Mulcahy v. Archibald (1898), 28 S.C.R. 523

SEDGEWICK J.:-- On the 19th of December, 1895, one Narcisse Blais obtained judgment in the Supreme Court of Nova Scotia against one Michael B. Wrayton, a brother of the present appellant, and under an execution issued upon that judgment the defendant as such sheriff levied upon 550 barrels of frozen herring which were then on board the schooner "Ocean Belle," the property of the appellant, whereupon she, claiming the herring, brought this action to recover the goods so levied upon, the question to be determined being whether they at the time of the levy were the property of Wrayton or the property of the present appellant. The learned trial judge, Mr. Justice Meagher, gave judgment in favour of the plaintiff, holding that there was a real transaction between Wrayton and his sister, and that no matter what the motive of Wrayton himself was in reference to one or more of certain other creditors the transfer to his sister having been in security for or in payment of a bona fide antecedent debt the transaction was not within the statute 18 Eliz. ch. 5. Upon appeal to the Supreme Court of Nova Scotia the judgment of the trial judge was reversed, and it was held that the transaction in question was void as a fraud by Wrayton against his creditors.

We are of opinion that the judgment of Mr. Justice Meagher should be restored. There is little question as to the salient features of this case. At the time of the transaction impeached Wrayton owed the plaintiff upwards of $4,000. The goods which were transferred to her by Wrayton from the proceeds of which the goods levied upon were bought were transferred to her on account of this indebtedness. No doubt it was the intention on the part of Wrayton to prevent this seizure under the judgment which he expected Blais would very soon recover against him and for the very purpose of securing his sister at the expense of Blais and with intent either to delay him in his remedies or to defeat them altogether. The statute of Elizabeth while making void transfers, the object of which is to defeat or delay creditors, does not make void but expressly protects them in the interest of transferees who have given valuable consideration therefor, and it has been decided over and over again that knowledge on the part of such a transferee of the motive or design of the transferor is not conclusive of bad faith or will not preclude him from obtaining the benefit of his security. So long as there is an existing debt and the transfer to him is made for the purpose of securing that debt and he does not either directly or indirectly make himself an instrument for the purpose of subsequently benefiting the transferor, he is protected and the transaction cannot be held void. As Jessel M.R. said in Middleton v. Pollock, 2 Ch. D. 104, at page 108