Canadian Bank of Commerce v. Barrette

Canadian Bank of Commerce v. Barrette

The bank, having control of pledged securities, owed a duty to exercise its contractual discretion in good faith to realize the full value for the purpose of liquidating the indebtedness and preserving any surplus for Barrette; by settling with the Syndicat without protecting or accounting for Barrette's interest and by refusing to enforce or secure the judgment, the bank violated that duty and failed to discharge the burden of proving Barrette suffered no loss as a result; appeal dismissed.

Citation
(1909) 41 SCR 561
Parties
Defendant/appellant: Canadian Bank of Commerce; Plaintiff/respondent/cross Appellant: Joseph Barrette; Defendant/respondent: Le Syndicat Lyonnais du Klondyke
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
5 April 1909
Procedural Posture
Appeal / On Appeal From the Territorial Court of the Yukon to the Supreme Court of Canada
Outcome
Appeal and cross-appeal dismissed with costs.
Legal Topics
Hypothecation, Pledge, Duty of Pledgee, Settlement and Release, Accounting for Trust/securities, Costs
Source Language
English
Trust Banking Equity Property Civil Procedure Hypothecation Pledge Duty of Pledgee +3 more

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Parties

Canadian Bank of Commerce

Defendant/appellant

Joseph Barrette

Plaintiff/respondent/cross Appellant

Le Syndicat Lyonnais du Klondyke

Defendant/respondent

Procedural Posture

Appeal / On Appeal From the Territorial Court of the Yukon to the Supreme Court of Canada

Legal Issues

  1. 1 Whether bank exercising discretion over pledged securities owed a duty to realize them for debtor's surplus and to act in good faith
  2. 2 Whether settlement between bank and debtor of the securities, made without pledgor's consent, unlawfully sacrificed pledgor's interests
  3. 3 Whether bank breached duty by refusing to account and by failing to enforce or secure judgment against the Syndicat after reversal

Ratio Decidendi

The bank, having control of pledged securities, owed a duty to exercise its contractual discretion in good faith to realize the full value for the purpose of liquidating the indebtedness and preserving any surplus for Barrette; by settling with the Syndicat without protecting or accounting for Barrette's interest and by refusing to enforce or secure the judgment, the bank violated that duty and failed to discharge the burden of proving Barrette suffered no loss as a result; appeal dismissed.

Court Disposition

Appeal and cross-appeal dismissed with costs.

Orders

  • Appeal dismissed and cross-appeal dismissed with costs to respondents.
  • Bank ordered to account to Joseph Barrette for moneys and value of securities and to reassign or pay for securities to the extent determined on accounting (as adjudged by trial court and subject to detailed accounting).