Supreme Court of Canada
Montana et al. v. Les développements du Saguenay Ltée et al., [1977] 1 S.C.R. 32
Date: 1975-03-26
Anthony Montana et al. (Plaintiffs) Appellants;
and
Les Développements du Saguenay Ltée et al. (Defendants) Respondents.
1975: February 20; 1975: March 26.
Present: Judson, Pigeon, Dickson, Beetz and de Grandpré JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC
Conflict of laws—Proof of foreign law—Interpretation of foreign law—Foreign trustee—Capacity to institute legal proceedings—Appeal—Code of Civil Procedure, art. 57, 523.
Respondent, Les Développements du Saguenay Ltée, signed a deed of obligation before a notary by which it acknowledged a debt, for money loaned, of a certain sum to the trustees of the Plastering Industry Pension Trust Fund. A hypothec was granted to secure repayment of this loan. Another hypothecary deed was signed for an additional loan. The borrower having defaulted on its obligations, appellants, the trustees, brought an action in the Superior Court of the Province of Quebec. A New York attorney testified on the trustees’ right to sue, under the law of his State. The trial judge allowed the action. This judgment was reversed by the Court of Appeal solely on the ground that the trustees had not established that, under the law of the State of New York, they were authorized to bring such an action. Hence the appeal to this Court.
Held: The appeal should be allowed.
The section cited by the attorney contains an exception for the case where a court decision appointing an administrator orders otherwise, which implies that capacity to institute legal proceedings is the rule and incapacity the exception. The power to make investments implies that of initiating legal action to recover the monies invested, in accordance with the principle that the power to do a thing carries with it all powers necessary for that purpose.
The Court of Appeal should have hesitated to interfere with the findings of the trial judge who had heard the witnesses. Even if it found the proof of foreign law insufficient, it is inconceivable that it should not be considered obliged to make use of the powers conferred on it by art. 523 of the Code of Civil Procedure in such circumstances.
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Assuming the trustees did exceed their powers in making the loans in question, this could not be a ground of defence for the borrower, since the most elementary honesty requires the debtor to make restitution under the principle of unjust enrichment.
Lister v. McAnulty, [1944] S.C.R. 317; Martin v. William Casey & Sons, Inc. (1958), 170 N.Y.S. 2d 228; Rolland v. La Caisse d’Économie N.-D. de Québec (1895), 24 S.C.R. 405; Breckenridge Speedway v. The Queen, [1970] S.C.R. 175, 9 D.L.R. (3d) 142, referred to.
APPEAL from a judgment of the Court of Appeal of the Province of Quebec, reversing a judgment of the Superior Court. Appeal allowed.
Michel A. Gagnon, for the plaintiffs, appellants.
M. Abramowitz, for the defendants, respondents.
PIGEON J.—This appeal is from a judgment of the Court of Appeal of Quebec, reversing a Superior Court judgment which had maintained the hypothecary action of the plaintiffs in the amount of $370,000.
On March 1, 1963 respondent, Les Développements du Saguenay Ltée, signed a deed of obligation before a notary by which it acknowledged a debt, for money loaned, in the amount of $150,-000, to persons whom I shall call “the trustees”, and who are referred to in the deed as “Trustees of the Plastering Industry Pension Trust Fund”. A hypothec was granted to secure repayment of this loan. The loan bore interest at seven per cent, payable quarterly.
On December 12, 1963 the borrower signed another hypothecary deed for an additional loan of $75,000, and undertook to repay the total debt by a payment of $7,500 on January 15, 1964, twenty-four monthly payments of $2,000 and sixty-eight monthly payments of $2,500, the whole in addition to the interest payable quarterly.
The borrower having defaulted on its obligations, appellants, the trustees, brought an action in
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May 1968. They ended their designation as follows:
all eight in their quality of TRUSTEES OF THE PLASTERING INDUSTRY PENSION TRUST FUND, an unincorporated association with offices at 84 Fifth Avenue of the City and State of New York, U.S.A.
In response to repeated preliminary exceptions the action was amended several times. In the final form para. 1 and 2 of the statement of claim read as follows:
1.—Plaintiffs are all the present trustees of the Plastering Industry Pension Trust Fund;
2.—Plaintiffs are authorized by the laws of the State of New York, in the United States of America, to appear in judicial proceedings and as such may do so before the Courts of this Province.
The trial began on April 28, 1970, and it was admitted that on that date the amount due to the trustees was $370,000, including interest. A New York attorney, Mr. Sutro, testified as to the law of his State. His testimony that, under that law, trustees were entitled to sue to recover the sum in question, was not contradicted, and the trial judge accepted it. On March 30, 1971 he gave judgment, declaring the property hypothecated for the admitted amount.
This judgment was reversed by the Court of Appeal solely on the ground that the trustees had not established that, under the law of the State of New York, they were authorized to bring such an action. There is no question that, being domiciled outside the province of Quebec, the trustees had, under art. 57 of the Code of Civil Procedure, the burden of such proof, but was the evidence given as to the law of the State of New York correctly held to be insufficient? In reasons concurred in by his two colleagues, Deschênes J.A. said:
[TRANSLATION] Mr. Sutro first referred to s. 210 of the Civil Practice Act of New York:
Every action must be prosecuted in the name of the real party in interest, except that an executor or administrator, a trustee of an express trust, a person with whom or in whose name a contract is made for the benefit of another, or a person expressly autho-
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rised by statute, may sue without joining with him the person for whose benefit the action is prosecuted.
According to the witness, this enactment was amended in 1963, becoming s. 1004, and now reads as follows:
Except where otherwise prescribed by order of the court, an executor, administrator, guardian of the property of an infant, committee of the property of a judicially declared incompetent, trustee of an express trust, insured person who has executed to his insurer either a loan or subrogation receipt, trust agreement, or other similar agreement, or person with whom or in whose name a contract has been made for the benefit of another, may sue or be sued without joining with him the person for or against whose interest the action is brought. (Words in italics omitted in original quotation)
Clearly, the purpose of this provision is not to give a trustee a general right to institute legal proceedings: it is designed to enable him, when he otherwise already holds this right, to exercise it alone, without joining with him the beneficiary of the trust.
The question is then whether the Trust Agreement creates, or the case law recognizes, such a right as exercisable by respondents.
With respect, what is clear to Deschênes J.A. is not at all clear to me. The section cited by Mr. Sutro does not provide that only a trustee authorized to sue in his own name by the deed creating the trust may do so without joining with him the beneficiary of the trust. No such condition is stated. On the contrary, the exception made is for the case where a court decision appointing an administrator orders otherwise, which implies that capacity to institute legal proceedings is the rule and incapacity the exception. It is perfectly clear that with regard to an administrator appointed by a court, the section confers or recognizes the right to take legal action upon the trustee alone and in his own name; it is only if this right has been taken away or limited by a decision of the court that the general rule does not apply. Why would it be otherwise in the case of a contract? Literal interpretation of statutes is the cardinal rule, and there must be some special reason for departing from it. Textually, this enactment confers upon or recognizes to all trustees, the right to institute legal
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proceedings. The only exception made implies that such capacity is the rule, and incapacity the exception.
Even if I was not certain that s. 1004 of the Civil Practice Act of New York really has the meaning apparently given it by the witness Sutro, I would have great hesitation in holding that it must be interpreted otherwise, without having the witness’ knowledge of the general principles of this foreign law, and when the entire Code is not before the Court. All the sections of a statute are interpreted the one by the other, giving to each the meaning derived from the whole; interpreting one section in isolation, inferring what is not stated therein, is highly questionable. In the cases cited by Deschênes J.A., the principle that the Court is not bound by the interpretation given to foreign law by an expert witness is formulated with respect to an entire code. Thus, in Lister v. McAnulty, the following passage, taken from Halsbury’s Laws of England, is cited at p. 324:
If, however, the witness produces any text book, decision, code, or other legal document, as stating or representing the foreign law, the court, on looking at or dealing with these books and documents, is entitled to construe them and form its own conclusion thereon. The court, in deciding on foreign law as a fact, is not bound to accept the construction put upon it by the expert, even if uncontradicted, nor is it bound to accept the decision of foreign courts as correctly setting out the law of the foreign state.
This difficulty does not arise with respect to the case cited by Mr. Sutro: Martin v. William Casey & Sons, Inc., the complete text of which is available. The decision of the Supreme Court of the United States which is there cited relates only to a question with which we are not concerned here, namely whether employer contributions to a welfare fund should be regarded as part of workmen’s wages within the meaning of a bond. However, as regards the right of trustees to institute legal proceedings under state law, the following will be found at p. 232:
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(3) The next and subsidiary question raised is that of the right of the trustees to sue. The bond expressly provided that the unpaid workmen and materialmen have a direct right of action on the bond. From this, the sureties argue that others, such as the fund trustees are excluded from that right. That does not follow. The express inclusion of the right to sue simply served to make clear, all the more, that the workmen and the materialmen were to be benefited directly by the bond, thus avoiding the tenuous and refined speculation involved in cases where such express provision has been lacking. Cdf. e.g., Daniel-Morris Co. v. Glens Falls Indemn. Co., 308 N.Y. 464, 126 N.E. 2d 750 and the cases cited therein. Nor do the fund trustees sue in their own right for labor performed or services rendered by them, but in the right of the workmen as beneficiaries of the funds. So, the workmen are both named and intended beneficiaries of the payment bond, but with respect to rights for which they cannot sue directly, their trustees or assignees (which label is used for the concept is not important) have the right to sue, in the absence of express exclusion from the payment bond.
I can only read this as meaning that the right of trustees to sue is not limited to cases where it is expressly conferred by the deed creating the trust, but that, on the contrary, it is the general rule, and this rule is not precluded because the right to sue is specifically conferred in certain cases. We have seen that this is so for administrators appointed by a court, surely it is logical that the same be true of administrators appointed by agreement.
This conclusion disposes of the objection based on the fact that the deed creating the trust confers the right to sue for the recovery of contributions but is silent regarding the recovery of investments. For my part, even without the opinion expressed in Martin, I would have been inclined to hold that the power to make investments implies that of initiating legal action to recover the monies invested, in accordance with the principle that the power to do a thing carries with it all powers necessary for that purpose. Further, it should be noted that Mr. Sutro did not produce the deed in support of
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his opinion, but only in response to a request made to him in cross-examination.
Finally, Deschênes J.A. said that Mr. Sutro had not given a definite opinion. If ever there was a case in which the Court of Appeal should have hesitated to interfere with the findings of the trial judge who had heard the witnesses, this was such a case. It is apparent that the transcript of the shorthand notes leaves a great deal to be desired. Of course, the attorneys for the trustees could have taken steps for corrections. However, bearing in mind the delays already inflicted on them and the countless difficulties raised by attorneys for the borrower, it is easy to understand that they considered the case otherwise clear enough to take a chance on that, as the trial judge had found the proof of foreign law made before him sufficient and this evidence stood uncontradicted. Even if the Court of Appeal found it insufficient, only an archaic approach to the administration of justice could justify, in such circumstances, the final and outright dismissal of the action. Under art. 523 of the Code of Civil Procedure the Court of Appeal may, if the ends of justice so require, receive indispensable new evidence and make any order necessary to safeguard the rights of the parties. Under a modern concept of the administration of justice, it is inconceivable that it should not be considered a duty to make use of such powers in such circumstances. Here is a borrower who has paid its creditor nothing for ten years, and has resorted to every procedural device and quibble imaginable to prevent its creditor from recovering the large sum advanced.
Assuming the trustees did exceed their powers in making the loans in question, this could not be a ground of defence for the borrower in an action for recovery, since the most elementary honesty requires the debtor to make restitution under the principle of unjust enrichment, if not on contractual grounds: Rolland v. La Caisse d’Économie
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N.-D. de Québec, Breckenridge Speedway v. The Queen.
At the hearing counsel for the borrower again raised most of the arguments he had raised at first instance, which arguments the Court of Appeal did not consider in view of its conclusion on the first point. I think it will suffice to say that it was not shown that the trial judge had erred in dismissing, as he did, all these arguments. On the contrary, the Court has noted that with respect to the intervention by one Kwiat, which was allowed in part by the trial judge, not only was the borrower not entitled to re-open the discussion of this point, but the intervenant has acquiesced in the judgment by surrendering all that was not allowed to him.
On the whole, I conclude that the appeal should be allowed, the judgment of the Court of Appeal be set aside and the judgment of the Superior Court be restored with costs in this Court and in the Court of Appeal against the respondents jointly and severally as well as hypothecarily in addition to costs as awarded by the Superior Court.
Appeal allowed with costs.
Solicitors for the plaintiffs, appellants: Ogilvy, Cope, Porteous, Hansard, Marier, Montgomery & Renault, Montreal.
Solicitor for the defendants, respondents: Mark Abramowitz, Montreal.
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