The Queen v. Mendelson

The Queen v. Mendelson

The transactions were loans on pledge, not sales; the pawnbroker's obligation to return the pledged article on repayment was part of the original contract and redemption was performance of that obligation, so s.140 of the Excise Tax Act did not apply and no sales tax was payable.

Citation
[1954] SCR 422
Parties
Appellant (plaintiff): Her Majesty The Queen; Respondent (defendant): Morris Mendelson
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
26 June 1954
Procedural Posture
Appeal From Exchequer Court Concerning Sales Tax Under the Excise Tax Act / Final Appeal Judgment by Supreme Court of Canada
Outcome
Appeal dismissed; judgment of the Exchequer Court of Canada affirmed.
Legal Topics
Sales Tax, Pawnbroker Transactions, Sale Versus Pledge, Redemption of Pledged Goods, Statutory Interpretation
Source Language
English
Tax Law Contract Law Property Law Commercial Law Sales Tax Pawnbroker Transactions Sale Versus Pledge Redemption of Pledged Goods +1 more

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Parties

Her Majesty The Queen

Appellant (plaintiff)

Morris Mendelson

Respondent (defendant)

Procedural Posture

Appeal From Exchequer Court Concerning Sales Tax Under the Excise Tax Act / Final Appeal Judgment by Supreme Court of Canada

Legal Issues

  1. 1 Whether redemption by a borrower of an article pledged with a pawnbroker constitutes a "sale" within s.140 of the Excise Tax Act
  2. 2 Whether the contractual use of the word "sale" determines tax liability or whether substance of transaction governs
  3. 3 Whether title remained with the borrower under a suspensive condition until expiry of the loan period

Ratio Decidendi

The transactions were loans on pledge, not sales; the pawnbroker's obligation to return the pledged article on repayment was part of the original contract and redemption was performance of that obligation, so s.140 of the Excise Tax Act did not apply and no sales tax was payable.

Court Disposition

Appeal dismissed; judgment of the Exchequer Court of Canada affirmed.

Orders

  • Appeal dismissed with costs.
  • Judgment of the Exchequer Court of Canada confirmed.