Trusts & Guarantee Co. Ltd. et al. v. Brenner et al.

Trusts & Guarantee Co. Ltd. et al. v. Brenner et al.

The proceeds of the unauthorized sale were trust property and the brokers were accountable for $41,822; that cause of action against innocent brokers amounted to a breach of trust provable in bankruptcy so the action against the bankrupt brokers was irregular without leave under s.24 but the court should grant leave nunc pro tunc subject to conditions limiting use of the judgment against the bankrupt estate; Brenner, who knowingly induced and concealed the transactions, was personally liable for fraudulent breach of trust for the same amount.

Citation
[1933] SCR 656
Parties
Appellant / Plaintiff: The Trusts and Guarantee Company Limited; Dora Miller (Executrix of the Will of Harry Miller, Deceased); Respondent / Defendant: Meyer Brenner; Respondent / Defendant (bankrupt): Malcolm Stobie; Charles J. Forlong (formerly trading as Stobie, Forlong & Company)
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
28 June 1933
Procedural Posture
Appeal (civil Bankruptcy and Insolvency; Trusts) / Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario; Final Judgment on Appeal
Outcome
Appeal allowed in part. Judgment entered for plaintiffs for $41,822 against both Brenner and Stobie & Forlong; judgment against brokers may be used only to determine the amount for ranking in bankruptcy and as prima facie evidence; leave to proceed against bankrupt brokers granted nunc pro tunc on conditions; costs:...
Legal Topics
Breach of Trust, Debts Provable in Bankruptcy, Leave to Sue Under Bankruptcy Act S.24, Accounting, Fraudulent Misrepresentation, Tracing of Proceeds
Source Language
English
Bankruptcy and Insolvency Trusts and Equitable Remedies Tort (conversion, Fraud) Civil Procedure Breach of Trust Debts Provable in Bankruptcy Leave to Sue Under Bankruptcy Act S.24 Accounting +2 more

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Parties

The Trusts and Guarantee Company Limited; Dora Miller (Executrix of the Will of Harry Miller, Deceased)

Appellant / Plaintiff

Meyer Brenner

Respondent / Defendant

Malcolm Stobie; Charles J. Forlong (formerly trading as Stobie, Forlong & Company)

Respondent / Defendant (bankrupt)

Procedural Posture

Appeal (civil Bankruptcy and Insolvency; Trusts) / Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario; Final Judgment on Appeal

Legal Issues

  1. 1 Whether the proceeds of unauthorized sales by brokers constituted trust property recoverable in equity
  2. 2 Whether claim against brokers was a debt provable in bankruptcy under s.104 of the Bankruptcy Act
  3. 3 Whether action brought without leave under s.24 was barred and whether leave nunc pro tunc should be granted

Ratio Decidendi

The proceeds of the unauthorized sale were trust property and the brokers were accountable for $41,822; that cause of action against innocent brokers amounted to a breach of trust provable in bankruptcy so the action against the bankrupt brokers was irregular without leave under s.24 but the court should grant leave nunc pro tunc subject to conditions limiting use of the judgment against the bankrupt estate; Brenner, who knowingly induced and concealed the transactions, was personally liable for fraudulent breach of trust for the same amount.

Court Disposition

Appeal allowed in part. Judgment entered for plaintiffs for $41,822 against both Brenner and Stobie & Forlong; judgment against brokers may be used only to determine the amount for ranking in bankruptcy and as prima facie evidence; leave to proceed against bankrupt brokers granted nunc pro tunc on conditions; costs:...

Orders

  • Judgment for plaintiffs against Meyer Brenner for $41,822.
  • Judgment for plaintiffs against Malcolm Stobie and Charles J. Forlong for $41,822, subject to the condition that plaintiffs shall not use that judgment against the bankrupt estate except as determining the amount for which they may rank in bankruptcy and then only as prima facie evidence of that amount.