The Montreal Trust Co. v. Richardson

The Montreal Trust Co. v. Richardson

The subscription signed by Richardson was an underwriting — a conditional obligation extinguished when J.A. Mackay & Co. sold the $150,000 of preferred stock they had undertaken to place; the Montreal Trust, as assignee/pledgee of a non‑negotiable underwriting, took subject to the same equities and constructive notice, so could not recover; appeal dismissed with costs.

Citation
(1921) 62 SCR 617
Parties
Plaintiff/appellant: The Montreal Trust Company; Defendant/respondent: James Richardson, Executor of George T. Richardson (deceased)
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
9 December 1921
Procedural Posture
Contract Appeal / Appeal to Supreme Court of Canada From Appellate Division of the Supreme Court of Ontario; Final Judgment
Outcome
Appeal dismissed with costs.
Legal Topics
Underwriting, Subscription for Shares, Assignment of Contract, Pledge/hypothecation, Notice/constructive Notice, Fraud/misrepresentation, Negotiability
Source Language
English
Contract Corporate Law Securities Banking Underwriting Subscription for Shares Assignment of Contract Pledge/hypothecation +3 more

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Parties

The Montreal Trust Company

Plaintiff/appellant

James Richardson, Executor of George T. Richardson (deceased)

Defendant/respondent

Procedural Posture

Contract Appeal / Appeal to Supreme Court of Canada From Appellate Division of the Supreme Court of Ontario; Final Judgment

Legal Issues

  1. 1 Whether Richardson’s subscription was an unconditional purchase or an underwriting conditional on Mackay & Co. failing to dispose of certain shares
  2. 2 Whether assignee (Montreal Trust) taking a pledged non‑negotiable underwriting takes free of equities affecting it in the hands of the assignor
  3. 3 Whether the Trust qualified as a "banking institution" for the purpose of the hypothecation clause

Ratio Decidendi

The subscription signed by Richardson was an underwriting — a conditional obligation extinguished when J.A. Mackay & Co. sold the $150,000 of preferred stock they had undertaken to place; the Montreal Trust, as assignee/pledgee of a non‑negotiable underwriting, took subject to the same equities and constructive notice, so could not recover; appeal dismissed with costs.

Court Disposition

Appeal dismissed with costs.

Orders

  • Appeal dismissed with costs.