Wade v. Kendrick

Wade v. Kendrick

Because company funds were misapplied by interested directors and the partnership members who received the benefit cannot retain unrighteous profits, the non-director partners who benefited (Kendrick and Forsythe) are liable to repay the company the difference; the transaction was voidable and rescission/restoration was ordered.

Citation
(1905) 37 SCR 32
Parties
Plaintiff/appellant: Osler Wade, Liquidator of the Pakenham Pork Packing Company, Limited; Defendant/respondent: John Kendrick; Defendant/respondent: Rachel E. Forsythe
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
22 December 1905
Procedural Posture
Civil Appeal (company/partnership) / Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario
Outcome
Appeal allowed; judgment of trial court restored.
Legal Topics
Directors' Duties, Self Dealing, Ratification, Rescission and Restitution, Liability of Partners, Misrepresentation/non Disclosure, Misappropriation of Corporate Funds
Source Language
English
Commercial Law Company Law Partnership Law Equity Directors' Duties Self Dealing Ratification Rescission and Restitution +3 more

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Parties

Osler Wade, Liquidator of the Pakenham Pork Packing Company, Limited

Plaintiff/appellant

John Kendrick

Defendant/respondent

Rachel E. Forsythe

Defendant/respondent

Procedural Posture

Civil Appeal (company/partnership) / Appeal to the Supreme Court of Canada From the Court of Appeal for Ontario

Legal Issues

  1. 1 Whether partners who were not directors are liable for losses when company funds were misapplied to pay partnership debts
  2. 2 Whether a sale between a partnership and a company is voidable where majority of directors who approved were interested parties
  3. 3 Whether ratification by directors is invalidated by misrepresentation or nondisclosure

Ratio Decidendi

Because company funds were misapplied by interested directors and the partnership members who received the benefit cannot retain unrighteous profits, the non-director partners who benefited (Kendrick and Forsythe) are liable to repay the company the difference; the transaction was voidable and rescission/restoration was ordered.

Court Disposition

Appeal allowed; judgment of trial court restored.

Orders

  • Judgment restored against all partners including John Kendrick and Rachel E. Forsythe to repay the loss represented by the difference between sums paid and the true value of assets (account as per trial)
  • Costs to the appellant in this Court and in the Court of Appeal