Western Assurance Co. v. Doull, (1886) 12 SCR 446

Supreme Court of Canada

Western Assurance Co. v. Doull (1886) 12 SCR 446

Date: 1886-03-06

The Western Assurance Company (Defendants)

Appellants

And

John Doull, William Miller, Francis H. Doull, William M. Doull, And Vincenzo J. Gibson (Plaintiffs)

Respondents

1886: Feb. 17, 18; Mar. 6.

Present—Sir W. J. Ritchie C.J., and Strong, Fournier, Henry, Taschereau and Gwynne JJ.

On Appeal From The Supreme Court Of Nova Scotia.

Insurance against fire—Condition in policy—Subsequent insurance—Notice to company—Waiver.

A policy of insurance against loss by fire contained the following condition:—In case of subsequent assurance on any interest in property assured by this company (whether the interest assured be the same as that assured by this company or not) notice thereof must be given in Writing at once, and such subsequent

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assurance endorsed on the policy granted by this company, or otherwise acknowledged in writing; in default whereof such policy shall thenceforth cease and be of no effect.

The insured effected subsequent insurance and verbally notified the agent, but there was no indorsement made on the policy, nor any acknowledgment in writing by the company. A loss having occurred, the damage was adjusted by the inspector of the company, and neither he, nor the agent, made any objection to the loss on the ground of non-compliance with the above condition.

In a suit to recover the amount of the policy the company pleaded breach of the condition, in reply to which the plaintiff set up a waiver of the condition and contended that by the act of the agent and inspector the company were estopped from setting it up.

Held, reversing the judgment of the court below, that the insured not having complied with the condition the policy ceased and became of no effect on the subsequent insurance being effected and that neither the agent nor the inspector had power to waive a compliance with its terms.

Appeal from a judgment of the Supreme Court of Nova Scotia refusing to set aside a verdict in favor of the plaintiffs.

The plaintiff, Gibson, insured his stock in the Western Assurance Company and assigned the policy to the firm of Doull & Miller, to whom he was indebted. He subsequently effected an insurance of $4,000 on the same stock in the British American Insurance Company and notified the agent of the Western of his having done so, but such further insurance was not indorsed on his policy in the Western, nor in any way acknowledged in writing by the company. A loss having occurred, one Corey, the official adjuster or inspector of the Western, adjusted the damage, and a certain amount of delay took place owing to some of Gibson's books having been burnt or mislaid. Gibson had several interviews with the agent and the inspector, both of whom knew of the insurance in the British American, but at no time was payment of the loss objected to on that ground; the agent, on one occasion, telling him

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that the company would pay, and that the delay was occasioned by another company with whom Gibson had insured previous to insuring in the Western. The company did not pay and Doull & Miller sued, and when the case was brought down to trial obtained leave to amend by adding Gibson as a plaintiff. The company pleaded non-compliance with the condition in the policy requiring notice of subsequent insurance to be given to the company and indorsed on the policy or otherwise acknowledged in writing. In answer to that it was contended that the agent, or inspector, or both, had waived such condition. The plaintiffs obtained a verdict, which was sustained by the Supreme Court of Nova Scotia. The company then appealed to the Supreme Court of Canada.

Henry Q.C. and Graham Q.C. for the appellants.

Greer had no authority to waive any of the conditions of the policy. There was no doubt as to the subsequent insurance. The only proof of notice was that the same person was agent for both companies. They say that Greer told Doull that there was no objection to the claim, and that the mere fact that Greer was the agent was sufficient.

We take the point first that Greer had no authority to waive any condition. He only had special authority and had no right to settle losses. It is contended that the renewal was an acknowledgment of the subsequent insurance, but I take it that it makes no difference if it was renewed twenty times if it was not brought home to the company.

Billington v. Provincial Ins. Co.[1]; Scott v. McGrath[2].

Greer had no authority to settle this loss, and therefore the waiver amounts to nothing. Where a contract provides that notice shall be given to an agent, it is not

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met by showing mere knowledge in the agent. David v. Hartford Ins. Co.[3]; Ayres v. Hartford Ins. Co.[4]; Bush v. Westchester Ins. Co.[5]; Acey v. Fernie[6]; were cited on the point as to authority of agent.

Even if Greer had authority to waive the condition, inasmuch as this matter called waiver operates as an estoppel, company could not be bound by it because the time had already expired.

And see also Lohnes v. Ins. Co. of North America[7], which refers to those other decisions. The Ontario decisions are to the same effect. Hendrickson v. The Queen Ins. Co.[8]; Walsh v. Hartford Ins. Co.[9].

Sedgwick Q.C. for respondents.

Greer was the general agent of the company. The policy provides that proofs of loss shall be given to the agent. This is a condition which may or may not be taken advantage of by the company. I submit that Corey had authority to waive proofs of loss. When the policy was renewed the other insurance had been effected whereby the policy was void, therefore the premium should have been returned.

See Mayor on Insurance, sec. 500, citing a case from the Supreme Court of Illinois Etna Ins. Co. v. Maguire[10].

As to the appointment of adjuster, see a case from Indiana, Etna Ins. Co. v. Tryer[11] decided in 1883. May on Insurance, secs. 498, 501, 502[12].

Both Corey and Greer extended the time for putting in proofs of loss. That is a matter for the jury. As the point regarding proofs of loss was not taken at the trial, I contend that silence is an admission that they were properly put in. Cites May, secs. 464, 468, 469, 473

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and sec. 142[13]. As to agency Wood on Insurance[14].

Sir W. J. RITCHIE C. J.—The policy in this case was issued 22nd April, 1882, and contained this clause:

This policy is made and accepted in reference to the conditions herein contained and hereto annexed, which are hereby declared to be part of this contract, and to be used and resorted to in order to explain the rights and obligations of the parties hereto, in all cases not herein or otherwise specially provided for.

And this condition:

VI.—Notices of all previous assurances upon property assured by this company shall be given to them, and endorsed on this policy, or otherwise acknowledged by this company in writing, at or before the time of their making assurance thereon, otherwise the policy subscribed by this company shall cease and be of no effect. And in case of subsequent assurance on any interest in property assured by this company (whether the interest assured be the same as that assured by this company or not), notice thereof must also be given in writing at once, and such subsequent assurance endorsed on the policy granted by this company, or otherwise acknowledged in writing; in default whereof, such policy shall thenceforth cease and be of no effect. And in all cases of further assurance this company shall be liable only for such ratable proportion of the loss or damage happening to the object assured as the amount assured by this company shall bear to the whole amount assured thereon, without reference to the dates of the different policies; and any general policy on different properties to be treated as a specific policy on each property for the whole amount thereby assured.

On the 28th of May, 1883, a further insurance of $4,000 in the British American Insurance Company was put on the property by Gibson in addition to the amount insured by the policy in suit, and which was admitted to be in force.

This subsequent insurance was not at once notified to the company in writing, nor was it endorsed on the policy in suit granted by the company or otherwise acknowledged in writing, in default whereof the policy thenceforth ceased and became of no effect.

The respondents contend that the appellants waived

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this condition, and are stopped from setting it up. It is not, and cannot be, contended that the company, with knowledge of this further insurance waived the condition in respect to it, for previous to the loss it does not appear to have been called to their notice; in fact, the head office had neither notice verbal or written, nor actual cognizance of such further insurance. But it is contended that the condition was waived by their agent, or inspector, or both, neither of whom, however, in my opinion, had any authority to dispense with the performance of this condition, if they really attempted or intended to do so, which is more than doubtful.

STRONG J.—The policy sued upon contains a reference to the conditions in the following terms:

This policy is made and accepted in reference to the conditions herein contained and hereto annexed, which are hereby declared to be part of this contract, and to be used and resorted to, in order to explain the rights and obligations of the parties hereto in all cases not herein or otherwise specially provided for.

The sixth condition annexed to the policy is as follows:

VI.—Notices of all previous assurances upon property assured by this company shall be given to them, and endorsed on this policy, or otherwise acknowledged by this company in writing, at or before the time of their making assurance thereon, otherwise the policy subscribed by this company shall cease and be of no effect. And in case of subsequent assurance on any interest in property assured by this company (whether the interest assured be the same as that assured by this company or not), notice thereof must also be given in writing at once, and such subsequent assurance endorsed on the policy granted by this company, or otherwise acknowledged in writing; in default whereof, such policy shall thenceforth cease and be of no effect. And in all cases of further assurance this company shall be liable only for such ratable proportion of the loss or damage happening to the object assured as the amount assured by this company shall bear to the whole amount assured thereon, without reference to the dates of the different policies; and any general policy on different properties to be treated as a specific policy on each

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property for the whole amount thereby assured.

It is alleged in the declaration that, except as hereinafter mentioned, all conditions were fulfilled, and all things happened, and all times elapsed necessary to entitle the plaintiffs to maintain this action.

Further, the declaration contains the following averment with reference to the 6th condition:

And as to the sixth condition contained in said policy, whereby it was provided that in case of subsequent assurance on any interest in property assured by defendant company notice thereof must be given in writing at once and such subsequent assurance endorsed on the policy granted by the company or otherwise acknowledged in writing, plaintiffs say that shortly after subsequent assurance was effected on said property, and before said loss, notice thereof was given verbally and in writing to the agent of defendant company, who accepted the same as a sufficient compliance with said condition on the part of the plaintiffs, it being the duty of the defendant company or its agent to endorse such subsequent assurance on the policy or otherwise to acknowledge it in writing, and which said company or its agent neglected to do.

The fifth plea is as follows:

5. And for a fifth plea to said amended declaration defendants say that no notice of any subsequent insurance was given their agent, nor was such notice accepted as sufficient compliance with said sixth condition as alleged, nor was it the duty of defendants to endorse such subsequent insurance on said policy, or otherwise to acknowledge it in writing, nor did defendants or their agent neglect so to do as alleged.

To this fifth plea the plaintiffs replied taking issue, and also as follows:—

2. As to 5th plea, that all subsequent insurances were known to defendants, and defendants accepted such knowledge as a sufficient compliance with 6th condition, and relieved plaintiffs from further compliance with condition.

Upon this replication issue was taken.

Pending this action the "Nova Scotia Judicature Act, 1884," was passed by the provincial legislature, and by the 10th sec. of that act it was made applicable

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to proceedings in actions pending and which had not reached the stage of final judgment prior to the 1st of October, 1884. The cause came on for trial on the 8th of November, 1884. Consequently all equitable as well as legal questions, which were sufficiently raised by the pleadings, were open to the parties, and the court was bound, pursuant to the 12th sec. of the act in question, to administer equitable as well as legal relief in determining the issues raised upon the record.

The allegation as to compliance with the 6 th condition contained in the declaration and which has already been stated, is clearly insufficient to show performance of this condition. The condition requires that notice shall be given to the company. It is not alleged, nor is it proved, that it was within the authority of the local agent to receive such a notice, and decided cases have determined that a condition of this kind requires that notice should be given to the company directly through its managing officers at its head office Gale v. Lewis[15]; Mason v. Hartford Ins. Co.[16]. Moreover, the terms of the condition show that beyond giving notice, the subsequent assurance must be indorsed on the policy or acknowledged in writing; the words are "in default whereof such policy shall thenceforth cease and be of no effect." It is neither pleaded nor proved that any notice was given to the company in the manner required, nor that the subsequent policy was endorsed or otherwise acknowledged in writing, which by the express stipulations of the policy was to be the only evidence of the appellants' consent to continue the risk after a subsequent policy had been effected Noad v. The Provincial Ins. Co.[17]; Chapman v. Lancashire Ins. Co.[18].

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The question as to the sufficiency of the respondent's answer to the defence raised upon this sixth condition is therefore reduced to one of waiver. It is not shewn that it was within the scope of Greer's authority as a local agent to waive such a condition. The condition itself does not, either by express words or by implication, recognize such an authority, but the reason for requiring the notice obviously points to a directly contrary construction Moreover, the English case already quoted, which determines that the required notice is to be given to the company itself and not to the local agent, shows, a fortiori, that such an agent has in the absence of express authority no power to waive the condition Direct authority is, however, not wanting. In the case of Shannon v. The Gore District Mutual Insurance Co.[19] the facts were the same as in the present case, the subsequent assurance having been effected through the agent who also acted for the defendants in taking the original risk. It was contended that the successive insurances having been thus effected with the same person as the agent of the two companies, the company which granted the first policy had knowledge of the subsequent insurance, and were, therefore, estopped from setting up a condition vitiating the policy for want of written notice. But the Court of Appeal held otherwise, and determined that in such a case notice to the agent was not notice to the company, and that the agent neither had authority to waive the condition nor could by his conduct estop his principals the first insurers. As regards any direct action of the appellants through their immediate agents, the directors or principal officers of the company conducting its affairs at the head office, there is no pretence for saying that there is in the present case the slightest evidence of conduct upon which either a defence of waiver of the condition,

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or by way of estoppel against insisting upon it, can be based, and this for the very plain reason that these directors and officers never had the fact of a subsequent assurance brought to their knowledge; and without proof of such knowledge neither waiver nor estoppel can be made out.

If, therefore, the appellants have in any way disentitled themselves to set up the defence they insist upon, founded on the 6th condition, it can only be in consequence of what was done or agreed to by Mr. Corey, the adjuster, employed to ascertain the circumstances attending the loss and the amount for which the appellants were liable.

The observations already made with reference to a waiver by the company, that it could not be said to have waived an objection to its liability founded on a fact of which it had no knowledge, is also applicable to any contention of this kind founded on the mere fact of the appointment of Corey as an agent to ascertain the circumstances of the loss and a reference to him to adjust the proportion which the appellants were liable for. It is manifest that, upon the facts in evidence, no waiver can be implied from such an appointment and delegation. If, then, there was any waiver or estoppel binding the appellants, it can only be by reason of the acts of Corey within the scope of his authority. Corey was an average adjuster living at St. John, and came to Halifax for the special purpose of investigating this loss, and ascertaining the share which the several companies, whose policies covered the goods, were bound to contribute. It does not appear very clearly whether he was instructed directly from the principal office of the appellants or through Greer. The latter in his evidence says, he "had a telegram from defendant "company authorizing me to request Corey to adjust "the loss, and I requested him to do so." In cross-examination

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he says: "After a loss I notify the head "office and I get instructions from them what to do. "Generally they instruct Corey or Dodd to adjust for "them. I do not remember getting a telegram authorizing "me to get Corey." Corey himself does not state from whom he derived his instructions, nor what they precisely were.

I think, however, we may assume—and this is putting it perhaps more strongly against the appellants than the evidence warrants—that Corey was employed either directly by the appellants managing officers, or through Greer, in pursuance of express instructions from the head office; and that, consequently, whatever he did within the scope of his authority bound the appellants.

Then, what were his powers? We have no direct evidence of this. All that appears is that he was authorized to investigate and adjust the loss. By this I understand that it was his duty to ascertain the circumstances and amount of the loss, and either with or without the agreement of the adjuster for the other insurers to ascertain the proportion of it to which the defendants were liable It is manifest that this involved no actual authority to waive a condition by a breach of which the policy had been avoided long before the loss, and of which breach the appellants themselves, when they conferred authority on Corey to act for them, had no knowledge. Neither did it imply any such authority. As regards proofs of loss I should have no difficulty in holding that Corey had authority to waive them, for as the first step to be taken by him in investigating the loss would have been to call for the proofs he must have had, by implication, power to dispense with such proofs, or to accept such proofs short of those actually required by the conditions, as might seem to him sufficient. But as regards breaches of conditions which had vitiated the policy long before the

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loss, these he could have had no more power to waive than he had to waive a defence extra the terms and conditions of the policy altogether, such as fraud in the inception of the contract or want of interest invalidating the policy ab initio.

In the case of Mason v. Hartford Insurance Co.[20] the court had to deal with this identical question, and they held that an agent with much wider authority than Corey had in the present case, viz, express authority to examine into the circumstances of the loss, adjust it and to settle it, or report to the office, had no authority to waive a condition respecting subsequent assurance in all respects similar to that now in question. The court, by Wilson J., say:

It was said at the trial the duties of the inspector are to examine into the circumstances, to adjust the loss and to settle, or report to the office. The description of the position which Mr. Marr, the inspector of the defendants, filled in their service, and of the duties that devolved upon him, and of the powers exercisable by him as such officer, does not necessarily give him the right to waive conditions favorable to the company unless the waiver relate distinctly to some matter in and over which he can exercise such power. It is said the inspector is to adjust the loss—that is, to examine the books of accounts and vouchers and to make all due enquiries of the insured and of his employees as to the value of the goods insured which have been destroyed or injured, to determine probably whether the goods claimed for come within the description of those insured, the extent of the loss sustained, how much is total and how much partial, the value to be set upon the different kinds of loss; and, generally, to do all such acts as will enable him to arrive at a fair estimate of the damage sustained. Now, suppose there was a condition on the policy that in adjusting the loss the insured should deliver to the inspector or agent of the company engaged in the adjustment an account or statement in writing of the various matters which the inspector should require him to furnish, and if he did not do so that the policy should be void. I should say without hesitation that if an adjustment were made by an agent without a statement in writing such as the condition required being furnished by the insured and without the agent requiring any such

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statement because he was willing and content to do without it, that the adjustment so made—free from fraud or collusion of course - would be binding on the insurer because that would be an act within the line of duty, and powers, of such an agent to deal with. But when such a person assumes to dispense with conditions relating to the keeping of prohibited or highly hazardous goods or largely in excess of the allowable quantities, or to a misdescription of the mode of heating or the precautions required in case of steam being used, or with respect to chimneys or stove pipes, or the deposit of ashes in the proximity of dangerous places and the like, a different question is certainly presented. * * * * * * * * I am not satisfied that an inspector of an insurance company, or such an agent as Marr is described to be, has the right or power to waive or dispense with the condition in question relating to further insurance, or with any other condition than such as may fall clearly within the power of the agent's clear and acknowledged line of duty.

Although this case was not a binding authority either on the court below or on this court, yet the observations contained in the extract from the judgment just given so commend themselves to our consideration in the present case, alike by the force of the reasoning and by their exact applicability to the facts now before us, that they appear to me to be decisive of the question here raised as to the powers of Mr. Corey to waive this condition. It is further to be observed that the powers of the agent in the case just quoted from were much larger than those which were possessed by Corey, for in the Ontario case the agent had express power to "settle the loss."

But even if Corey had had authority to waive, it is plain, on the evidence, he never assumed to exercise it. All he did was to ascertain the circumstances attending the loss, and the amount which the appellants would have had to contribute to it in case they had been liable to pay; he did not assume to waive any rights of the appellants, and nothing of the kind could be implied from the investigation and valuation which he made or caused to be made. Indeed, so careful was Greer to guard against any such construction

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being put on what was done, that in the appointment of appraisers to value the damaged goods there was an express provision that the reference to the valuers should not affect the rights of the insurers as regards the conditions of the policies. The clause being as follows:—

It being understood that this appraisement is without reference to any other questions or matters of difference, if any, within the terms and conditions of the insurance, and is of binding effect only so far as regards the actual cash value of or damage to such property covered by policies of said companies as may be found to have been saved in a damaged condition, and not in regard to any other matter whatever.

Nothing seems to have been done by Mr. Corey beyond making this appraisement and making an enquiry into the circumstances of the loss, and it is impossible to imply from these acts any intention on his part to waive the rights of the appellants to insist on a forfeiture under the 6th condition, even if he had had notice of the breach of condition, of which there was no evidence, and had had authority to waive the defence which the company had under its terms, in respect to which, also, there is an entire failure of proof.

I am of opinion that the appeal should be allowed and judgment in the court below entered for the appellants, with costs in both courts.

FOURNIER and TASCHEREAU JJ. concurred

HENRY J.—I think, also, that this appeal should be allowed. The condition in the policy is one which must be complied with or waived. The company, by signing a condition of that kind, reserves to itself the right to withdraw the policy in case of further insurance. That question is one which cannot be decided by a mere local agent. He may receive the notice for transmission, but he cannot act on it; it must be brought to the notice of some person authorized by the company

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to continue the insurance after notice has been given them. It has been decided in a number of cases in England that a local agent has not such authority, and a mere notice to him, even in a case where he is acting for another company taking the further risk, has been held to be no notice to the company.

But independent of all that, the condition requires that the consent should be signed on the back of the policy. So that, even if the company had consented verbally, and had not so signified its consent, it would not have been a compliance with the condition.

I think we must come to the conclusion that the agent had not power to waive the condition, and did not waive it.

GWYNNE J.— I am also of opinion that the appeal should be allowed.

Appeal allowed with costs.

Solicitors for appellants: Henry & Weston.

Solicitor for respondents: Thomas Ritchie.