OSLER

J.A.

section 2, of the Timber License Act, R. S. O. (1887) ch. Judgment. 28, require us to hold that each yearly license stands by itself, so that what in popular language is called the renewal cannot be regarded as the extension of the license of a previous year, and so relate back to the earliest license. The defendants, therefore, in my opinion acquired no right over the plaintiff's lot at the date of their license, as more than three years had then elapsed from the date of the sale of the lot.

But even if the license was effectual for any purpose at the date of issue, there is another difficulty quite as formidable in the defendants' way. The license was subject to the conditions, &c., established by the Lieutenant-Governor in Council, and among others to those of the Order in Council of the 27th of May, 1869, of which the defendants must be taken to have had actual notice, as it is one of those referred to in the license.

One of the conditions and regulations of that order is, that all trees remaining on the land at the time the patent issues, shall pass to the patentee. The defendants, therefore, to adopt the language of Gwynne, J., in Anderson v. Muskoka Mill and Lumber Co., 27 C. P. at p. 182, a decision. under the Free Grants Act, took the license with actual notice in fact and in law that the land in question was located or sold on the 13th of March, 1884, and that upon the issuing of the patent to the locatee, he would eo instanti become seized of all the trees growing upon the lot.

For these reasons I am of opinion that the judgment at the trial was right, and that the appeal should be dismissed.

MACLENNAN, J. A.:

I am of opinion that this appeal should be dismissed.

I think it is clear that the plaintiff's land was not land within the limits of the Free Grant territory within the meaning of section 10 of R. S. O. (1887) ch. 25, the Free Grants and Homesteads Act.

For the purpose of construction this section must be read

J.A.

Judgment. in connection with sections 3 and 4. Section 3 authorizes MACLENNAN the Lieutenant-Governor in Council to appropriate any public lands, &c., as free grants to actual settlers under regulations to be made by order in council, and section 4 declares that such grants or appropriations shall be confined to lauds situate within a certain defined tract or territory. It appears that from time to time after the year 1868, when the Free Grants Act was first enacted, the LieutenantGovernor in Council set apart different townships in this tract, as free grant townships, in which alone free grants and homesteads were given to settlers under the regulations. But the township of Burleigh, in which the lot in question is situated, never was so appropriated, and never was a free grant township. Section 10 of the Act as originally worded in 1868 did not contain the words " free grant territory," and these words were used for the first time in 1880, when the section was amended by 43 Vic. ch. 4, sec. 2. The words themselves do not necessarily import the whole of the tract or area mentioned and described in section 4, and having regard to the manner in which the Act had been administered by the Lieutenant-Governor in Council, before the Act of 1880, I think the words must be held to mean only so much of the tract described in section 4, as had been or might in time be appropriated or set apart by Government for the purposes of the Act.

If I am right in the conclusion I have come to on the first point, the Free Grants Act, and the regulations made under it, are inapplicable to the present case, and the plaintiff's rights depend altogether upon the Public Lands Act, R. S. O. (1887) ch. 24, and the Timber License Act, R. S. O. (1887) ch. 28, and the regulations made under them respectively.

By section 15 of the Public Lands Act the rights of purchasers are defined, and they are put as high as those of a patentee, against all persons but the Crown, except that it is declared, they shall have no force against a license to cut timber existing at the time of granting there

of.

J.A.

The Timber License Act limits the duration of licenses Judgment. to twelve months from their date and vests in the licensee MACLENNAN in the most absolute manner all trees cut during the term of the license. The licenses are to be granted subject to such conditions, regulations, and restrictions, as may be made from time to time by the Governor in Council.

Most of these regulations now in force under the Timber License Act, so far as concerns the present action, were made on the 16th of April, 1869, but there is another which is also very important, made in the following month, namely the 27th of May, 1869.

The regulations of the 16th of April provide, among other things, for a renewal of licenses by the holders upon compliance with all existing regulations, and it was argued before us that the defendants, who claim to have had licenses over the land in question for seventeen years before action, regularly renewed from time to time, were entitled by virtue of this right of renewal to be regarded as persons having an uninterrupted license during the whole of that period.

It is no doubt true that the right of renewal is a most valuable one, but it is not given expressly by the statute, and arises altogether from the regulations of the Governor in Council; therefore while the defendants had, and availed themselves of, the right of renewal, from year to year, that right was always subject to the other order of the 27th of May, 1869, referred to in the judgment.

By the plain terms of this last order a licensee may take the timber, under any license, either existing at the time of a sale, or issued within three years from the date of sale, but he is to do it under the authority of such license "while lawfully in force."

It is very plain, I think, that what is here referred to is not a renewal, or right of renewal, but it is the actual annual license itself. It was pressed upon us that in the early part of the order it is said without qualification that as to all future sales the timber shall be considered as reserved from such sale, and that therefore the reservation was absolute. I think, however, that means no more than

Judgment. that the timber is reserved to the extent of the words MACLENNAN mentioned, namely, until the expiration of the existing J. A. license, if any, and of any license that may be granted within three years from the sale.

The order goes on to say that all trees remaining on the land at the time the patent issues shall pass to the patentee, and it may be that in view of the last clause of section 15 of the Public Lands Act, this part of the order must be read as meaning that the timber shall pass to the patentee, not immediately, but at the expiration of the existing license, or of any one granted within the three years.

In either view the defendants fail; for all the licenses which they received within three years after the sale to the plaintiff, had expired before the patent issued, and it was after the issue of the patent that the cutting complained of was done.

It is remarkable that in Contois v. Bonfield, 25 C. P. 39, and S. C. in this Court, 27 C. P. 84, the Order in Council of the 27th of May, 1869, was not referred to, or relied upon on behalf of the plaintiff, although it was then in force, and if valid, would have entitled the plaintiff to recover. In that case the cutting was done by the licensee, under a license of the year 1873-4, which was a renewed license issued within the first year after the sale and patent to the defendants, and it was held in this Court, affirming a judgment of the Court of Common Pleas on a demurrer, that the renewed license was void as against the patentees, notwithstanding an agreement in writing between the latter and the Commissioner of Crown Lands that the patent should be subject to a renewal of the license.

I am therefore of opinion that the judgment appealed from is right, and should be affirmed, and that the defendants not having taken the timber before patent, or before the expiration of the last of their licenses issued within three years from the date of the sale to the plaintiff, thereby lost it, and that it passed to the plaintiff.

HAGARTY, C.J.O., and BURTON, J.A., concurred.

Appeal dismissed with costs.

IN RE HERR PIANO COMPANY.

Trusts and trustees-Breach of trust-Following trust moneys.

Three persons occupying a fiduciary position towards a bank, became partners in a firm, ageing to pay for their interests a certain sum of money in liquidation of creditors claims. They did pay this sum but out of moneys of the bank wrongfully appropriated by them. Subsequently the firm was formed into a jomt-stock company, and the assets of the partnership were assigned by the partners to the company. The company soon afterwards failed, and a winding-up order was made, the original assets, upon which the bank claimed a lien, to a considerable extent coming into the possession of the liquidator.

Hell, that the original partners were not affected with constructive notice of the means by which the incoming partners obtained the moneys brought in, and that no actual notice to them or to the company being shown the bank had no lien.

Judgment of the County Court of York reversed.

THIS was an appeal from the judgment of MCDOUGALL, Statement. Co. J., in an interpleader issue tried before him to determine the question whether the liquidators of the Central Bank of Canada were entitled to rank upon the estate of the Herr Piano Company, (Limited.)

The Herr Piano Company was being wound up under the provisions of the Ontario Winding-up Act, and the liquidators of the Central Bank of Canada filed their claim for $25,334.01, the amount of two promissory notes, one for $2,001.54, and the other for $551.28, made by the Herr Piano Company, and endorsed by D. Mitchell McDonald, and discounted by him with the Central Bank of Canada before its failure, and of a certain overdraft. The claim as far as the two notes were concerned was admitted, but as to the overdraft was disputed.

The overdraft in question was an overdraft of David Blain, president of the Central Bank, and vice-president of the Herr Piano Company, and D. Mitchell McDonald, a director of the Central Bank, and managing director of the Herr Piano Company.

Prior to the 9th of March, 1887, Jacob Herr and Messrs. Donaldson and Milne, were carrying on business in partnership for the manufacture of pianos, organs, and other 43-VOL. XVII. A.R.