Allis-Chalmers Credit Corp. of Canada Ltd. v. Leon's Mfg. Co. and Cormack Developments Ltd., (1983) 45 A.R. 175 (CA)

• Judge: Moir, Kerans, Stevenson, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: April 12, 1983
• Citations: (1983), 45 A.R. 175 (CA)

Allis-Chalmers Credit v. Leon's Mfg. Co. (1983), 45 A.R. 175 (CA)

MLB headnote and full text

Allis-Chalmers Credit Corporation of Canada Ltd. v. Leon's Mfg. Co. Ltd. and Cormack Developments Ltd.

Indexed As: Allis-Chalmers Credit Corp. of Canada Ltd. v. Leon's Mfg. Co. and Cormack Developments Ltd.

Alberta Court of Appeal

Moir, Kerans, Stevenson, JJ.A.

April 12, 1983.

Summary:

A farm equipment manufacturer sold a plow to a dealer by a registered conditional sale agreement. The dealer leased the plow to a farmer. The dealer then assigned its rights under the lease to Allis-Chalmers Canada Inc., which sold its rights under the lease to a retail financer. The retail financer paid part of the price to the dealer in trust to be paid to the manufacturer. The dealer did not pay the manufacturer. Both the manufacturer and the retail financer claimed the plow. The Alberta Court of Queen's Bench in a judgment unreported in this series of reports held that the manufacturer was entitled to the plow. The retail financer appealed.

The Alberta Court of Appeal allowed the appeal and held that the retail financer was entitled to the plow under s. 2(1) of the Factors Act, having purchased it from the dealer as a mercantile agent in the ordinary course of business without actual notice of the conditional sale agreement.

Conditional Sales - Topic 1005

Rights of third parties - Loss of title to subsequent purchasers - Resale by trader in ordinary course of business - Factors Act, R.S.A. 1980, c. F-1, s. 2(1) - A manufacturer sold a plow to a dealer under a registered conditional sale agreement - The dealer leased the plow to a farmer, then assigned its rights under the lease to another, who sold its rights to a retail financer without actual notice of the conditional sales agreement - The Alberta Court of Appeal held that the retail financer was entitled to the plow over the manufacturer pursuant to s. 2(1) of the Factors Act, having purchased the plow from the dealer as a mercantile agent in the ordinary course of business.

Sale of Goods - Topic 3302

Transfer or loss of title to third parties - Sale in ordinary course of business - Sale - What constitutes - A conditional purchaser of a plow leased the plow, then assigned its rights under the lease to a retail financer - The Alberta Court of Appeal held that the transfer of the dealer's interest to the retail financer constituted a sale under s. 2(1) of the Factors Act, R.S.C. 1980, c. F-1.

Sale of Goods - Topic 3305

Transfer or loss of title to third parties - Sale in ordinary course of business - Notice - What constitutes - The Alberta Court of Appeal held that the purchaser from a mercantile agent under s. 2(1) of the Factors Act, R.S.A. 1980, c. F-1, must have actual notice of the agent's lack of authority to sell for the sale to be invalid - See paragraph 17.

Cases Noticed:

Re Jull and Industrial Acceptance Corporation Ltd. and Traders Finance Corporation Limited (1962), 38 W.W.R.(N.S.) 174 (Alta. S.C.), disapproved. [para. 10].

Terra Power Tractor Co. Ltd. v. Chapman (1977), 5 A.R. 286; 2 Alta. L.R.(2d) 247, appld. [para. 16].

Klimove v. G.M.A.C. (1955), 14 W.W.R.(N.S.) 463, consd. [para. 21].

Bank of Nova Scotia v. Tissington (1981), 31 A.R. 332, consd. [para. 21].

Lickbarrow v. Mason (1787), 2 Term. Rep. 63, consd. [para. 23].

Globe Financial Corporation v. Sterling Securities Corporation Limited, [1932] 1 W.W.R. 347 (Sask. C.A.), dist. [para. 26].

Statutes Noticed:

Conditional Sales Act, R.S.A. 1980, c. C-21, sect. 17 [para. 21].

Factors Act, R.S.A. 1980, c. F-1, sect. 2(1) [para. 7].

Authors and Works Noticed:

Bowstead on Agency (14th Ed.), p. 305 [para. 17].

Hanbury, The Principles of Agency (2nd Ed. 1960), pp. 110 [para. 24]; 111 [para. 8].

Munday, A Legal History of the Factor (1977), 6 Anglo-American Law Rev. 22 [para. 14].

Counsel:

S.L. Shavers, for the appellant;

R.G. McVey, for the respondent.

This case was heard before MOIR, KERANS and STEVENSON, JJ.A., of the Alberta Court of Appeal.

On April 12, 1983, KERANS, J.A., delivered the following judgment for the Court of Appeal: