This section of the book is from the "Canadian Banking Practice" book, by John T. P. Knight.
Question 541.— A, who is a wholesale dealer in live stock in the North-West Territories, applies to a chartered bank for an advance. They take security upon his cattle running at large on the public range under section 74 of the Bank Act, and do not register their lien. Some time after A applies to B, a private party, for a loan, offering his cattle as security, and stating they are clear. B makes a search in the registry office for the district, and finding no registrations against A, advances him the amount, taking as security a chattel mortgage on the cattle, which is duly registered. According to chapter 43, sections 6 and 11 of the Consolidated Ordinances of the North-West Territories, 1898, as follows:
" 6. Every mortgage or conveyance intended to operate as a mortgage of goods and chattels which is not accompanied by an immediate delivery and an actual and continued change of possession of the things mortgaged, shall within thirty days from the execution thereof be registered as hereinafter provided, together with an affidavit of a witness thereto of the due execution of such mortgage or conveyance, and also with the affidavit of the mortgagee or one of several mortgagees or the agent of the mortgagee or mortgagees, if such agent is aware of all the circumstances connected therewith and is properly authorized by power in writing to take such mortgage, in which case a copy of such authority shall be attached thereto (save as hereinafter provided under section 21 hereof), such last mentioned affidavit stating that the mortgagor therein named is justly and truly indebted to the mortgagee in the sum mentioned in the mortgage, that it was executed in good faith, and for the express purpose of securing payment of money justly due or accruing due, and not for the purpose of protecting the goods and chattels mentioned therein against the creditors of the mortgagor, or of preventing the creditors of such mortgagor from obtaining payment of any claim against him; and every such mortgage or conveyance shall operate or take effect upon, from and after the day and time of the filing thereof.
" 11. In case such mortgage or conveyance and affidavits are not registered as hereinbefore provided, or in case the consideration for which the same is made is not truly expressed therein, the mortgage or conveyance shall be absolutely null and void as against creditors of the mortgagor and against subsequent purchasers or mortgagees in good faith for valuable consideration."
Who has best title to the cattle, the bank or B? Do not these provisions in the North-West Territories Ordinances override section 74 of the Bank Act?
Answer.—If the bank has taken security in the proper form under the Bank Act, and if the cattle can be sufficiently identified as being those covered by the security, the claim of the bank will prevail over that of the mortgagee.
The validity of those sections of the Bank Act, which of necessity interfere with the laws of the provinces respecting the registration of bills of sale and chattel mortgages, has been determined by the Privy Council in England. See Tennant v. Union Bank (1895), Appeal Cases 31.