Supreme Court of Canada
Segsworth v. Anderson, (1895) 24 S.C.R. 699
Date: 1895-01-15
Segsworth
and
Anderson
1894: October 16, 17; 1895: January 15.
Present: Sir Henry Strong C.J., and Taschereau, Gwynne, Sedgewick and King JJ.
Insolvency—Assignment in trust for creditors—Sale of estate to insolvent’s wife—Guarantee by creditor and inspector—Trustee—Account for profit.
APPEAL from a decision of the Court of Appeal for Ontario, reversing the judgment of the Divisional Court in favour of the plaintiffs.
[Page 700]
The plaintiffs (appellants) in this case were creditors of the insolvent estate of one Jorgenson who had assigned under the Act relating to assignments and preferences to creditors. The defendant Anderson was also a creditor, and the defendant Lee an inspector of the estate. The assets of the estate were offered for sale by tender and purchased by the insolvent’s wife who gave as security for payment notes indorsed by defendant Anderson. After the tender of the purchase had been approved by the inspectors, Anderson induced the defendant Lee to join him in securing the payment, and they took a chattel mortgage on the stock so purchased to protect themselves. The estate paid a small dividend, and the plaintiffs brought an action to have defendants account for any profit they may have made out of the sale of the stock.
On the trial judgment was given for the plaintiff and a reference ordered to ascertain what profit the defendants had received The Divisional Court varied this judgment by declaring that plaintiffs should receive the difference between their claims against the estate and what they would have received in common with the other creditors by way of dividend, with liberty to apply to the court if the amount could not be agreed upon. The Court of Appeal reversed the decision of the Divisional Court and dismissed the action, holding that no loss to the estate had been proved.
The Supreme Court allowed the appeal and restored the judgment of the trial judge. Taschereau J. dissenting. The court held that the defendant Lee, as inspector, could not obtain an advantage for himself from his position and that the creditors were entitled to a reference to ascertain what profit, if any, he had derived from the transaction.
Appeal allowed with costs.
Moss Q.C. and Parker for the appellants.
S.H. Blake Q.C. for the respondents.
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