Supreme Court of Canada
Merchants Bank of Canada v. McLachlan; Merchants Bank of Canada v McLaren, (1894) 23 SCR 143
Date: 1893-04-02
MERCHANTS BANK OF CANADA v. McLACHLAN.
MERCHANTS BANK OF CANADA v. McLAREN.
1893: Oct 10; 1893: Oct 11; 1894: April 2
PRESENT: Sir Henry Strong O.J. and Fournier, Tasehereau, Sedgwick and King J J.
Partnership—Dissolution—Married Woman—Benefit conferred on wife during Marriage—Contestation—Priority of claims.
APPEALS from the decisions of the Court of Queen's Bench for Lower Canada (Q. R. 2 Q. B. 431) reversing the judgments of the Superior Court which had maintained the contestations of the respondent's claims in each action.
On the 10th April 1886 John S. McLachlan, a retired partner from the firm of McLachlan & Bros., composed of the said John S. McLachlan and William McLachlan his brother, agreed to leave his capital, for which he was to be paid interest, in a new firm to be constituted by the said William McLachlan and one William Radford an employee of the former firm, and that such capital should rank after the creditors of the old firm had been paid in full. The new firm
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undertook to carry on business under the same firms-name up to 31st December, 1889. John S. McLachlan died on the 18th November, 1886. Mrs. Annie McLaren, the wife, separate as to property of John S. McLachlan had an account in the books of both firms. On the 16th April 1890, an agreement was entered into between the new firm of McLachlan Bros, and the estate of John S. McLachlan and Mrs. McLachlan, by which a large balance was admitted to be due by them. to the estate of John S. McLachlan and to Mrs. John. S. McLachlan. The new firm was declared insolvent in January, 1891. Claims having been filed. respectively by Mrs. John S. McLachlan and the executors of the estate of John S. McLachlan against the insolvent firm, the Merchants Bank of Canada contested the claims on the following grounds, inter alia . 1st that they had been creditors of the firm and continued to advance to the new firm on the faith of the agreement of April, 1886; 2nd, that Mrs. John S. McLachlan's moneys formed part of John S. McLachlan's capital and 3rd that the dissolution was simulated. (See also report Q. R. 2 Q. B. 431).
The Supreme Court reversed the judgment of the Court of Queen's Bench for Lower Canada (appeal side) restoring the judgment of the Superior Court, Fournier and King JJ., dissenting, and held, that the dissolution of the partnership was simulated; that the moneys which appeared to be owing to Mrs. John S. McLachlan after having credited her with her own separate moneys were in reality moneys deposited by her husband, in order to confer upon her during marriage, benefits contrary to law, and that the bank had a sufficient interest to contest these claims, the transaction being in fraud of their rights as creditors.
Appeals dismissed with costs.
Laflámme Q.C. and Green shields Q C., for the appellants
Hall Q.O. and Geoffrion Q.C, for the respondent.
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