The CBY-3 "lifting fuselage" was an evolution of the earlier Burnelli UB-14. Burnelli worked as a designer at Canadian Car and Foundry (CanCar) in Montreal, and the CBY-3 was intended for bush operations in northern Canada. The sole prototype was extensively tested but failed to gain a production contract.

Originally registered CF-BEL-X while still in the experimental stage, this one-off, twin-boom, aerofoil-section fuselage, high-lift airliner garnered significant interest from the industry. CF-BEL-X underwent rigorous testing and proving flights designed to show off its potential. Despite a trouble-free test program and glowing accolades from the press and industry observers, no production orders resulted and the prototype was later sold in the United States as N17N.

The Loadmaster continued to fly regularly as a commercial airliner both in northern Canada and South America; acquired with design rights by Airlifts Inc. in Miami, Florida, it went to Venezuela, and returned to Burnelli Avionics for refitting with Wright R-2600 engines, finally ended its flying days at Baltimore's airport in Maryland.

In 1964, the CBY-3 air transport was retired to the New England Air Museum in Windsor Locks, Connecticut, where it was displayed outside. As of November 2020, after an eight-year restoration, the CBY-3 was moved into the Civil Aviation Hangar where the final assembly will be completed.