Coles v. Higginson, [1961] SCR 577

Supreme Court of Canada

Coles v. Higginson, [1961] S.C.R. 577

Date: 1961-06-12

Harry Coles (Plaintiff) Appellant;

and

Thomas H. Higginson (Defendant) Respondent.

1961: February 16; 1961: June 12.

Present: Kerwin C.J. and Taschereau, Fauteux, Abbott and Martland JJ.

ON APPEAL FROM THE COURT OF QUEEN'S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC.

Partnership—Mining claims—Partner acquiring co-partner's interest and re-selling at a profit—Claim for share of price of partnership property —Allegation of fraud and misrepresentation.

The parties jointly owned 18 mining claims. The defendant bought the plaintiff's share and gave a cheque which bore the notation "in full payment for all … interest in 18 claims …" This cheque was later cashed by the plaintiff. The defendant then sold the claims to a mining company, of which he was the president. Some 15 months later the plaintiff instituted this action, claiming that he had not sold his interest in the claims to the defendant, but had been induced to consent to a sale to the mining company by the fraudulent representations of the defendant. The claim was for one-half of the purchase price. The trial judge dismissed the action and this judgment was affirmed by the Court of Queen's Bench. The plaintiff appealed to this Court.

Held: The appeal should be dismissed.

Per Curriam: The contention that this claim was for a share of the price of sale of partnership property was not open to the plaintiff on the pleadings, but even on the assumption that a partnership existed

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between the parties for the exploitation of the claims—which was doubtful—such a partnership would be dissolved upon one partner requiring all the interest of his co-partner in the assets of the partnership. It is true that during the continuation of a partnership one partner cannot profit from dealings with partnership assets at the expense of a co-partner. However, one partner is always free to purchase the interest of his co-partner with a view to re-selling at a profit, and under the law of Quebec no duty was imposed upon the purchasing partner to disclose to his co-partner such intention to re-sell. Such a sale was valid and put an end to the partnership in the absence of fraud or misrepresentation. The findings of the lower Courts should not be disturbed.

Per Martland J.: As the plaintiff failed to establish a fiduciary relationship at the time of the purchase by the defendant there was no obligation upon the defendant at that time to disclose his future intended dealings with the claims.

APPEAL from a judgment of the Court of Queen's Bench, Appeal Side, Province of Quebec1, affirming a judgment of Smith J. Appeal dismissed.

E. Lafontaine, for the plaintiff, appellant.

T. P. Slattery, Q.C., for the defendant, respondent.

The judgment of Kerwin C.J. and of Taschereau, Fauteux and Abbott JJ. was delivered by

Abbott J.:—Prior to December 15, 1954, appellant and respondent were the joint undivided owners of eighteen mining claims in the Sudbury district of Northern Ontario. The parties were apparently well known to each other, and some time in June or July of 1954, respondent had acquired from appellant a half interest in the said claims.

On December 15, 1954, respondent issued to appellant his cheque for $1500, which was cashed by the latter on December 20, 1954, and which bore on the back the following notation:

In full payment for all of H. Coles interest in eighteen claims adjoining Zinc Lake Mines, Ltd. property to the west, in Shelley & Onaping Townships, Sudbury District, Ontario.

Up to that time no extensive examination had been made of the said claims, but in the latter part of December 1954, after acquiring appellant's interest, respondent arranged to have a geophysical survey made, obtained certain other reports on the property, and in January 1955, through an intermediary, sold the said claims to West Malartic Mines

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Limited, a company of which he was then the president, for a price of $15,000 in cash and 150,000 fully paid up shares of the said West Malartic Mines Limited. It is a reasonable inference, in my opinion, that in acquiring appellant's interest in these claims, the respondent did so with a view to disposing of them at a profit to the mining company in question.

Some fifteen months later, in March 1956, appellant took the present action, claiming that he had not sold his interest in the said claims to respondent but had been induced to consent to a sale to West Malartic Mines Limited as a result of false and fraudulent representations made to him by respondent. He claimed from respondent one-half of the purchase price, less the $1500 already received by him. Appellant's cause of action is set forth by him in his declaration in the following terms:

3. During the latter part of the year 1954, Defendant represented to Plaintiff that he could sell the said mining claims to the WEST MALARTIC MINES LIMITED, a company of which he was the President, for the price of $3,000.00 in cash and 200,000 fully paid up shares of the said company, to which Plaintiff agreed.

4. The said representations were false and fraudulent and made by Defendant to Plaintiff in order to induce him to accept the said price, while the true transaction was a sale by Defendant to the said WEST MALARTIC MINES LIMITED, for the price of $15,000.00 in cash and 150,000 fully paid up shares of the Capital Stock of the said company.

Respondent's defence was that on or about December 15, 1954, appellant had sold and transferred to him all his right, title and interest in the said claims for the sum of $1500.

It was argued by counsel for appellant that appellant and respondent were in partnership in respect of the said mining claims and that, in effect, appellant's claim is one for a share of the price of sale of partnership property. I do not think such a contention is open to appellant on the pleadings, but even if it be assumed that a partnership did exist between the parties for the exploitation of the said claims—which I think is doubtful—such a partnership would be dissolved upon one partner acquiring all the interest of his copartner in the assets of the partnership.

It is trite law of course, that during the continuation of a partnership one partner cannot profit from dealings with partnership assets at the expense of a co-partner.

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However, one partner is free at any time to purchase the interest of his co-partner in the assets of the partnership with a view to reselling those assets at a profit, and under the law of Quebec no duty is imposed upon the purchasing partner to disclose to his co-partner such intention to resell. In the absence of fraud or misrepresentation, such a sale is valid and puts an end to the partnership.

After a careful review of the respective contentions of the parties and of the evidence, the learned trial judge made the following findings:

The proposition advanced on behalf of the Plaintiff to the effect that there was no contract of sale entered into between himself and the Defendant, but that he, the Plaintiff, was induced by fraud practised by the Defendant to consent to the sale of said claims to West Malartic by the Defendant, representing the partnership, is not only unsupported by the prof but is inconsistent with the terms endorsed on the reverse of the cheque accepted by Plaintiff in consideration of the transfer of his interest in the said mining claims. On the contrary, the Court is forced to conclude that on the 15th day of December 1954 the Plaintiff sold and transferred his interest in said claims to the Defendant thereby terminating any partnership which may have existed previously in respect of said claims, and that thereafter the Defendant was the sole owner of said claims with the right to deal with them as he might see fit.

Those findings were confirmed by the Court of Queen's Bench and appellant has failed to convince me that they should be disturbed.

The appeal should be dismissed with costs.

Martland J.:—After reviewing all of the evidence in these proceedings I am not satisfied that the appellant has proved the facts necessary to establish a fiduciary relationship as between himself and the respondent at the time when the respondent purchased from him his remaining one-half interest in the mining claims. That being so, there was no obligation upon the respondent, at the time the purchase was made, to disclose to the appellant the respondent's intended dealings with the mining claims after the completion of the purchase.

With respect to those issues which were determined by the Courts below, I agree with my brother Abbott that their conclusions should not be disturbed.

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In my opinion the appeal should be dismissed with costs.

Appeal dismissed with costs.

Attorney for the plaintiff, appellant: E. Lafontaine, Montreal.

Attorneys for the defendant, respondent: Slattery, Bélanger & Fairbanks, Montreal.