NOTES
Creditor’s recourse for deterioration of immovable security
by Allan Lutfy *
A creditor may be faced with the real or apparent deterioration
of that immoveable property over which he has been given an hypo-
thecary right in return for the money he has loaned or advanced to
his debtor. Although the present jurisprudence allows the creditor
to sue the debtor when faced with these circumstances either under
the general provisions of article 1092 c.c.,1 or under articles 2054 – 2055
c.c., 2 which deal specifically with hypothecs and privileges, it is sub-
mitted that a correct interpretation of the law necessarily limits the
plaintiff creditor to the latter recourse.3
Of the Junior Board of Editors, McGill Law Journal; second year law student.
1 Article 1092 c.c. “The debtor cannot claim the benefit of the term when he
has become a bankrupt or insolvent, or has by his own act diminished the security
given to his creditor by the contract.”
2 Article 2054 c.r. “Neither the debtor nor other holder can, with a view of
defrauding the creditor, deteriorate the immoveable charged with privileged or
hypothecary claim, by destroying or injuring, carrying away or selling the whole
or any part of the buildings, fences or timber thereon.”
“Le d~biteur nile tiers-d6tenteur ne peuvent cependant dans la vue de frauder
le cr~ancier dt~riorer l’immeuble grev6 de privilege ou d’hypoth~que, en d6trui-
sant on endommageant, enlevant ou vendant la totalit6 on partie des bitisses,
des cl~tures et des bois qui s’y trouvent.”
Article 2055 c.c. “In the event of such deterioration the creditor who has
a privilege or hypothec upon the immoveable may sue him, even though the claim
be not yet payable, and recover from him personally the damages occasioned by
such deteriorations, to the extent of such claim and with the same right of
privilege or hypothec; but the amount so recovered goes in reduction of the claim.”
“Dans le cas de telles d6triorations, le cr~ancier qui a le privilege ou hypo-
th6que sur l’immeuble pent poursuivre ce d6tenteur lors m9me que la cr~ance ne
serait pas encore exigible, et recouvrir de lui personnellement les dommages
resultant de ces dft6riorations, jusqu’b concurrence de sa cr6ance et au mame
titre de privilge ou d’hypoth~que; mais le montant qu’il en percoit est imput6
sur et en d6duction de sa cr6ance.”
3 Cases applying 1092 c.c.: Pichg v. Jean-Paul Guenette [1960] R.P. 155;
Demers v. Strachan [1915] 48 S.C. 71; Robert v. Robert [1951] S.C. 41.
Cases applying 2054-2055 c.c.: Davis v. Smith (1912) 8 D.L.R. 486; Stevens V.
Kerklow (1923) 61 S.C. 435; Lasalle Builders Supply Ltd. V. Lasalle Quarry Ltd,
[1947] S.C. 72.
328
McGILL LAW JOURNAL
[Vol. 12
Despite a conflict amongst French authors 4 as to the scope of
their equivalent of article 1092 c.c. and despite similar uncertainty
in Quebec jurisprudence,5 it can be assumed for the purpose of this
discussion that the article is limited to contracts and does not extend
to privileges whose legal effects are derived from the Civil Code and
not from the express will of the parties. Secondly, no one has argued
that a tiers-ddtenteur or other holder of the immoveable can be sued
under 1092 c.c. In short, it would seem that of the creditors with a
privileged or hypothecary right who are confronted with the deteriora-
tion of the immoveable, only those who sue the debtor of a hypothecary
claim enjoy the option of one of the two recourses.0 It is the author’s
contention that, even in these limited applications, such an advantage
is unjustified.
Why would the plaintiff-creditor prefer to sue under 1092 c.c.?
A quick reading of the relevant articles of the Civil Code provides the
obvious answer. In the first place, it is only article 2054 c.c. which
allows the defense of lack of fraudulent intention on the part of the
debtor. In the case of Demers v. Strachan,7 although the court re-
cognized that the deterioration of the immoveable was only temporary
and that a new and better building was to replace the old structure,
it was held that since the hypothecary creditor saw fit to sue under
1092 c.c., the debtor could not avail himself of this defence. A second
advantage lies in the fact that a successful action under 1092 c.c.
will immediately make exigible the whole of the debt regardless of
the terms of the contract. On the other hand, article 2055 c.c. provides
that only the portion of the debt equivalent to the damages suffered
will be immediately owing to the creditors.
4 Those authors who would allow privilege resulting from contracts to come
within the scope of 1092 c.c. include: Paniol et Ripert, Des Obligations, t. vii at
p. 352 f.f.; Baudry-Lacantinerie et Barde, Des Obligations, t. 2, n. 1016. For
Quebec doctrine see Faribault, TraitM de Droit Civil, t. VIII, bis pp. 112-3.
Other authors give a restrictive interpretation to 1092 c.c. and include
only those claims resulting directly from the expressed intention of the parties:
Laurent, Droit Civil Frangais, t. 17, n. 202; Moudon, t. 2, p. 627. For Quebec
doctrine see Mignault, Droit Civil Canadien, t. 5, p. 460.
5 War v. Perron [1893] 3 S.C. 56; Jacques v. Belhumeur, 50 S.C. 319; Pich6
v. Guenette [1960] R.P. 155.
6 It has been held that these two recourses are incompatible, of a different
nature and cannot be included in one and the same action. See Lasalle Builders
Supply Ltd. v. Lasalle Quarry Ltd., [1947] S.C. 72 at p. 75, and St. Hilaire v.
Dame Lavoie [1935] 73 S.C. 90 at p. 94.
7 (1915) 48 S.C. 71.
No. 3]
NOTES
Mignault has gone so far as to argue that the debtor must always
be sued under article 1092.8 He bases this contention on the ground
that the codifiers, when referring to a personal action in article 2055
c.c., could only have intended a tiers-d6tenteur or other holder since
such an action is already available against the hypothecary debtor.
It is submitted that this interpretation of the article is erroneous.
Firstly, some meaning must be attached to the opening words of
article 2054 : “Neither the debtor nor the other holder…”. Despite
the poor draftsmanship of article 2055 c.c., it is suggested that the
preliminary words of article 2054 c.c. are sufficiently explicit to
warrant the conclusion that the codifiers intended to favor both the
debtor and the tiers-d~tenteur with the advantages of articles 2054
c.c. and 2055 c.c.
Secondly, the words “… even though the claim be not yet paya-
ble…” of article 2055 c.c. obviously imply that a debt may still be
owing by the defendant. This would not be the case if the creditor
was suing a tiers-d6tenteur; the words could only have reference
to an action against the debtor.2
It is submitted, therefore, that the words “ce d6tenteur” of 2055
c.c. refer to both the debtor and other holder.10 The advantage of
articles 2054 and 2055 c.c. were intended for both situations. As such,
these provisions of the Civil Code serve as exceptions to the general
rule of 1092 c.c. and should be applied by the courts in all cases based
on hypothecary or privileged claims. The words of the text justify
this proposition and the economy of the law would be greatly served
if the hypothecary creditor who is faced with what appears to be
a diminution of his security were limited to an action under articles
2054 and 2055 c.c., without regard to whether the holder of the
immoveable is the debtor or tiers-d6tenteur.
s Droit Civil Canadien, vol. IX at pp. 137 ff.
0 Mignault limits the application of 2054 c.c. and 2055 c.c. to tiers-ddtenteur.
However, tiers-d~tenteurs are other holders of the immoveable that have NOT
assumed the debt of the original holder. Mignault’s interpretation, therefore,
leaves these words of article 2055 c.c. without any meaning and effect.
10 This proposition is maintained in Stevens v. Kerklow (1923) 61 S.C. 435 at
437, and Best Realties Corporation v. Quintal [1948] B.R. 139 at 146.
