Holland Canada Mortgage Co. v. Hutchings

Holland Canada Mortgage Co. v. Hutchings

The increase in the rate of interest from 7% to 8% as part of the extension/renewal constituted a material alteration of the original contract that discharged the sureties; the bond clause relied on could not reasonably be read to authorize such a material change, and the written acknowledgements did not establish informed assent because the sureties were not shown to have been made aware of the true facts including non-assent of co-sureties.

Citation
[1936] SCR 165
Parties
Appellant (plaintiff): Holland-Canada Mortgage Company Limited; Respondent (defendant Surety): Robert John Hutchings; Respondent (defendant Trustee for Decedent Surety): The Royal Trust Company, Judicial Trustee of the Estate of Hugh Neilson, deceased
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
31 March 1936
Procedural Posture
Appeal (mortgage/suretyship Action) / Appeal to Supreme Court of Canada Final Judgment on Appeal From Appellate Division of the Supreme Court of Alberta
Outcome
Appeal dismissed; judgment of Appellate Division affirmed
Legal Topics
Surety Discharge by Variation, Extension and Renewal of Loan, Interest Rate Alteration, Written Acknowledgements by Surety, Disclosure to Surety, Limitation of Actions
Source Language
English
Guarantee and Suretyship Mortgage Contract Law Property Surety Discharge by Variation Extension and Renewal of Loan Interest Rate Alteration Written Acknowledgements by Surety +2 more

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Parties

Holland-Canada Mortgage Company Limited

Appellant (plaintiff)

Robert John Hutchings

Respondent (defendant Surety)

The Royal Trust Company, Judicial Trustee of the Estate of Hugh Neilson, deceased

Respondent (defendant Trustee for Decedent Surety)

Procedural Posture

Appeal (mortgage/suretyship Action) / Appeal to Supreme Court of Canada Final Judgment on Appeal From Appellate Division of the Supreme Court of Alberta

Legal Issues

  1. 1 Whether increase in interest rate in extension/renewal discharged the sureties
  2. 2 Whether clause 'no matter what dealings the said company may have had with the mortgagors' permitted the creditor to materially alter the contract and retain sureties
  3. 3 Whether written acknowledgements signed after completion of the extension/renewal bound the sureties

Ratio Decidendi

The increase in the rate of interest from 7% to 8% as part of the extension/renewal constituted a material alteration of the original contract that discharged the sureties; the bond clause relied on could not reasonably be read to authorize such a material change, and the written acknowledgements did not establish informed assent because the sureties were not shown to have been made aware of the true facts including non-assent of co-sureties.

Court Disposition

Appeal dismissed; judgment of Appellate Division affirmed

Orders

  • Appeal dismissed with costs
  • Judgment of the Appellate Division of the Supreme Court of Alberta affirming trial judge and dismissing appellant's actions against Hutchings and the estate of Neilson