On appeal from the Supreme Court of Nova Scotia.

ROYAL BANK v. E. TRUST CO. [19th December, 1922.]

Bankruptcy Authorized assignment

Railway Co. Prior assignment of book debts-(D.) 9-10 Geo. V. c. 36, s. 30 (1); 10-11 Geo. V. c. 34.

A company incorporated as a railway and mining company entered into an agreement with the purchaser of the property of a similar company under which it operated, for a few months, the short line of railway covered by the purchase. The purchaser having, then, made default in his payments, the former owners resumed possession of the property. Shortly after the company which had so operated made a voluntary assignment under the Bankruptcy Act.

Held, Idington and Brodeur, JJ. dissenting, that the said company was not a "railway company" within the meaning of sec. 2 (k) of the Bankruptcy Act, and its assignment was authorized under the provisions of that Act.

Shortly before going into bankruptcy the company made an assignment of its book debts but did not comply with the requirements of provincial legislation as to registration, notice and publication thereof.

Held, that sec. 30 (1) of the Bankruptcy Act made such assignment void as against the trustee in bankruptcy. Appeal dismissed with costs.

On appeal from Board of Railway Commissioners. CANADIAN PACIFIC RAILWAY CO. v. DEPT. OF LANDS & FORESTS. [19th December, 1922.]

Railway company-Highway crossing-Cost of construction and maintenance Seniority Existing and potential highways.

The Department of Lands and Forests, Ont., applied to the Board of Railway Commissioners for orders directing the C.P. Ry. Co. to construct at its own cost an overhead crossing over its right of way at a point in the Township of Eton and a highway crossing in the Township of Aubrey. The board granted both applications and gave leave to the company to

appeal to the Supreme Court of Canada. The order for leave stated that the title of the company was obtained under authority of the Provincial Act, 59 Vict. ch. xi, and was expressly made subject to the provisions of sec. 2 thereof, namely, "such transfer . . . shall not be deemed . . . to affect or prejudice the rights of the public with respect to common and public highways existing at the date hereof within the limits of the land hereby intended to be conveyed."

It also stated that when the Act was passed there were existing common and public highways across the lands intended thereby to be conveyed, but none at either of the points in question, and none laid out in the area covered by the Townships of Eton and Aubrey. Further that by an order in council passed in 1866 in respect to lands on the northerly shores of Lakes Huron and Superior an allowance of five per cent. of the acreage should be reserved for roads, and the right was reserved to the Crown to lay out roads where necessary.

Held, per Davies, C.J. and Duff, Brodeur and Mignault, JJ., that the phrase "rights of the public with respect to common and public highways existing at the date hereof," should receive its ordinary grammatical construction, namely, rights of the public in existing highways and not such rights existing in highways; and that as there were highways existing on the right of way the rights of the public were only protected in respect thereto and not in respect to highways laid out subsequently under the 5 per cent. reservation in the order in council of 1866.

Per Anglin, J. The legislature could not have intended. that sec. 2 of 59 Vict. c. xi, would only protect public rights in the scattered trails over the hundreds of miles covered by the right of way in question and must have meant to protect such rights which were in posse under the order in council when the Act was passed; but as the order in council only applies to lands on the northerly shores of Lakes Huron and Superior, and the Townships of Eton and Aubrey are not so situated, there is no reservation of rights in respect to the highways in question on this appeal and the Province of Ontario has no right reserved to construct crossings over the railway.

Idington, J. did not deal with the merits of the appeal, being of opinion that the order of the board did not supply the necessary information.

Appeal allowed with costs.

An appeal from the Court of King's Bench, Quebec.

DUFORT v. DUFRESNE.

[27th November, 1922.]

Contract-Partnership-Dissolution-Profits, division of.

In 1909, the respondent, carrying on on his own account the practice of a civil engineer, employed the appellant as his assistant. In 1912 the respondent entered into a contract by private writing with the appellant and one Héroux to carry on the same undertaking under the name of "Marius Dufresne."

The agreement provided inter alia that the profits realized ("benefices realisés ") at the expiration of each year should be divided, 80 per cent. to the respondent and 10 per cent. to each of the others.

The agreement was silent as to what was to become of the fruits of work done during the term of the partnership that should remain uncollected upon its expiration. The appellant, over two years after the agreement had terminated claimed 10 per cent. of the moneys collected by the respondent after the dissolution of the partnership for work done during its existence.

Held, that, as the meaning of the provisions of the written agreement is not so unequivocal as to be entirely free from obscurity, the common intention of the parties must be ascertained by taking into consideration the surrounding circumstances and the conduct of the parties themselves in so far as it throws light on the interpretation they have placed upon their contractual rights. The contract so interpreted gives the appellant no claim on the profits realized after the expiration of the agreement.

Appeal dismissed with costs.

C. H. M.

(b) Province of Quebec.

Bankruptcy Act-Power of Judge to Stay Proceedings by Secured or Privileged Creditors-Secs. 2 (GG), 6, 7, 18, and 18A.

The unfortunate situation which has arisen in the affairs of the Riordon Co. has at least afforded the Quebec Court of Appeal an opportunity to pronounce upon a question of the first importance and of general interest-namely, whether or not the Judge

in Bankruptcy has the power to stay the action taken by a secured creditor for the purpose of realizing upon his security. The circumstances involve also, to some extent, the question as to who is a secured creditor, and how far the Act must be interpreted in the light of provincial laws.

The main question had already come up for judicial consideration before the Riordon case came before the court. In Re Empire Traction Co., Ltd. (1 C.B.R. 361) a lien creditor seized two engines, under an agreement giving him the right to do so without judicial process, after a trustee had been appointed. He then applied to the Master in Chambers for an order to remove and sell under the Extra-Judicial and other Seizures Act of Alberta. In spite of the trustee's opposition, the order was granted (Sept., 1920) by Blain, M.C., who said: "There seems to be no doubt that secured creditors, when the security had been completed before the making of the receiving order, have a right as against the trustee. See sec. 6 of the Bankruptcy Act." A similar opinion was expressed by Hodgins, L.J., in Admiralty, in White & Co. v. The "Iona" (1 C.B.R. 415) where a writ was issued and a vessel arrested by the mortgagee after the debtor had made an assignment. The court held that, "the combined effect of sections 6 and 10 is to declare that the bankruptcy proceedings do not interfere with or lessen the rights of a secured creditor . to enforce or retain his security unaffected by the bankruptcy proceedings."

In Quebec, the question had already been dealt with, before the Riordon case, by at least three judges of the Superior Court, and once by the full Court of Appeal. Two of the Superior Court Judges, in cases as yet unreported, upheld the absolute right of the secured creditor to proceed and realize on his security in spite of the bankruptcy proceedings (Surveyer, J., in a judgment of March 30th, 1921, and Rinfret, J., Aug. 14th, 1922). Maclennan, J., however, in Cie. du Boulevard Pie IX. v. Damphousse, granted the petition of the trustee asking for an order to suspend the sale of a property under a judgment for taxes. An appeal against this order was dismissed by a unanimous judgment of the Court of Appeal (67 D.L.R. 385). Lamothe, C.J., held that the judge in bankruptcy "has always the power under sec. 7, first par., to issue a formal order restraining a secured creditor from continuing his proceedings." Allard, J., concurred explicitly in this view. Guerin, J., concurred in dismissing the appeal, but gave no reasons. Martin, A.C.J. (then judge in appeal), distinguished between: (a) the secured creditor

who has an acquired right in the property, as in the case of banks making advances under the Bank Act or a bondholders' trustee who has entered into possession, or, in general, secured creditors who have their security in hand subject to an equity of redemption on behalf of the debtor; and (b) the creditor who merely has a secured claim on property in the possession of the debtor, or a privilege to be paid by preference out of the proceeds of the sale of such property. The proviso saving the rights of secured creditors might prevent the court from staying proceedings taken by the first class of creditors, but the second class have not the absolute right to proceed to have the property seized and sold.

In view of this lack of unanimity, the judgment of the Court of Appeal of December 29th, 1922, in Danforth v. Riordon Co., Ltd. (hitherto unreported) is of the first importance. It is, if one may express such an opinion, the most elaborate and most logically satisfactory decision which has so far been rendered on the point. The circumstances of the case may be briefly summarized: In November, 1921, at a general meeting of the Riordon creditors an extension of one year was proposed, and accepted by the requisite majority. The extension was duly approved by the judge in bankruptcy by a judgment expressly saving the rights of secured creditors. (This extension was subsequently enlarged). The Danforth Co., some time prior to the meeting, had become a creditor in a sum of approximately 100,000 dollars for work done and material supplied in providing the piping system for one of the new Riordon plants. In order to secure its position as a privileged creditor in accordance with the provisions of the Quebec Code, it registered its claim against the property upon which the work had been done, and within the prescribed delay instituted an action against the Riordon Co., praying (a) that the defendant be condemned to pay the amount of the claim; (b) that the registration of its privilege as a builder be declared valid; and (c) that it be paid by preference out of the proceeds of the sale of the said property. The action was contested, issue joined, and the trial fixed for February 9th, 1922. On January 31st, 1922, defendant petitioned the Judge in Bankruptcy for a staying order. This petition was granted by Maclennan, J. (2 C.B.R. 339), who made the same distinction as did Martin, J., in the Damphousse case between the creditor in possession of the security and the creditor merely entitled to be paid by preference out of the proceeds of property in the possession of the debtor, and questioned whether the Danforth Co. could be regarded as secured creditor under the Act. He bases