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LAWS3206-Ogilvie-Banking Law-Full Semester Notes copy.doc

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LAWS 3206

LAWS 3206AJan 18 Lecture NotesBanking Human activity one of its oldest forms Bank or banker is an financial intermediary receives funds form one party loans them out to another party and makes it profit son spread from what it pays from borrowing the money and what it receives from the borrower of the funds They are the middle man Earliest bankers from the west was in various Italian states in the 14th century Bourgeois Maditchee Banks start to grow in Europe england etc Bank of England 1694 first retail bank Banking from legal standpoint is hard to define In law we define banks by how Parliament legislature defines our banks federal jurisdiction Both federal and provincial incorporated institutionsTwo questions will be asked Who may define bankingWho has jurisdiciton over banking in our constitutional structureWhat is banking how was parliament defined itWho may define banking Answered by section 91 and 92 Section 91 preamble contains residual order main power is with Federal of peace order good government law If its not expressively said for the provinces the power lies with the Federal government It also contains concept that section 91 lists the exclusive powers of the Feds and that means implicitly if it not exclusively in 91 and not exclusively in 92 that it is a federal power but that also means it is an exclusive power List of powers 2 regulation of trade and commerce 14currency and coinage 15banking incorporating banks and paper money 16savings banks18 bills of exchange and promissory notes 19Interest 20legal tender Savings Banks Cooperative or a caisses populaires In England in the 19th century banking was different from ttodays system IN England Banks were largely only available to professional and upper classes class related activity Movement came up to have savings banks which were bank for poor people Upper classes could not have access to these banks We never had these in Canada when the Banking system picked up in the early 19th century were open to all social classes They incorporated it in 91 because they thought it would eventually adopt the England system 9115 most important as shown it is given to the Federal government Fathers of confederation gave jurisdiction over anything that had to do with a national economy section 92 11incorporation of companies with provincial objects Does this mean that banks only operating in a province would be allowed 13property and civil rights in the province Looking at this you can see possible conflicts between the two different jurisdictions How has parliament used it 9115 power in early days banks and other organizations would be offering more specified services With the constitution Federal only went after deposit banking So now there is a multitude financial institutions banks federal trust companies some fed or prov insurance companies some both credit unions coops etc This is why we have this complex multijurisdiction system in Canada How have the courts upholdreenforce this positionCases fall in too two categories constitutionality of provincially incorporated financial institutions and when courts have struct down provincial legislation that has attempted to regulate or interfere with the banks 1st category trust companies burgitaller in 1948 and Pioneer Trust in 1970 provincial incorporated Kess provincially incorporated savings offices provincial treasurer of Alberta and Long in 1973 2nd Category struct down provinciallyattempt to tax banks Expropriate banks funds fromaccounts confiscate bank accounts regulate bank security documentation bank of montreal and Hall Bankers are easier to spot then to define courts have acknowledged that defining banking getting a really good legal definition has been given up on by the Common law courts ReasonsOther institutions offer the same services Dejardins look act talk like banks Banking consists of a bundle of activities not just a single one Making it hard to defineActivities are constantly changing meaning a definition of a bank would be in constant change different people or organizations will have different definitions to get a legal definition lawyers will look to the law and that comes to the conclusion banking means whatever the parliament says it means Tendent and Union Bankpage 5section 9115 saw mill in Ontario CK and they became insolvant legal issue was dispute beetwen two creditors Nickle Tennant sueing to protect Nickle and other creditor was Union Bank Tebbabt v union bank Union Bank claim in CK was logs Peter Cristie cK make loan to company at the start of a logging season operating expenses In exchange for the loan 50000 and take security over the sod logs for that amount To secure the payment he took a warehouse receipt Peter C would take his W receipt and sell it to the federal bank and now he owns the security on the logs THen the federal bank sold it to the Union Bank basis of their claim This gives them right to the logs in their opinion 9115 issues comes out of the nature of the Warehouse receipt Mercantile Law Amendment act prov Bank Act Federal Union bank took its security under the BA not the provincial legislation Tennant argument was that Union Banks security was invalid because it was taken presuent to the federal act and not the provincial law Invalid securityno security and Tennant wins Federal bank took it from Bank act so we dont have to use security from the MLA Act to be valid Trial and Ontario Court of Appeal held for the BankTennant took it to Privy CouncilAgreed with bank pg910 Two points Asked who has authority and how has it been exercised Question 1 9115 gives Parliament givesparamount authority over banking Question 2 It also comprehends banking an expression that is wide enough to embrace every transaction within the legitimacy business of the bank Banking is what bankers do confirms paramount nature of fed 9115 power confirms power of feds to give content to the words banks and banking confirms feds should look to what Bankers do banking is what bankers doBergentaller trust company incorporated by the province of manitoba Incorporated to hold funds left in trusts for orphans people of unsound mind etc Berg got into financial difficulty and had to be wound up Dispute between two classes of creditors Once groups is the trust creditors came through the try relationship with Berg Other class was the depositor creditors He also took deposits from other people in the community and they were unable to repay those deposits one issue was the constitutionality of the right of a province to incorporate a financial institution under 9213 they do have this power to incorporate non bank financial institutions trial judgeTrial judge also found he was banking relating to deposits This action was beyond his power Ultra Vires there for the depositors had no valid legal claim and all the funds go to Trust creditors Appeal agreed with trial judge on first point but disagreed on 2nd Was he actually banking They turned to the Oxford dictionary defines bank as its essential duty payment of orders given by its customers Through this they found that they were not a bank Because all the checks went through a real bank So they werent ultra vires and therefore all the creditors ranked equally in the court view nonbanks can engage in activities like other banks intravires just not deposits or call themselves banks Pioneer Management pg 16core issue was that there was company that been insolvency for a long time Pioneer Insurance and Pioneer Trust Both were federerally incorporated financial institutions both had business across Province lines attempt to get unions in these companies should they be certified by Saskatchewan rules or national level The Sask Board trust claimed it had the power Pioneer Insurance Both federal and provincial could work Pioneer trust claimed prov labour relations board had not jurisdiction over it because it was federally incorporated as a trust company but also it was engaged int he business of banking and therefore it could only be regulated by the federal government Attorney general came in and said only banks incorporated under the act are banks But Pioneer engages in banking therefore is should be regulated as if it was a bank court saidSubstance its real nature pg19 is there something in its relationship with others that tells us what it really is Court says it doesnt really tell us anything so not relavent
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