050 MADEN v.
LONG (NAPA) In these circumstances, the Sale of Goods Act specifically declares that since the mobile
4 Nov. 1982 | Bouck, J. | Lex Situs Rule
PLAINTIFF: Mark Maden
DEFENDANTS: Charles James Long, Marcel Management Ltd., Canadian Imperial
Bank of Commerce Bob Biggins, Gary Banting, Lauren Deming Hall, and Surray
SUMMARY: Mark Maden purchased a mobile home. After 11 months of living there,
he realized that he cannot afford the payments for the mobile home. Hence, Mark Maden's
lawyer drew up a form of purchase and sale agreement between the Maden and Wesson
(Hall’s lawyer). It provided for a sale price of $13,900 with a down-payment of $1,300
and the balance on 1st November 1977. Both Seller Maden and Hall signed the document
on 28th September 1977. After receipt of the $1,300, and at the request of Hall, the Maden
delivered possession of the mobile home on 29th September 1977 by arranging for its
move from Tonasket, Washington, to Chelan, Washington, where Hall intended to live.
On 31st October 1977, MARK MADEN visited the mobile home pad at Chelan,
Washington, where Hall was supposed to have placed it, but the house was missing. So
was Hall. In this action the Mark Maden claim damages for return of a mobile home which
they say was stolen from them by the defendant Lauren Deming Hall while it was located
in the state of Washington. Eventually, the mobile home came to Canada where it was
purchased by the defendant Gary Banting from a dealer named Bob Biggins. Mr. Banting
borrowed money to acquire the home from the defendant Canadian Imperial Bank of
Commerce. In turn it took back a chattel mortgage to secure the loan. Marcel
Management Ltd. was a kind of financial broker for Biggins. Interlocutory judgment was
entered against Lauren Deming Hall on 8th September 1981, with damages to be assessed.
Apparently, Maden not pursuing any claim they may have against the defendants Charles
James Long, Marcel Management Ltd. and Bob Biggins.
The Issue in this case is that: Was the mobile home "stolen" from the plaintiffs in
Washington state so that Gary Banting never acquired lawful title? But first, the Court
shall resolve what law to apply sinceiIn this instance, the mobile home was in Washington
state at the time of the transfer from the plaintiffs to Hall. Then it was in British Columbia
at the time of the transfer from Biggins to Banting. Hall was convicted of theft in
Washington. However, the court must look at the facts surrounding the transaction in
Washington on 28th and 29th September 1977 and decide whether the plaintiffs' title is
protected by our Sale of Goods Act. Today, in Canada, the validity of a transfer of
tangible movable property is governed by the law where the movable is at the time
of the transfer. It has become known as the lex situs rule.
home was obtained by fraud or other means not amounting to theft, property in the chattel
does not revest in the plaintiffs. Should the court be obliged to apply Washington state
law, the result would frustrate the objectives of the Sale of Goods Act. This is because the
plaintiffs, as residents of Washington, would be entitled to succeed, whereas if the original
dealings on 28th and 29th September 1977 occurred in British Columbia, they would not.
Because one purpose of our laws is to give a foreign resident no better title than he
would get if he were resident in the province from the beginning, the Court decline
to apply the Washington state definition of theft to of our Sale of Goods Act.
On the issue whether the act amounted to theft: Hall did not commit theft. An examination
of the facts and the Criminal Code shows this is not theft because Hall did not acquire
possession "fraudulently and without colour of right". At best, Hall may be guilty of a
crime arising from either obtaining goods by false pretenses or by fraud.
DOCTRINE: Today, in Canada, the validity of a transfer of tangible movable property
is governed by the law where the movable is at the time of the transfer. It has become
known as the lex situs rule.
Because one purpose of our laws is to give a foreign resident no better title than he would
get if he were resident in the province from the beginning, the Court decline to apply the
Washington state definition of theft to of our Sale of Goods Act.
FACTS:
1. November 1976 the PLAINTIFFS purchased the mobile home from a dealer at
Grande Coulee, Washington, for the price of $13,900 plus tax. Financing was
arranged through the seller by means of a document entitled "Conditional Sale
Contract and Security Agreement".
2. They took the trailer to a town called Tonasket, Washington, where they lived in it
for about 11 months. However, they found they could not afford to make the
payments on the home and put it up for sale. An advertisement was placed in a local
paper and a man by the name of John Wesson, alias the defendant Lauren Deming
Hall, offered to purchase the home.
3. On 28th September 1977 the PLAINTIFF's lawyer drew up a form of purchase and
sale agreement between the plaintiffs and Wesson (Hall). It provided for a sale price
of $13,900 with a down-payment of $1,300 and the balance on 1st November 1977.
Both plaintiffs and Hall signed the document on 28th September 1977.
4. After receipt of the $1,300, and at the request of Hall, the plaintiffs delivered
possession of the mobile home on 29th September 1977 by arranging for its move
from Tonasket, Washington, to Chelan, Washington, where Hall intended to live.
 5. On 31st October 1977, MARK MADEN visited the mobile home pad at Chelan,
Washington, where Hall was supposed to have placed it, but the house was missing.
So was Hall.
6. By means unknown, the mobile home found its way to the lot of the defendant
Biggins at Surrey, British Columbia. He carried on business as "Biggins Family
Mobile Homes". In mid-October 1977 the defendant Gary Banting purchased the
home from Biggins for $25,000. To finance the purchase he borrowed money from
the defendant Canadian Imperial Bank of Commerce. It took back security by way
of a promissory note and chattel mortgage. Banting moved the mobile home to
Dawson Creek, where he and his family have lived in it for the past five years.
7. An expert in Washington law gave evidence on behalf of the plaintiffs. He testified
that when the plaintiffs gave up possession to Wesson on 29th September 1977, title
to the mobile home probably passed to Wesson. He went on to say that the sale
agreement dated 28th September 1977, which reserved title to the plaintiffs until
full payment of the purchase price, was probably effective only to retain a "security
interest" in the plaintiffs.
8. On a further analysis of Washington law, he stated that a purchaser in Washington
does not acquire title to goods where they are obtained through fraud punishable
as larcenous under the criminal law. In 1975 the Washington Criminal Code was
revised and a section was enacted which provides:
a. Theft and Larceny Equated. All offences defined as larcenies outside this
title shall be treated as thefts as provided in this title.
9. It was his opinion that in Washington state, since 1975, the word larceny has only
one meaning — theft. If title to a chattel is transferred to a purchaser on the basis
of materially false representations by the purchaser, this amounts to larcenous theft.
In his view, the false representation of an alias by Hall and the representation that
he intended to perform the contract of 28th September 1977 were not bona fide and
can be defined as larceny or theft in Washington.
10. It is agreed between the parties that Hall was convicted of theft in Washington state
some time after 31st October 1977 when the plaintiffs discovered the mobile home
was missing from Chelan, Washington.
ISSUE/S:
1. (Issue provided for the case itself) Was the mobile home "stolen" from the plaintiffs
in Washington state so that Gary Banting never acquired lawful title? NO
RULING: Based upon the reasons previously enunciated, the claim against the defendants
Banting and C.I.B.C. is dismissed. Judgment will be entered against the defendant Hall for
damages in the sum of $12,669.60 together with prejudgment interest at 14 per cent from 1st
November 1977 until today. Banting and C.I.B.C. are entitled to their costs. The plaintiffs
will recover costs against the defendant Hall.
Order accordingly.
RATIO:
1. Two sections of the Sale of Goods Act require intepretation. They read:
a. When the seller of goods has a voidable title to them, but his title has not
been avoided at the time of the sale, the buyer acquires a good title to the
goods, if he buys them in good faith and without notice of the seller's defect
of title.
2. (1) Where goods have been stolen and the offender is prosecuted to conviction, the
property in the goods stolen revests in the person who was the owner of the goods,
or his personal representative, notwithstanding any intermediate dealing with them,
whether by sale in market overt or otherwise.
(2) Notwithstanding any enactment to the contrary, where goods have been obtained
by fraud or other wrongful means not amounting to theft, the property in the goods
shall not revest in the person who was the owner of the goods, or his personal
representative, by reason only of the conviction of the offender.
3. For the plaintiffs, it is argued that since Hall was convicted of theft in Washington
state, he had a void title which did not permit transfer of ownership in the mobile
home to either Biggins or Banting. But the defendants submit the title held by Hall
was voidable and not void since the transaction between the plaintiffs and Hall in
September 1977 does not amount to theft in Canada. Thus, the problem is mainly
one of statutory interpretation and conflict of laws
4. For a variety of reasons, English common law did not face the same kind of
dilemma in its early development. Growth in this area of the law comes mostly from
Canadian and American authorities. In the beginning, common law held that
movables were governed by the law of the domicile of the owner. That rule did not
prove satisfactory when applied to the inter vivos transfer of chattels and today, in
Canada, the validity of a transfer of tangible movable property is governed by the
law where the movable is at the time of the transfer. It has become known as the lex
situs rule.
For the plaintiffs, it is argued that since Hall was convicted of theft in Washington
5. In this instance, the mobile home was in Washington state at the time of the transfer
from the plaintiffs to Hall. Then it was in British Columbia at the time of the transfer
from Biggins to Banting. Since there are these two lex siti, what law governs?
Almost invariably the authorities apply the law in the country or province where
the goods actually are at the time of litigation, sale of a motor vehicle conditional
sales agreement in Alberta; car taken to British Columbia and sold to defendant
purchaser in good faith for value; British Columbia law applied. The motor vehicle
sold by conditional sales agreement to purchaser in Quebec; car taken to Ontario
and sold there to purchaser in good faith for value; Ontario law applied.
6. There are several reasons for this rule. One must assume that when the legislature
enacted the Sale of Goods Act, it meant to provide for an orderly transfer of goods
in British Columbia with an idea of protecting its own citizens. Throughout the
reported cases the courts adopt this theme. Although a foreign plaintiff will be
treated fairly, he will never be placed in a better position than a comparable
 dissatisfied resident plaintiff complaining about the same kind of transaction which
took place within the boundaries of the province. Put in the context of this case,
Washington state law cannot give the plaintiffs any better title than they would get
in British Columbia if the original sale and disposition on 28th and 29th September
1977 occurred here instead of in Washington.
7. Similarly, when the legislature speaks of stolen goods, theft and fraud (s. 29), it
must have in mind the meaning of these words in Canadian law. For example, it
could not be thinking of theft as it is known in, say, Mexico, Japan or the United
States of America. Consequently, The court must look at the facts surrounding the
transaction in Washington on 28th and 29th September 1977 and decide whether
the plaintiffs' title is protected by our Sale of Goods Act.
8. On 29th September 1977 I know the plaintiffs voluntarily gave up possession of the
mobile home to Hall on his promise to pay the balance due by 1st November 1977.
In return, they received a signed contract and a down-payment of $1,500. An
examination of of the Criminal Code, , shows this is not theft because Hall did not
acquire possession "fraudulently and without colour of right". At best, Hall may be
guilty of a crime arising from either obtaining goods by false pretenses or by fraud.
9. In these circumstances, the Sale of Goods Act specifically declares that since the
mobile home was obtained by fraud or other means not amounting to theft, property
in the chattel does not revest in the plaintiffs. Should I be obliged to apply
Washington state law, the result would frustrate the objectives of the Sale of Goods
Act. This is because the plaintiffs, as residents of Washington, would be entitled to
succeed, whereas if the original dealings on 28th and 29th September 1977 occurred
in British Columbia, they would not. Because one purpose of our laws is to give a
foreign resident no better title than he would get if he were resident in the province
from the beginning, I decline to apply the Washington state definition of theft to
our Sale of Goods Act.
10. Less persuasive but still worth mentioning is the application of s. 30(2) and (3) of
the Sale of Goods Act. They state:
(2) Where a person having bought or agreed to buy goods obtains, with the consent
of the seller, possession of the goods or the documents of title to the goods, the
delivery or transfer by that person, or by a mercantile agent acting for him, of the
goods or documents of title under any sale, pledge or other disposition of them, or
under any agreement for the sale, pledge or other disposition of them, to any person
receiving the same in good faith and without notice of any lien or other right of the
original seller in respect of the goods shall have the same effect as if the person
making the delivery or transfer were a mercantile agent in possession of the goods
or documents of title with the consent of the owner.
(3) Subsection (2) does not apply to goods, the possession of which has been
obtained by a buyer under a conditional sale within the meaning of the Sale of
Goods on Condition Act, where the seller has complied with that Act.
11. Secction 1 of the statute gives the definition of a mercantile agent as follows:
a. "mercantile agent" means a mercantile agent having, in the customary
course of his business as an agent, authority either to sell goods, or to
consign goods for the purpose of sale, or to buy goods or to raise money
on the security of goods.
12. There is no evidence the plaintiffs complied with the Sale of Goods Act by
registering the contract made in Washington on 28th September 1977 in British
Columbia. Therefore, s. 30(2) does apply. It can be paraphrased as follows:
(a) When Hall agreed to buy the mobile home, and
(b) with the consent of the plaintiffs obtained possession.
(c) the delivery of the mobile home by Hall under any sale or disposition to
Biggins,
(d) where Biggins received it in good faith and without notice of any lien or
other right in the plaintiffs as the original sellers,
(e) has the same effect as if Hall were a mercantile agent in possession of the
mobile home with the consent of the plaintiffs.
13. While there is no direct evidence that Hall delivered the mobile home to Biggins,
from the facts this is a reasonable inference. Evidence is also lacking as to whether
Biggins acquired the mobile home from Hall in good faith and without notice of
any lien held by the plaintiffs. In such a case, the onus of proving there were these
circumstances that prevented Biggins from being an innocent purchaser rests upon
the plaintiffs
14. Because the plaintiffs have failed to prove Biggins was other than an innocent
purchaser from Hall, it means that Biggins had title to the goods which he could
pass on to Banting. I am satisfied Banting was an innocent purchaser for value
without notice when he bought the mobile home from Biggins and therefore he
acquired good title against everyone.
15. Against the proposition with respect to whether or not there was a theft of the mobile
home is a decision of His Honour Judge MacKinnon sitting as a local judge of this
court. It involved a similar fact pattern arising out of the theft of another mobile
home in Washington state, its delivery to a company called Marcel Management
Ltd. in British Columbia and a subsequent purchase by two defendant British
Columbia residents named Bevan. They were bona fide purchasers for value
without notice.
16. His Honour informs me that at the trial both sides agreed the law of Washington
state was the relevant law. Acting on this consensus, he rightly concluded that since
the trailer was "stolen" and the thief was prosecuted to conviction in Washington
state, no subsequent purchaser could acquire a valid title in British Columbia. But
here there is no such agreement, and I have decided the law of British Columbia is
the law I must look to and not the law of Washington state.