DATE: 20030306

DOCKET: C36838

COURT OF APPEAL FOR ONTARIO

RE: AGRICULTURAL COMMODITY CORPORATION (Plaintiff/Appellant) v. SCHAUS FEEDLOTS INC., SCHAUS LAND AND CATTLE CO. LIMITED and SCHAUS TRADING COMPANY LTD. (Defendants/Respondents)

BEFORE: O’CONNOR A.C.J.O., ABELLA and SIMMONS JJ.A.

COUNSEL: A. Duncan Grace

for the appellant

Daniel R. Dowdall and

Alex A. Ilchenko

for the respondent

HEARD: February 20, 2003

RELEASED

ORALLY: February 20, 2003

On appeal from the judgment of Justice J.M. Donnelly dated July 11, 2001.

E N D O R S E M E N T

[1] Section 5(b)(iii) of the loan agreement expressly authorized Mr. Eurig to sell the crops that were secured by the agreement on a “farm-to-farm” basis. The sale from Eurig to the respondent was a sale from farm-to-farm. The fact that Eurig told the respondent that the corn was being sold by his neighbours rather than by himself is irrelevant to the authority conferred by s. 5(b)(iii). There was no prejudice to the appellant’s security under the loan agreement arising from the misrepresentation.

[2] Because the sale was expressly authorized by the agreement, it falls within s. 25(1) of the PPSA. As a result, the respondent took title of the crops free and clear of the security interest.

[3] Thus, we agree with the result reached by the trial judge and dismiss the appeal.

“Dennis O’Connor A.C.J.O.”

“R. Abella J.A.”

“Janet Simmons J.A.”