H A MORINE Vs. LONDON LOAN ASSETS, LTD

JUDGEMENT

(1.) In this case one Morine appeals from a judgment of the Appellate Division of the Supreme Court of Ontario, which dismissed his appeal from a judgment of Wright, J. The relevant facts out of which the litigation originated may be stated briefly. On 8 June 1923, there were in existence three mortgages affecting a property in Toronto, subsequently known as "Buckingham Apartments," viz.-(1) a mortgage dated 7 February 1923, and made between one Green and Morine as mortgagors (their wives joining to, bar dower) and the Huron and Erie Mortgage Corporation (hereinafter called the Huron Corporation) as mortgagees, to secure a principal sum of $150,000 and interest; (2) a mortgage dated 13 February 1923, and made between the said Green and Morine as mortgagors (their wives joining to bar dower) and the London Loan and Savings Company of Canada (hereinafter called the Loan Company) as mortgagees to secure a principal sum of $35,000 and interest, and (3) a mortgage dated 23 May 1923, and made between the said Green and Morine as mortgagors (their wives joining to bar dower) and the Loan Company as mortgagees, to secure a principal sum of $20,000 and interest. Under or by virtue of each of these mortgages Morine was personally liable for the payment of the principal moneys and interest thereby secured. On 8th June 1923, Green conveyed and released to Morine all his interest in the property. Morine, as sole owner, subsequently negotiated a further loan on the property from one Renton, who represented a group of Scottish investors. For the purpose of carrying this transaction through, Morine assigned his equity of redemption in the property to his son-in-law, Dyas, who created a fourth mortgage (dated 10 August 1923) on the property in favour of Renton to secure a principal sum of $46,000 and interest.

(2.) In the month of June 1925, the Loan Company, after an attempted sale by public auction, sold the property to one Durno, in exercise of their powers under the mortgage of 23 May 1923. The price stated in the conveyance to him (dated 1 June 1925) to have been paid by Durno is the sum of $227,500. No moneys, were, in fact, paid by Durno, the price being satisfied or accounted for as follows : Durno took his conveyance subject to the Huron Corporation's mortgage upon the security of which the sum of $147,000 and no more was then due. Durno executed a mortgage (dated 1 June 1925) in favour of the Loan Company to secure a principal sum of $77,000, which represented the amounts due to the Loan Company in respect of the mortgages for $35,000 and 20,000 and other items; the balance of $3,500, payable in cash, was never in fact paid. Durno then executed a conveyance of the property (dated 26 June 1925) to the Consolidated Trusts Corporation in trust, his wife joining to bar dower; but by an indenture dated 8 July 1925, Durno granted and released to the Consolidated Trusts Corporation (nearly all the stock of which was owned by the Loan Company) all his right, title and interest at law or in equity in the property. In the meantime, by a document dated 3 July 1925, and purporting to be under the seal of the Loan Company, it was certified that all money due under the said mortgage of 13 February 1923, had been satisfied. The conveyance to Durno, the mortgage by him to the Loan Company, the conveyance by Durno to the Consolidated Trust Corporation of 26 June 1925, and the document of 3 July 1925, were all registered on 8 July 1925. The identure of 8th July 1925 was never registered. By an indenture dated -7 February 1928, the Loan Company paid off the Huron Corporation, and the Huron Corporation assigned to the Loan Company all moneys due or to become due in respect of the said mortgage of 7 February 1923, and the security for the same.

(3.) The result of the transactions with Durno, if those dealings were binding on the Loan Company, would be to put an end to the mortgages for $35,000 and $20,000, and to Morine's personal liability thereunder. Whether the transaction bound the Loan Company was, indeed, the crucial question in the litigation which subsequently ensued. By an agreement dated 3 July 1929, the Loan Company sold, and the Huron Corporation purchased, the entire assets and undertaking of the Loan Company, and by the same agreement the Huron Corporation sold, and the London Loan Assets Company, Limited (hereinafter called the Assets Company) purchased, the assets acquired by the Huron Corporation from the Loan Company which were listed in the schedule thereto, and all rights of action arising out of or incidental or appurtenant to the assets so acquired. The schedule included the said mortgage of 7 February 1923, and the said mortgage by Durno for $77,000. It 'did not include the said mortgages of $35,000 and $20,000. In November 1930, the Assets Company and the Loan Company, as co-plaintiffs, instituted proceedings against Morine, one Brickenden (the Loan Company's solicitor), Durno, one McCormick (the Loan Company's ex-President) and the Consolidated Trusts Corporation. Durno did not appear or defend the action, and the Consolidated Trusts Corporation at the trial expressed its willingness to carry out any order of the Court so far as applicable to it.