume.2
It is a curious coincidence that in 1956 there should appear two works on
Medical Responsibility written by distinguished members of the legal pro-
fession in the Province of Quebec. The first is –
“La Responsabilit6 Civile
du M~decin et de l’itablissement Hospitalier” by Paul A. Crepeau.3 The
second work is the book under review.
There are in the Province of Quebec as elsewhere an appreciable number
of cases involving the responsibility of doctors and hospitals, and it is a
reasonable assumption that there have been and will be many more potential
cases which have required a study by members of the legal and medical pro-
fessions of this important branch of the law.
The author, who is Dean of the Faculty of Law of McGill University and
the author of two very useful and widely used works 4 and who has been counsel
for one of the large Montreal hospitals for many years, is particularly well
qualified to write a book on Medical Responsibility. In his preface he says:-
“My object has been to produce a short book that will be useful to doctors
and lawyers both in Quebec and in the other Canadian provinces”. In this he
has admirably succeeded. The book deals successively with relations between
doctor and patient; professional secrecy; the doctor as a witness; malpractice
in diagnosis and treatment; liability of hospitals; civil courts and procedure;
assessment of damages: and criminal malpractice. The chapters on “Mal-
practice in Diagnosis and Treatment” and “Liability of Hospitals” are part-
icularly useful and set forth succinctly and in non-technical language, the law
of the common law provinces and the law of Quebec.
The author points out that the civil law does not differ materially from the
law of the common law provinces in the matter of Malpractice Liability.
‘Law and the Practice of Medicine, K. G. Gray, Toronto, 1947.
2Second edition 1955.
SWilson et Lafleur Lt~e, Montreal. 1956.
4Insanity as a Criminal Defence –
1940.
1931. Cihvl Law on Automobile Accidents (Quebec)
–
No. 1]
BOOK REVIEWS
The necessary conditions for a successful malpractice suit (whether in
Quebec or the other provinces of Canada) are stated as follows at p. 61 :-
“FIRST: There must have been a legal duty on the part of the doctor towards his
patient to exercise care. This duty arises as a matter of law when the doctor takes on the
case, and as already stated, is independent of contract.
SECOND: There must have been negligence on the part of the doctor, i.e. a breach of
his legal duty to conform to the standards of proficiency and care required by law. These
standards are discussed in the present chapter.
THIRD: The patient must have suffered loss or injury. Negligence not resulting
in loss or injury provides no ground for a civil action in damages.
FOURTH: The patient’s loss or injury must have resulted directly from the doctor’s
negligence. In other words, the negligence must have been the determining (as distinct
from the indirect or remote) cause of the damage.”
The treatment by the author of the question of “Standards of Proficiency
and Care” is most interesting. He illustrates with actual cases which must
pretty well exhaust the possibilities of medical and surgical carelessness.
The chapter on “Liability of Hospitals” is subdivided in order to different-
iate between doctors, internes and nurses in a hospital’s employ; doctors not
in a hospital’s employ; interns and nurses under direction by third parties;
and special nurses. The chapter is completed by useful information on
“Consents to Operations” and “Autopsies”.
The writer’s conclusions are supported by detailed footnotes which contain
references to authors and jurisprudence in England, France, the United
States, and all the provinces in Canada, and appear to comprise all the
relevant jurisprudence up to the end of 1955. For ease in reading, the foot-
notes do not appear at the bottom of each page, but are found at the end of
each chapter.
The only possible criticism that the reviewer can offer (and it is a very
minor one) is that it would have been useful to have a biography of works
in French and English on Medical Responsibility. Perhaps this can be added
to the second edition.
There is a detailed table of cases and a very complete index. The typography,
binding, proof-reading and arrangement of the book are excellent. It is written
in an admirably clear style. The work should prove very useful to members
of the medical profession. For the lawyer it provides an accurate and detailed
treatment of the legal problems involving doctors and hospitals.
GEORGE S. CHALLIES.*
*The Hon. G. S. Challies, Superior Court, Montreal.
McGILL LAW JOURNAL
[Vol. 3
LEVONS DE DROIT CIVIL
PAR HENRI, LiON ET JEAN MAZEAUD, 1955 PARIs, AITION MONCHRESTIEN
Pour appricier la valeur rielle de cet ouvrage, le premier d’une nouvelle
s~rie, il faut avant tout digager le sens de la rfforme des itudes de Droit,
riforme entr&e en vigueur en France, en Novembre 1955.
Les 6tudes de Droit ont it6 porties de trois A quatre ans. Au cours des
deux premieres annes, se dispense un enseignement thtarique commun A tous
les itudiants; apris ces deux annies, les itudiants peuvent opter entre le
droit civil, le droit public, comprenant les sciences politiques, et le droit des
sciences 6conomiques. C’est en fonction de ces cours communs que le droit
‘histoire des institutions, et
romain est d6sormais itudii dans le cadre de
que le droit constitutionnel se complete par l’6tude des institutions financi~res
et internationales. Enfin, remarquable et n~cessaire r~forme, les institutions
judiciaires qui n’taient 6tudi~es qu’en troisiime annie, sont maintenant
enseignies dis la premiire ann6e. On voit par la le souci de faire connaitre A
tout 6tudiant en droit tout ce qui fait ]a vie du droit.
Mais, l’essentiel de la r6forme consiste i avoir institu6 A titre obligatoire des
travaux pratiques (une heure et demie, deux fois par semaine). Tout 6tu-
diant qui ne justifie pas d’une excuse valable A son absence a ces travaux
pratiques, est radi6. Ces travaux pratiques sois la direction du professeur du
cours sont conduits en fait par des magistrats du corps judiciaire, des magis-
trats du Conseil d’Etat et de la Cour des Comptes et par des docteurs en
droit ayant subi des examens p~dagogiques spciaux.
Ainsi donc par l’institution de cette sorte de tronc commun des deux pre-
miires annes consacr~es A l’tude des grandes disciplines du droit, ]a reforme
sene le germe d’une culture g~nrale indispensable avant toute splcialisation.
Grace A l’institution des travaux pratiques obligatoires, on a voulu d6-
congestionner la partie par trop thorique de l’enseignement pour mettre
davantage l’Etudiant au fait de Ia vie r~elle du droit. Les travaux pratiques
ne doivent pas supplier au cours, comme le font parfois les s~minaires prati-
qu~s dans les pays de common law, mais ils en sont le compl6ment n6cessaire.
Le cours ouvre l’intelligence aux principes sup~rieurs de droit dans les diff6-
rentes disciplines, tandis que les travaux pratiques donnent le sens de la
realit6 vivante de ces m&nes principes au sein de la vie sociale.
L’ouvrage de MMrs. Mazeaud r~pond en tous points tant A l’esprit qu’A la
lettre mne de la r~forme.
No. 1]
BOOK REVIEWS
Les “Leqons de droit dvil” (premiire ann6e) sont divisies en quatre-vingts
le(ons, ce qui reprisente trois heures de cours par semaine durant 1’annie
universitaire.
Chaque leon est composie de maniire i former un “tout”.
Une leqon doit exposer un sujet. Or celui qui fait de 1’enseignement sa
profession sait ce qu’une lemon de ce genre repr~sente de puissance de synthise
de clart6, non pas pour puiser le sujet (les auteurs ne le pr~tendent pas, et
personne avec eux ne pourrait le pr&endre), mais pour mettre au moins
1’6tudiant en contact avec les problmes que cbaque sujet doit susciter-i son
esprit.
I1 faut ajouter A cela que MMrs. Mazeaud ont su agrimenter, (le mot n’est
leqon de
pas trop fort, car les textes choisis sont significatifs) chaque
“lectures” c’est-i-dire d’extraits d’articles de droit de livres ou de d6cisions
jurisprudentielles les plus importants ou les plus originaux. C’est en cela que
cet excellent ouvrage r~pond vraiment A. 1’esprit de ]a r~forme. I1 est en effet
permis d’esp6rer que l’&udiant moyen ou m~me l’6tudiant paresseux se culti-
vera pour ainsi dire malgr6 lui. I1 est aussi permis d’esprer que cette m6thode
6veillera chez les meilleurs &udiants le d~sir d’aller plus loin dans la lecture
des textes et d&isions rapport~s.
Ce n’est pas une des moindres qualit~s de cet ouvrage que d’avoir su rendre
attrayantes des theories qui traditionnellement chez les 6tudiants passent
pour ennuyeuses ou r~barbatives, telles celles des nullit~s, de la preuve ou de
]a distinction entre actes et faits juridiques.
Enfin, ii faut rendre hommage aux auteurs d’avoir su se mettre au niveau
de l’tudiant (ce qui ne diminue en aucune faqon la haute tenue intellectuelle
de l’ouvrage) en faisant d~buter chaque leqon par un sommaire. Les auteurs
n’ont pas oubliE que 1’6tudiant lors de ]a priode des examens doit travailler
sous pression. Le sommaire vient A point pour les aider A “se rafraichir la
m~moire”. Mais il ne faudrait pas croire que ce sommaire vise uniquement A
cela. “I ne saurait suffire A une preparation srieuse”. Ce sommaire est a la
fois une entree en matitre qui conduit 1’6tudiant A saisir 1’ensemble des
probl~mes que la leqon et la lecture doivent n~cessairement completer, et un
aide m~moire utile en vue des examens. Lorsqu’on se donne la peine d’analyser
ce sommaire on peut constater que les auteurs en ont fait aussi un “tout”
c’est-a-dire quelque chose qui d~passe le seul stade de la m~moire. L-e som-
maire est conqu A la fois comme une introduction A la legon et comme une
conclusion. II doit donc par une sorte de travail d’osmose faire appel A autre
‘Etudiant; il doit r~veiller en lui ses connais-
chose qu’1 la seule m~moire de
sances profondes.
Pour porter A son maximum l’6veil de l’intelligence de 1’6tudiant MMrs.
Mazeaud n’ont pas craint de noter parfois les projets de r6forme l6gislative A
I’ordre du jour. II faut leur savoir gr6 de n’avoir pas n6glig6 cet aspect de la
132
McGILL LAW JOURNAL
[Vol. 3
culture g~narale. Les auteurs diveloppent ainsi chez l’6tudiant le sens de
l’esprit critique averti sans lequel aucun progris reel ne peut &re fait. L’&u-
diant prend ainsi conscience du r6le que plus tard in pourra peut-&re jouer
dans la soci&& II mesure par IA que le droit est et doit &re en constante
Evolution.
Louis BAUDOuIN*
*Professeur a la Facult6 de Droit de l’Universiti McGill, Montreal.