Dionne v. Madawaska Company and Lacroix

Dionne v. Madawaska Company and Lacroix

Prescription was suspended because the debtor's pledged shares remained in the creditor's possession until 1941; the 1936 renewal did not effect novation because there was no clear intention to extinguish the original obligation and the creditor retained the original note; payments and security realizations could not be unilaterally imputed to prefer one creditor where two distinct creditors held the same security, so proceeds must be apportioned; applying these principles the respondents were liable for one-half of the determined balance, $11,158.18.

Citation
[1947] SCR 498
Parties
Appellant / Plaintiff: Arsène Dionne; Appellant / Plaintiff: Ludger Dionne; Respondent / Defendant: Madawaska Company; Respondent / Defendant: Edouard Lacroix
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
10 June 1947
Procedural Posture
Contract / Appeal to Supreme Court of Canada (on Appeal From Court of King's Bench, Province of Quebec)
Outcome
Appeal allowed; judgment of Court of King's Bench reversed in part and appellants' action maintained to the extent of $11,158.18
Legal Topics
Guarantee, Renewal/renewal Note, Novation, Imputation of Payments, Joint and Several Creditors, Prescription Interruption by Security, Onus of Proof, Appropriation of Realized Securities
Source Language
English
Contract Law Civil Prescription Security Interests Suretyship/guarantee Obligations/novation Guarantee Renewal/renewal Note Novation +5 more

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Parties

Arsène Dionne

Appellant / Plaintiff

Ludger Dionne

Appellant / Plaintiff

Madawaska Company

Respondent / Defendant

Edouard Lacroix

Respondent / Defendant

Procedural Posture

Contract / Appeal to Supreme Court of Canada (on Appeal From Court of King's Bench, Province of Quebec)

Legal Issues

  1. 1 Whether prescription was interrupted while creditor held debtor's security
  2. 2 Whether the 1936 renewal note operated as a novation extinguishing the 1931 obligation
  3. 3 Whether payments should be imputed against the older note or divided between multiple creditors

Ratio Decidendi

Prescription was suspended because the debtor's pledged shares remained in the creditor's possession until 1941; the 1936 renewal did not effect novation because there was no clear intention to extinguish the original obligation and the creditor retained the original note; payments and security realizations could not be unilaterally imputed to prefer one creditor where two distinct creditors held the same security, so proceeds must be apportioned; applying these principles the respondents were liable for one-half of the determined balance, $11,158.18.

Court Disposition

Appeal allowed; judgment of Court of King's Bench reversed in part and appellants' action maintained to the extent of $11,158.18

Orders

  • Appeal allowed
  • Judgment restored in favour of appellants in sum of $11,158.18 (one-half of $22,316.37) against Madawaska Company and Edouard Lacroix, joint and several