Long v. Hancock

Long v. Hancock

The mortgage was not a fraudulent preference under R.S.O. ch. 118 because the company and its officers bona fide believed that giving the mortgage and obtaining an extension would enable the company to continue and ultimately pay all creditors; pressure and the form of the instrument did not prove an intent to prefer or to defraud creditors, so the security was valid.

Citation
(1885) 12 SCR 532
Parties
Plaintiff Appellant: William D. Long; Plaintiff Appellant: George H. Bisby; Defendant Respondent: Edward H. Hancock; Defendant Respondent: J.B. Fairgrieve; Defendant Respondent: John Hallam
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
16 November 1885
Procedural Posture
Interpleader Issue on Appeal / Appeal to Supreme Court of Canada From Court of Appeal for Ontario (final Appellate Review)
Outcome
Appeal allowed with costs; judgment of chancellor and divided Court of Appeal reversed
Legal Topics
Fraudulent Preference, Chattel Mortgage, Pressure Doctrine, Interpleader, Intent to Prefer
Source Language
English
Priorities and Hypothecs Insolvency Law Corporate Law Fraudulent Preference Chattel Mortgage Pressure Doctrine Interpleader Intent to Prefer

Case Brief

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Parties

William D. Long

Plaintiff Appellant

George H. Bisby

Plaintiff Appellant

Edward H. Hancock

Defendant Respondent

J.B. Fairgrieve

Defendant Respondent

John Hallam

Defendant Respondent

Procedural Posture

Interpleader Issue on Appeal / Appeal to Supreme Court of Canada From Court of Appeal for Ontario (final Appellate Review)

Legal Issues

  1. 1 Whether the chattel mortgage constituted a fraudulent preference under R.S.O. ch. 118
  2. 2 Whether pressure applied by the creditor rendered the mortgage void as a preference
  3. 3 Whether the company's bona fide belief that extension would save the business negates intent to prefer

Ratio Decidendi

The mortgage was not a fraudulent preference under R.S.O. ch. 118 because the company and its officers bona fide believed that giving the mortgage and obtaining an extension would enable the company to continue and ultimately pay all creditors; pressure and the form of the instrument did not prove an intent to prefer or to defraud creditors, so the security was valid.

Court Disposition

Appeal allowed with costs; judgment of chancellor and divided Court of Appeal reversed

Orders

  • Appeal allowed with costs
  • Judgment ordered for the appellants (plaintiffs in the interpleader) with costs in all courts