When a company purchases used equipment, it is important to verify if the seller is actually selling it in the course of their business activities.
Many entrepreneurs today are acquiring used equipment pieces from companies that want to replace them or simply get rid of them.
An entrepreneur acquires a backhoe without knowing that it was stolen. The president of the quarry who sold the backhoe had previously admitted to buying it from a third party who had stolen it from a garage. The insurance company that compensated the garage opposes, through subrogation, its right of ownership.
The backhoe is seized, but the entrepreneur is authorized by the Court to regain possession of it, while paying the incurred expenses. As soon as the seizure is lifted, he is served with a claim action ordering him to return the backhoe to the insurance company. The entrepreneur, who does not dispute the insurer's ownership right, declares that he acquired the backhoe in the normal course of activities of a quarry and that the insurer must reimburse him for the expenses of regaining possession following the seizure, as well as the amounts paid for its acquisition.
The Court concludes that the expression "in the normal course of activities of a business" must receive a restrictive interpretation. Therefore, the activity that generates profits and constitutes the reason for the company's existence must be considered. The purpose of a quarry is the production of stone, gravel, etc., while the sale of equipment can only be occasional. The Court therefore orders the entrepreneur to return the backhoe to the insurer without any compensation.
When a company buys used equipment, it is important to verify if the seller is actually selling it in the course of their activities.
If you don't want to follow the beef to the slaughterhouse, a verification at the Register of Personal and Movable Real Rights (RDPRM) is necessary!
*CA Montreal 500-09-012781-027, 2004-06-30
