Ahsley Colter Ltd. v. Scott

Ahsley Colter Ltd. v. Scott

Partial failure of consideration between the immediate parties did not defeat the rights of a holder in due course or a holder for value who derived title through a holder in due course; respondent obtained title via the bank (holder in due course) and, not being party to fraud or illegality, was entitled to recover the full amount of the notes from the maker. An accommodation endorsement and taking of overdue notes without prior value did not render the endorser's title defective absent an equity inherent in the bill incompatible with assignment.

Citation
[1942] SCR 331
Parties
Defendant/appellant: Ashley Colter Limited; Plaintiff/respondent: W. J. Scott
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
26 June 1942
Procedural Posture
Contract (commercial Sale of Lumber) / Negotiable Instruments / Appeal to the Supreme Court of Canada From the Supreme Court of New Brunswick, Appeal Division
Outcome
Appeal dismissed with costs; judgment of the Supreme Court of New Brunswick, Appeal Division affirmed.
Legal Topics
Promissory Notes, Endorsement, Holder in Due Course, Accommodation Endorser, Partial Failure of Consideration, Assignment of Overdue Bills, Equities Attaching to Bills
Source Language
English
Contract Bills of Exchange Negotiable Instruments Commercial Law Promissory Notes Endorsement Holder in Due Course Accommodation Endorser +3 more

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Parties

Ashley Colter Limited

Defendant/appellant

W. J. Scott

Plaintiff/respondent

Procedural Posture

Contract (commercial Sale of Lumber) / Negotiable Instruments / Appeal to the Supreme Court of Canada From the Supreme Court of New Brunswick, Appeal Division

Legal Issues

  1. 1 Whether partial failure of consideration between immediate parties defeats recovery by a remote endorser/holder for value
  2. 2 Whether an accommodation endorser charged back after maturity who takes notes without giving value can recover the full amount from the maker
  3. 3 Whether equities attaching to a bill include contractual adjustments between the immediate parties or only equities inherent in the bill

Ratio Decidendi

Partial failure of consideration between the immediate parties did not defeat the rights of a holder in due course or a holder for value who derived title through a holder in due course; respondent obtained title via the bank (holder in due course) and, not being party to fraud or illegality, was entitled to recover the full amount of the notes from the maker. An accommodation endorsement and taking of overdue notes without prior value did not render the endorser's title defective absent an equity inherent in the bill incompatible with assignment.

Court Disposition

Appeal dismissed with costs; judgment of the Supreme Court of New Brunswick, Appeal Division affirmed.

Orders

  • Appeal dismissed with costs
  • Judgment of the Supreme Court of New Brunswick, Appeal Division affirmed