Cochrane v. Schetky

Cochrane v. Schetky

Where related companies under common control transferred assets by an agreement procured by the controlling persons, the transfer was voidable for fraud and the liquidator could rescind the agreement and obtain a declaration that a party who recovered a note connected with that transfer was wrongfully in possession,...

Source-derived case information.

Citation
(1920) 60 SCR 650
Parties
Appellant/defendant: Cochrane; Respondent/plaintiff: Schetky
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
8 March 1920
Procedural Posture
Civil Appeal (contract/rescission) / Final Appeal to Supreme Court of Canada From Court of Appeal for British Columbia; Judgment Affirmed
Outcome
Appeal dismissed; judgment of the Court of Appeal for British Columbia affirmed.
Legal Topics
Rescission for Fraud, Transfer of Company Assets, Wrongful Possession of Negotiable Instrument, Control and Related Party Transactions
Source Language
english
Contract Equity Corporate Law Insolvency/liquidation Fraud Rescission for Fraud Transfer of Company Assets Wrongful Possession of Negotiable Instrument +1 more

Source-derived case record

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Parties

Cochrane

Appellant/defendant

Schetky

Respondent/plaintiff

Procedural Posture

Civil Appeal (contract/rescission) / Final Appeal to Supreme Court of Canada From Court of Appeal for British Columbia; Judgment Affirmed

Legal Issues

  1. 1 Whether the transfer of promissory notes between related companies could be rescinded for fraud
  2. 2 Whether the liquidator could obtain a declaration that the appellant was in wrongful possession of his note
  3. 3 Whether recovery of the note upon payment defeated the rescission remedy when the transaction was tainted by fraud

Ratio Decidendi

Where related companies under common control transferred assets by an agreement procured by the controlling persons, the transfer was voidable for fraud and the liquidator could rescind the agreement and obtain a declaration that a party who recovered a note connected with that transfer was wrongfully in possession, even though the party paid to recover the note, when the transaction was tainted by fraud.

Court Disposition

Appeal dismissed; judgment of the Court of Appeal for British Columbia affirmed.

Orders

  • Appeal dismissed with costs
  • Judgment of Court of Appeal for British Columbia restoring respondent's action for rescission and declaration of wrongful possession upheld