Supreme Court of Canada
Mulcahy v. Archibald (1898) 28 SCR 523
Date: 1898-06-14
Addra Jane Mulcahy and Patrick J. Mulcahy (Plaintiffs)
Appellants
And
Donald Archibald (Defendant)
Respondent
1897: Nov. 9; 1898: June 14.
Present Sir Henry Strong C.J. and Taschereau, Sedgewick, King and Girouard JJ.
ON APPEAL FROM THE SUPREME COURT OF NOVA SCOTIA.
Debtor and creditor—Transfer of property—Delaying or defeating creditors—13 Eliz. c. 5.
A transfer of property to a creditor for valuable consideration, even with intent to prevent its being seized under execution at the suit of another creditor, and to delay the latter in his remedies or defeat them altogether, is not void under 13 Eliz. c. 5, if the transfer is made to secure an existing debt and the transferee does not, either directly or indirectly, make himself an instrument for the purpose of subsequently benefiting the transferor.
Appeal from a decision of the Supreme Court of Nova Scotia, reversing the judgment at the trial in favour of the plaintiffs.
This is an action brought by Addra Jane Mulcahy, a married woman, and Patrick J. Mulcahy, her
[Page 524]
husband, against the defendant Donald Archibald, high sheriff of the county of Halifax, on the 2nd day of March, 1896, to recover 550 barrels of frozen herring, in bulk, which were seized by the said defendant on board the schooner "Ocean Belle," which said vessel was owned by the said Addra Jane Mulcahy, and for damages for detaining the same and for refusing to deliver up the same to the said plaintiffs on demand. On the 3rd day of March, 1896, an order to replevy the said goods was issued under order XLV of the rules of the Supreme Court, 1884.
The defendant levied upon the said 550 barrels of frozen herring, on the 2nd day of March, 1897, under an execution issued on a judgment recovered by Narcisse Blais, as plaintiff, against Michael B. Wrayton, as defendant, on the 19th day of December, A.D. 1896; and the defendant claims that at the date of the said levy the said herring were the property of the said Wrayton.
The said schooner "Ocean Belle" was conveyed to the female plaintiff in 1891, by George E. Forsyth, for the sum of $800, of which $400 was paid by her in cash on July 11th, 1891, and the balance of $400 was secured by a mortgage of the said schooner for that amount, made by the female plaintiff to the said Forsyth, and a promissory note for $400 made by the female plaintiff and the said Wrayton in favour of the said Forsyth, dated July 7th, 1891, which was subsequently paid and satisfied by the female plaintiff.
The schooner "Foaming Billow" was purchased by the said plaintiff under similar circumstances in 1892.
The said Wrayton was master of the schooner "Ocean Belle" and managed both vessels on his own account with the assistance of advances made by said plaintiff until December, 1895, at which date the said
[Page 525]
Wrayton owed the said plaintiff upwards of $4,000 for advances, etc.
The schooner "Ocean Belle" arrived in Halifax, from a trading voyage on or about November 12th, 1895, with a cargo of fish consigned by said Wrayton to Billman, Chisholm & Co., which cargo was sold to Eisenhaur & Co., for $2,804.19. About one-third of this cargo had been purchased by said Wrayton, from said Blais, to whom Wrayton gave in payment for the same a bill of exchange drawn by him upon Billman, Chisholm & Co, for $925.50, dated October 19th, 1895, payable ten days after sight.
At that time (November 1895,) the said Wrayton owed the firm of Billman, Chisholm & Co., for goods, supplied for these trading voyages, the sum of $2,357.57; of which $1,260.32 was secured by promissory notes made by Wrayton and indorsed by the said plaintiff to the said firm. Billman, Chisholm & Co., as consignees of the cargo, demanded the proceeds of the sale of the cargo from Eisenhaur & Co., in settlement of their account, and a dispute arising they refused to accept Wrayton's said draft on them in favour of Blais for $925.50. Pending the adjustment of this dispute Eisenhaur & Co., paid the proceeds of the sale of the cargo to the Halifax Banking Company.
The dispute between Wrayton & Billman, Chisholm & Co., in which the female plaintiff was interested as an indorser of Wrayton's notes and as a creditor of Wrayton's, was settled by an agreement signed by the parties and by which Billman, Chisholm & Co., received payment of their claims in full, leaving a balance of $416.62 which was ultimately paid over to Wrayton and out of which he paid $275 for wages due to seamen.
At the time of the above settlement it was agreed between the plaintiff and Captain Wrayton that she
[Page 526]
was to take over, on account of what Wrayton owed her, the trading stores remaining on board the two schooners, and also the trading stores then in possession of Billman, Chisholm & Co., referred to in this agreement, and thereupon she fitted out the schooner "Ocean Belle" by her agents, Thomas Forhan & Co., for a trading voyage to Newfoundland in December, 1895, for which purchases to the amount of $610.23 were made and paid for by her. She subsequently employed Wrayton as master for said voyage on wages at the rate of $50 per month.
Wrayton proceeded on the said voyage, and purchased with these goods 550 barrels of frozen herring in bulk, for which a bill of lading was made to the said plaintiff or her assigns, dated at Burin, Newfoundland, February 19th, 1896, and forwarded by mail to her at Halifax.
In the meantime the said bill of exchange in favour of the said Blais, dated October 19th, 1895, having been protested by reason of the refusal of Billman, Chisholm & Co. to accept it, Blais recovered judgment on December 19th, 1895, against Wrayton, in the Supreme Court, for the amount due thereon and costs at that suit, which was not defended.
On the arrival of the schooner "Ocean Belle" at Halifax, on March 2nd, 1896, the said herring were seized by the defendant under execution issued on the said judgment, and the same day the plaintiff commenced this action.
This action was tried without a jury before Mr. Justice Meagher, who on January, 2nd, 1897, delivered judgment, in favour of the plaintiff, and decided that "the sole question is whether the goods levied upon were the property of Wrayton or of the plaintiff," and that the said goods were the property of the plaintiff, inasmuch as "the voyages (i.e. the December
[Page 527]
voyages) were undertaken by Wrayton as plaintiff's agent," and that "he (Wrayton) ceased to act as principal and undertook to hold the goods (i.e. the goods on board the 'Ocean Belle,' prior to the commencement of the voyage) as her agent," that is, as agent of the female plaintiff.
On appeal to the Supreme Court of Nova Scotia, judgment was delivered by Graham J., and Townshend J., reversing the judgment of the trial judge, on the ground that the transfer from Wrayton to the female plaintiff of the goods on board the schooner "Ocean Belle" in November, 1895, was void under the statute of 13 Elizabeth, ch. 5; and that therefore the herring purchased in Newfoundland in February, 1895, with the proceeds of those goods and of the other goods purchased by the female plaintiff and placed on board the schooner "Ocean Belle" at the commencement of the December voyage, were the property of Wrayton, and not the property of female plaintiff.
From this judgment the plaintiff asserts this appeal.
Harris Q.C. for the appellants. It is not disputed that plaintiff gave value for the goods and even if they were transferred with intent to defeat the execution of Blais the transfer would not be void under the statute of Elizabeth. See Middleton v. Pollock. Ex parte Elliott
It is well established in Nova Scotia that replevin of goods taken in execution will lie against a sheriff. Ring v. Brenan; McGregor v. Patterson per Bliss J. at page 226; Freeman v. Harrington.
McInnis for the respondent. Goods in the custody of the law cannot be replevied. George v. Chambers; Calcutt v. Ruttan.
[Page 528]
In Carty v. Bonnett the Supreme Court of Nova Scotia so held.
The learned counsel argued on the other point that the transaction was only a scheme to defraud the defendant and was void under 13 Eliz. ch. 5.
Harris Q.C. in reply. Carty v. Bonnett (1) was decided under a special statute which has since been repealed.
The judgment of the court was delivered by:
SEDGEWICK J.—On the 19th of December, 1895, one Narcisse Blais obtained judgment in the Supreme Court of Nova Scotia against one Michael B. Wrayton, a brother of the present appellant, and under an execution issued upon that judgment the defendant as such sheriff levied upon 550 barrels of frozen herring which were then on board the schooner "Ocean Belle," the property of the appellant, whereupon she claiming the herring, brought this action to recover the goods so levied upon, the question to be determined being whether they at the time of the levy were the property of Wrayton or the property of the present appellant. The learned trial judge, Mr. Justice Meagher, gave judgment in favour of the plaintiff, holding that there was a real transaction between Wrayton and his sister, and that no matter what the motive of Wrayton himself was in reference to one or more of certain other creditors the transfer to his sister having been in security for or in payment of a bonâ fide antecedent debt the transaction was not within the statute 13 Eliz. ch. 5. Upon appeal to the Supreme Court of Nova Scotia the judgment of the trial judge was reversed, and it was held that the transaction in question was void as a fraud by Wrayton against his creditors.
[Page 529]
We are of opinion that the judgment of Mr. Justice Meagher should be restored. There is little question as to the salient features of this case. At the time of the transaction impeached Wrayton owed the plaintiff upwards of $4,000. The goods which were transferred to her by Wrayton from the proceeds of which the goods levied upon were bought were transferred to her on account of this indebtedness. No doubt it was the intention on the part of Wrayton to prevent this seizure under the judgment which he expected Blais would very soon recover against him and for the very purpose of securing his sister at the expense of Blais and with intent either to delay him in his remedies or to defeat them altogether. The statute of Elizabeth, while making void transfers, the object of which is to defeat or delay creditors, does not make void but expressly protects them in the interest of transferees who have given valuable consideration therefor, and it has been decided over and over again that knowledge on the part of such a transferee of the motive or design of the transferor is not conclusive of bad faith or will not preclude him from obtaining the benefit of his security. So long as there is an existing debt and the transfer to him is made for the purpose of securing that debt and he does not either directly or indirectly make himself an instrument for the purpose of subsequently benefiting cannot be held void protected and the transaction cannot be held void. As Jessel M. R. said in Middleton v. Pollock at page 108:
It has been decided, if decision were wanted, that a payment is bonâ fide within the meaning of the statute of Elizabeth, although the man who made the payment was insolvent at the time to his own knowledge, and even although the creditors who accepted the money knew it. * * * The meaning of the statute is that the debtor must not retain a benefit for himself.
[Page 530]
And that proposition was a mere re-affirmance of such previous decisions as Holbird v. Anderson et at; Pickstock v. Lyster; Wood v. Dixie. Reference was made in Mr. Justice Townshend's opinion in the Court of Appeal to the case of Thompson v. Webster; but I am unable to see the applicability of that case to the present one. The transaction impeached in that case was held to be valid, but it seems to me clear that the learned Vice-Chancellor Kindersley in the observations which he made to which reference is had was referring, not to transfers for valuable consideration but to voluntary debts. On the whole we are of opinion that the appeal should be allowed, the usual rule as to costs prevailing.
Appeal allowed with costs.
Solicitors for the appellants: Harris, Henry & Cahon.
Solicitors for the respondent: Drysdale McInnis.
Email this Content