In re Dunlop Hotel / Quinn v. Guernsey

J.-The facts of this case are not in dispute. Prior to May 11, 1926, J. T. Dunlop had been conducting and managing an hotel, known as the Dunlop Hotel, on premises owned by the respondent Guernsey.

On April 26, 1926, the sheriff, acting under writs of execution in his hands, made a seizure of the goods and chattels of Dunlop in said hotel. On May 4, the landlord Guernsey issued a distress warrant for $3,025, being eleven months' rent at $275 per month, then due in respect of said premises, and sent it to one W. C. Wheaton with instructions to distrain on the goods and chattels of Dunlop in the hotel. On May 5 the sheriff, feeling that the property in the hotel seized by him was no longer safe without a man in possession, employed the said Wheaton and one Gibbons to remain in possession of the goods he had seized. Wheaton and Gibbons went into possession immediately. On May 11 J. T. Dunlop made an assignment under the Bankruptcy Act and the appellant Quinn was appointed trustee. On May 26 Quinn made an application to Chief Justice Barry, as Judge in Bankruptcy, for directions (a) as to how much of the bill presented by the sheriff should be paid as a preferred claim, and (b) as to what portion of the landlord's claim for rent should be treated as a preferred claim. The learned Chief Justice fixed the amount of the sheriff's bill at $252.21. As to the landlord's claim he held that Dunlop was a trader within the meaning of s. 47 of c. 30 of the Acts of New Brunswick of 1924, entitled An Act in addition to chapter of the Consolidated Statutes of New Brunswick, 1903, respecting Landlord and Tenant, and that the landlord was, therefore, only entitled to three months' rent in priority to the other debts, but leaving it to him to prove as a general creditor for the surplus rent due at the date of the assignment. From that part of the order of Barry, C.J., decreeing that the landlord was.entitled to only three months' rent an appeal was taken to the Supreme Court of New Brunswick. That court set aside the order appealed against and held that the landlord was entitled to be paid by the trustee the full proceeds of the assets of J. T. Dunlop in the hands of the trustee, as those assets had not realized the amount of the eleven months' rent due when Dunlop made the assignment. The ground upon which the court reversed the order of Barry, C.J., was that, on the evidence, J. T. Dunlop could not be said to be a trader within the meaning of s. 47 above referred to. The trustee now appeals to this Court, and the question we have to determine is: Upon an assignment in bankruptcy by a debtor what priority, if any, has a landlord for rent in arrear of the premises on which were situated the debtor's goods and chattels at the date of the assignment?

By c. 31 of the Acts of 1923 (Can.), s. 52 of the Bankruptcy Act was repealed and the following enacted in lieu thereof:such abandonment or voluntary assignment; nor shall anything in this Act be deemed to interfere or conflict with the operation of any such provincial law heretofore or hereafter enacted in so far as it provides for or regulates the rights and priorities of landlords in such an event.

The effect of this section is to give to a landlord in bank- QumN ruptcy proceedings the same priority for rent in arrear as the law of the province would give him if his tenant had Lamont J. made an abandonment or a voluntary assignment of his property for the benefit of his creditors. What rights or priorities do the laws of New Brunswick give to a landlord where his tenant had made such a voluntary assignment? The Act respecting Assignments and Preferences by Insolvent Persons (C.S. c. 141) contains no provision whatever giving a landlord priority for rent in case of an assignment under that Act.

It is, however, provided for in the Act respecting Landlord and Tenant (C.S. c. 153). Section 21 of the Act provides that where a tenant's goods are seized under an execution against the tenant, the goods are not to be removed from the premises unless the execution creditor pays to the landlord the rent in arrear up to one year's rent. Sections 47, 48, 49 and 51 of the Act, which were enacted in 1924 (c. 30) presumably to meet the situation created by the enactment of the new section 52 of the Bankruptcy Act in 1923, read as follows:- 47. In this act, unless the context otherwise requires or implies, the word " trader " means and includes retail merchants, wholesale merchants, commission merchants, manufacturers and persons who, as their ostensible occupation, buy and sell goods, wares and merchandise ordinarily the subject of trade and commerce.

(b) Any accelerated rent to which he may be entitled under his lease, not exceeding an amount equal to three months' rent.

If, therefore, Dunlop was a trader s. 48 above quoted applies, and the respondent is entitled to priority for three months' rent only. To be a trader he must come within s. 47. The facts as found by Barry, C.J., and which are not dis- J puted, are: That in addition to managing the hotel J. T. Dunlop in the outer lobby of the hotel conducted a cigar stand and sold cigars, cigarettes and tobacco not only to guests of his hotel but to the general public, and that at the rear of the premises there was a bar where he sold beer to the general public. Do these acts constitute him a trader within s. 47? On the facts proven he could not be said to be a wholesale merchant, commission merchant or manufacturer. Can he properly be termed either a retail merchant or a person who as his ostensible occupation buys and sells goods the subject of trade and commerce?

In Comyn's Digest, Vol. 5, at page 65 " Merchant " is defined as follows:- In Murray's New English Dictionary a " Merchant " is defined as:

A retail merchant is one who deals in merchandise by selling it in smaller quantities than he buys. U.S. v. Mickle If Dunlop, instead of conducting the cigar stand himself, had done as many hotel proprietors now do and had leased or sold to another the right to conduct the stand, and that other had sold cigars, cigarettes and tobacco to the general public for gain, there could not, in my opinion, be any question that such person would be a retail tobacco merchant within the meaning of s. 47. See Josselyn v. Parson (2).

If that is so would the person conducting the stand be any less a retail tobacco merchant because he managed the hotel as well?

That a person may be an hotel-keeper and also a trader is, I think, well established by the authorities. In the old case of Mayo v. Archer (3), a farmer bought a quantity of potatoes with the intention of selling them again for profit, which he did. Under the bankruptcy laws in force at the time a farmer could not be declared a bankrupt, but a trader could. It was held that the buying and selling of the potatoes for gain constituted the farmer a trader within the statute. In his judgment the Chief Justice said:- And Mr. Justice Powys said:- The other two justices who comprised the court were of opinion that the quantities bought and sold should be shewn in order to see whether trading or farming was the debtor's chief business. It appears, however, now to be settled that the quantity sold is immaterial. In Patman v. Vaughan (1), the question was whether or not an inn keeper was a trader within the bankruptcy law. He was conducting an hotel and had on several occasions sold quantities of spirits to persons other than the hotel guests, and his servant testified that " if any person had sent for liquor he might have had it."

The learned trial judge left the question to the jury with the direction that " if they were of opinion that the plaintiff had endeavoured to make a profit out of his trading and was ready to sell to anyone who applied to him and not merely as a favour, then the quantum and extent of the trading were immaterial." The jury found in favour of the defendant and the plaintiff moved for a new trial. In giving judgment Ashhurst J. said:- In Bartholomew v. Sherwood (2), the question was whether a farmer who bought horses for the purpose of reselling them at a profit was a trader; it was held that he was. In that case Ashhurst J. said:- And Buller J. said:- These cases, in my opinion, are instructive in that they shew that a man may be held to be a trader although he has, at the time he carries on his trading, another occupation, which is his chief means of livelihood.

In giving the judgment of the Supreme Court of New Brunswick, on appeal, in the present case, Mr. Justice Grimmer said:- With great deference, I am of opinion that this statement begs the question, for it assumes that it was in his capacity as hotel keeper that Dunlop bought and sold cigars and tobacco, while the evidence shews that he sold to the public generally and not merely to accommodate those who patronized his hotel. It could not have been in his capacity as hotel keeper that he sold to the general public. To my mind the question here is not what was Dunlop's ostensible occupation as hotel keeper, for undoubtedly as an hotel keeper his ostensible occupation was managing the hotel. The question is: Was he ostensibly . occupied in selling cigars, cigarettes and tobacco?

Was that his ostensible occupation?

An occupation signifies the employment of a person's time in some calling or pursuit, not simply periodically or for a special purpose, but more or less continuously and in a general way of business. In Creighton v. Chittick (1), Strong J. quoted with approval the following statement from Robson on Bankruptcy:

" Ostensibly " is defined as " open to view; open to public view; conspicuous."

As ostensible occupation, therefore, is the employment of a person's time in a certain calling or pursuit so openly and conspicuously that the members of the public coming in contact with such person would know that he was following that calling or pursuit. It IN HE does not, to my mind, import an exclusive occupation, nor yet a chief occupation, but it must be in the general way of business and not an intermittent or spasmodic employment.

While the selling of beer was chiefly done by Dunlop through a bar-tender, the evidence is that the cigar stand was conducted by himself; it was conducted openly and in the general way of business and anyone who desired to do so could buy. It, therefore, seems to me that anyone frequeinting the lobby of that hotel and purchasing cigars, cigarettes or tobacco would know that Dunlop was employing his time, or part of his time at least, in selling those articles in the general way of business and to the public. That he was doing it for profit may, I think, be presumed until the contrary is shewn. It was argued that there was here no evidence that he purchased any cigars, cigarettes or -tobacco. He must have either purchased or manufactured those he sold. If he manufactured them he comes expressly within s. 47, as a manufacturer.

There is nothing in the material to indicate whether the cigar stand, the bar, or the hotel did the largest business or furnished the greatest profit, even if these could be considered as essential elements in the determination of an ostensible occupation, which I doubt.

Selling merchandise, as he did, openly to the public for the purpose of gain, brought Dunlop, in my opinion, within 1) a retail merchant, and (2) a person who as his ostensible occupation bought and sold merchandise the subject of trade and commerce. He was, therefore, a trader and s. 48 governs the respondent's priority. Having reached the conclusion that Dunlop was a trader it is not necessary to consider the priority, if any, to which a landlord is entitled where the debtor is a non-trader.

The appeal, in my opinion, should be allowed; the judgment appealed from set aside and the order of Barry C.J., restored. The appellant is entitled to his costs both here and on appeal below.

Appeal allowed with costs.