Bank of Montreal v. White, (1976) 10 Nfld. & P.E.I.R. 346 (NFCA)

• Judge: Furlong, C.J.N., Morgan and Gushue, JJ.A.
• Court: Court of Appeal (Newfoundland)
• Case Date: April 06, 1976
• Jurisdiction: Newfoundland and Labrador
• Citations: (1976), 10 Nfld. & P.E.I.R. 346 (NFCA)

Bk. of Mtrl. v. White (1976), 10 Nfld. & P.E.I.R. 346 (NFCA);

    17 A.P.R. 346

MLB headnote and full text

Bank of Montreal v. White and White

Indexed As: Bank of Montreal v. White

Newfoundland Supreme Court

Court of Appeal

Furlong, C.J.N., Morgan and Gushue, JJ.A.

April 6, 1976.

Summary:

This case arose out of the plaintiff's claim against the defendants for a deficiency after repossession and resale of an automobile under a chattel mortgage. The defendant bought an automobile with a loan from the plaintiff bank and gave a chattel mortgage and a promissory note to the bank as security. The defendant defaulted and the plaintiff repossessed and resold the automobile and sued the defendant on the promissory note for the deficiency. The trial court in an unreported judgment allowed the action. The trial court held that the note was a promissory note within the Bills of Exchange Act, R.S.C. 1970, c. B-5, and that s. 12(3) of the Conditional Sales Act, R.S.N. 1970, c. 56 could not constitutionally affect the plaintiff's right of action on the promissory note under the Bills of Exchange Act. The defendants appealed.

The Newfoundland Court of Appeal allowed the appeal and dismissed the action. The Newfoundland Court of Appeal held that the action on the note was merely an attempt to circumvent the effect of s. 12(3) of the Conditional Sales Act which barred an action for a deficiency. The appeal court held that the note was not a promissory note within the meaning of s. 176(1) of the Bills of Exchange Act, since it was not unconditional, and held that the Bills of Exchange Act was inapplicable.

Chattel Mortgages - Topic 6130

Seller's remedies - Seizure and sale - Claim for deficiency on resale - The defendant bought an automobile with a loan from the plaintiff bank - The defendant gave the bank a chattel mortgage and a promissory note as security for the loan - The defendant defaulted and the plaintiff repossessed and resold the automobile and sued the defendant on the promissory note for the deficiency - S. 12(3) of the Conditional Sales Act, R.S.N. 1970, c. 56, barred an action for a deficiency after repossession and resale - The Newfoundland Court of Appeal held that the promissory note was taken to secure payment on any balance due under the chattel mortgage, was therefore conditional upon the chattel mortgage and was no more than "an agreement to the contrary" within the meaning of s. 12(11) of the Conditional Sales Act - The Court of Appeal held that the action on the note was an attempt to circumvent the effect of s. 12(3) which barred an action for a deficiency - The Court of Appeal dismissed the action.

Negotiable Instruments - Topic 6001

Bills of exchange - What constitutes a promissory note - The defendant bought an automobile with a loan from the plaintiff bank and gave a chattel mortgage and a promissory note to the bank as security - The defendant defaulted and the plaintiff repossessed and resold the automobile and sued the defendant on the promissory note for the deficiency - The Newfoundland Court of Appeal held that the note was not a promissory note within the meaning of s. 176(1) of the Bills of Exchange Act, R.S.C. 1970, c. B-5, since it was not unconditional, and held the Bills of Exchange Act inapplicable - The Court of Appeal held the action on the note was an attempt to circumvent the effect of s. 12(3) which barred an action for a deficiency - The Court of Appeal dismissed the action.

Cases Noticed:

Range v. Belvedere Finance Corp., [1969] S.C.R. 492; 5 D.L.R.(3d) 257, appld. [para. 11].

Traders Finance Corp. v. Casselman (1958), 16 D.L.R.(2d) 183, affd. 22 D.L.R.(2d) 177 (S.C.C.), consd. [para. 13].

Statutes Noticed:

Bills of Exchange Act, R.S.C. 1970, c. B-5, sect. 176(1) [para. 9].

Bills of Sale Act, R.S.Nfld. 1970, c. 21, sect. 2(b), sect. 14 [para. 6].

Conditional Sales Act, R.S.Nfld. 1970, c. 56, sect. 12(3), sect. 12(11) [para. 5].

Counsel:

E. Poole, for the defendants-appellants;

No one for the plaintiff-respondent.

This case was heard on March 23, 1976, before FURLONG, C.J.N., and MORGAN and GUSHUE, JJ.A., of the Newfoundland Supreme Court, Court of Appeal.

On April 6, 1976, MORGAN, J.A., delivered the judgment of the Court of Appeal