Supreme Court of Canada
Firestone Tire & Rubber Company of Canada Limited v. Industrial Acceptance Corp., [1971] S.C.R. 357
Date: 1970-11-27
Firestone Tire & Rubber Company of Canada Limited Appellant;
and
Industrial Acceptance Corporation Limited Respondent.
1970: October 14, 15; 1970: November 27.
Present: Martland, Judson, Ritchie, Hall and Laskin JJ.
ON APPEAL FROM THE SUPREME COURT OF ALBERTA, APPELLATE DIVISION
Conditional sales—Truck purchased under conditional sale contract—Other tires subsequently purchased for truck, again under conditional sale contract—Truck repossessed by assignee of seller upon buyer’s default—Claim of unpaid conditional seller of tires to priority upheld—Doctrine of accession not applicable.
The conditional buyer of a truck, which was a used truck when he bought it under a conditional sale contract, subsequently purchased other tires for it from the appellant, again under a conditional sale contract. Eight months after the truck was purchased, it was seized by the respondent for default in payments thereon. As a result of interpleader proceedings, an adjudication on the competing claims of the appellant and the respondent was made in favour of the appellant by Cullen D.C.J. His determination was reversed by the Appellate Division of the Supreme Court of Alberta, which found that the doctrine of accession was applicable to the situation. With leave, an appeal from the judgment of the Appellate Division was brought to this Court.
Held: The appeal should be allowed.
The doctrine of accession ought not to be applied where, as in the present case, removable and identifiable accessory chattels are claimed by the holder of an original title thereto, retained as security for their value, against the prior security title holder of the principal chattel. No policy of commercial dealing in chattels of the kind in question here was known that would warrant subordination of the claim of their title holder to that of another who has given no value for them.
Regina Chevrolet Sales Ltd. v. Riddell, [1942] 2 W.W.R. 357, [1942] 3 D.L.R. 159, applied.
[Page 358]
APPEAL from a judgment of the Supreme Court of Alberta, Appellate Division[1], allowing an appeal from a judgment of Cullen D.C.J. Appeal allowed.
W.K. Moore, Q.C., and S.D. Saville, for the appellant.
G.R. Forsyth, for the respondent.
The judgment of the Court was delivered by
LASKIN J.—The issue in this appeal is whether the assignee of the conditional seller of a truck, which it repossessed upon the buyer’s default, may retain the tires then mounted on the truck as against the claim of the unpaid conditional seller of the tires to priority.
Nothing turns on either registration or non-registration of the respective conditional sale contracts, nor on notice of them apart from registration. There is nothing unusual about the relevant facts. The conditional buyer of the truck, which was a used truck when he bought it under a conditional sale contract, subsequently purchased other tires for it from the appellant, again under a conditional sale contract. Eight months after the truck was purchased, it was seized by the respondent for default in payments thereon. As a result of interpleader proceedings, an adjudication on the competing claims of the appellant and the respondent was made in favour of the appellant by Judge A.J. Cullen. His determination was reversed by the Appellate Division of the Supreme Court of Alberta1, which relied mainly on a utility conception of the doctrine of accession, which it held to be applicable, and on the exposition of that doctrine by the Saskatchewan Court of Appeal in Regina Chevrolet Sales Ltd. v. Riddell[2].
It is common ground that the tires are removable without physical injury to the body of the truck or to any of its constituent parts. The appellant urges this factor as the governing principle in the application of the doctrine of accession between competing security claimants. The respondent contends for a principle of integral convenience or utility in invoking the same doc-
[Page 359]
trine. The authorities cited by opposing counsel reveal that the doctrine of accession has yielded different results in the same fact situations. This has been because of the attempt, on the one hand, to give it a consistent meaning, regardless of the purpose for which it is invoked or of the relationship of the litigating parties; and because of the attempt, on the other hand, to give it a functional direction to take account of the purpose to be served and of the character of the claims for which its support is sought. I can make a compendious reference to these authorities, Canadian, Australian and American, by noting an article by Guest, “Accession and Confusion in the Law of Hire-Purchase”, (1964) 27 Mod. L. Rev. 505.
The present case is unembarrassed by any suggestion that the accessory chattels have lost their identity. Nor are we concerned with an accession to the title of the purchaser of a fabricated product, be it a ship or other chattel, by the maker thereof. Again, we are not concerned with the enhancement of a security holder’s position against a conditional buyer or chattel mortgagor who improves the burdened chattel in some way. In my opinion, whatever be the rationale of the doctrine of accession in taking effect in the foregoing situations, it ought not to be applied to the present case where removable and identifiable accessory chattels are claimed by the holder of an original title thereto, retained as security for their value, against the prior security title holder of the principal chattel.
There is no justification for a conclusion in this case that would give the respondent a windfall against a third party who has reserved title. I know of no policy of commercial dealing in chattels of the kind in question here that would warrant subordination of the claim of their title holder to that of another who has given no value for them. The respondent is not a subsequent purchaser of the principal chattel, and it cannot even urge here that as such a purchaser for value and without notice of the security claim to the tires it is entitled to retain them as accessories to its purchase.
It was submitted on behalf of the respondent that a decision adverse to its claim of accession
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would mean that numerous searches for possible conditional sale agreements, covering separable automobile parts, would become necessary, and thus hamper commercial dealing in the sale and purchase of automobiles. This might be so in the case of dealings with private sellers. It is hardly likely if business is done with reputable retailers.
The result I would reach here is consistent with the apparent factual situation in Regina Chevrolet Sales Ltd. v. Riddell, supra, albeit the exposition of the law there may have gone further than was necessary on the facts. In that case, the conditional buyer of a truck purchased other tires for it, which he obtained on credit without the seller reserving a security title. Some months later, the seller of the tires was given a chattel mortgage on them by the buyer. In subsequent litigation between the conditional seller of the truck and the chattel mortgagee of the tires, the former prevailed. This is easily explicable on the ground that title to the tires mounted on the truck had passed to the buyer upon purchase, and they thereupon came under the security title of the conditional seller of the truck. The buyer could only mortgage them thereafter subject to that conditional seller’s prior claim. Counsel for the respondent conceded that under the exposition of the law in the Saskatchewan case, which he supported, the buyer of the tires, although liable for their price, could resist their seizure by their conditional seller for default in payment. I cannot agree with a view of the doctrine of accession that would produce such a result.
I would allow the appeal, set aside the judgment of the Alberta Appellate Division and restore the judgment of Judge Cullen. The appellant should have its costs in this Court and in the Alberta Appellate Division as well as of the proceedings before Judge Cullen.
Appeal allowed with costs.
Solicitors for the appellant: Moore, Lougheed, Atkinson, McMahon & Tingle, Calgary.
Solicitors for the respondent: Howard, Moore, Dixon, Mackie & Forsyth, Calgary.