Salter & Arnold, Ltd. v. Dominion Bank

Salter & Arnold, Ltd. v. Dominion Bank

The Court held the statutory presumption of preference under s.31(2) was rebutted by evidence that the debtors reasonably expected the bank to continue the account and had no actual intent to prefer the bank; payments by cheque were ordinary banking transactions and not made to give a preference, and the bank lawfully appropriated a credit balance under its lien and right of set-off, so the trustee's claim failed.

Citation
[1926] SCR 621
Parties
Plaintiff/appellant (trustee in Bankruptcy): Salter & Arnold, Ltd.; Defendant/respondent: The Dominion Bank
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
4 May 1926
Procedural Posture
Bankruptcy / Appeal to the Supreme Court of Canada From the Court of Appeal for Manitoba
Outcome
Appeal dismissed with costs; judgment of the Court of Appeal for Manitoba affirmed.
Legal Topics
Preferential Payments, Intention to Prefer, Banker's Lien, Set Off, Appropriation of Current Account Credits
Source Language
English
Bankruptcy and Insolvency Banking Law Preferential Payments Intention to Prefer Banker's Lien Set Off Appropriation of Current Account Credits

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Parties

Salter & Arnold, Ltd.

Plaintiff/appellant (trustee in Bankruptcy)

The Dominion Bank

Defendant/respondent

Procedural Posture

Bankruptcy / Appeal to the Supreme Court of Canada From the Court of Appeal for Manitoba

Legal Issues

  1. 1 Whether payments made within three months of the assignment were preferential under s.31 of the Bankruptcy Act
  2. 2 Whether the prima facie presumption under s.31(2) that such payments were made with a view to preferring the bank was rebutted
  3. 3 Whether the bank lawfully appropriated a credit balance under a banker's lien and right of set-off

Ratio Decidendi

The Court held the statutory presumption of preference under s.31(2) was rebutted by evidence that the debtors reasonably expected the bank to continue the account and had no actual intent to prefer the bank; payments by cheque were ordinary banking transactions and not made to give a preference, and the bank lawfully appropriated a credit balance under its lien and right of set-off, so the trustee's claim failed.

Court Disposition

Appeal dismissed with costs; judgment of the Court of Appeal for Manitoba affirmed.

Orders

  • Appeal dismissed with costs
  • Judgment of the Court of Appeal for Manitoba affirmed