Diewold v. Diewold

J.-The question in this appeal is whether or not the appellant is entitled to the benefits provided by the Farmers' Creditors Arrangement Act, 1934, and amendments.

On the 4th of

December,

1933, the respondent agreed in writing to sell farm lands in Saskatchewan to the appellant for the sum of $7,500, payable $300 cash, $500 a year for a number of years and a final payment in 1947, with interest in the meantime at the rate of 7%. The appellant covenanted to pay these sums and also taxes.

The agreement contained an acceleration clause by which, in case of default, the total amount should become payable at once. Default was made in payment of various sums and on the 18th of October, 1938, the respondent commenced an action, alleging that there was due under the agreement as of 1st October, 1938, the sum of $8,804.64, and claiming specific performance of the agreement, payment of the said sum with interest and, in default of payment, cancellation of the agreement and forfeiture of all moneys paid thereunder and, lastly, immediate possession of the lands.

The appellant did not defend and on the 10th of November, 1938, the respondent recovered a judgment in the form of what is called an order nisi, whereby the amount due in respect of principal and interest under the agreement was fixed at $8,804.64, of which sum $4,104.64 was in arrears. It further ordered the defendant to pay into court to the credit of the cause on or before the 19th day of February, 1939, the said sum together with interest thereon, and costs to be taxed.

It was further ordered that in default of payment into court as aforesaid the agreement should be cancelled and determined and that all moneys paid thereunder by defendant to the plaintiff be forfeited and retained by the plaintiff. There was a proviso, however, that on payment of $4,104.64, the sum in arrears, together with interest, the defendant should be released from immediate payment of so much of the purchase money as may not have become payable by lapse of time. It was further ordered that the plaintiff should have immediate possession of the lands. There was also a provision for rectification of the name of one of the parties, which is not material to the question here involved.

It is important at this point to determine the rights of the parties upon the signing of this judgment. It is clear that the defendant ceased to have right to the possession of the land.

It is also clear that he had a right to the restoration of his position as purchaser under the agreement of sale upon payment of the sum of $4,104.64, with interest and costs, and the right to acquire title to the land on payment of the total sum due, providing one or other of these payments was made within the time prescribed by the order of the court, or such extension as might thereafter be given.

The plaintiff became entitled to immediate possession of the land and he had and retained title to the land, subject only to the right of the defendant to the restoration of his possession as purchaser under the agreement, DVo on payment of the sum or sums above mentioned. There remains the question of whether or not the vendor still retained any right to collect the moneys theretofore due under the agreement of sale from the defendant personally. It was held by the learned judges in the court below that he had no longer any such right because he had elected to take the judgment for cancellation. In arriving at this conclusion, it is stated by Mr. Justice Gordon, speaking for the court, that in his opinion this was the effect of the judgment of this court in the case of Davidson v. Sharpe (1), and a decision of the Saskatchewan Court of Appeal delivered by the late Mr. Justice Lamont in a later case of Primeau and Imperial Lumber Yards Ltd. v. Meagher (2). Mr. Justice Gordon further states that

It was contended on behalf of the appellant that the decisions referred to could not be held to deprive the vendor of a right to collect until after the expiration of the time provided by the order or judgment for final payment. On consideration, it seems to me that the conclusion reached by the learned judges in the Court of Appeal is well founded, and that when the respondent elected to take out a judgment in the form in which he did, he ceased to have any personal right against the appellant. Subsequently to this order nisi and before the time for payment prescribed by the judgment had expired, the Board of Review under the Farmers' Creditors Arrangement Act formulated a proposal for submission to the defendant and the plaintiff, who was said by the court below to have been the only creditor of the defendant. This proposal reduced the amount owing to the plaintiff under his agreement for sale to $3,000 as of January 1st, 1939, and extended the payments for ten years. The plaintiff having rejected this proposal, it was confirmed by the Board on February 21st, 1939.

Thereafter, the plaintiff issued a writ of possession and this was executed by the sheriff, who placed the plaintiff in possession.

Following this, there was a motion to set aside the writ before the Local Master, who dismissed same.

The defendant appealed to the Judge in Chambers and this application Hu was heard before Mr. Justice Bigelow who allowed the H appeal and set aside the writ. From that decision, the plaintiff appealed to the Court of Appeal, where his appeal was allowed as above stated.

The defendant contends that section 7 of the Farmers' Creditors Arrangement Act gives the Board of Review authority to formulate the rights of plaintiffs and argued that there was a debt owing by the defendant to the plaintiff.

The preamble of the Act states in part as follows:

The word " debt " is not defined by the Farmers' Creditors Arrangement Act or the Bankruptcy Act, but subsection 2 of section 2 of the Farmers' Creditors Arrangement Act provides that expressions in the Act shall be given the same meaning as in the Bankruptcy Act, unless it is otherwise provided or the context otherwise requires. The word " debt " is defined in Stroud's Judicial Dictionary as " a sum payable in respect of a liquidated money demand, recoverable by action," and I think that this definition can be accepted as applicable here.

By section 9 of the Farmers' Creditors Arrangement Act it is provided that subsection 5 of section 16 of the Bankruptcy Act shall not apply in the case of a proposal for a composition, extension or scheme of arrangement made by any farmer.

Now, section 16, subsections 1 and 5, provide:

It was argued that the fact that subsection 5 was expressly excluded had some bearing on the interpretation of the