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Supreme Court of Canada

Banks and banking—Transactions between bank and customer involving loans and share purchases—Transfers by bank from savings account to loan account—No impropriety in bank’s action and no basis for customer’s claim of having been overcharged.

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In an action arising out of certain transactions between the plaintiff and the defendant bank, the plaintiff claimed a declaration to the effect that he had been overcharged an amount of $11,000 on a loan by the defendant and a mandamus requiring the defendant to delete what the plaintiff termed a disputed debit charge from his bank account and restore the $9,000 balance which he claimed that he had in his savings account in the bank together with the $1,000 balance in his favour in his loan account. The action was dismissed by the trial judge and an appeal from his judgment was dismissed by the Court of Appeal. The plaintiff then appealed to this Court.

Held: The appeal should be dismissed.

A detailed tracing of the transactions and the entries in reference thereto demonstrated that the trial judge was correct in holding that there was nothing improper in transfers made by the defendant from the plaintiff’s savings account to his loan account, that the bank had not been overpaid, that the plaintiff had been fairly treated in his dealings with the defendant and that there was no basis in fact for the plaintiff’s claim.

There was not the slightest indication of any impropriety in the bank’s action and certainly no evidence that the bank had been paid twice. All the transactions seemed to have been in the ordinary course of the bank’s business and carried out in exactly the same fashion as such transactions are usually carried out.

APPEAL from a judgment of the Court of Appeal for Ontario, dismissing an appeal from a judgment of Donnelly J. Appeal dismissed.

Frank P. O’Hearn, plaintiff, appellant, in person.

G.G. Sedgwick, for the defendant, respondent.

The judgment of the Court was delivered by

SPENCE J.—This is an appeal from the judgment of the Court of Appeal for Ontario pronounced on February 6, 1969. By that judgment, the said Court of Appeal for Ontario dismissed an appeal from the judgment of Donnelly J. at trial pronounced on November 1, 1968. Donnelly J. had dismissed the appellant’s action.

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The appellant, by his statement of claim, had claimed a declaration to the effect that he had been overcharged an amount of $11,000 on his loan by the respondent bank and a mandamus requiring the respondent bank to delete what the appellant termed a disputed debit charge from his bank account and restore the $9,000 balance which he claimed that he had in a savings account in the bank together with the $1,000 balance in his favour in his loan account.

On October 27, 1958, the appellant borrowed $5,600 from the Bank of Nova Scotia at its Kingston Road and St. Clair Avenue Branch in the City of Toronto. In accordance with the usual practice, the proceeds of this loan, $5,600, were deposited in the appellant’s savings account No. 1875. The promissory note for the demand loan was produced at trial as Ex. No. 19 and the deposit slip showing the deposit of the proceeds was produced at trial as Ex. No. 7. The appellant himself produced at trial two passbooks of this savings account and those passbooks were marked as Ex. No. 2. The credit of the $5,600 is shown there under date of November 13, 1958. Contemporaneously, the appellant purchased 200 shares of New York Central Railroad for $5,484.95 and the debit of the said purchase price appears in the appellant’s savings account. The debit item is shown in the passbook (Ex. No. 2) under date of December 9, 1958, and the confirmation slip for the purchase and debit to the savings account was produced at trial as Ex. No. 9.

On November 25, 1958, the appellant borrowed $5,400 from the same bank and the proceeds again were deposited to the credit of the appellant in his savings account No. 1875. Again, the promissory note was produced at trial (Ex. No. 20). The credit slip showing the deposit in the savings account was produced at trial as Ex. No. 8 and the amount of the loan appears as a credit in the appellant’s passbook (Ex. No. 2) under date of December 9, 1958. On that same day, December 9, 1958, the respondent bank took delivery of 300 shares of Pennsylvania Railroad purchased on the appellant’s order and debited the savings account, No. 1875, with the purchase price thereof, $5,342.89. The confirmation slip was produced at trial as Ex. 10 and the

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debit for the purchase price is shown in the appellant’s passbook (Ex. No. 2) under this date of December 9, 1958.

It would appear that the appellant makes complaint as to these loans being deposited in his savings account and the cost of the shares purchased being debited to his savings account and seems to believe that the whole of the transaction should have been confined to a loan account and that by proceeding in this fashion the respondent bank has, by some inexplicable means, twice received repayment of the loans which it made to the appellant. The procedure of crediting a loan made by a bank to an account which either the borrower already has in the bank or which is set up for the purpose of receiving the credit resulting from the loan is a perfectly ordinary transaction in the usual course of business and so long as the debits and credits are properly made and properly entered it cannot possibly cause a borrower to repay a loan twice. The four documents which went to the appellant, i.e., the two deposit slips, Exs. Nos. 7 and 8, and the two confirmation slips, Exs. Nos. 9 and 10, all specify that the credit for the loans and the debit for the two stock purchases were transactions entered in the appellant’s savings account No. 1875.

On October 29, 1959, the respondent bank on the appellant’s instructions sold 200 shares of Pennsylvania Railroad for $3,012.42 and credited the appellant’s account, No. 1875, with that sum. The confirmation slip which again specifically stated that the credit had been assigned to his savings account was produced at trial as Ex. No. 11 and the credit again appears in the passbook (Ex. No. 2) under this date. At the same time, the bank applied $2,000 from the savings account in reduction of the appellant’s demand loan which up until this time had stood at $11,000 principal due to the bank. The respondent bank notified the appellant that it had taken this course in the confirmation slip (Ex. No. 11) and the debit of the sum of $2,000 is shown in the passbook (Ex. No. 2) on that date, October 29, 1959.

The loans had been on demand and had been made expressly for the purchase of shares which

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the appellant had not intended to hold for any length of time and which had been pledged as security for the loan together with an additional 400 shares of New York Central Railroad. The respondent bank had, since September 23, 1959, been pressing for repayment of the loans. On September 13, 1961, the appellant instructed the respondent bank in writing, produced at trial as Ex. No. 27, to deliver to his brokers 200 shares of New York Railroad against payment of $3,000 and further instructed:

As requested please deposit this money in my savings account and let me know when it comes in and I will go in and see you.

On September 20, 1961, the appellant again gave like instructions in writing to the respondent bank, produced at trial as Ex. No. 28, for the delivery of 400 shares of New York Central Railroad and 100 shares of Pennsylvania Railroad against payment of $4,000 and similarly instructed that such latter sum should be deposited in his savings account. The respondent bank carried out these instructions receiving the said sums and depositing them to the appellant’s credit in his savings account No. 1875. The credits for such deposits are shown in the passbook (Ex. No. 2) under the dates of September 21 and September 29, 1961, respectively, and the same items appear under the same dates in the bank’s ledger cards of the savings account produced at trial as Ex. No. 24. The respondent bank had intended combining the loan account, with its debit of $9,000 plus interest, and the savings account, with the credit of these receipts from the appellant’s broker, but refrained from doing so while the appellant and the general manager of the bank entered into some correspondence in reference to the appellant’s somewhat unorthodox theories of banking. That correspondence, in which the general manager quite failed to satisfy the appellant, ended on November 6, 1961, and on November 8, 1961, the amount of the loan from the respondent bank to the appellant stood at $9,022.19, being the total of the two demand notes of $5,600 and $5,400 less $2,000 transferred to the credit of the loan from the savings account on October 29, 1959, plus interest. The

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credit standing to the appellant in his savings account was on the same day $6,149.18 as shown on the bank’s ledger card (Ex. No. 24) and as acknowledged by the appellant in his hand-writing in the passbook (Ex. No. 2).

The respondent bank then transferred to the said savings account the sum of $3,000, being part of the balance standing to the appellant’s credit in the current account. This current account was in the name of O’Hearn & Company but the appellant had operated the current account as his personal account for years. The transfer is shown by a $3,000 credit appearing on Ex. No. 24, the bank’s ledger card, and Ex. No. 2, the appellant’s passbook, and by a $3,000 debit in the ledger of the current account (Ex. No. 25). This put the savings account into credit in the sum of $9,149.18 and left the appellant’s current account under the name of O’Hearn & Company in credit in the amount of $4,008. The respondent bank then combined the demand loan account, having a debit balance of $9,022.19, with the savings account No. 1875, having a credit balance of $9,149.18, thus repaying to itself the amount outstanding on its loans and leaving a credit balance in the appellant’s savings account of $126.99. The entries are shown in the bank’s ledger card of the savings account (Ex. No. 24), the appellant’s passbook (Ex. No. 2), and in a copy of the statement by the respondent bank of the appellant’s loan account which the appellant himself produced at trial in his evidence‑in‑chief and which was marked Ex. No. 14. This copy bears a typed endorsement “(This is the statement of my loan account as submitted to me by the bank)”. The credit standing to the appellant’s favour in the current account under the name of O’Hearn & Company is shown in the ledger statement of that account (Ex. No. 25).

I have traced these transactions and the entries in reference thereto in such detail in order to demonstrate that the learned trial judge was quite correct in his statement made in his reasons for judgment:

There was nothing improper in the transfers which were made either on the 29th October, 1959 or the

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8th November, 1961. The evidence satisfies me that the Bank has not been overpaid, that Mr. O’Hearn was fairly treated in his dealings with the defendant and that there is no basis in fact for his claim. He failed to appreciate that the sum of $3,012.42, the two cheques from Leslie & Co. totalling $7,000.00 were deposited in his Savings Account, and with $3,000.00 transferred from the Current Account to the Savings Account, provided the funds to pay the Demand Loans.

The actions will be dismissed. Are you asking for costs?

MR. SEDGWICK: I am, my Lord.

His LORDSHIP: Mr. O’Hearn, I find that you have not overpaid the Bank. The Bank has not been overpaid. The funds which you allege were paid on the demand loan were credited to your Savings Account, and eventually used to pay the demand loans, so I must dismiss your action.

I should add that there is not the slightest indication of any impropriety in the bank’s action and certainly no evidence that the bank has been paid twice. All the transactions seem to have been in the ordinary course of the bank’s business and carried out in exactly the same fashion as such transactions are usually carried out.

I would dismiss the appeal with costs.

Appeal dismissed with costs.

Frank P. O’Hearn, plaintiff, appellant, in person.

Solicitors for the defendant, respondent: Tilley, Carson & Findlay, Toronto.

 

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