John M.M. Troup Ltd. et al. v. Royal Bank of Canada
Majority: bank acquired the deposited funds in the ordinary course of business, gave value by reducing an overdraft and had no actual or constructive notice that the deposit constituted a breach of the statutory trust created by s.3(1); the registered assignment of book debts was not acted upon and without notice to the payer could not affect the payment. Consequently the bank's legal title and bankers' lien prevailed and it was not liable to account to the subcontractors; s.3(1) is intra vires the province under s.92(13).
- Citation
- [1962] SCR 487
- Parties
- Appellant / Plaintiff: John M.M. Troup Ltd.; Appellant / Plaintiff: National Painting & Decorating, Ltd.; Respondent / Defendant / Intervenant: Royal Bank of Canada; Respondent (intervenor on Constitutional Point): The Attorney-General for Ontario
- Court
- Supreme Court of Canada
- Jurisdiction
- Canada
- Judgment Date
- 11 June 1962
- Procedural Posture
- Civil Appeal Concerning Mechanics' Liens, Trust and Banking Priority / Final Appeal to the Supreme Court of Canada From Court of Appeal for Ontario
- Outcome
- Appeal dismissed (majority); Locke J. dissenting
- Legal Topics
- Mechanics' Lien / Statutory Trust, Assignment of Book Debts, Bankers' Lien and Priority, Notice and Constructive Knowledge, Breach of Trust, Constitutionality of Provincial Legislation
- Source Language
- English
Case Brief
Summary, issues, holding and outcome
More case intelligence is available
Unlock the full research layer for this judgment.
Parties
John M.M. Troup Ltd.
Appellant / Plaintiff
National Painting & Decorating, Ltd.
Appellant / Plaintiff
Royal Bank of Canada
Respondent / Defendant / Intervenant
The Attorney-General for Ontario
Respondent (intervenor on Constitutional Point)
Procedural Posture
Civil Appeal Concerning Mechanics' Liens, Trust and Banking Priority / Final Appeal to the Supreme Court of Canada From Court of Appeal for Ontario
Legal Issues
- 1 Whether sums paid to a contractor (holdback) were held on statutory trust for subcontractors under s.3(1) of The Mechanics' Lien Act and whether the bank must account to subcontractors
- 2 Whether the bank acquired the funds as assignee under a prior assignment of book debts and, if so, whether notice was required to defeat subcontractors' statutory trust
- 3 Whether the bank had actual or constructive notice of a breach of trust when it applied the deposit to reduce the contractor's overdraft
Ratio Decidendi
Majority: bank acquired the deposited funds in the ordinary course of business, gave value by reducing an overdraft and had no actual or constructive notice that the deposit constituted a breach of the statutory trust created by s.3(1); the registered assignment of book debts was not acted upon and without notice to the payer could not affect the payment. Consequently the bank's legal title and bankers' lien prevailed and it was not liable to account to the subcontractors; s.3(1) is intra vires the province under s.92(13).
Court Disposition
Appeal dismissed (majority); Locke J. dissenting
Orders
- Appeal dismissed with costs
Full Case Text
Judgment text and source record
Sign in to read
Sign in to read the full judgment text
Sign in to read the full judgment text. Downloads and additional research tools may depend on your plan.
Sign in to read the full judgment