Supreme Court of Canada
Donovan v. Excelsior Life Insurance Co., (1916) 53 S.C.R. 539
Date: 1916-06-24
Katherine Donovan (Plaintiff) Appellants;
and
The Excelsior Life Insurance Company (Defendants) Respondents.
1916: May 15; 1916: June 24.
Present: Sir Charles Fitzpatrick C.J. and Davies, Idington, Anglin and Brodeur JJ.
ON APPEAL FROM THE SUPREME COURT OF NEW BRUNSWICK, APPEAL DIVISION.
Life insurance—Delivery of policy—Condition—Instructions to agent.
D. applied to an insurance agent in St. John, N.B., for $1,000 insurance on her life. The application was accepted, the premium paid, and the policy forwarded to the agent, with instructions to reconcile a discrepancy between the application and the doctor's return as to D.'s age before delivering it. The agent then ascertained that the age of 64 given in the application should have been 65, and obtained from D. the additional premium required for a $1,000 policy at that age. A new policy was sent by the head office to the agent, who did not deliver it on hearing that D. was ill. She died a few days later The beneficiary brought action for specific performance of the contract to deliver a policy for $1,000 or for payment of that amount. A condition of the policy sent to the agent was that it should not take effect until delivered, the first premium paid, and the official receipt surrendered during the lifetime and continued good health of the assured.
Held, affirming the judgment of the Supreme Court of New Brunswick (43 N.B. Rep. 580) and of the trial judge (43 N.B. Rep. 325), Davies and Brodeur JJ. dissenting, that there was no completed contract of insurance between the company and D. at the time of the latter's death, as the condition as to delivery of the policy and surrender of the receipt during the lifetime and continued good, health of the assured was not complied with North American Life Assur. Co. v. Elson (33 Can. S.C.R. 383.) distinguished.
APPEAL from a decision of the Supreme Court of New Brunswick, Appeal Division., affirming the
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judgment at the trial in favour of the defendant company.
The material facts are stated in the above headnote.
Daniel Mullin K.C. for the appellant. Sending the policy to the agent after the risk had been accepted constituted delivery and effected a binding contract of insurance. North American Life Assur. Co. v. Elson. See also Holdsworth v. Lancashire and Yorkshire Ins. Co..
Fred. R. Taylor K.C. for the respondents referred to Equitable Fire and Accident Office v. Ching Wo Hing; Canning v. Farquhar; Harrington v. Pearl Life Assur. Co.; Calhoun v. Union Mutual Life Ins. Co., in contending that North American Life Assur. Co. v. Elson was not applicable under the terms of the policy in this case.
Daniel Mullin K.C. for the appellant.
Fred. R. Taylor K.C. for the respondents
The Chief Justice.—This appeal should be dismissed with costs.
Davies J. (dissenting)—The defence set up by the insurance company in this action is, in my judgment, an unrighteous one. I am glad to be able to find that, so far as I am concerned, it cannot prevail.
The real questions, and indeed the only material ones, in my judgment, are whether the policy of insurance was legally delivered before there was a change in the nature of the risk, and, if so, whether condition 1 of the policy prevented it attaching.
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The application for insurance of Mrs. Donovan was taken by the provincial manager and forwarded by him to the company. On the 18th March, 1912, they had received the application, and wrote to their manager as follows:—
Toronto, March 18th, 1912.
F. S. Ferris, Esq.,
Provincial Manager,
St. John, N.B.
Dear Sir,
Re Application of Mrs. Julia Donovan.
We have accepted this application, and are issuing policy, but before delivering the same, you will please ascertain from Dr. Pratt that he has sent in his confidential report, and that it is satisfactory. It is not yet to hand.
You will also reconcile Dr. Pratt's statement that the applicant is sixty-five, whereas the applicant herself gives her age as sixty-four. In a case of this kind, in future, in view of the age, it is best that proof of age be submitted, with a view of the same being admitted on the policy.
Yours truly,
E. Marshall,
General Manager.
Now, I take it as clearly decided by this court, in the case of North American Life Assurance Co, v. Elson, that if the letter contained nothing more than the first two statements,
we have accepted this application and are issuing policy,
just as soon as the policy was executed and posted to the general agent, the contract of assurance would have been complete. If it was destroyed in the mail or otherwise lost, that would not have affected its validity nor could any action of the local agent do so. There would then have been a completed contract of assurance, the premium having been paid and accepted.
The question, however, in this case is whether the letter did not shew a qualified or conditional delivery,
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and, if so, whether the conditions were complied with. I think it did, because the general agent was informed he was not to deliver the policy until he had ascertained, first, that Dr. Pratt had forwarded his confidential report and that it was satisfactory, and had
reconciled Dr. Pratt's statement that the applicant was 65, whereas the applicant herself gave her age as 64.
The policy itself, a 20-year endowment policy for $1,000 on the life of Julia Donovan, was issued by the defendant under its seal from the head office in Toronto, payable, in the event of the death of the insured, to her daughter, the plaintiff. The manager in St. John received it in due course of mail, and, in his evidence, says "he presumed he called upon Dr. Pratt," but could not remember whether he saw him, but he would not undertake to say that he did not see him.
He, then, to carry out his instructions, on March 26, called on the insured to reconcile Dr. Pratt's statement that the applicant's age was 65 years with the applicant's statement that it was 64.
The learned trial judge found as a fact that there had not been any wilful misrepresentation as to age, and that at this time, March 26, when Ferris called, the applicant was in good health. The learned judge says:—
I accept her statement that when Mr. Ferris called—that is to say, on the 26th March—her mother was in good health.
Mr. Ferris admitted that, in calling the plaintiff's attention to the alleged discrepancy between the age mentioned in the application and that reported by Dr. Pratt, she at once stated that her mother would be 65 on her next birthday. The agent and inspector of the company, Dr. King, who filled in the application, stated in his evidence that Mrs. Donovan had told him her age was 64 at that time, consequently she would be 65
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on her next birthday, and the doctor had put her age for insurance purposes at 65, her next birthday.
These facts reconciled the apparent discrepancy, and Mr. Ferris, the provincial manager, then accepted from the plaintiff the $4.15 of additional premium, calculated on the age of 65, told her, after receiving it, that he would send back the policy to have the age and the premium corrected, and that, while it would be some days before he would receive it back, "in the meantime everything was all right." In this both the plaintiff and Mr. Ferris, the manager, agree.
He did mail it back to the head office the same day, 26th March, and on April 4 he received a corrected policy in accordance with the age discrepancy he had "reconciled.''
At that time, Mr. Ferris says that, because he had learned of the then illness of the assured, he did not hand over the policy to her. He said he knew that the premium had been paid and that the company had been informed of the payment.
Now, with respect to the crucial point of the delivery of the policy, what is the proper inference to be drawn from the evidence as to whether the companys' provincial agent had ascertained
that Dr. Pratt's confidential report had been sent in and that it was satisfactory,
and that he, the agent, had reconciled the age discrepancy? Surely, only one inference can be drawn. He "presumed, he says, that he went to see Dr. Pratt" before going to see the insured. He cannot remember whether he saw him or not. It was his duty to see him, and the fact that after "he presumed he called upon Dr. Pratt" he went to the insured, reconciled the age discrepancy question, recovered the excess premium of $4.15 from her required because the assured's
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next birthday would be 65, and, on being asked whether everything was all right now, replied that it was—completes the necessary facts to enable a proper inference to be drawn from them.
The inference then and the only inference which can be drawn from these proved facts is that he had fully complied with his instructions as to Dr. Pratt's confidential report, and had subsequently satisfactorily "reconciled" the age discrepancy and then received the excess premium, and assured the plaintiff that everything was all right.
It seems to me from that moment the contract of assurance was complete, and that the company could have been compelled to issue a policy in accordance with it, and that, if the assured died in the meantime, there was a contract which the plaintiff, as beneficiary, could have enforced. The subsequent illness of the assured at the time when the rectified policy came back to the provincial agent, namely, the 4th April, could not operate to annul a completed contract. Manual delivery of the second or rectified policy was not essential to complete the contract. That was complete when the conditions contained in the letter from the general manager of March 18th had been complied with or at any rate when the new policy was executed and forwarded unconditionally from Toronto. The policy was merely the evidence of the contract.
It does not seem to me that the withholding of the manual delivery of the rectified policy from the assured by the provincial agent on April 4th, after he had unconditionally received it, because he heard the assured was then ill, could in any way operate to destroy or impair that completed contract.
The learned judges in the Court of Appeal for New Brunswick
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inclined to the view that the first policy did not represent a concluded and completed contract expressive of their true intentions between the parties.
But, apart from that they held and, as I understand their reasons, they based their judgment upon the fact that the condition (1) of the policy had not been complied with alike as to its delivery and the surrender of the official receipt. That condition reads:—
This policy shall not take effect until the same has been delivered, the first premium paid thereon and the official receipt surrendered to the company during the lifetime and continued good health of the assured.
I have already given, my reasons for holding that there was a legal delivery of the policy, if not when the first policy was forwarded to the provincial agent and the instructions enclosing it complied with, at any rate when the rectified and fully executed policy was posted from Toronto on the 1st or 2nd of April, directed to the provincial agent without any conditions as to its delivery. That unconditional forwarding of the policy to the provincial agent operated in law as a legal delivery from its posting. The agent says distinctly that he did not get any letter of instructions from the company with that policy. They simply enclosed the policy and the official receipt to him, and, as he heard the assured was ill, he returned both to the company, and did not hand them over to the assured. As to the full premium, that had been admittedly paid and received, and as to the "surrender of the official receipt," there is not a particle of evidence that I can find shewing that any such official receipt ever was given to the assured which could be surrendered. On the contrary, there was merely a receipt for the monies paid given by the provincial agent, and it could not be contended and was not contended that such a receipt was in any sense an official
[Page 546]
receipt such as that referred to in condition (1), the official receipt there mentioned being, as I understand it, substantially an interim insurance issued by the head office and held by the assured until he receives his formal policy, and, when the latter is given him, the receipt is to be surrendered.
If no official receipt was given to the assured, and no one says it was, and there is no evidence from which it can be inferred it was, then it is plain that its "surrender" could not be required by the company before the policy attached and that part of condition (1) would not be applicable at all. It is surely plain and clear that the surrender up of the "official receipt" is only necessary in cases where such a receipt has been delivered. In this case there is no pretence that it was delivered.
As authority for this position taken by me, that there was a complete delivery of the corrected policy when, with full knowledge of the facts, it was executed by the officials of the head office in Toronto and mailed without conditions to their provincial agent in St. John, and, secondly, that, when received by that official, he had no power to cancel it, and that physical possession of the policy by the assured was not necessary to complete the contract, I rely not only upon the case already cited from this Court, but also upon the well-known case decided by the House of Lords, after having the opinions of the judges summoned before them, of Xenos v. Wickham.
The facts of that case, of course, are different from this, but the principles there laid down, it seems to me, govern this case. It was there held that
A policy of insurance purported to be "signed, sealed and delivered" by two of the directors of an insurance company in the presence of
[Page 547]
their secretary, and according to the powers vested in the directors by the deed of settlement of the company. This statement was taken, as against the company, to be conclusive that it was not only duly signed and sealed, but also duly delivered.
A policy "signed, sealed and delivered" is complete and binding as against the party executing it, though, in fact, it remains in his possession, unless there is some particular act required to be done by the other party to declare his adoption of it.
That case was decided in 1867. Then, again, in 1896, the case of Roberts v. Security Company was decided by the Court of Appeal, affirming the decision of the Divisional Court.
It determined two points: First, that when there was no evidence of a conditional delivery and when the policy was executed by the directors of the company, the insurance became effective and constituted a completed contract of insurance; and, secondly, that by the recital therein the defendants had waived the condition for prepayment of the premium, and, therefore, the policy had attached. On the first point, the language of Lord Esher is in full accord with the decision of the House of Lords in Xenos v. Wickham, and admits of no doubt as to the law.
The learned trial judge suggests that this decision of Roberts v. Security Company had been questioned by the Privy Council in the appeal of Equitable Fire Office v. Ching Wo Hing, but a reference to the latter case shews clearly that the observation of Lord Davey, in delivering the opinion of the Judicial Committee, was confined solely to the second point decided in Roberts v. Security Co. as to the recital in the policy operating as a waiver, and had nothing to do with the first point decided that the execution of the policy by the directors constituted a complete
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contract, although the assured had not received physical delivery of the policy.
Then there was the case of Canning v. Farquhar, where the Court of Appeal decided that, the nature of the risk having been altered at the time of the tender of the premium, there was no contract binding the company to issue a policy.
But in the case before us there is no pretence for saying that, when the premium was paid in full and accepted by the provincial agent, who then wrote to the company, and when the company, acting upon their agent's letter, executed the new or later policy, the nature of the risk had been altered. The learned trial judge, on this crucial point, as I have already pointed out, found the fact in plaintiff's favour.
Lord Esher, in that case of Canning v. Farquhar, says, at p. 731:—
When does the contract of insurance commence? It commences at the time when the premium is offered.
If at that time the offer of the premium is accepted and there has been no change in the nature of the risk, the negotiations for a contract have matured and the contract is complete.
That I take to be the substance of the decision in Canning v. Farquhar.
The text writers on the subject of insurance are, I think, quite in accord with what I have written as to the above several decisions which are binding upon us.
The grounds of my judgment for allowing this appeal are that there was no wilful misstatement of fact in the application for insurance by the deceased; that the first policy sent to the assured by the company
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had been sent for delivery conditionally; that the two conditions, the seeing to the confidential report of Dr. Pratt and the "reconcilement" of the discrepancy between the ages of the assured as stated by her and that stated by Dr. Pratt, had been effected; that at the time the assured "was in good health," and the trial judge so found the facts; that the company had been informed by its agent of the true facts and of the payment to its agent of the full premium based upon the age of 65, and had then (2nd April, 1912), with full knowledge of all material facts, executed the seconder corrected policy and mailed it to the agent without any conditions attached; that the contract of insurance was, if not before, then at least fully completed, and that there was no power on the part of the agent, on his receipt of the policy without conditions and simply on his then hearing of a change in the health of the assured, to withhold the policy or to attempt to cancel a completed contract.
I am, therefore, of opinion that the appeal should be allowed and judgment entered for the plaintiff for the amount of the policy executed by the company and mailed from Toronto to its provincial agent in St. John on the 2nd day of April, 1912, $1,000, with interest from the due date of that policy, and costs in all the courts.
Idington J.—The findings of fact by the learned trial judge and maintained by the Court of Appeal have reduced anything involved in this appeal to the bare question of law relative to the delivery of the policy in question. The delivery of the first policy can certainly not be maintained as complete in face of the terms of the letter of March 18th, 1912, by the general manager to the provincial manager. If the
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conditions set forth in that communication had been complied with, then it would be fairly arguable that the company had intended to deliver the policy. If, for example, the provincial manager had been able to reconcile Dr. Pratt's statement that the applicant was 65 with the fact that the applicant had given her age as 64, there would have been much in favour of the appellant's contention. Inasmuch as it was impossible to reconcile these statements, it would seem to have been his obvious duty to return the policy as he did. There is, however, a statement in the application which must be taken to be the basis of the concensus of mind between the parties and to govern the question involved herein relative to the delivery. The application reads thus:—
That any policy which may be issued under the application shall not be in force until the same be delivered and until the actual payment to and acceptance of the premium by said company, or its authorized "agent, in accordance with the company's rules, during my lifetime and continued good health, and said premium shall then be considered to have been paid and the insurance to have been begun at the due date named in the policy.
In pursuance thereof it is competent for the company to define the mode of delivery by which it is to be bound.
The first condition of the policy provides:—
1. When Policy in Force.—This policy shall not take effect until the same has been delivered, the first premium thereon paid and the official receipt surrendered to the company during the lifetime and continued good health of the assured.
It seems to me impossible within the language of that condition to hold that it had been the intention of the company to deliver, or be held as having delivered, any policy unless and until the condition had been complied with.
As the policy and official receipt for the premium
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were not dealt with within the terms of the said condition, the company cannot, I think, be held bound.
To hold otherwise would seem to conflict with the supreme rule, relative to the common purpose or intention of the parties thereto, which must govern this and every other contract.
The courts in both the cases of Roberts v. Security Co. and the North American Life Ins. Co. v. Elson, so much relied upon by appellant, observed, or intended to observe, that rule, and only decided that, after fully assenting to an insurance contract, the insurer could not recede.
This company, now respondent herein, would seem to have taken special pains to avoid any misunderstanding by courts of its intention, though it may thereby have misled others.
I think the appeal must be dismissed with costs.
Anglin J.—There was no delivery of the first policy of insurance—that sued upon. By a condition of the application, delivery of the policy was made a prerequisite of the creation of contractual liability. The present case is in several particulars distinguishable from North American Life Ins. Co. v. Elson, relied on by the appellant, notably in that in the case now at bar the policy was sent to the company's agent not for unconditional delivery, as in the Elson Case (2), but to be delivered only upon conditions stated in the letter from the company to their agent referring to it. Instead of delivery being made when the agent called at the applicant's residence on the 26th of March, he became satisfied that there had been a misstatement of the age of the applicant—one of the matters subject
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to which the policy had been forwarded mentioned in the company's letter. He appears to have explained to the applicant's daughter (the plaintiff in this action), with whom he dealt on her mother's behalf, the effect which the difference between the age stated in the policy and the actual age of the applicant would have upon the amount that would be payable under the policy, and also to have informed her that for a slight additional premium a policy could be obtained which would entitle the beneficiaries to the full amount of the insurance. Thereupon it was determined that such a policy should be taken rather than the policy which the company had sent to the agent, and the policy so sent was accordingly returned by the agent to the company at Toronto with the additional amount of premium which he had obtained from the applicant's daughter. A second policy of insurance was thereupon prepared and forwarded to the agent, but it was not delivered by him because he learned that the insured was ill. The evidence clearly establishes that when the agent visited the house of the insured on the 26th of March for the purpose of discussing the difficulty arising out of the misstatement of age in the application for the first policy, the applicant had already become ill. She never recovered and died on the 7th of April. Her daughter deposes that she had been continuously ill for about three or four weeks before her death, and there is no contradiction of this evidence. In face of it, the finding of the learned trial judge that the plaintiff's mother was in good health on the 26th of March is somewhat difficult to understand. The application made continued good health of the insured at the time of payment and acceptance of the premium a condition of the policy coming into force. The conclusion, therefore, seems
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inevitable that the risk never attached, and that the judgment dismissing the plaintiff's action is correct and must be affirmed.
Brodeur J.—This is an action concerning a contract of insurance instituted in the following circumstances :—
In the month of March, 1912, the plaintiff's mother, Mrs. Donovan, expressed her wish to the agent of the respondent company to take a life insurance policy for $1,000: As she was then 64 years of age, the agent, however, would not receive the application before conferring with the company. He came back to Mrs. Donovan's residence a few days after, and an application was made for a policy.
She did not know how to read and write at all; the necessary answers were written by the agent. She declared that she was 64 years of age, and the agent, instead of entering 65 as being her next birthday, as required by the printed form, inserted by mistake 64, and received the payment as based upon the age of 64.
When she was examined by the doctor she must have made the same declaration about her age, but the doctor properly entered 65 as being her next birthday.
The policy was issued by the company and sent to the provincial manager in St. John, N.B. He was advised, however, that before delivering the policy he should
also reconcile Dr. Pratt's statement that the applicant is sixty-five, whereas the applicant herself gives her age as sixty-four. In a case of this kind, in future, in view of the age, it is best that proof of age be submitted with a view of the same being admitted on the policy.
On the 26th of March the provincial manager called at the home of the assured with the policy, and the following occurred, as told by the plaintiff:—
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Q. Mr. Ferris came to the shop, did he?
A. Yes.
Q. You saw him personally?
A. Yes.
Q. Just tell us what took place, what he said to you?
A. He said he brought the policy and he opened it and he told me it was for $800; there was a mistake of one year in the age.
Q. Did he say this?
A. Yes, he said that. So he said to secure the other $200, to pay a few more dollars, and that would make the thousand; so he took away the policy and said it would be nine or ten days before the other would come back, but in the meantime that it was all right.
Q. What did you do when he said that?
A. I gave him the balance.
Q. How much?
A. I gave him a five-dollar bill and he gave me some change back.
Q. You gave him what he asked?
A. Yes, I gave him what he asked.
Q. What did he say then?
A, He said it might be nine or ten days before the policy would came back, but in the meantime everything was all right; that was all the conversation.
At that time the insured was in good health. Unfortunately, she took sick a few days after, and she died on the 7th of April.
In the meantime the policy was sent back to Toronto to be modified or to have a new one issued and a new one was issued on the 1st of April. When the agent received it, he did not make the delivery immediately, because he heard that the insured was sick, and after her death he went and offered to return the money.
The question is whether the plaintiff, in those circumstances, as a beneficiary under the policy of insurance, would be entitled to recover.
In the policy it was provided that, in order that a policy should be binding, it should be delivered. It is contended by the respondent that there was no delivery in the present case, and that, consequently, the contract was not binding.
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It was decided in the case of North American Life Assurance Co. v. Elson that an insurance policy having been sent from Toronto on the 27th September to the company's agent at Winnipeg and forwarded by him on October 1st to the insured, that the contract of insurance was complete; that the policy and receipt were delivered when the papers were mailed at Toronto on the 27th September.
It was contended in this case that the policy was binding, and, relying on that judgment in the case of Elson, that the policy was duly delivered when it was mailed from Toronto. But the instructions given by the company to their provincial manager in New Brunswick not to deliver the policy until he would have reconciled the different ages given by the agent and by the doctor may and must affect the case and lead me to distinguish this case from the Elson Case (1).
But when the facts had been ascertained by the provincial manager of the respondent and when he goes to the insured with the policy and when the facts and circumstances reported above have taken place, can it be said that there was actual delivery?
I am inclined to answer that question in the affirmative.
Constructive delivery has taken place. It is true that the policy had been given back to the manager to have another one issued for a larger amount, but there was, according to my opinion, a binding contract, which bound the respondent company for at least $800. The representations with regard to the age of the insured are not sufficient to invalidate the contract, because it was formally stated that if some
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errors happen with regard to the age, the amount of the policy or the premiums varied.
I have come to the conclusion that there was a binding contract for $800, and that the judgment of the courts below dismissing appellant's action should be reversed.
The appeal should be allowed, with costs of this court and of the courts below.
Appeal dismissed with costs.
Solicitor for the appellant: Daniel Mullin.
Solicitor for the respondents: Fred. R. Taylor.
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