Larue v. Attorney General for Quebec / Larue v. Royal Bank of Canada

Both courts in New Brunswick have decided that the appellant's action to recover damages for non-acceptance of the prunes should be dismissed with costs. For the reasons sumouo which we have given, we think those decisions ought to be upheld.

NEWCOMBE J.-The Royal Bank of Canada, one of the respondents, recovered judgments against P. E. Emile B6langer on 25th March, 1922, for $14,036.44, and caused the judgment to be registered in the registration division of Quebec, on 6th April, 1922, also, at the same time, causing to be registered a notice describing real estate of the debtor, as required by art. 2121 of the Civil Code, and later, on 11th April, 1922, a further notice, describing additional lands. The article reads as follows:

2121. The judgments and judicial acts of the civil courts confer hypothees when they are registered, from the date only of the registration of (1) Appeal to Privy Council.

Afterwards, on 24th December, 1923, the debtor made an authorized assignment for the benefit of his creditors under the Bankruptcy Act of the Dominion, c. 36 of 1919, and the appellants were, on 15th January, 1924, appointed trustees under this instrument; the assignment and appointment were registered as required by the Bankruptcy Act, ss. 8 and 9 of s. 11, the former as amended by s. 14 (2) of c. 31 of 1923. The bank filed its claim with the trustees for the amount of the judgment, asserting a privilege in the nature of a judicial hypothee against the real estate of the debtor described in the registered notices.

Subsequently, on 8th May, 1924, the trustees, pursuant to their powers under s. 53 of the Bankruptcy Act, disallowed the bank's claim, in so far as it set up a privilege or hypothec upon the immovables in virtue of the judgment, saving however the costs of registration. The ground of the disallowance was that under s. 11, subss. 1 and 10, the assignment had, precedence of the bank's claim. The bank appealed to the Superior Court at Quebec, alleging that the trustees had misinterpreted the relevant provisions of s. 11, or that, if their interpretation were correct, these provisions were incompetent to the Parliament of Canada; and, pursuant to the statutory requirements, the bank gave notice of its appeal, and of the constitutional question involved, to the Attorney General for Canada, and likewise to the Attorney General of Quebec. The latter filed an intervention in the case, supporting the contention of the bank in so far as it denied the validity of the legislation.

The appeal was heard in the Superior Court before the learned Chief Justice, who reversed the decision of the trustees and restored the claim. He held that upon the true interpretation of the Bankruptcy Act the bank was not disentitled to recognition as a privileged creditor, and that therefore the question of legislative power did not arise, but that, if the enactment were intended to avoid the privilege or priority of the bank as a registered judgment creditor under the provisions of the Civil Code, the intention would fail to operate for lack of enacting authority. The trustees appealed to the Court of King's Bench and that court unanimously affirmed the judgment of the Superior Court.

The provisions of the Bankruptcy Act which were considered by the courts below, and must be reviewed upon LAw this appeal, are those already mentioned; they are contained in s. 11, subss. 1 and 10, as enacted by s. 6 of c. 34 of BANx or 1920, and s. 10 of c. 17 of 1921.

These two subsections, the former in its amended form, are here set out as fol- NeacombeJ. lows:

(1) Every receiving order and every authorized assignment made in pursuance of this Act shall take precedence over,-(a) all attachments of debts by way of garnishment, unless the debt involved has been actually paid over to the garnishing creditor or his agent; and

(b) all other attachments, executions or other process against property, except such thereof as have been completely executed by payment to the execution or other creditor; and except also the rights of secured creditor under section six of this Act; but shall be subject to a lien for one only bill of costs, including sheriff's fees, which shall be payable to the garnishing, attaching or execution creditor who has first attached by way of garnishment or lodged with the sheriff an attachment execution or other process against property.

From and after such registration or filing or tender thereof (referring to the requirements for registration and filing contained in the preceding subsections 8 and 9) within the proper office to the registrar or other proper officer, such order or assignment shall have precedence of all certificates of judgment, judgments operating as hypothecs, executions and attachments against land (except such thereof as have been completely executed by payment) within such office or within the district, county or territory which is served by such office, but subject to a lien for the costs of registration and sheriff's fees, of such judgment, execution or attaching creditors as have registered or filed within such proper office their judgments, executions or attachments.

It should be observed that by subs. 16, added to s. 11 by c. 34 of 1920, it was enacted that the provisions of subsections 1 and 10, above quoted, should not apply to any judgment or certificate of judgment registered against real or immovable property in Nova Scotia or New Brunswick prior to the coming into force of the Bankruptcy Act, and which became, under the laws of the province wherein it was registered, a lien or hypothec upon such real or immovable property. And, subsequently, by c. 31, s. 5, of 1925, this subsection was repealed and re-enacted to include the province of Quebec. The provisions of subs. 16 distinctly shew that in 1925 Parliament considered that subas. 11 (1) and (10) had previously applied to judgments or certificates of judgment registered against immovable property in the province of Quebec, but they have no application in this case, because it was, as I have shewn, after the .221 coming into force of the Bankruptcy Act that the judgment was recovered and registered.

I have come to a conclusion differing from that of the courts below upon both branches of the case.

First, as to the interpretation, it will be perceived that J. subs. 10 of s. 11 provides explicitly that, from and after registration, a receiving order or auth-orized assignment in bankruptcy shall have precedence of all certificates of judgment, judgments operating as hypothecs, executions and attachments against land, except those which have been completely executed by payment. The learned chief Justice considers that this is a mere rule of procedure for the execution and application of the Bankruptcy Act, and does not affect the civil rights of hypothecary creditors, except so far as to provide that registration of the receiving order or assignment shall suspend the creditors' execution upon the immovables of the bankrupt, and. that it endows the receiving order or assignment only with a priority, He says, moreover, as to the statutory expressions, " certificates of judgment," and, " judgments operating as hypothecs," that they are not known in the province of Quebec. To the like effect is the view expressed by the learned Chief Justice of Quebec, speaking for the Court of King's Bench.

I confess, with great respect for the learned judges below, that I am unable to follow the interpretation or the reasoning by which they qualify and expound the meaning and effect of subs. 10 in its application to the province of Quebec. I find nothing, either in this subsection or in any other part of the Bankruptcy Act, to justify the opinion that, when Parliament enacted in terms that the order or assignment in bankruptcy should have precedence of all certificates of judgment and judgments operating as hypothecs, the priority should not apply for all purposes, including distribution as well as realization of the assets. If it had been intended, as the learned judges seem to suggest, that, although the trustee in bankruptcy was to realize upon the immovables against which a judgment is registered, the proceeds when realized should nevertheless be subject to the charge which the creditor had obtained by registration of his judgment before the making of the receiving order or of the assignment, it is difficult to see what different or additional security is afforded to the creditor with regard to his costs, which are, by the subsection, expressly declared to enjoy a lien, that is a preference-the same sort of preference I suppose as, upon the interpretation propounded by the learned judges, the creditor would have in respect to the whole amount secured by his judgment. It is not easy to express the meaning of the statute in words which make it more clear than those of the text; and, when s. 51, providing for the priority of claims, is read along with s. 11, the intention becomes manifest; I do not doubt that Parliament meant to create equality in the distribution as between ordinary creditors and judgment creditors, except as to the costs, which were to retain their priority.

Moreover, it seems impossible to exclude from the description, " certificates of judgment," " judgments operating as hypothecs," the judgments and judicial acts of the civil courts which confer hypothecs under art. 2121 of the Civil Code. These judgments may, under the provisions of the article, be registered, and the registration is effected not otherwise than by producing to the registrar, accompanied by the statutory notice identifying the lands, an -exemplification or certified copy of the judgment, which is the document in respect of which the requisite entries are made by the registrar; it is from the registration that the hypothecs result, and I should think therefore that these judgments and judicial acts, when registered, are not inappropriately described as " certificates of judgment " or " judgments operating as hypothecs."

Subsection clearly was enacted for the whole of the Dominion, including the province of Quebec. The word " hypothee " is apt to refer to the real right described in the code under that name (arts. 2016 et seq. C.C.).

A judgment operates as a " hypothec " in the province of Quebec when it is registered upon immovable property belonging to the debtor (arts. 2034, 2121 C.C.), and the "hypothec " thereby acquired is the " judicial hypothec" which, in the language of the code, " results from the judgments."

(Arts. 2020, 2034 C.C.).

Secondly, upon the question of legislative authority, it was contended that Parliament, in the execution of its powers of bankruptcy and insolvency, cannot alter the status quo as between debtor and creditor, in relation to privilege or priority, -existing at the time when the act bankruptcy is committed; that all rights then subsisting must be recognized, and that Parliament can provide only for the realization and distribution of the estate, subject to such creditors' charges, preferences and priorities as exist under the provincial laws at the time when the condition of the debtor's affairs make the Dominion procedure applicable. But this narrow definition of the enumerated powers of Parliament rejects the doctrine of the common or unoccupied field, where place must be found for the powers which are described as ancillary or incidental, or those possessing a double aspect, and is at variance with the course of legislative practice which has prevailed since the Union, and with the ruling cases.

The Insolvent Acts, c. 16 of 1869, and its successor, c. 16 of 1875, contained proVisions for invalidating fraudulent preferences and conveyances, and they provided, moreover, that no lien or privilege, upon either the personal or real estate of the insolvent, should be created for the amount of any judgment debt by the issue or delivery to the sheriff of any execution, or by levying upon or seizing the effects or estate of the insolvent under any such writ, if before payment to the plaintiff of the moneys actually levied the estate of the debtor should have been assigned to an interim assignee or placed in compulsory liquidation under the Act, saving however the judgment creditor's lien or privilege for his costs. The Insolvent Act of 1875 and its amending Acts were repealed by c. 1 of 1880, and, two years later, an Act was passed respecting insolvent banks, insurance companies, loan companies, building societies and trading corporations, c. 23 of 1882. This Act was consolidated in the Revised Statutes, 1886, c. 129, as the Winding-Up Act, and, by s. 66, it was provided, not only that .there should be no lien or privilege created for the amount of any judgment debt by the issue or delivery to the sheriff of any execution, or by levying upon or seizing under such writ the effects or estate of the company, but also that no lien, claim or privilege should be created upon the real or personal property of the company by the filing or registering of any memorial or minute of judgment, if, before payment over to the plaintiff of the moneys actually levied, paid or received under such writ, memorial or minute, the winding-up of the business of the company had commenced, saving in like manner the plaintiff's lien or privilege for costs. Sec. 66 remains in force as s. 84 of the Winding-Up Act, Revised Statutes, 1906, c. 144. The authority of Parliament to enact these provisions has certainly never been successfully attacked, and so far as I am aware has not been questioned, and when, at the argument, the attention of counsel was directed to the winding-up legislation they were not able to point to any decision in which the legislative power had been denied or doubted.

It was pointed out in Citizens and Queen Insurance Companies v. Parsons (1), that some of the classes of subjects assigned to the provincial legislatures unavoidably run into and are embraced by some of the enumerated classes of subjects in s. 91, and that, while it is not intended that the powers exclusively assigned to the legislatures shall be absorbed by the Parliament, nevertheless, with regard to certain classes of subjects, it is the duty of the courts to ascertain, and to define, in the particular cases before them, the limits of the respective powers belonging to Parliament and to the legislatures. Later, in Hodge v. The Queen (2), we are told that the principle which the Parsons Case (1) illustrates is that subjects which in one aspect and for one purpose fall within s. 92, may in another aspect and for another purpose fall within s. 91. Another -exposition of the competing powers of legislation as 'between the Dominion and the provinces is very concisely expressed by Lord Dunedin in Grand Trunk Railway Co. v. Attorney General for Canada (3), as follows:

Canada and Tennant v. Union Bank of Canada (2), seems to estab- %_ lish these two propositions: First, that there can be a domain in which provincial and Dominion legislation may overlap, in which case neither legislation will be ultra vires, if the field is clear; and secondly, that if the field is not clear, and in such a domain the two legislations meet, then the Dominion legislation must prevail.

NewcombeJ.

That the enumerations of s. 91 describe exclusive Domin- ion powers has been frequently affirmed and is not denied. It was pointed out long ago by Lord Selborne, when he delivered the judgment of the Judicial Committee of the Privy Council in L'Union St. Jacques de Montr6al v. Blisle (3), that the words " bankruptcy and insolvency," as mentioned in the 21st enumeration of s. 91, describe in their known legal sense provisions made by law for the administration of the estates of persons who may become bankrupt or insolvent according to the rules and definitions prescribed by law, including of course the conditions in which that law is to be brought into operation, the manner in which it is to be brought into operation, and the effect of its operation.

And, in Cushing v. Dupuy (4), Sir Montague Smith, delivering the judgment of the Committee, said:

It would be impossible to advance a step in the construction of a scheme for the administration of insolvent estates without interfering with and modifying some of the ordinary rights of property, and other civil rights, nor without providing some mode of special procedure for the vesting, realization and distribution of the estate, and the settlement of the liabilities of the insolvent.

An assignment for the general benefit of creditors under this Act shall take precedence of all judgments and of all executions not completely executed by payment, subject to the lien, if any, of an execution creditor for his costs, where there is but one execution in the sheriff's hands, or to the lien, if any, of the creditor for his costs, who has the first execution in the sheriff's hands.

It was contended on behalf of the Attorney'General for Canada that this enactment was incompetent to the legislature of Ontario as affecting the exclusive Dominion power of bankruptcy and insolvency. At that time the former (1) [18941 A.C. 189.

(3) L.R. 6 P.C. 31.

(2) [1894] A.C. 31.

(4) [1880] 5 A.C.

409, at pp. 415-6.

Dominion Insolvent Acts had been repealed, and the Dominion field of bankruptcy and insolvency was, except LABUE as to the companies to which the Winding-Up Act applied, unoccupied. It will be perceived that the declared intention of the legislature was to displace the precedence which had belonged to judgment or execution creditors, except as NewcombeJ. to costs, and to give priority to assignments for the general benefit of creditors. In the present case, the contention is, conversely, that Parliament cannot give effect to a similar provision with regard to the operation of a receiving order or compulsory assignment in bankruptcy as against a creditor who, under the provincial law, is first in the race for execution. It is apparent I think that the observations of Lord Herschell, at pp. 200-1 (1), effectively dispose of this contention. His Lordship said:

It is not necessary in their Lordships' opinion, nor would it be expedient to attempt to define what is covered by the words " bankruptcy " and "insolvency"

in s. 91 of the British North America Act. But it will be seen that it is a feature common to all the systems of bankruptcy and insolvency to which reference has been made, that the enactments are designed to secure that in the case of an insolvent person his assets shall be rateably distributed amongst his creditors whether he is willing that they shall be so distributed or not.

'In their Lordships' opinion these considerations must be borne in mind when interpreting the words " bankruptcy " and " insolvency " in the British North America Act. It appears to their Lordships that such provisions as are found in the enactment in question, relating as they do to assignments purely voluntary, do not infringe on the exclusive legislative power conferred upon the Dominion Parliament. They would observe that a system of bankruptcy legislation may frequently require various ancillary provisions for the purpose of preventing the scheme of the Act from being defeated. It may be necessary for this purpose to deal with the effect of executions and other matters which would otherwise be within the legislative competence of the provincial legislature. Their Lordships do not doubt that it would be open to the Dominion Parliament to deal with such matters as part of a bankruptcy law, and the provincial legislature would doubtless 'be then precluded from interfering with this legislation inasmuch as such interference would affect the bankruptcy law of the Dominion Parliament. But it does not follow that such subjects, as might properly be treated as ancillary to such a law and therefore within the powers of the 'Dominion Parliament, are excluded from the legislative authority (1) [1894] A.C. 189.

This decision clearly recognizes the necessity, or at least the propriety, of including in general bankruptcy legislation such provisions as those of s. 11 (1) and (10) of the Bankruptcy Act; and, following the view expressed by their Lordships, I hold that these enactments belong or have strict relation to the subject of bankruptcy and insolvency, and are therefore, as provisions of the Bankruptcy Act, within the paramount authority of Parliament.

I would allow the appeal with costs throughout, and the disallowance should be restored.

J. (dissenting).-La loi de faillite exige que toute ordonnance de s6questre et toute cession autoris6e soit enregistrie ou d6pos6e " au bureau r6gulier dans chaque district ", etc., oil sont situ6s les biens appartenant au failli ou au cdant.

Elle ajoute (article paragraphe 10):

A Le juge en chef de la Cour Sup6rieure et la Cour du Banc du Roi pr6sid6e par le judge en chef de la province ont 6t6 unanimement d'avis que les expressions " certificats de jugement " et " jugement op6rant comme hypothiques " 6taient inconnues dans la langue juridique du Qu6bec et que, par cons6quent, 'article de la loi reproduit plus haut ne pouvait affecter 1'hypoth6que judiciaire r~clam6e par la Banque Royale du Canada dans la cession autoris~e de P. E. Belanger, que les syndics ont rejet6e en s'appuyant sur ce paragraphe de la loi.

Sur le sens de ces expressions et la question de savoir si, dans cette province, elles correspondent A une rdalit6 quelconque, je ne saurais rien ajouter h ce qu'ont d6jA dit les deux jugements qui sont portis en appel devant cette cour. On objecte que leur interpretation ne tient aucun compte des mots " assujettis A un privilege pour les frais d'enregistrement ". La r6ponse me parait 6tre que: s'il n'y a dans la provine m "er tificat s dejugemenft 'n i "

ement op rant comme hypothiques," la phrase accessoire qui les suit et les qualifie assujettis A un privilige pour les frais d'en- J. registrement ne peut non plus s'appliquer h quoi que ce soit dans la province et il n'y aurait done pas lieu de s'en occuper, lorsqu'on discute un litige de cette province. Sans doute, cette interpretation est stricte, mais on ne saurait 1'6tre trop, lorsqu'il s'agit d'accepter une pritention qui aurait pour effet de faire disparaitre une garantie hypoth6caire reconnue par le droit civil et dont les origines remontent A l'Ordonnance de Villers-Cotterets (1539) et A l'Ordonnance de Moulins (1566).

Les notes des juges de la Cour Sup6rieure et de la Cour du Banc du Roi me dispensent de tracer l'historique de 1'hypothique judiciaire. Elle est, dans son essence, identiquement semblable h l'hypoth~que l6gale et A l'hypothique conventionnelle.

Elle n'a rien de la proc6dure, mais est uniquement matisre de droit civil.

Comme tout instrument hypoth6caire, elle se divise en deux parties: 1'obligation et la garantie. L'obligation personnelle (convention, loi ou jugement de condamnation) est de nature diffrente dans chaque genre d'hypothique; mais la garantie elle-mime, qu'elle soit conventionnelle, l6gale ou judiciaire, est r6gie exactement par les mimes r~gles de droit (arts. 2016 A 2081 C.C.)

et produit les mimes effets. En sorte que, dans le cas actuel, si B61anger avait, avant sa cession autoris6e, c6d6 sa propri6t6 affect6e par 1'hypothbque judiciaire de la Banque Royale, cette dernibre aurait continu6 d'avoir sa r~clamation hypoth6ca-ire contre le tiers-d6tenteur, tout en conservant son jugement contre B61anger.

C'est donc avec raison, dans mon humble opinion, que la Cour Sup6rieure et la Cour du Banc du Roi ont envisag6 la criance de la Banque Royale sous son double aspect: dont 1'un, en tant que jugement ex6cutoire, est du ressort de la proc6dure; mais dont 1'autre, en tant que garantie hypoth6caire, constitue un droit acquis, auquel on h6site A supposer que le 16gislateur f6d6ral ait voulu attenter.

Il me semble que toute l'6conomie de la loi de faillite repousse cette supposition. Par la d6finition de la loi ellememe, la Banque Royale est un " crbancier garanti " (2gg). Or, il serait oiseux de d6montrer que cette loi ophre en dehors des cr6anciers garantis.

(Exemples: arts. 6-8b-13 (16)-42 et (16).

Cette particularit6 avait d6jA frapp6 cette cour dans la cause de Riordon Co. v. Danforth Co. (1) et M. le juge Mignault y disait:

L'article 51 en est une preuve 6clatante puisque, en donnant l'ordre de priorit6 des reclamations, il ne parle pas du tout des cr~anciers garantis.

Les modifications que la loi a subies depuis n'en ont pas chang6 l'aspect sous ce rapport.

Il est d'ailleurs logique qu'il en soit ainsi. L'hypothbque est un d6membrement de la propridt6. On peut consid6rer la propri6td hypoth6qu6e comme 6tant en dehors du domaine du failli jusqu'A concurrence du montant de la dette hypoth6caire; et la cession des biens appartenant au failli ne concerne v6ritablement que " l'6quiti " ou valeur exc6dant le montant de l'hypoth6que.

Dans une loi qui, de cette fagon, fait exception constante du cr6ancier garanti, i.e. du cr6ancier hypothicaire, on est justifiable de d6cider que le paragraphe 10, article 11, n'a pas pour but de l'affecter, A moins qu'on ne soit contraint A la decision contraire par un texte positif ou une d6duction in6luctable.

Or, si l'on examine le texte dont il s'agit h la lumibre des observations qui pricident, 1'on constate ce qui suit: La Banque Royale a un jugement contre B6langer et elle a en mme temps une hypothique judiciaire.

Le paragraphe dit que, A la suite de son enregistrement, 'ordonnance de siquestre a priorit6 sur les " certificats de jugement " ou " jugement op6rant comme hypothbques Assumons que ces expressions puissent s'adapter A la proc6dure dans le Qu6bec. Il est certain, en tout cas, qu'un "certificat de jugement " n'est pas une hypoth~que judiciaire. I est egalement certain qu'un "jugement-op6rant-BANKoF comme hypothbque " n'est pas une hypoth6que judiciaire. Un cr6ancier obtient d'abord un jugement. Cela n'ophre J. pas comme hypothbque.

Cela ne confire au cr6ancier aucun droit hypoth6caire, mais, si l'on veut, c'est la premibre 6tape dans la proc6dure requise pour acquerir une hypothbque judiciaire (art. 2034 C.C.).

Ayant son jugement, et ne d6sirant pas l'ex6cuter, mais voulant s'en servir pour obtenir une hypothbque judiciaire, le cr6ancier s'en fait remettre une copie certifi6e par 1'officier autoris6.

(N.B. C'est ce qui se rapproche le plus du certificat de jugement). Ce serait la seconde 6tape de la proc6dure.

Le cr6ancier d6pose ensuite la copie certifi6e de son jugement entre les mains du r6gistrateur avec " un avis specifiant et d6signant les immeubles du d6biteur sur lesquels le cr6ancier entend faire valoir son hypothbque " (arts. 2034, 2026, 2121 C.C.).

C'est la troisibme 6tape.

Le r6gistrateur fait alors dans le registre la transcription de la copie certifi6e du jugement qui a 6t6 d~posie, P'inscription " au moyen d'un bordereau ou sommaire " du jugement (arts. 2131, 2132, 2136, 2139 C.C.).

C'est la quatribme 6tape.

Ce n'est qu'alors que le cr6ancier acquiert son hypoth&que judiciaire. Elle n'est pas un mode d'ex6cution, elle cr6e sur l'immeuble sp6cialement d6sign6 un droit r6el en tout point semblable h l'hypothbque conventionnelle.

Dans un sens, elle cesse d'6tre un jugement. Elle est devenue une hypothique avec une existence distincte; bien que le jugement subsiste ind6pendamment d'elle comme mode d'ex6cution.

On congoit donc que le paragraphe 10 de Particle 11 veuille dire que la cession de biens a priorit6 sur tout jugement, c'est-h-dire que, d~s l'enregistrement de la cession de biens, le criancier ne pourra plus se servir de son jugement pour commencer la proc6dure n6cessaire pour acqu6rir une hypoth6que judiciaire.

L'enregistrement de la cession de biens empiche le jugement d'6tre utilis6 pour acqu6rir une hypoth6que judiciaire. II arrate le crdancier dans la marche de sa proc6dure vers l'acquisition de cette hypothique judiciaire. Et comme il se peut que cet arrit ou cette suspension ne se produise qu'apris la deuxibme ou la troisibme 6tape, I'article prdvoit que le cr6ancier, en voie d'acquirir son hypothique judiciaire mais arr~t6 en chemin avant d'avoir franchi la quatribme 6tape, aura un privilbge pour lui assurer les frais qu'il aura faits jusque-lh pour les fins de 1'enregistrement de son jugement.

Cette clause relative aux frais peut 6galement pr6voir le cas d'un cr6ancier qui ferait enregistrer son jugement avant d'avoir connu 1'existence de 1'ordonnance de s6questre ou de la cession autorise; comme, par exemple, entre le " d6p8t " de cette ordonnance ou de cette cession au bureau du district ou " l'offre de ces actes " au registraire et 1'enregistrement lui-m~me de 1'ordonnance ou de la cession. Cet enregistrement est sans doute un avis suffisant pour en ehformer le cr6ancier porteur de jugement; mais il n'en est pas ainsi du d6p6t ou de l'offre de l'ordonnance de sequestre ou de la cession au registraire. D'apris le paragraphe 10, ce simple d6p6t ou cette offre seule arr~te imm6diatement l'effet futur de tout jugement ou de toute execution et saisie-arr~t bien que le public et les cr6anciers porteurs de jugement n'ont aucun moyen d'en 6tre inform6s avant 1'enregistrement proprement dit de l'ordonnance ou de la cession de biens, et que, durant cet intervalle, ils ont pu encourir de bonne foi des frais d'enregistrement inutiles.

Mais, toujours en assumant que les expressions s'adaptent A la loi du Qu6bec, ce paragraphe ne donne priorit6 A la cession de biens que sur un jugement ou une copie certifi6e de jugement. Il ne dit pas et veut pas dire priorit6 sur une hypothique judiciaire.

Le d6tenteur d'un jugement ne pourra plus s'en servir soit pour faire saisir et vendre les biens de son d6biteur, soit pour obtenir une hypothique sur ces biens; et les proc6dures d6jA commenc6es pour arriver A l'une ou l'autre de ces fins sont arr~t6es par I'enregistrement de la cession de biens.

Ainsi interprit6, le paragraphe 10 a l'avantage de s'harmoniser avec tous les autres paragraphes de l'article 11. Noscitur a sociis. II arr~te, suspend ou pr6vient une proc6dure en marche ou un mode d'ex6cution. Cette interpr6tation est d'ailleurs confirm6e par Particle 51 de la loi, qui, au deuxibme alin6a, d6finit les frais " rgis par les dispositions de 1'article 11, paragraphe 10 ", comme 6tant " les frais du cr6ancier ex6cutant

(Loi de faillite, art. 51 (1),

2e alinba).

En passant-comme le fait tris justement observer sir Frangois Lemieux,-ce paragraphe " ne fait que donner 'une priorit6, une pr6f6rence' Il n'annule pas; il ne fait rien disparaitre. II pourrait tout au plus vouloir dire, s'il s'appliquait A 1'hypothbque judiciaire, que les droits du cr6ancier de cette dernibre, au lieu d'6tre exerc6s par luim~me, le seront par le syndic. Mais mgme cette interpr6tation restreinte serait incompatible avec les priviliges reconnus au cr6ancier garanti par les articles 6 et 8b de la loi. Mais il faut surtout insister sur le fait que le paragraphe 10 ne parle que de jugements, et nullement d'hypoth~que judiciaire. I ne suggire en aucune fagon l'intention d'an~antir une hypothbque judiciaire et de d6pouiller un citoyen d'un droit compl6t6 et acquis.

En adoptant le point de vue des jugements des deux cours de la province de Qu6bec et celui que je viens d'exposer, on 6vite une cons6quence qui conduirait A cet 6trange r6sultat: la loi prot6gerait les hypothbques conventionnelles, c'est-A-dire celles qui ont 6t consenties au gr6 du failli; et elle r6pudierait les hypothiques judiciaires, c'est-A-dire celles qui sont acquises sous le contr6le des officiers de la loi.

Elle ferait pis encore.

Elle rayerait compl6tement du code civil le chapitre de l'hypoth6que judiciaire, car il ne semble pas y avoir de r6ponse A l'argument de 1'intim6:

Tout en se bornant h d6cider la cause sur l'interpr6tation qu'ils ont donn6e au paragraphe 10 de Particle de la Loi de faillite, les juges de la province de Qu6bec ont indiqu6 que si la loi efit empi6t6 sur les droits des cr6anciers hypoth6caires, elle serait, dans leur opinion, inconstitutionnelle. Sir Frangois Lemieux dit qu'il n'6tait pas n6cessaire pour le fonctionnement de la loi de faillite d'enlever aux cr~anciers hypothicaires leur droit d'hypothbque judiciaire; LARUE et le juge Lafontaine ajoute:

Toucher, en effet, h l'hypothique judiciaire, c'est toucher h. l'hypothique conventionnelle comme 6, l'hypoth&oue l6gale, et, par cons6quent, h une matibre appartenant i la propri6t6 et aux droits civils; et I'annulation Rinfret des hypothbques judiciaires, pas plus que des hypothiques conventionnelles, n'a rien de commun avec le fonctionnement d'une loi de faillite. Les caract6ristiques essentielles d'une loi de faillite sont l'institution des proc6dures pour faire reconnaitre l'insolvabilit6, l'adoption des mesures conservatoires pour preserver les biens du failli, l'organisation d'un systime (machinery) pour l'administration de ces biens, la punition de l'insolvable pour les actes qu'il a commis au prejudice de ses crianciers ou h 1'encontre de 1'honn~tet6, et la liberation du failli (Duncan, Law and Practice of Bankruptcy in Canada, p. 30).

J'adopterai la d6finition qu'en donne le juge de premibre instance:

Le but de la loi de faillite, c'est de liquider, par l'entremise d'officiers speciaux nommis par le tribunal ou par la loi, les biens de l'insolvable; de distribuer les deniers provenant de la liquidation aux cr6anciers suivant leurs droits respectifs et leurs privillges; de permettre au failli d'obtenir un concordat et une d6charge, s'il est dans les conditions vou!ues par la loi.

En examinant "l'autorit6 l6gislative exclusive du parlement du Canada" tir6e du paragraphe 21 de Particle 91 de l'Acte de l'Amrique britannique du Nord, il n'est pas utile A la d6cision de cette cause de poser des principes g6n6raux et il suffit de se borner h l'6tude de la question qui est soulev6e par le pr~sent litige.

C'est le conseil que donnait d6jh sir Montague Smith dans Citizens Insurance Co. v. Parsons (1):

In performing this difficult duty, it will be a wise course for those on whom it is thrown to decide each case which arises as best they can without entering more largely upon an interpretation of the statute than is necessary for the decision of the particular question in hand.

Nous avons ici une situation bien d6finie: la faillite de B6langer, qui est du ressort de la 16gislation f6d6rale, et I'hypothbque judiciaire de la Banque Royale, qui, en vertu du paragraphe 13 de 'article 92 de la constitution, tombe dans la cat6gorie de sujets sur lesquels les l6gislatures provinciales ont un pouvoir exclusif.

L'on ne saurait dire que 1'annulation des hypothbques judiciaires acquises avant

'existence de l'insolvabilit6 (comme dans le cas actuel) ait une relation essentielle, ou (1) 7 A.C. 96, at p. 109.

telle qu'on la retrouve h sati6t6 dans City of Montreal v. Montreal Street Railway (2), et telle qu'elle a 6t6 divelopp6e dans les d6cisions plus r6centes du Conseil Priv6, 6carte le pouvoir d'annuler une hypothique judiciaire cr66e en vertu de la loi de la province de Qu6bec sous pr6texte qu'il serait auxiliaire du droit de 16gif6rer sur la banqueroute et la faillite en vertu du paragraphe 21 de Particle 91. Il n'est pas du tout n6cessaire & 1'exercice du pouvoir f6d6ral en matibre de banqueroute et de faillite de d6truire la pr6f6rence et le droit acquis qui r6sultent de 'hypoth&que judiciaire. Ce pouvoir n'a rien h voir avec les dont il est question dans L'Union Saint-Jacques de Montreal v. B6lisle (3).

Il est clair qu'une l6gislation relative h " la banqueroute et la faillite " devra d'une certaine fagon empi6ter sur certains " droits civils dans la province " et, en particulier, devra pourvoir A un mode de proc6dure sp6cial

Cushing v. Dupuy (4). Toute la procdure en matibre de banqueroute tombe n6cessairement dans le domaine fid6ral et l'on ne saurait concevoir une loi de faillite qui ne substituerait pas sa procedure sp~ciale aux proc6dures provinciales. C'est pourquoi il est logique que, d~s 1'ordonnance de s6questre ou la cession de biens, les procedures en marche soient immidiatement suspendues.

L'6tat de faillite cr6e une situation nouvelle. D&s que cette situation est officielle t.

ou judiciairement reconnue, tout doit 6tre arrat6e et rester dans le statu quo. Les droits qui ne sont pas encore acquis sont perdus, parce que les n~cessit6s de la faillite emp6chent de continuer la proc6dure requise pour les acqu6rir. Ainsi les saisies-arrits et les ex6cutions qui n'ont pas t6 " complitement satisfaites par paiement " (art. 11, par. 10) sont assujetties et subordonn6es h la faillite; il n'est plus permis de les continuer.

En plus, il est des privilges et des droits qui naissent de l'6tat de faillite; comme, par exemple, de la suspension du louage de services ou de l'interruption de bail d'une propri6t6. La faillite entraine une modification des droits respectifs du locateur et du locataire; et l'on congoit qu'il convienne que le pouvoir f6d6ral, en adoptant une 16gislation concernant la faillite, r~gle, en mime temps, entre le locateur et le locataire, les nouvelles relations qui sont le r6sultat de la faillite elle-mime.

L'on comprend 6galement que le pouvoir f6d6ral inclue dans sa l6gislation les dispositions voulues pour 6carter et mettre de c~t6 les transactions qui ont eu lieu dans un certain d6lai pr6c6dant la d6claration judiciaire de faillite. Cela parait raisonnable, vu la pr6somption d'insolvabilit6 qui existait durant cette p6riode ant~rieure h la banqueroute, et cela fait donc logiquement partie de toute 16gislation relative A cette banqueroute.

Mais il n'en est pas ainsi des droits et des privileges complbtement acquis en vertu des lois provinciales, ant6rieurement h la faillite et A la p6riode de temps pendant laquelle il n'existe aucune pr6somption d'insolvabilit6.

Pour ces raisons, et en tout respect, je trouve, comme les tribunaux de la province de Qu6bec, que la destruction de l'hypothique judiciaire ne fait pas partie du pouvoir direct de 16gislation sur la banqueroute et la faillite, ni du pouvoir accessoire ou auxiliaire.

L'historique des Actes d'insolvabilit6 ou de faillite qui ont pr6c6d6 la loi de 1919 (actuellement en vigueur) ne va pas l'encontre des propositions que je viens de soumettre. Les actes de 1869 et de 1875 pourvoyaient A, l'invalidation des transactions frauduleuses, emp&chaient un jugement de cr6er une charge ou un lien sur les biens de l'insolvable, par suite de la remise d'un bref d'ex~cution au sh6rif ou par suite d'une saisie-ex6cution effectu6e, et enlevalent toute LARUE efficacit6 A tout ce qui avait besoin d'8tre compl6t6 apris la cession de biens ou la liquidation forc6e. C'est 1h, comme BANKop j'ai tent6 de le faire remarquer plus haut, 16gif6rer sur des questions qui sont du ressort propre de la banqueroute ou Rinfret J. de la faillite; r6gler des transactions faites au moment oil i'insolvabilit6 6tait pr6sum6e exister ou refuser de permettre A des cr6anciers de parfaire des droits par la continuation de leurs proc6dures apris qu'une faillite a 6t6 d~clar6e. Il y a loin entre empicher d'acqu6rir des droits aprbs que la banqueroute est prononc6e et d6truire des droits acquis longtemps auparavant, comme on voudrait le faire en 1'espece.

L'Acte de 1882 et l'Acte des liquidations (Winding-Up Act) c. 129 des statuts revis6s de 1886 ne sont pas all6s au delh.

Les syndics ont fait grand 6tat de 'article 66 de cette loi qui est devenu l'article 84 du chapitre 144 des statuts revis6s de 1906 et qui se lit comme suit:

Je ne puis y voir quoi que ce soit qui ressemble A la pr6tention que 1'on 6met maintenant en vertu du paragraphe 10 de Particle 11 de la Loi de faillite. Cet article 84 dit simplement que, apris que la liquidation des affaires de la compagnie a commenc6, 'on ne saurait acquirir un lien, privilige ou reclamation sur les biens de la compagnie au moyen d'une saisie ou du d6p6t ou de l'enregistrement d'un bordereau ou d'une copie de jugement. II parle du futur; il empiche la creation de nouveaux droits aprbs la failhite; -237 il ne d6truit pas les droits acquis ant6rieurement; et il n'a jamais, que je sache, t6 interprt6 autrement.

On remarquera 6galement que les articles 66 du chapitre 129 et 84 du chapitre 144, lorsqu'ils font exception pour le o privilge ledemandeur Rmnt J. parlent que du " bref d'ex6cution, bref d'arr~t simple ou d'arr~t en mains tierces ou autre ordre ". Il n'y est nullement question des frais d'enregistrement d'un jugement. Ces articles n'ont jamais envisag6 l'ide d'annihiler l'hypothbque judiciaire r6gulibrement acquise avant la faillite. Jamais, avant la prdsete cause, pareille pr6tention a-t-elle 6t soulev6e dans la province de Qubbec. Autant vaudrait an6antir 1'hypoth6que conventionnelle ou les " mortgages " et les " liens " assures aux porteurs d'obligations ou de " d6bentures " par les contrats de fid6icommis et les " trust deeds

Je ne puis done voir I'analogie entre la l6gislation ant6- .rieure et celle qui nous occupe dans la pr6sente cause; et je suis humblement d'opinion que si le paragraphe 10 de l'artide a r6ellement le sens que les syndics lui ont donn6, ce paragraphe ne peut s'appuyer sur l'histoire de la l6gislation f6d6rale en matibre -de banqueroute et de faillite (ce qui, d'ailleurs, ne serait pas une justification suffisante pour le rendre constitutionnel), ni sur le paragraphe 21 de 1'article 91 de l'Acte de l'Am6rique britannique du Nord. Mais je suis 6galement d'avis que ce paragraphe 10 ne peut 6tre interpr6t6 comme 1'ont fait les syndies; et je conclurais au rejet de 1'appel avec d6pens.

Appeal allowed with costs.