Supreme Court of Canada
Reid v. Creighton (1895) 24 SCR 69
Date: 1895-01-15
Edward M. Reid and Aubrey D. Coffill (Plaintiffs)
Appellants
And
Joseph Creighton (Defendant)
Respondent
1894: Nov. 5; 1895: Jan. 15.
Present:—Sir Henry Strong C.J., and Taschereau, Gwynne, Sedgewick and King JJ.
ON APPEAL FROM THE SUPREME COURT OF NOVA SCOTIA.
Chattel mortgage—Affidavit of bona fides—Compliance with statutory forms—Change of possession—Levy under execution—Abandonment.
N. executed a chattel mortgage of his effects and shortly afterwards made an assignment to one of the mortgagees, in trust for the benefit of his creditors. The assignee took possession under the assignment.
Held, affirming the decision of the Supreme Court of Nova Scotia, that there was no delivery to the mortgagees under the mortgage which transferred to them the possession of the goods.
The Bills of Sale Act, Nova Scotia, R.S.N.S. 5th ser. c. 92, by s. 4 requires a mortgage given to secure an existing indebtedness to be accompanied by an affidavit in the form prescribed in a schedule to the act, and by s. 5 if the mortgage is to secure a debt not matured the affidavit must follow another form. By s. 11 either affidavit must be, "as nearly as may be," in the forms prescribed. A mortgage was given to secure both a present and future indebtedness, and was accompanied by a single affidavit combining the main features of both forms.
Held, affirming the decision of the court below, Gwynne J. dissenting, that this affidavit was not "as nearly as may be" in the form prescribed; that there would have been no difficulty in complying strictly with the requirements of the act; and though the legal effect might have been the same the mortgage was void for want of such compliance.
APPEAL from a decision of the Supreme Court of Nova Scotia reversing the judgment for plaintiffs at the trial.
The material facts governing the decision of the appeal are as follows:—
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The plaintiffs (appellants) were merchants doing business at Bridge water, in the county of Lunenburg, under the name of Reid, Coffill & Co. The defendant (respondent) is the sheriff of the county of Lunenburg, and as such sheriff seized certain goods under an execution issued against one Alexander Nelson, who at one time also did business as a merchant at Bridge-water. The goods were the property of the said Alexander Nelson, who gave a chattel mortgage to the plaintiffs of the property in question previously to the seizure by the defendant as sheriff. It was claimed by the defendant that the chattel mortgage did not set out the agreement between the parties, as required by the Bills of Sale Act. and that the affidavit accompanying the chattel mortgage was not in compliance with the statute, chap. 92, Revised Statutes of Nova Scotia, fifth series, and that the chattel mortgage for these reasons was inoperative against the defendant seizing the goods as sheriff under the said execution. The plaintiff's contention was that the chattel mortgage and affidavit were in compliance with the statute; that if not, the plaintiffs were in possession of the goods at the time of seizure from the grantor in the chattel mortgage, and in such case the statute had no application; or that the sheriff had abandoned the levy made by him on the goods under the said execution, and was a trespasser in selling them.
The mortgage was given to secure an existing indebtedness and also to secure the mortgagees as indorsers of notes of the mortgagor not matured. As to the first section 4 of the Nova Scotia Bills of Sale Act, R.S N.S. 5th ser. ch. 92, requires the mortgage to be accompanied by an affidavit in the form given in schedule A of the act, by which form the mortgagor makes oath that:
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"The amount set forth therein as being the consideration thereof is justly and honestly due and owing by the grantor to the grantee, and the chattel mortgage was executed in good faith and not for the purpose of protecting the property mentioned therein against the creditors of the mortgagor or of preventing the creditors of such mortgagor from obtaining payment of any claims against him."
Section 5 of the act requires a mortgage given to secure future advances or to secure the mortgagee against indorsements of bills or notes, to be accompanied by an affidavit in the form given in schedule B. the material part of said form being as follows:
"The mortgage hereto annexed truly sets forth the agreement entered into between the parties, and truly states the extent of the liability intended to be created and covered by said mortgagor, and that such mortgage was executed in good faith and for the express purpose of securing the mortgagee against the payment of the amount of the liability of the mortgagor and not for the purpose of securing the goods and chattels mentioned therein against the creditors of the mortgagor, nor to prevent such creditors from recovering any claims they may have against such mortgagor."
Sec. 11 of the act is as follows:
"11. The affidavits mentioned in sections four and five of this chapter, shall be as nearly as may be in the forms in schedules A and B respectively."
In this case the mortgage, as stated above, was to secure both an existing debt and liability against indorsements, and the affidavit of the mortgagor was as follows, omitting the formal portions:
"2. The amount of $625.32 set forth therein as being part of the consideration thereof is justly and honestly due and owing by me the grantor to the said grantees
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or mortgagees, and the said mortgage truly sets forth the agreement entered into between the said parties thereto and truly states the extent of the liability intended to be covered by me in respect of the notes therein mentioned, upon which the said firm of Reid, Coffill & Co. are liable for me as accommodation indorsers."
"3. The said mortgage was executed by me in good faith and for the express purpose of securing to the said mortgagees the said amount owing by me to them and of securing said mortgagees against the payments of the amounts of their liability for me as aforesaid, and not for the purpose of securing the goods and chattels mentioned therein against my creditors, nor to prevent such creditors from recovering any claim they may have against me."
There was no delivery of the goods to the mortgagees as such, but the mortgagee Coffill took possession of the effects of the mortgagor under the assignment to him as trustee executed after the mortgage. This was claimed to be a possession of the goods by the mortgagees which made the statute of no application.
It was also contended by the plaintiff that the sheriff, after seizing under the execution, abandoned the levy by leaving the goods on the premises with no one in charge of them. The defendants contended that under the facts proved there was no abandonment in law, and also that there was evidence of a man having been left by the sheriff to watch the goods.
At the trial a verdict was given for the plaintiffs, the trial judge holding that the affidavit was substantially in the form required by the act and that the mortgagees had possession of the goods. The verdict was set aside by the court en banc on the grounds that there was no possession under the mortgage; that the affidavit was not "as nearly as may be" in the prescribed form; and
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that the sheriff had not abandoned the levy. The plaintiffs appealed.
Russell Q.C. for the appellants. The words "as nearly as may be" in the act do not mean as nearly as possible, but only that there shall be no unnecessary deviation. Parsons v. Brand; Bird v. Davey; Thomas v. Kelly.
The act did not contemplate a mortgage to secure the two kinds of indebtedness mentioned in sections 4 and 5. The affidavit here covers the essential parts of both forms.
Possession by the assignee takes the case out of the statute. McLean v. Bell; McMullin v. Buchanan.
Borden Q.C. and Roscoe for the respondent. As to the defect in the affidavit see Archibald v. Hubley; Morse v. Phinney.
There is nothing in the act to show that possession does away with the necessity for an affidavit.
THE CHIEF JUSTICE.—I am of opinion that this appeal must be dismissed with costs for the reasons stated in the judgment of my brother Sedgewick.
TASCHEREAU J.—On the appellant rested the onus to convince us that the form he has to make good in this case is as nearly as may be in the form prescribed by the statute. His task was an arduous one. He has not succeeded, and could not succeed. I am of opinion that the appeal should be dismissed. I adopt Mr. Justice Graham's reasoning.
GWYNNE J.—This case, in my opinion, turns wholly upon the question whether the affidavit annexed to the
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chattel mortgage under which the plaintiffs claim was a sufficient compliance with ch. 92 of the 5th series of the Revised Statutes of Nova Scotia; and reading that statute, as I am of opinion it always must be read, in the light of sec. 11 of ch. 1 of the same series I am of opinion that it was, and that, therefore, the appeal should be allowed with costs and judgment be ordered to be entered for the plaintiffs in the court below, in accordance with the decision of Mr. Justice Henry, the learned trial judge.
SEDGEWICK J.—Three questions were raised at the argument of this appeal, viz.: (1). Were the plaintiffs entitled to succeed by virtue of the alleged delivery to them of the goods referred to in their chattel mortgage? (2). Were the levy and sale under execution of the goods regular? And (3). Was the chattel mortgage invalid by reason of non-compliance with the statutory provisions of the Bills of Sale Act?
The first two questions were practically disposed of at the argument. The evidence showed that there never had been any possession of the goods by the plaintiffs under their chattel mortgage, even although the plaintiff Coffill may have had possession under, another instrument, and further that there was no intentional or actual abandonment of the levy so as to render the sheriff's sale ineffectual.
The sole question remaining is as to the validity of the chattel mortgage.
This instrument was executed by Alexander Nelson in favour of the plaintiffs for the purpose of securing an existing indebtedness of $625.32 and for the further purpose of securing them against loss in respect of two promissory notes, amounting in the aggregate to $500, which they had indorsed for his accommodation.
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Section 4 of the Bills of Sale Act refers to the case of a chattel mortgage executed for the first purpose, and specifies the character of the affidavit that must accompany it in order to make it valid as against creditors.
Section 5 refers to the case of a chattel mortgage executed for the second purpose, likewise specifying the character of the affidavit that must accompany it.
Section 11 enacts that the affidavits mentioned in sections 4 and 5 shall be as nearly as may be in the forms in schedules A and B respectively, and in the schedules the forms are given.
These forms are not in words identical and it is open to much argument to say that they are substantially identical in effect.
The affidavit accompanying the chattel mortgage in question did not comply with either form but rather attempted to combine the two, selecting some words from the one and others from the other, doubtless with a view of giving effect to the statutory requirements.
The question then is: Is this affidavit as nearly as may be in the forms in schedules A and B?
In my view it is not. There would in my judgment have been no obstacle (so far as the evidence goes) in the way of the mortgagor swearing to an affidavit in which the first form might be used in relation to the existing debt and the second form in relation to the accommodation notes. It was not the function of the gentlemen who drafted this instrument to assume the responsibility of using language in a statutory affidavit differing in words (whether or not differing in substance) from the prescribed form, in the hope that identity of meaning in the words used would secure validity for it. The affidavit was not as nearly as it might have been in the statutory form. There was a clear, manifest and altogether needless departure
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from it, and when that is the case it is not proper that we should be astute in inquiring the extent to which the volunteered form is equivalent to the statutory one.
In my view this case is a much stronger one against the instrument than Hubley v. Archibald or Morse v. Phinney.
Even if it be admitted that the legal effect is the same it does not necessarily follow that the affidavit is valid. If a form might have been followed but is knowingly and unnecessarily departed from, even although there is no alteration in the legal effect of the document, I know of no principle of construction which makes that a compliance with the statute. Thomas v. Kelly.
On the whole I am of opinion the appeal should be dismissed with costs.
KING J. concurred.
Appeal dismissed with costs.
Solicitor for appellants: H. T. Ross.
Solicitor for respondent: W. E. Roscoe.
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