Lewis v. Wilson

Lewis v. Wilson

Because the solicitor acted as agent for the combined scheme and his detailed knowledge is imputable to Wilson, the whole arrangement must be treated as one transaction contrived to evade the Assignments and Preferences Act; the advance was not a bona fide payment within the statutory exception and the transfer must be set aside and the proceeds distributed pro rata among creditors.

Citation
(1897) 28 SCR 207
Parties
Appellants (creditors): Burns & Lewis; Debtor/defendant: Eliza Barnet Cheyne; Respondent/defendant (lender): James D. Wilson; Respondent/defendant (preferred Creditor): W.E. Sanford Manufacturing Company, Limited
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
9 December 1897
Procedural Posture
Appeal / Final Judgment of the Supreme Court of Canada on Appeal From the Court of Appeal for Ontario
Outcome
Appeal allowed; judgment for appellants; mortgage/transfer set aside and proceeds to be distributed pro rata among creditors; costs to appellants.
Legal Topics
Fraudulent Preference, Chattel Mortgage, Assignments and Preferences Act Interpretation, Bona Fide Advance, Imputation of Solicitor Knowledge
Source Language
English
Insolvency Contract Equity Agency Fraudulent Preference Chattel Mortgage Assignments and Preferences Act Interpretation Bona Fide Advance +1 more

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Parties

Burns & Lewis

Appellants (creditors)

Eliza Barnet Cheyne

Debtor/defendant

James D. Wilson

Respondent/defendant (lender)

W.E. Sanford Manufacturing Company, Limited

Respondent/defendant (preferred Creditor)

Procedural Posture

Appeal / Final Judgment of the Supreme Court of Canada on Appeal From the Court of Appeal for Ontario

Legal Issues

  1. 1 Whether a chattel mortgage given to a third party to enable payment of a single creditor constitutes a bona fide assignment under the Act Respecting Assignments and Preferences
  2. 2 Whether the knowledge of the solicitor is imputable to the lender/principal for purposes of determining bona fides
  3. 3 Whether the transaction was a colourable device to give an unjust preference and should be set aside

Ratio Decidendi

Because the solicitor acted as agent for the combined scheme and his detailed knowledge is imputable to Wilson, the whole arrangement must be treated as one transaction contrived to evade the Assignments and Preferences Act; the advance was not a bona fide payment within the statutory exception and the transfer must be set aside and the proceeds distributed pro rata among creditors.

Court Disposition

Appeal allowed; judgment for appellants; mortgage/transfer set aside and proceeds to be distributed pro rata among creditors; costs to appellants.

Orders

  • Appeal allowed with costs
  • Judgment for appellants and in the court below as claimed