Trust & Loan Co. of Canada v. Würtele

Trust & Loan Co. of Canada v. Würtele

The deed and surrounding conduct established that the lender was to pay premiums out of the constituted rents and, having become mandatary for that purpose, the lender negligently failed to use proper diligence to obtain funds from the agent and to pay the renewal premium; that omission caused the lapse of the policy and deprived the sureties of the security, thus discharging the sureties pro tanto under art.1959 C.C. and entitling them to retransfer of the pledged rents.

Citation
(1905) 35 SCR 663
Parties
Appellant (defendant and Incidental Plaintiff): The Trust and Loan Company of Canada; Respondent (plaintiff and Incidental Defendant; Surety): Jonathan Saxton Campbell Würtele; Respondent (plaintiff and Incidental Defendant; Surety): Ernest Frederick Würtele
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
20 March 1905
Procedural Posture
Appeal From Court of King's Bench, Province of Quebec / Supreme Court of Canada on Appeal (final Disposition)
Outcome
Appeal dismissed with costs; judgment of Court of King's Bench affirmed; plaintiffs' action maintained and defendants' incidental demand dismissed with costs.
Legal Topics
Principal and Surety, Pledge (antichrèse), Payment of Insurance Premiums, Mandate/mandatary Liability, Subrogation, Release of Surety, Creditor Diligence
Source Language
English
Agency Suretyship Mortgage/hypothec Pledge Insurance Law Contract Interpretation Negligence Principal and Surety +6 more

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Parties

The Trust and Loan Company of Canada

Appellant (defendant and Incidental Plaintiff)

Jonathan Saxton Campbell Würtele

Respondent (plaintiff and Incidental Defendant; Surety)

Ernest Frederick Würtele

Respondent (plaintiff and Incidental Defendant; Surety)

Procedural Posture

Appeal From Court of King's Bench, Province of Quebec / Supreme Court of Canada on Appeal (final Disposition)

Legal Issues

  1. 1 Did the deed and surrounding conduct impose on the creditor a duty to advance and pay insurance premiums from the assigned rents?
  2. 2 Did the creditor become the mandatary of the sureties and thereby incur liability for failing to obtain funds from the agent to pay the premium?
  3. 3 Does a creditor's omission to preserve a security (life policy) discharge the surety under Civil Code art. 1959?

Ratio Decidendi

The deed and surrounding conduct established that the lender was to pay premiums out of the constituted rents and, having become mandatary for that purpose, the lender negligently failed to use proper diligence to obtain funds from the agent and to pay the renewal premium; that omission caused the lapse of the policy and deprived the sureties of the security, thus discharging the sureties pro tanto under art.1959 C.C. and entitling them to retransfer of the pledged rents.

Court Disposition

Appeal dismissed with costs; judgment of Court of King's Bench affirmed; plaintiffs' action maintained and defendants' incidental demand dismissed with costs.

Orders

  • Decree in favor of plaintiffs ordering the defendant company to execute a discharge of the second mortgage upon tender of the difference between the amount due thereon and the $2,500 amount of the lapsed policy
  • Retransfer to the plaintiffs of the constituted rents pledged to secure the second loan to the extent of the sureties' discharge (pro tanto)