Edmonton Savings and Credit Union Ltd. v. Weir, (1988) 86 A.R. 329 (QB)

• Judge: Murray, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: March 11, 1988
• Citations: (1988), 86 A.R. 329 (QB);1988 CanLII 3448 (AB QB);58 Alta LR (2d) 144;86 AR 329

Edmonton Savings & Credit v. Weir (1988), 86 A.R. 329 (QB)

MLB headnote and full text

Edmonton Savings and Credit Union Ltd. (plaintiff) v. Betty Lou Weir (defendant)

(Action No. 8203 44217)

Edmonton Savings and Credit Union Ltd. (plaintiff) v. Albert Edward Wright (defendant)

(Action No. 8203 44219)

Edmonton Savings and Credit Union Ltd. (plaintiff) v. Leo Gustav Zimmerman (defendant)

(Action No. 8203 44220)

Edmonton Savings and Credit Union Ltd. (plaintiff) v. Isidor Gliener (defendant)

(Action No. 8203 44222)

Edmonton Savings and Credit Union Ltd. (plaintiff) v. Vallma Bennett (defendant)

(Action No. 8203 44209)

Indexed As: Edmonton Savings and Credit Union Ltd. v. Weir

Alberta Court of Queen's Bench

Judicial District of Edmonton

Murray, J.

March 11, 1988.

Summary:

Ten individuals and three companies executed a joint venture agreement to purchase land. The purchase was financed by a $360,000.00 mortgage. Each of the 10 co-venturers contemporaneously executed a separate promissory note for an amount in proportion to their interest in the joint venture. The cumulative total of the notes was $360,000.00. Following default, the mortgagee commenced foreclosure proceedings and ultimately purchased the property for $90,000.00. The mortgagee sued five of the co-venturers under their notes. The mortgagee applied under rules 220 and 221 for a preliminary determination as to whether the actions on the promissory notes were precluded by s. 41(1)(a) of the Law of Property Act. The mortgagee also applied under rule 159 for summary judgment for the amount of the notes. The co-venturers applied under rule 221(2) to dismiss the application and applied under rule 129 to strike the mortgagee's statement of claim.

A Master of the Alberta Court of Queen's Bench, in a judgment not reported in this series of reports, held that s. 41(1)(a) did not apply. The Master granted the mortgagee leave to apply for summary judgment and accordingly dismissed the co-venturers' cross-applications. The co-venturers appealed.

The Alberta Court of Queen's Bench allowed the appeal and struck the mortgagee's statement of claim. The court held that the obligation under the mortgage and the promissory notes were not merely coextensive in form, but were in substance the same and indistinguishable. Therefore, the mortgagee, by taking foreclosure proceedings, was precluded by s. 41(1)(a) from suing on the notes.

Mortgages - Topic 5405

Mortgage actions - Actions on the covenant - Prohibition against - Ten individuals and three companies executed a joint venture agreement to purchase property - The purchase was financed by a $360,000.00 mortgage - Each of the 10 co-venturers contemporaneously executed a separate promissory note for an amount in proportion to their interest in the joint venture - The mortgage and notes were dated the same day, the interest rates were identical and the total amount of all the notes equalled the total amount of the mortgage - The Alberta Court of Queen's Bench held that following commencement of foreclosure proceedings by the mortgagee, the mortgagee was precluded by s. 41(1)(a) of the Law of Property Act from suing under the promissory notes - The court held that the mortgage was the primary security and that the obligations under the mortgage and the notes were in substance the same.

Cases Noticed:

Bank of Nova Scotia v. Bailey and Bailey (1986), 71 A.R. 321; 45 Alta. L.R.(2d) 259, refd to. [para. 7].

Clayborn Investment Ltd. v. Riegert (1977), 5 A.R. 50; 3 Alta. L.R.(2d) 295 (C.A.), consd. [para. 9].

Merit Mortgage Ltd. v. Sicoli (1983), 75 A.R. 204 (C.A.), consd. [para. 9].

Clayborn and British American Oil Company v. Ferguson (1951), 1 W.W.R.(N.S.) 103, refd to. [para. 14].

McLaren v. Calgary Federal Credit Union Ltd. (1984), 56 A.R. 1, refd to. [para. 17].

Chateau Developments Ltd. v. Steele et al. (1983), 46 A.R. 188, not appld. [para. 19].

Canadian Imperial Bank of Commerce v. Robertshaw (1985), 61 A.R. 192, dist. [para. 23].

Canadian Imperial Bank of Commerce v. Andrejcsik (1984), 53 A.R. 137, dist. [para. 23].

Wainwright Savings & Credit Union Ltd. v. Fuder (1976), 1 Alta. L.R.(2d) 188, dist. [para. 23].

Statutes Noticed:

Rules of Court (Alta.), rule 129, rule 159, rule 220, rule 221.

Credit Union Act, R.S.A. 1980, c. C-31, sect. 32, sect. 67(1) [para. 17].

Law of Property Act, R.S.A. 1980, c. L-8, sect. 41(1)(a), sect. 41(2)(b), sect. 41(5) [para. 10].

Counsel:

T.C. Hagg, for the appellants (defendants);

P.J. Pidde, for the respondent (plaintiff).

This appeal was heard before Murray, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following judgment on March 11, 1988.