Mercantile Bank and Trust Co., Liquidators of and Mercantile Bank and Trust Co. v. Credit Europeen S.A., (1980) 32 N.B.R.(2d) 239 (TD)

JudgeStratton, J.
CourtCourt of Queen's Bench of New Brunswick (Canada)
Case DateNovember 14, 1980
JurisdictionNew Brunswick
Citations(1980), 32 N.B.R.(2d) 239 (TD)

Mercantile Bk. v. Credit Europeen (1980), 32 N.B.R.(2d) 239 (TD);

    32 R.N.-B.(2e) 239; 78 A.P.R. 239

MLB headnote and full text

Sommaire et texte intégral

Mercantile Bank and Trust Company Limited, Liquidators of, and Mercantile Bank and Trust Company Limited v. Credit Europeen S.A.

Indexed As: Mercantile Bank and Trust Co., Liquidators of and Mercantile Bank and Trust Co. v. Credit Europeen S.A.

Répertorié: Mercantile Bank and Trust Co., Liquidators of and Mercantile Bank and Trust Co. v. Credit Europeen S.A.

New Brunswick Court of Queen's Bench

Trial Division

Stratton, J.

November 14, 1980.

Summary:

Résumé:

This case arose out of an interpleader application by a customer of Mercantile Bank and Trust Company Limited. Mercantile Bank agreed to loan 2.3 million dollars to the customer, but because of liquidity problems, was forced to borrow the funds to make the loan. Mercantile Bank felt it had to make the loan to avoid withdrawal of the customer's deposits. Mercantile Bank's parent company arranged with Credit Europeen, another of its subsidiaries, to provide the funds to Mercantile. Credit Europeen sent the funds to Mercantile, which in turn loaned them to the customer, so that the customer would not know where the funds came from. No condition was agreed between Mercantile and Credit Europeen that the loan to Mercantile was to be repaid from the repayment proceeds of the customer's loan or that the loan to the customer could be assigned to Credit Europeen. When Mercantile subsequently failed, both Mercantile and Credit Europeen claimed the funds on repayment by the customer. The customer brought an interpleader application to determine entitlement to the funds.

The New Brunswick Court of Queen's Bench, Trial Division, held that Mercantile was entitled to the funds. The Trial Division held that the loan from Credit Europeen to Mercantile was made by deposit to Mercantile and created a mere creditor-debtor relationship between them and that Credit Europeen had no claim contractually or in equity to the customer's repayment funds.

Banks and Banking - Topic 3102

Bank Deposits - Deposit - What constitutes - Mercantile Bank agreed to loan 2.3 million dollars to a customer, but because of liquidity problems, was forced to borrow the funds to make the loan - Mercantile Bank felt it had to make the loan to avoid withdrawal of the customer's deposits - Mercantile Bank's parent company arranged with Credit Europeen, another of its subsidiaries, to provide the funds to Mercantile - Credit Europeen sent the funds to Mercantile, which in turn loaned them to the customer, so that the customer would not know where the funds came from - No condition was agreed between Mercantile and Credit Europeen that the loan to Mercantile was to be repaid from the repayment proceeds of the customer's loan or that the loan to the customer could be assigned to Credit Europeen - When Mercantile subsequently failed, both Mercantile and Credit Europeen claimed the funds on repayment of the customer's loan - The New Brunswick Court of Queen's Bench, Trial Division, held that Mercantile was entitled to the funds - The Trial Division held that the loan from Credit Europeen to Mercantile was made by a deposit to Mercantile and created a mere creditor-debtor relationship between them and that Credit Europeen had no claim contractually or in equity to the customer's repayment funds - See paragraphs 56 to 92, 103 - The Trial Division set out the definition and nature of a deposit - See paragraph 80.

Evidence - Topic 4705

Witnesses - Examination - Cross-examination - Failure to cross-examine - Effect of - The New Brunswick Court of Queen's Bench, Trial Division, held that, if a party fails to cross-examine a witness and no other testimony is inconsistent with the witness' testimony, the party must be taken to have accepted that evidence - See paragraphs 82 to 84.

Trusts - Topic 2310

Constructive trusts - Circumstances when not imposed - Credit Europeen loaned funds to a related bank so that the bank could make a loan of the funds to a customer - Subsequently, Credit Europeen claimed entitlement to the funds paid by the customer in repayment of the loan, claiming that the funds were imposed with a constructive trust in its favour - The New Brunswick Court of Queen's Bench, Trial Division, held that the bank and not Credit Europeen was entitled to the repayment funds and held in the circumstances that no constructive trust should be imposed - The Trial Division discussed the circumstances in which a constructive trust may be found - See paragraphs 93 to 96.

Trusts - Topic 2768

Beneficiaries - Remedies on breach - Tracing - When available - The New Brunswick Court of Queen's Bench, Trial Division, set out the circumstances in which the remedy of tracing of funds is available and held that one prerequisite was the existence of a fiduciary or quasi-fiduciary relationship between the claimant and the recipient of the money - See paragraphs 93 to 102.

Cases Noticed:

Foley v. Hill, [1843-60] All E.R. Rep. 16 (H.L.), appld. [para. 56].

Bank of Montreal v. Attorney-General of Quebec (1978), 25 N.R. 330; 96 D.L.R.(3d) 586 (S.C.C.), appld. [para. 56].

Province of Quebec v. Bank of Montreal (1978), 25 N.R. 330; 96 D.L.R.(3d) 586 (S.C.C.), appld. [para. 56].

Edwards v. Glynn (1859), 28 L.J.Q.B. 350, consd. [para. 56].

Re Brown (1889), 60 L.T.R. 397, consd. [para. 56].

Brunie & Maturie v. The Royal Bank of Canada, [1922] 3 W.W.R. 82, consd. [para. 56].

Barclay's Bank Limited v. Quistclose Investments Limited, [1968] 3 All E.R. 651 (H.L.), consd. [para. 56].

Re Alberta Legislation, [1938] 2 D.L.R. 81, appld. [para. 80].

Browne v. Dunn (1893), 6 R. 67 (H.L.), appld. [para. 83].

Sam v. Canadian Pacific Limited (1976), 63 D.L.R.(3d) 294, appld. [para. 84].

R. v. Palmer, [1980] 1 S.C.R. 759; 30 N.R. 181, appld. [para. 84].

Steffanson v. Jaasma, [1976] 4 W.W.R. 449, appld. [para. 97].

Authors and Works Noticed:

Oxford English Dictionary [para. 80].

Counsel:

David T. Hashey, Q.C., and Richard J. Scott, for the plaintiff;

John W. Turnbull, for the defendant.

This case was heard at St. John, N.B., before STRATTON, J., of the New Brunswick Court of Queen's Bench, Trial Division, who delivered the following judgment on November 14, 1980:

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4 practice notes
  • Table of cases
    • Canada
    • Irwin Books Bank and Customer Law in Canada. Second Edition
    • 19 Junio 2013
    ...20 C.C.L.I. (4th) 115, 2005 MBQB 27 ..................... 235 Mercantile Bank & Trust Co. (Liquidators of) v. Credit Europeen S.A. (1980), 32 N.B.R. (2d) 239, 9 E.T.R. 195, [1980] N.B.J. No. 17 (Q.B.) ........................................................................... 239 Mercantile......
  • Bank Accounts
    • Canada
    • Irwin Books Bank and Customer Law in Canada. Second Edition
    • 19 Junio 2013
    ...Legislation , [1938] 2 D.L.R. 81 at 99 (S.C.C.), Duff J. 5 Mercantile Bank & Trust Co. (Liquidators of) v. Credit Europeen S.A . (1980), 32 N.B.R. (2d) 239 at para. 60 (Q.B.), Stratton J.; see also Canadian Imperial Bank of Commerce v. Gardner Watson Ltd. (1983), 25 Alta. L.R. (2d) 319 at 3......
  • Credit Europeen S.A. v. Hamilton and Cross et al., (1981) 40 N.R. 498 (Motion)
    • Canada
    • Supreme Court (Canada)
    • 7 Diciembre 1981
    ...of Mercantile Bank and Trust Company Limited and Mercantile Bank and Trust Company Limited , a case from the New Brunswick courts, see 32 N.B.R.(2d) 239; 78 A.P.R. 239; 36 N.B.R.(2d); 94 A.P.R. - see Bulletin of Proceedings taken in the Supreme Court of Canada at page 9, December 11, 1981. ......
  • Mercantile Bank and Trust Co., Liquidators of and Mercantile Bank and Trust Co. v. Credit Europeen S.A., (1981) 36 N.B.R.(2d) 339 (CA)
    • Canada
    • New Brunswick Court of Appeal (New Brunswick)
    • 5 Marzo 1981
    ...monies repaid, as between the bank and the company. The New Brunswick Court of Queen's Bench, Trial Division, in a judgment reported in 32 N.B.R.(2d) 239; 78 A.P.R. 239 , held that the bank was entitled to the funds. The Trial Division held that the company had no claim to the monies, eith......
2 cases
2 books & journal articles
  • Table of cases
    • Canada
    • Irwin Books Bank and Customer Law in Canada. Second Edition
    • 19 Junio 2013
    ...20 C.C.L.I. (4th) 115, 2005 MBQB 27 ..................... 235 Mercantile Bank & Trust Co. (Liquidators of) v. Credit Europeen S.A. (1980), 32 N.B.R. (2d) 239, 9 E.T.R. 195, [1980] N.B.J. No. 17 (Q.B.) ........................................................................... 239 Mercantile......
  • Bank Accounts
    • Canada
    • Irwin Books Bank and Customer Law in Canada. Second Edition
    • 19 Junio 2013
    ...Legislation , [1938] 2 D.L.R. 81 at 99 (S.C.C.), Duff J. 5 Mercantile Bank & Trust Co. (Liquidators of) v. Credit Europeen S.A . (1980), 32 N.B.R. (2d) 239 at para. 60 (Q.B.), Stratton J.; see also Canadian Imperial Bank of Commerce v. Gardner Watson Ltd. (1983), 25 Alta. L.R. (2d) 319 at 3......

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