National Bank v. Soucisse et al., [1981] 2 S.C.R. 339 (1981)

Extract

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National Bank v. Soucisse et al., [1981] 2 S.C.R. 339 (1981)

SUPREME COURT OF

CANADA

National Bank v. Soucisse et al., [1981] 2 S.C.R. 339

Date: 1981-09-28

National Bank of Canada (successor of the Canadian National Bank) Appellant;

and

Dame Florence Soucisse, Dame Thérèse Groulx and Maurice Robitaille Respondents.

1980: December 16; 1981: September 28.

Present: Dickson, Beetz, Estey, Chouinard and Lamer JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC

Suretyship - Continuing and successory suretyship, revocable by the surety at any time - Death of surety - Debts prior to death - Debts subsequent to death - Duty of Bank to disclose to heirs the existence of suretyships and their revocability - Fault of Bank - Fin de non-recevoir - Civil Code, arts. 1022, 1024, 1929, 1937, 2246.

The surety died on October 20, 1963, and the Bank, in reliance on two letters of suretyship, claimed the sum of $122,249.41 from respondents, the heirs of the surety. The suretyship was continuing and successory, revocable by the surety at any time. The Bank took the initiative of contacting the estate on January 7 and April 10, 1964 to inform it of the obligations contracted by the surety. These letters referred to two other letters of guarantee, but the Bank did not tell the estate of the two letters of suretyship that are at issue, and on which it relies in claiming to be repaid certain advances.

The Superior Court allowed the Bank's action in its entirety. The Court of Appeal reversed this judgment and allowed the action only for the amount of $14,997.92, that is the amount of the debts contracted before the surety's death. Hence the appeal to this Court to decide whether the heirs should repay advances made after the death by a creditor who was aware of the death when the heirs, who were completely unaware of the suretyship, were unable to revoke it.

Held: The appeal should be dismissed.

The general and successory obligation to cover future debts is a true suretyship and passes to the heirs of the surety. The obligation pertains to the estate and is in no way purely personal. It is therefore hard for the Court to see why such an obligation would not be subject to the ordinary law, especially when the legislator took the trouble to enact a specific provision like art. 1937 C.C. Further, the surety clearly foresaw the transmission of his obligation to cover to his heirs, in paragraph 5 of the letters of suretyship. This stipulation is not contrary to good morals, public order or the provisions of the law.

However, the Bank was at fault with respect to the heirs of the surety by not disclosing to them the exist­ence of the letters of suretyship, and that they were revocable, before making new advances (Jeannin [Paris, 3e Ch., June 23, 1977, D. 1980. I.R. 11]). Once the Bank took the initiative in informing the estate, it assume...

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