Supreme Court of Canada
Laforest v. Factories Insurance Co., (1916) 53 S.C.R. 296
Date: 1916-05-02
Alfred Laforest (Plaintiff) Appellant;
and
The Factories Insurance Company (Defendants) Respondents.
1916: February 9; 1916 May 2.
Present: Sir Charles Fitzpatrick C.J. and Idington, Duff, Anglin and Brodeur JJ.
ON APPEAL FROM THE COURT OF KING'S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC.
Fire insurance—Statutory conditions—R.S.Q., 1909, arts. 7034, 7035, 7036—Notice—Conditions of application—Conditions, indorsed on policy—Keeping and storing coal oil—Agent's knowledge—Waiver—Adjustment of claim—Offer of settlement by adjuster—Estoppel—Transaction.
As required by article 7034 of the Revised Statutes of Quebec, 1909, the statutory conditions were printed upon the policy of insurance. The application for the insurance did not refer to them but contained a condition that the insured, should not use coal oil stoves on the premises insured. At the time the premises were destroyed by fire coal oil was kept and stored there in excess of the quantity permitted by clause 10 of the statutory conditions, without written permission of the insurance company. The company had given no written notice to the insured pointing out particulars wherein the policy might differ from the application as provided by the second clause of the conditions.
Held, Brodeur J. dissenting, that the law did not require the statutory conditions to be referred to in applications for insurance; that all applications for insurance to which the Quebec legislation applies must be deemed to be made subject to those conditions, except as varied under articles 7035 and 7036, Revised Statutes of Quebec, 1909, and that there was no necessity for the insurance company to give notice, as mentioned in the second clause of the conditions, calling the attention of the insured to the conditions indorsed upon the policy of insurance.
Per curiam.—Knowledge by an agent soliciting insurance that coal oil, in large quantities, was kept and stored upon the premises to be insured does not constitute notice of that fact to the company insuring them, nor does notice that coal oil in such quantities was kept and stored upon the premises prior to the insurance involve knowledge that it would be kept there afterwards in violation of
[Page 297]
the conditions of the policy. Fitzpatrick C.J., held that knowledge by the agent was knowledge of the company but was not equivalent to waiver of the condition of the policy respecting the keeping or storing of coal oil.
In the absence of proof that adjusting agents employed by the insurer had authority to dispose of the matter, the offer of settlement of the claim by the adjuster does not constitute waiver on the part of the insurer of objections which might be urged against theclaim.
APPEAL from the judgment of the Court of King's Bench, appeal side, reversing the judgment of Pouliot J., at the trial, in the Superior Court, District of Arthabaska, and dismissing the plaintiff's action with costs.
The circumstances of the case are stated in the head-note and the questions in issue on the present appeal are set forth in the judgments now reported.
G. G. Stuart K.C. and Crépeau K.C. for the appellant.
Aimé Geoffrion K.C. and Perrault K.C. for the respondents.
The Chief Justice :—At the close of the argument I was under the impression that the plaintiff, appellant, was fairly entitled to succeed. But a careful examination of the pleadings and evidence, documentary and oral, leads me irresistibly, if regretfully, to a contrary conclusion.
The action is brought to recover the amount due under a policy of insurance on a stock of goods in a country store in the Province of Quebec. There is no doubt that the goods covered by the policy were destroyed by fire on the 25th November, 1913. The company sets up by way of defence every objection that the ingenuity of counsel could suggest and the plaintiff is entitled at least to the benefit of my opinion that his claim was made honestly and he fails to
[Page 298]
succeed on a ground which involves neither moral nor legal turpitude.
The action was maintained in the Superior Court, but on appeal it was held that there was a breach of the condition in the policy which forbade the keeping and storing on the premises of coal oil in quantities exceeding five gallons without the permission in writing of the company and on that ground the action was dismissed. In my opinion that judgment must be affirmed.
I am satisfied that the insured was in complete ignorance of the statute when he applied for the insurance and it does not appear that his attention was ever drawn to the condition now invoked after the policy came into his possession. He acted throughout in perfect good faith and frankly disclosed to the officials of the company at the date of his application and when he filed his claim that coal oil was kept on the premises. Were I dealing with this case in the court of first instance I would have some difficulty in finding that the evidence was sufficiently conclusive as to the quantity of oil in the store at the time of the fire. The clerk, Lacerte, says that during the evening of the day preceding the fire he brought one "quart" of oil into the store, and that he sold a quantity which he estimates at possibly about twelve gallons and I accept this evidence in preference to that given by the witness Demers. There is no evidence as to the quantity of oil contained in a "quart" and Laforest speaks of a "tonne" containing 45 gallons. It does not appear that the one measure is deemed to be the equivalent of the other. Technically there is of course a wide difference between the two.
However, I am not satisfied that I have sufficient
[Page 299]
doubt to rebut the presumption that the decision appealed against is right.
The appellant also urges that the agent of the company, who solicited the risk, visited the premises, and knew that coal oil was kept and stored there at the time he filled in the application. Although I am of opinion that his knowledge was the knowledge of the company because acquired in the course of his employment (Bawden v. London, Edinburgh and Glasgow Assurance Co.; Wells v. Smith), I cannot hold that knowledge to be equivalent to a waiver of the condition which requires that, once the policy attaches, coal oil cannot be kept or stored on the premises without the written consent of the company.
The appellant relies also on the second statutory condition which creates a presumption that the policy issued conforms to the terms of the application. This point is so fully and satisfactorily covered by my brother Anglin in his notes that it is unnecessary for me to do more than refer to Provident Savings Life Assurance Society v. Mowat.
At the argument I was strongly inclined to hold that the appeal must succeed because the parties had subsequently to the fire entered into an agreement which in the language of the Quebec Code is called a "transaction" (1918 C.C.) with respect to this claim and that" in the result the plaintiff was entitled to recover $2,800. I accept the version given by the plaintiff and his wife of the interview during which the compromise was discussed. But to transact it was necessary for the officials of the company to have
complete control over the subject matter in dispute
[Page 300]
(1919 C.C.) and I cannot find in the record sufficient evidence to justify me in holding that Demers and Tanguay had such control. The principle of the Quebec law is;—
Peuvent seuls transiger les-mandataires et administrateurs du patrimoine d'autrui qui ont reçu un pouvoir spécial à cet effet. King v. Pinsonault.
This appeal must be dismissed with costs.
Idington J.—The appellant stored and kept upon his premises within the meaning of one of the statutory conditions of the policy of insurance in question herein, as an identically worded policy was construed, by a minority in this court and by the Judicial Committee of the Privy Council in the case of Thompson v. Equity Fire Ins. Co., and thereby forfeited his right to recover herein.
The application of appellant for the insurance in question herein contained the following obligation on his part:—
De plus le requérant s'engage à.ne garder ni chaux, ni cendre dans les vaisseaux de bois, dans ou auprès des bâtiments ci-dessus, à ne faire aucun usage de poèle à pétrole ou à gazoline, ni à prendre aucune autre police d'assurance sur les mêmes propriétés dans d'autres compagnies, sans en avertir celle-ci, sous peine de nullité de la police qu'il demande.
His counsel now presents the novel argument that inasmuch as in the same set of statutory conditions required by law to be indorsed on every policy of insurance there is the following clause,
After application for insurance, it shall be presumed that any policy sent to the assured is intended to be in accordance with the terms of the application, unless the company points out in writing, the particulars wherein the policy differs from the application,
[Page 301]
the respondent was bound to point out in writing the first mentioned condition, as a particular wherein the policy differed from the application.
I am unable to assent to this proposition.
There is in fact no conflict between the terms of the application and the policy if we have regard to the law (now well known to insured) binding the insurer to print upon its policy the statutory conditions.
It may be that the obligation above quoted from the application would be a new or additional condition which unless also printed in a different coloured ink, as required by the statute, might by such omission become null.
That is the converse of this case and, the insured is protected by the statute in that regard.
The obvious purpose of the condition, which is now presented for our consideration, was to meet the not infrequent cases of a variation in or departure from the description of the subject matter insured, as given in the application, or the time to run, or rate (if any) specified therein.
Such like errors sometimes might creep in and the insured was thus protected.
It is suggested that the condition, by virtue of which I hold the appellant fails, is one which an insurer might waive. It is very suggestive that the contention does not seem to have been set up in the appellant's pleadings. The omission might be overcome if the law and facts sustained the contention, but, if serious, why was it omitted from the pleading?
The appellant also sets up that the respondent settled and agreed to pay the sum claimed.
[Page 302]
That is met by evidence disputing that of appellant and that in any event the agent had no power to bind respondent in that regard.
Holding these views there is no need to consider other issues raised.
I think the appeal must be dismissed with costs.
Duff J.—The appeal should be dismissed with costs.
Anglin J.—The appellant urges three grounds of appeal against the judgment of the Court of King's Bench which held that he cannot recover upon his insurance policy with the defendant company, because, in breach of statutory condition 10 (f), which was indorsed upon the policy as required by article 7034 R.S.Q., when his premises were burned he had upon them for the purpose of sale thirty gallons of coal oil without having, obtained the permission in writing of the company. Thompson v. Equity Fire Ins. Co..
(1) The appellant maintains that the company through its agents adjusted his loss at $2,800 and agreed to pay him that sum in satisfaction of his claim. This fact is denied: it has not been found in favour of the appellant; and the evidence does not warrant such a finding being made.
(2) He contends that, because the application signed by the insured contains conditions, to which he thereby agrees that his policy shall be subject, but neither sets out the statutory conditions nor refers to them, it must, under the second statutory condition, in the absence of written notice from the company to
[Page 303]
the insured particularly calling the conditions indorsed upon the policy to his attention, be deemed free from all such conditions not covered by those expressed in the application, i.e., it must be deemed such a contract as would be constituted by a bare acceptance of the application of the insured.
By article 7034 R.S.Q. every company is required to print the statutory conditions upon every policy of fire insurance which it issues and is allowed to vary such conditions only by complying with articles 7035 and 7036. If the conditions are not so printed the policy is nevertheless deemed subject to those of them which contain provisions in the interest of the insured. If the statute is complied with, the statutory conditions in favour of the company as well as those in favour of the insured create contractual obligations between them. Having regard to this state of the law every application for insurance should, in my opinion, be deemed an application for a policy subject to the statutory conditions, except in so far as they may be varied in conformity with article 7035—that is, for a policy which the company may lawfully issue. It may well be that the effect of statutory condition No. 2 is to prevent the insurance company binding the insured by any condition inserted in the policy, other than the statutory conditions, by way of variation or otherwise, which differs from or adds to those expressed in the application. It may be that the statutory conditions themselves should be deemed modified in so far as they are inconsistent with any term expressed in the application— although, in the absence of a variation noted upon the policy itself as prescribed by article 7035, that view would seem to present some difficulties. But the legislature
[Page 304]
did not intend that the statutory conditions should be set forth in the application for insurance; and I am satisfied that, where these conditions have been duly printed upon the policy as required by the statute, it is subject to them, notwithstanding that they are neither set forth nor expressly referred to in the application. In so far as anything in the opinion of Osier J.A. in Mitchell v. City of London Assurance Co., at pages 278-9, may conflict with this conclusion I am, with great respect, unable to agree with it.
(3) Because, as counsel for the appellant asserted, it is common knowledge that the sale of coal oil is a part of the business of every country general-store, and the agent for the defendant company, when soliciting the plaintiff's insurance, saw coal oil on his premises, he contended that the company should not be heard to set up the condition relied upon; and he cited Mitchell v. City of London Assurance Co., in support of his argument. But the keeping of coal oil upon the insured premises is not a necessary part of the business in the case of a country general-store as is the carrying of a small quantity of lubricating oil upon a steam tug. Coal oil might have been kept outside and brought into the shop, if at all, in the permitted quantity, i.e., not exceeding five gallons. Notice to a mere soliciting agent—unlike notice to a general agent—is not notice, to the insurance company; and, if it were, notice that coal oil was kept on the premises before they were insured does not involve knowledge that it will be kept there afterwards in violation of an expressed condition of the policy.
The appeal, in my opinion, fails and should be dismissed with costs.
[Page 305]
Brodeue J. (dissident).—Il s'agit d'une réclamation pour assurance contre le feu. Plusieurs questions ont été soulevées par la défenderesse, la compagnie d'assurance, contre la réclamation du demandeur. Ce dernier a eu gain de cause en Cour Supérieure; mais en cour d'appel il a été décidé que l'assuré ne pouvait pas réclamer la valeur des pertes qu'il avait encourues parce qu'il avait dans son magasin de l'huile de charbon pour une quantité plus considérable que celle permise par les conditions de la police.
Le demandeur appelle de ce jugement devant cette cour et prétend entr'autres choses que la condition de la police sur laquelle la cour d'appel s'est basée pour renvoyer sa demande ne fait pas partie des obligations contractuelles qui existaient entre lui et la compagnie d'assurance.
Contrairement à la pratique qui est généralement suivie, me dit-on, depuis que la législature a jugé à propos de déterminer les conditions des polices d'assurance, la compagnie intimée a, dans le cas actuel, fait signer une demande d'assurance par le demandeur.
Il s'agit de savoir si, lorsqu'il y a une demande d'assurance de faite, les conditions insérées dans la police qui seraient incompatibles avec cette demande peuvent être invoquées par l'assureur.
L'article 7034 des Statuts Refondus de la Province de Québec déclare que les conditions indiquées dans cet article font partie de tout contrat d'assurance à l'encontre de l'assureur. Parmi ces conditions est le No. 2 qui se lit comme suit:
Après la demande d'assurance, il doit être considéré que toute police envoyée à l'assurée est censée conforme aux termes de la demande, à moins que la compagnie n'indique par écrit les détails sur lesquels la police diffère de la demande.
[Page 306]
Il me semble que cet article est suffisamment explicite par lui-même pour qu'il ne prête pas à ambiguité. Il ne consacre, après tout, que la doctrine qui se trouve dans tout contrat, c'est que du moment qu'il y a une proposition de faite et que cette proposition est acceptée, le contrat est censé fait suivant les termes de la proposition. Pour le contrat d'assurance, on stipule donc que s'il y a une demande d'assurance et qu'une police soit émise en réponse à cette demande, cette police est reputée conforme aux termes de la demande, à moins que la compagnie n'indique formellement qu'elle est incapable d'accepter la proposition qui Lui est faite.
Pourquoi cette législation a-t-elle été adoptée?
C'est que les compagnies d'assurance avaient l'habitude d'insérer en tout petits caractères dans leurs polices multitude de conditions et de clauses qui avaient virtuellement pour effet de faire disparaître toute source d'obligations de leur part. Les tribunaux ont à maintes reprises donné une interprétation libérale à ces clauses extraordinaires. Mais, d'un autre côté, elles donnaient lieu à des procès si nombreux que le, législateur a cru devoir intervenir et stipuler les conditions dans lesquelles ces polices seraient censées être émises, tout en déclarant, cependant, que ces conditions ne valaient qu'à l'encontre de l'assureur.
Le législateur a déclaré cependant en même temps quelles étaient les conditions auxquelles l'assuré pourrait se trouver obligé et il a pris le soin de rédiger lui-même ces conditions afin d'éviter les surprises, je pourrais peut-être même dire les fraudes, qui étaient pratiquées antérieurement à l'encontre de l'assuré. Il a laissé aux parties contractantes le soin de déterminer si, en tant que l'assuré est concerné, elles feraient partie du contrat ou non.
[Page 307]
L'une de ces conditions stipulées par l'article 7034 est la condition No. 10 qui comporte que la compagnie n'est pas responsable des pertes suivantes, savoir
(f) De la perte ou du dommage advenant lorsque du pétrole ou de l'huile de charbon, de la camphine, de la gazoline, un fluide inflammable, de la benzine, du naphte ou tous produits liquides en provenant, ou toutes parties constituantes d'iceux (sauf de l'huile de charbon clarifiée pour fin d'éclairage seulement, d'une quantité n'excédant pas cinq gallons, * * *)
Cette condition que je viens d'indiquer textuellement peut-elle être invoquée dans le cas actuel par la compagnie d'assurance?
Je dis que non; et voici pourquoi:
Une demande d'assurance est faite par Laforest, le demandeur. Cette demande d'assurance déterminait le montant de l'assurance qu'il désirait avoir, le taux, la prime, le fonds de magasin à assurer et la bâtisse dans laquelle se trouvaient ces marchandises. Il faisait une description, en réponse à certaines questions qui lui étaient posées, de la valeur du terrain, des bâtiments, des hypothèques qui les grevaient et il déclarait s'il avait déjà passé au feu, quels etaient les moyens de protection qu'il avait contre le feu, à qui les pertes devraient être payables, et il ajoutait ceci:
Le dit requérant assure et convient, par les présentes, envers la dite compagnie, que ce qui précède est la vraie, juste et entière exposition de tous les faits et circonstances, concernant la condition, situation, valeur et risque de la propriété qui doit être assurée, en tant qu'il le connaît lui-même et consent à ce que telle description avec le plan d'autre part, soit considérée comme formant la base de responsabilité de cette compagnie, ainsi qu'une partie essentielle de ce contrat d'assurance. Et il est de plus convenu que si l'agent signe ou remplit cette formule de demande, il sera, en ce cas, l'agent du requérant et non de cette compagnie. De plus le requérant s'engage à ne garder ni chaux, ni cendre, dans les vaisseaux de bois, dans un ou auprès des bâtiments ci-dessus, à ne faire aucun usage de poèle à pétrole ou à gazoline, ni à prendre aucune autre police d'assurance sur les mêmes propriétés dans d'autres compagnies, sans en avertir celle-ci, sous peine de nullité de la police qu'il demande.
[Page 308]
Chaque fois qu'une propriété assurée à cette compagnie aura été détruite ou endommagée par le feu, ou la foudre, la balance du billet de dépôt non cotisée sera déduite de la réclamation à payer. Il est de plus par les présentes compris et convenu que dans le cas de dommage à la propriété assurée ou de destruction d'icelle, cette compagnie ne sera dans aucun cas responsable pour plus des deux tiers de la valeur de cette propriété au moment de la perte, dans le cas où il y aurait d'autres assurances dans une proportion pro rata des deux tiers de la valeur de la propriété assurée. Toutes déclarations ou réponses autres que celles mentionnées dans la présente application ne pourront être invoquées contre la compagnie.
Voilà les conditions auxquelles il propose à la compagnie défenderesse de l'assurer. La compagnie défenderesse, en réponse à cette demande, envoie une police et sur le dos de cette police nous trouvons toutes les conditions de l'article 7034. Nous trouvons entr'autres la condition No. 2 que j'ai citée plus haut et la condition No. 10.
La condition No. 2 lie nécessairement la compagnie, car l'article nous dit que les conditions indiquées dans cet article doivent être considérées à l'encontre de l'assureur comme garantie de tout contrat d'assurance. Cette condition déclare formellement que le contrat d'assurance doit être considéré, dans ces circonstances, comme étant absolument conforme aux termes de la demande, à moins que la compagnie n'ait indiqué par écrit les détails sur lesquels la police diffère de la demande. Or, il n'y a pas de preuve au doissier, il n'a pas été suggéré non plus et il n'a pas été plaidé que la compagnie avait indiqué qu'elle ne pouvait émettre une police aux conditions énumérées dans la demande. La compagnie est donc censée, suivant moi, avoir voulu assurer le demandeur aux conditions qu'il indiquait dans sa demande; et toutes les autres conditions, par conséquent, qu'elle peut avoir insérées sur le dos de la police ne sauraient lier l'assuré.
L'intimé invoque en sa faveur le jugement rendu
[Page 309]
par cette cour dans la cause de Provident Savings Life Assurance Society v. Mowat, où il aurait été décidé que
A contract of life insurance is complete on delivery of the policy to the insured and payment of the first premium. Where the insured, being able to read, has had ample opportunity to examine the policy, and not being misled by the company as to its terms nor induced not to read it, has neglected to do so, he cannot after paying the premium, be heard to say that it did not contain the terms of the contract agreed upon.
Je ne crois pas que cette décision, qui, a été rendue en 1902, puisse être invoquée sous la législation postérieure qui a déterminé les conditions dans lesquelles les contrats d'assurance contre le feu se formeraient.
La livraison de la police aurait pu d'abord lier l'assuré, comme l'a décidé la Cour Suprême dans cette cause de Mowat; mais maintenant je considère que la législation en décrétant que la police sera censée être conforme aux termes de la demande a mis à néant le principe de droit énoncé dans cette décision.
Dans ces circonstances, je suis donc d'opinion que la condition invoquée contre l'assurée par la cour d'appel ne le lie pas, ne peut pas être invoquée contre lui; et, par conséquent, le jugement de la Cour Supérieure qui a condamné la compagnie d'assurance à payer la somme qu'elle s'est engagée de payer est bien fondé.
L'appel devrait être maintenu avec dépens de cette cour et de la cour d'appel.
Appeal dismissed with costs.
Solicitors for the appellant: Crépeau & Coté.
Solicitors for the respondents: Perrault & Perrault.
Email this Content