Turgeon v. Dominion Bank

Turgeon v. Dominion Bank

Section 75(d) of the Bank Act authorizes banks to take as security the assured’s eventual claim to insurance indemnities; a 'Loss, if any, payable to [bank]' clause does not create an assignment requiring the bank to have an insurable interest but operates on loss to direct payment to the bank as nominee of the assured; the transaction was bona fide and did not constitute a fraudulent preference under the Bankruptcy Act or Civil Code.

Citation
[1930] SCR 67
Parties
Appellant/plaintiff: Paul L. Turgeon; Respondent/defendant: The Dominion Bank
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
26 September 1929
Procedural Posture
Collection (trustee Action Under Bankruptcy) / On Appeal to the Supreme Court of Canada From the Court of King’s Bench, Province of Quebec
Outcome
Appeal dismissed; judgment of the Court of King’s Bench affirming dismissal of trustee’s action upheld
Legal Topics
Secured Advances, Loss‑payable Clause, Assignment of Insurance Proceeds, Fraudulent Preference, Statutory Interpretation, Insurable Interest
Source Language
English
Banking Insurance Bankruptcy Commercial Law Secured Advances Loss‑payable Clause Assignment of Insurance Proceeds Fraudulent Preference +2 more

Case Brief

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Parties

Paul L. Turgeon

Appellant/plaintiff

The Dominion Bank

Respondent/defendant

Procedural Posture

Collection (trustee Action Under Bankruptcy) / On Appeal to the Supreme Court of Canada From the Court of King’s Bench, Province of Quebec

Legal Issues

  1. 1 Whether a bank is authorized under s.75 Bank Act to take as security the insured’s eventual claim under fire insurance policies
  2. 2 Whether a 'Loss, if any, payable to [bank]' clause effects an assignment (invalid without insurable interest) or merely directs payment to the bank as nominee
  3. 3 Whether receipt of the insurance indemnities by the bank constituted a fraudulent preference under bankruptcy law or Civil Code provisions

Ratio Decidendi

Section 75(d) of the Bank Act authorizes banks to take as security the assured’s eventual claim to insurance indemnities; a 'Loss, if any, payable to [bank]' clause does not create an assignment requiring the bank to have an insurable interest but operates on loss to direct payment to the bank as nominee of the assured; the transaction was bona fide and did not constitute a fraudulent preference under the Bankruptcy Act or Civil Code.

Court Disposition

Appeal dismissed; judgment of the Court of King’s Bench affirming dismissal of trustee’s action upheld

Orders

  • Appeal dismissed with costs
  • Judgment of the Court of King's Bench affirming dismissal of the trustee's action is confirmed