Canadian Bank of Commerce v. Yorkshire & Canadian Trust Ltd.

Canadian Bank of Commerce v. Yorkshire & Canadian Trust Ltd.

The assignment was ineffective to give the bank rights to the moneys in question because the purchaser's covenant to pay is inseparable from the vendor's equitable obligation to convey, and the bank could not validly take the vendor's rights as security for future advances under the Bank Act; the bank therefore took subject to the vendor's prior equitable trust and had no right to the funds at issue.

Citation
[1939] SCR 85
Parties
Plaintiff/appellant: Canadian Bank of Commerce; Defendant/respondent: The Yorkshire & Canadian Trust Limited, as Administrator of the Estate of Nellie Grace Silk, Deceased
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
12 December 1938
Procedural Posture
Appeal to Supreme Court of Canada / On Appeal From the Court of Appeal for British Columbia; Final Judgment of Supreme Court of Canada
Outcome
Appeal dismissed with costs; bank had no right to the moneys in question.
Legal Topics
Assignment of Choses in Action, Vendor and Purchaser Obligations, Validity of Security for Future Advances, Priority of Equitable Claims, Statutory Limits on Bank Securities (bank Act)
Source Language
English
Banks and Banking Property Trusts and Equity Assignment of Choses in Action Vendor and Purchaser Obligations Validity of Security for Future Advances Priority of Equitable Claims Statutory Limits on Bank Securities (bank Act)

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Parties

Canadian Bank of Commerce

Plaintiff/appellant

The Yorkshire & Canadian Trust Limited, as Administrator of the Estate of Nellie Grace Silk, Deceased

Defendant/respondent

Procedural Posture

Appeal to Supreme Court of Canada / On Appeal From the Court of Appeal for British Columbia; Final Judgment of Supreme Court of Canada

Legal Issues

  1. 1 Whether an assignment by a vendor of moneys payable under an agreement for sale is a valid security for existing and future indebtedness to a bank
  2. 2 Whether the assignment was prohibited by Bank Act s.75(2)(c) unless falling within s.79(1)(b)
  3. 3 Whether the purchaser's obligation to pay is severable from the vendor's obligation to convey and therefore assignable independently

Ratio Decidendi

The assignment was ineffective to give the bank rights to the moneys in question because the purchaser's covenant to pay is inseparable from the vendor's equitable obligation to convey, and the bank could not validly take the vendor's rights as security for future advances under the Bank Act; the bank therefore took subject to the vendor's prior equitable trust and had no right to the funds at issue.

Court Disposition

Appeal dismissed with costs; bank had no right to the moneys in question.

Orders

  • Appeal dismissed with costs
  • Sums of $7,665 and $229.95 to be paid to the respondent (administrator of Nellie Grace Silk's estate)