Gilbert v. Lefaivre

Gilbert v. Lefaivre

Because Dubé, as president, acquired Mercier’s claim by paying Mercier with the company’s funds and held it for the benefit of the company, he obtained no personal right enforceable against the company; accordingly Dubé’s trustee cannot enforce that claim against the insolvent company’s estate, and moreover the transfer occurred within three months of the authorized assignments and is ineffective as against the company under s.64 of the Bankruptcy Act.

Citation
[1928] SCR 333
Parties
Appellant (trustee of Vaillancourt & Co. Ltd.): R. O. Gilbert; Respondent (trustee of Duncan Napoléon Dubé): R. E. Lefaivre
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
24 April 1928
Procedural Posture
Hypothecary Action; Appeal Under the Bankruptcy Act / On Appeal to the Supreme Court of Canada — Final Judgment
Outcome
Appeal allowed; judgment of the Court of King’s Bench reversed; action dismissed against appellant
Legal Topics
Preferences, Simulation, Mandate, Hypothec, Priority of Creditors, Assignment of Claims
Source Language
English
Bankruptcy Law Property Law Agency/mandate Contract Law Preferences Simulation Mandate Hypothec +2 more

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Parties

R. O. Gilbert

Appellant (trustee of Vaillancourt & Co. Ltd.)

R. E. Lefaivre

Respondent (trustee of Duncan Napoléon Dubé)

Procedural Posture

Hypothecary Action; Appeal Under the Bankruptcy Act / On Appeal to the Supreme Court of Canada — Final Judgment

Legal Issues

  1. 1 Whether a transfer of a hypothecary claim made to a company president who paid the creditor with the company’s funds can be enforced by the president’s trustee against the insolvent company’s estate
  2. 2 Whether a purported simulated transaction or a mandate invoked by the company can be set up against third‑party creditors of the president
  3. 3 Whether a transfer effected within three months before authorized assignment is avoidable under the Bankruptcy Act s.64

Ratio Decidendi

Because Dubé, as president, acquired Mercier’s claim by paying Mercier with the company’s funds and held it for the benefit of the company, he obtained no personal right enforceable against the company; accordingly Dubé’s trustee cannot enforce that claim against the insolvent company’s estate, and moreover the transfer occurred within three months of the authorized assignments and is ineffective as against the company under s.64 of the Bankruptcy Act.

Court Disposition

Appeal allowed; judgment of the Court of King’s Bench reversed; action dismissed against appellant

Orders

  • Appeal allowed
  • Action dismissed