Thomson v. Merchants Bank of Canada

Thomson v. Merchants Bank of Canada

Majority held there was no trust created: the Canadian Agency's receipt of cheques constituted at most agency or a contractual obligation, not a trust in favour of the Merchants Bank; wrongful dishonour of the Agency's cheque did not in equity operate as payment or assignment of the Agency's bank funds to the Merchants Bank; therefore the Merchants Bank had no proprietary claim to the disputed funds and only a personal remedy against the Agency.

Citation
(1919) 58 SCR 287
Parties
Appellant/defendant: Edmond D. C. Thomson; Respondent/plaintiff: The Merchants Bank of Canada
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
3 March 1919
Procedural Posture
Appeal / Final Judgment on Appeal to the Supreme Court of Canada
Outcome
Appeal allowed with costs; judgment of the Appellate Division reversed
Legal Topics
Trust Formation, Agent's Liability, Dishonoured Cheque, Assignment of Vendor's Interest, Constructive Trust, Equitable Remedies
Source Language
English
Agency Trusts Equity Banking Property Contract Trust Formation Agent's Liability +4 more

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Parties

Edmond D. C. Thomson

Appellant/defendant

The Merchants Bank of Canada

Respondent/plaintiff

Procedural Posture

Appeal / Final Judgment on Appeal to the Supreme Court of Canada

Legal Issues

  1. 1 Whether funds received by an agent (Canadian Agency) were held on trust for the vendor's assignee (Merchants Bank)
  2. 2 Whether the receipt and presentation of a cheque by the payee equates in law or equity to payment or an assignment of the drawer's funds
  3. 3 Whether an agent's undertaking to forward funds creates a trust or only a personal contractual liability to the intended payee

Ratio Decidendi

Majority held there was no trust created: the Canadian Agency's receipt of cheques constituted at most agency or a contractual obligation, not a trust in favour of the Merchants Bank; wrongful dishonour of the Agency's cheque did not in equity operate as payment or assignment of the Agency's bank funds to the Merchants Bank; therefore the Merchants Bank had no proprietary claim to the disputed funds and only a personal remedy against the Agency.

Court Disposition

Appeal allowed with costs; judgment of the Appellate Division reversed

Orders

  • Appeal allowed with costs
  • Judgment of the Appellate Division and trial judge reversed