Supreme
Court of Canada
Hobbs v.
Guardian Assurance Co., (1886) 12 S.C.R. 631
Date:
1886-04-09
Hobbs,
Osborn & Hobbs (Plaintiffs) Appellants;
and
The
Northern Assurance Co. (Defendants) Respondents.
and
Hobbs,
Osborn & Hobbs (Plaintiffs) Appellants;
and
The
Guardian Fire & Life Assurance Co. of London (Defendants) Respondents.
1885: December 4, 5; 1886:
April 9.
Present: Sir W.J. Ritchie
C.J. and Fournier, Henry, Taschereau and Gwynne JJ.
ON APPEAL FROM THE COURT OF
APPEAL FOR ONTARIO.
Fire insurance—Condition in policy—Loss by explosion—Loss by fire caused by
explosion—Exemption from liability.
A policy of insurance
against fire contained a condition that “the company will make good loss caused
by the explosion of coal gas in a building not forming part of gas works, and
loss by fire caused by any other explosion, or by lightning.”
A loss occurred by the
dropping of a match into a keg of gunpowder on the premises insured, the damage
being partly occasioned by the explosion of the gunpowder, and partly by the
gunpowder setting fire to the stock insured. The company admitted their
liability for the damage caused by fire but not for that caused by the
explosion.
Held, reversing the decision of
the Court of Appeal, Taschereau J. dubitante, that the company were not
exempt by the condition in the policy from liability for damage caused by the
explosion.
APPEAL from a decision of
the Court of Appeal for Ontario affirming the judgment of
the Common Pleas Division in the suit against the
Guardian, and that of the Queen’s Bench Division in the suit against
[Page 632]
the Northern, both of which
judgments were in favor of the defendants.
These
two cases were precisely similar, the insurance effected in the two companies
being the same premises and goods. The fire by which the loss occurred to the
plaintiff was caused by a burning match being dropped into a keg of gunpowder,
which exploded and set fire to the stock insured. A part of the loss was
occasioned by the explosion, and a part by the subsequent fire, and the
insurance companies claimed to be liable for the latter only, under the 11th
statutory condition of ch. 162 R.S.O. which provides that “the company will make good
loss caused by the explosion of coal gas in a building not forming part of the
gas works, and loss by fire caused by any other explosion or by lightning. The
amount of the loss caused by fire was paid into court and payment of the
balance refused. The plaintiffs brought suit for such balance and submitted the
facts to Chief Justice Wilson without argument, and a formal verdict was
entered for the plaintiffs in such case which was set aside by the Divisional
Court and the Court of Appeal. The insurance companies appealed from the
decision of the latter court to the Supreme Court of Canada.
Gibbons for the appellants.
It is
submitted that an explosion by gunpowder is a fire, it being, in fact, the
action of a vapid fire.
See Scripture
v. Lowell Mutual Fire Ins. Co. where the authorities on
this question are reviewed.
The
following cases refer to the distinction between such an explosion causing fire
and one not: Waters v. Merchants’ Louisville Ins. Co.; City Fire Ins. Co. v.
Corlies; Everett v. London
Assurance; Taunton v. Royal
Ins. Co.
[Page 633]
Lightning
causing fire is covered by ordinary insurance against fire.
In the
present case there is an express provision in regard to explosion which
distinguishes it from Stanley v. Western Ass. Co., relied upon by the
company.
See
also Citizens’ Ins. Co. v. Parsons Exception must be strong
to relieve the insurance company, Harper v. New York Ins. Co.; Barbat v. Allen
Marsh for the respondents.
We have
paid for all the loss caused by fire, and did not insure against loss by
explosion. Even if the explosion is a fire, it is not such a fire as is insured
against. The policy insures against “fire,” using the word in its
general, not in its scientific, sense. The company are liable for loss by fire
caused by an explosion, but not for loss by explosion not caused by fire.
But
there is one case in which the company is liable for loss by explosion, namely,
by explosion of coal gas. That necessarily excludes liability for loss by any
other explosion. Expressio unius est exclusio alterius. See Aspdin v.
Austin, Hare v. Horton, Blackburn v. Flavelle
If the
fire had caused the explosion we might be liable for the loss by the latter,
but here the explosion was the proximate cause of the loss. I would also refer
to Everitt v. London Ins. Co., Bunyon on Ins., Babcock v. Montgomery
Mutual Ins. Co.
Sir
W.J. RITCHIE C.J.—The policy of assurance
upon which this suit was brought is as follows:—
“Sum assured $7,000. Premium
$35.00.
Whereas
Messrs. Hobbs, Osborn & Hobbs, London,
[Page 634]
have
paid the sum of thirty-five dollars to the undersigned, Greorge Denholm, as
authorized agent at Montreal, of the Guardian Fire and Life Assurance Company,
of London; being the premium for insuring from loss or damage by fire, the
property hereby described; not exceeding the sum specified on each article,
namely:—
On a
four storey and basement brick building 31 by 100 feet, covered with patent
roofing owned and occupied by the assured as a wholesale hardware store,
situate and being Nos. 343 and 345 Richmond street, London, Ontario;
adjoined by similar class buildings on either side as per application and
diagram fyled in this office.”
I adopt
the conclusions arrived at in Scripture v. Lowell M.F. Ins. Co., that where the effects
produced are the immediate results of the action of a burning substance in
contact with a building, it is immaterial whether these results manifest
themselves in the form of combustion or explosion or of both combined. In
either case the damage occurring is by the action of fire and covered by the
ordinary terms of the policy against loss by fire
The
policy in this case being an ordinary policy against fire, the liability of the
company to indemnify the assured would, in my opinion, be beyond question
unless the assured’s right to recover is
barred by reason of the terms of the 11th statutory condition which reads as
follows:—
11.
The company will make good loss caused by the explosion of coal gas in a
building not forming part of gas works and loss by fire caused by any other
explosion or by lightning.
I think
this condition was not intended to limit but rather to extend, or at any rate
to make clear, the liability of the insurer to losses caused by the explosion
of coal gas in any building not forming part of gas
[Page 635]
works,
and to make liable the company for loss by fire caused by any other explosion,
and not to limit or restrict the right of the assured to recover for a loss by
the action of fire, whether the results of such action is in the form of
combustion or explosion, the same being such a loss as would be covered by the
ordinary terms of a policy against loss by fire, in other words, was not
intended to change the contract as entered into in the policy and alter the
risk as expressed on the face of the policy, and I think this is abundantly
manifest from the preceding section, which is as follows:—
“10. The company is not
liable for the losses following from a to f inclusive:
a. In case of non-ownership.
b. Riot, invasion, &c.
d. Goods to which fire heat is
being applied.
e. Repairs by carpenters,
&c.
f. For loss or damage
occurring while petroleum, rock, earth, or coal oil, camphine, burning fluid,
benzine or any liquid products thereof, or any of their constituent parts
(refined coal oil for lighting purposes only, not exceeding five gallons in
quantity, excepted,) or more than twenty‑five pounds weight of gunpowder
are stored or kept in the building insured or containing the property insured
unless permission is given in writing by the company.”
Surely
if the legislature had intended to exclude from liability such a loss,
admittedly covered by the policy, as an explosion by gunpowder, we should have
found it in the category of losses for which the company is not liable, but a
critical reading of the condition excludes the construction of the defendants.
It says the company shall make good a “loss
by fire caused by any other explosion or by lighting,” but it does not say the company shall
make good a loss by explosion caused by fire, which is the loss covered by the
terms
[Page 636]
of the
policy, but by fire caused by explosions. An explosion of steam or dynamite by
concussion might overturn an oil lamp in the same or in the adjoining building
whereby the building was injured and burnt; in such a case there would be a
loss by fire caused by the explosion, and for such, under the terms of the
contract, the insurer would be liable.
I think
the appeal should be dismissed and verdict for plaintiff restored.
FOURNIER
J.—I am in favor of allowing
the appeal on the grounds stated by His Lordship the Chief Justice.
HENRY
J.—This is an action on a
policy of insurance issued to the appellants by the respondent company for
$5,000 on a four-storey stone and brick building, having basement, owned by the
insured, occupied as a hardware store (wholesale), situate on the west side of
Richmond street, London, Ontario, against destruction or damage by fire, but
subject to the terms and conditions printed on the back of the policy, which
were to be taken as part of the policy.
The
provisions required by the Insurance Act for variations from the statutory
conditions were not adopted in the policy, and we are, therefore, to consider
the rights of the parties in this case by applying those conditions as against
those in the policy which conflict with them in favor of the appellants.
We are
then to inquire how the loss occurred, and to what to attribute it. The
question for our decision is whether, under the circumstances, the respondent
company is liable for damage to the property covered by the policy not
occasioned by the immediate action of fire, but through an explosion. If an
explosion from any other cause than that of fire took place, without causing
fire in the building insured, it could not be
[Page 637]
contended
that any liability would arise, unless specially provided for either in the
conditions of the policy or those prescribed by the Act.
An
explosion in a building might be the cause of serious damage, but the general
provision of the policy against damage by fire would not cover it; but if fire
resulted, and damage was done thereby, such damage would be covered under the
11th statutory condition: “The company will make good
loss caused by the explosion of coal gas in a building not forming part of gas
works, and loss by fire caused by any other explosion or by lightning.”
The
judgments of all the learned judges who decided this case in favor of the
respondents are founded on their construction of that statutory provision. With
every deference to opinions justly entitled to great weight and consideration,
I feel constrained to say that in my opinion that statutory condition does not
affect in any way the merits of the contest between the parties, and that the
contract in, the body of the policy is the governing one in this case,—and I do not think the
appellants need invoke the aid of the statutory condition, nor do I think that
its provisions can aid the respondents.
The
policy and the loss or damage are admitted, but the respondents allege that
under the statutory condition they are not liable.
It is
not so much a question of law as of fact that we are called on to decide. The
policy is an indemnity against loss or damage by fire, and the legitimate
inquiry is therefore to ascertain if the loss in this case caused more
immediately by the explosion had or had not its origin in fire; and if we
decide that question in the affirmative, then the only one left is as to
subsequent results. We have to decide whether the fire was caused by the
explosion, or the latter caused by the
[Page 638]
former.
The
evidence upon that point is to be found in the “statement of facts,” agreed upon as follows: “The said loss was
occasioned by some employees accidentally setting fire to some gunpowder stored
in the premises insured.” Which, then, in the order
of time was first, the explosion or the fire? Which caused the other? Did not
the fire precede the explosion? If it did, how can it be said that the
explosion caused the fire. It is said the company is not liable for a loss
caused by explosion, nor would they be if it was an explosion not preceded by
fire. Without the fire there would have been no explosion, and the damage was
occasioned by the explosion as the immediate result of the fire. The damage
was, therefore, through the agency of the explosion caused by the fire. The
time the fire was burning is of but little consequence, and if it caused the
explosion, it is unimportant how long it lasted before the explosion took
place. Suppose that instead of the almost instantaneous explosion, which I
presume took place in the appellants store, a fire had accidentally caught in
some ignitable substances and after progressing for hours had reached and
exploded gunpowder or some other explosive substances, and damage thereby was
done to the insured property, could it be gravely argued that the subsequent
explosion was not caused by the fire? The proposition to my mind, admits but of
one solution. As well might it be said, in the case of three men standing on
the verge of a precipice, one violently shoves a second against the third, who,
by the violence, is thrown over the precipice and killed, that his death was
occasioned by the second man who was pushed against him. The fire in this case
took effect on the gunpowder, and the latter, influenced and promoted by the
former, did the damage as the immediate and not remote result of the
[Page 639]
primary
cause.
I think
the defence not sustainable either under the contract in the body of the
policy, or within the terms of the 11th statutory condition pleaded by the
respondents, and, as the legal result, that the appeal should be allowed and
the judgment of the learned judge who tried the action affirmed with costs.
TASCHEREAU
J.—I have had some difficulty
in reaching this conclusion, and if my judgment could have affected the case, I
might have decided on dismissing the appeal. I will not dissent, however,
though I was much impressed by the arguments of the judges in the court below.
GWYNNE
J.—By reason of the neglect of
the defendants to endorse on these policies the statutory conditions with
variations, as required by the Act to secure uniform conditions on policies of
fire insurance, ch. 162 of the revised statutes of Ontario, these policies must
be read as being subject to the statutory conditions only. The policies are for
indemnity against all loss by fire, but loss by fire only happening to the
property insured, which consists of a hardware warehouse and the stock of
hardware therein, subject, however, to the exceptions and qualifications
specified in the 10th statutory condition, and subject also, to such exception
and qualification, if any, as may be contained in the 11th of such conditions,
which is as follows:
The
company will make good loss caused by the explosion of coal gas in a building
not forming part of gas works, and loss by fire caused by any other explosion
or by lightning.
Some of
these statutory conditions, if care be not taken by inserting variations framed
so as to adapt the conditions to the particular property insured in each case,
may prove to be inapplicable in some cases; for it must be always borne in mind
that, although
[Page 640]
the act
requires that when they are not endorsed on the policy with variations in the
manner pointed out in the Act the statutory conditions alone without any
variations are to be imported into the contract contained in every policy; they
must be imported and read in their proper place and character, that is to say,
not as what they are not, but as what they are, namely, conditions only, to
which the contract, which is in the body of the policy, and is a contract of
indemnity against loss to the insured property by fire, is subject. Now the
contracts contained in these policies being for indemnity against any loss by
fire which should happen to the insured property, subject to such
qualification, if any, as is contained in the 11th condition, what is that
qualification, if there be any?
The
condition begins with an affirmation of liability in a particular case
terminating with an implied negation of liability in another case. The affirmation
is that “the company will make good
loss”—what loss? Plainly only
such as can be said to come within their contract for indemnity against loss by
fire contained in the body of the policy, for they could be liable to make good
no other—“Occasioned by the explosion
of coal gas.” Now loss occasioned by
explosion of coal gas occurring on the insured premises unless specially
excepted, would be a loss within the contract of indemnity contained in the
body of the policy, but in reading this condition in connection with the
particular property here insured, it is not merely to an explosion of coal gas
occurring on the insured premises, to which the condition relates, but an
explosion of coal gas occuring “in a building not forming
part of gas works,” and doing damage to the
insured property of the plaintiffs—so
that the manner in which this condition (if it affects at all the contract in
the policy) operates as a qualification or modification of the liability of the
[Page 641]
defendants
to indemnify the insured against loss by fire happening to the insured
premises, namely, the plaintiffs hardware warehouse and stock of hardware, is
that the defendants will not be responsible for any loss occurring to the
insured property, although within the terms of the contract of indemnity
contained in the body of the policy, if such loss be occasioned by the
explosion of coal gas occurring in any building which forms part of gas works.
This is the only way, in my opinion, in which this condition qualifies the
contract of indemnity contained in the body of the policies, and except as
qualifying such contract it can have no operation whatever.
As to
reading the condition as an independent contract providing for the case of loss
of a wholly different character, and occuring from a different cause from that
mentioned in the body of the policies, namely, the case of loss occurring by
concussion wholly apart from loss by fire, if such concussion should be
occasioned by the explosion of coal gas, it might be in a building quite
remote, that is, in my opinion, quite out of the question. Such a construction
would create a wholly new contract, imposing a wholly new liability on the
defendants, not imposed by the body of the policy—diverting that which is intended to
be, and whose sole office is to operate as, a condition or qualification,
subject to which the contract, which is in the body of the policy, is made into
a wholly new and independent contract. Such a construction cannot, in my
opinion, be supported. But the condition adds that the company will make good
loss by fire caused by any other explosion or by lightning. Such losses,
however, are within the terms of the contract contained in the body of the
policies, and this affirmation of liability in respect of such losses is but a
re-affirmation of a liability incurred by the contract, which is in the body of
the
[Page 642]
policies,
and is not a qualification of that contract. The language is not put in the
form of an exception from or qualification of, that contract, and this
condition in which the language appears can operate in no other way. If it had
been intended to operate as creating an exemption from liability for such loss
as should be occasioned by the explosion of gunpowder on the insured premises
as distinguishable from loss by lire, it should have been specifically so
expressed, and no doubt would have been in the 10th condition, in which
provision is made for the case of gunpowder being on the insured premises, and
which provision must, I think, be held to comprehend the whole of the
provisions as affecting the policies in so far as gunpowder or its explosion is
concerned.
The
whole question really arising in the cases is one arising on the contract as
contained in the body of the policies, unqualified, as it appears to me, by the
11th condition, and is simply this: When gunpowder within the quantity
authorised by the tenth statutory condition is on the insured premises, and
becomes ignited by contact with fire, whether of the flame of a candle, or a
lighted match, or otherwise, and by explosion expands and spreads the fire by
which it became ignited, and in such explosion and expansion does damage, is or
is not the whole of the property so damaged loss within the contract contained
in the policy for indemnity against loss by fire? And are the defendants liable
for the whole of the damage so occasioned, or only for a part? And can they
separate the loss so as to claim exemption from liability for so much as is
attributable to the explosion as distinguished from that attributable directly
to fire subsequent to the explosion, and the answer, in my opinion, is that the
whole loss or damage is loss by fire within the contract of indemnity, and that
the defendants are liable for the
[Page 643]
whole.
In the
case of the Northern Insurance Company, whose policy insured the stock in trade
on the insured premises, including the gunpowder which exploded, the contention
that the defendants are exempt from liability for a part of the loss as
attributable to the explosion seems to me to border upon the brink of
absurdity. The gunpowder itself, having been part of the stock in trade
insured, its loss surely is a loss within the terms of the policy for which the
insured is entitled to be indemnified—its
loss was loss by fire. If, then, the plaintiffs are entitled to indemnity for
the loss of the gunpowder, how can their right to indemnity be said to be
limited to the property damaged or destroyed subsequently to the loss of the
gunpowder? The loss for which the plaintiffs are in both cases, in my opinion,
entitled to indemnity is the whole loss caused by and consequent upon the lire
which ignited the gunpowder which, by its explosion, expanded and caused the
whole loss.
The
appeals, therefore, in both cases, should, in my opinion, be allowed with costs
to the plaintiffs in all the courts, and judgment should be entered for the
plaintiffs on the verdicts rendered in their favor.
Appeal allowed with costs.
Solicitors for appellants:
Gibbons, McNab & Mulkern.
Solicitors for respondents:
Lount & Marsh.
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