Supreme Court of Canada
Mowat v. The Boston Marine Insurance Company (1896) 26 SCR 47
Date: 1896-02-18
John P. Mowat (Plaintiff)
Appellant
And
The Boston Marine Insurance Company (Defendant)
Respondent
Present:—Sir Henry Strong C.J., and Taschereau, Gwynne, King and Girouard JJ.
1895: Nov. 2; 1896: Feb. 18.
ON APPEAL FROM THE SUPREME COURT OF NEW BRUNSWICK.
Marine insurance—Goods shipped and insured in bulk—Loss of portion—Total or partial loss—Contract of insurance—Construction.
M. shipped on a schooner a cargo of railway ties for a voyage from Gaspé to Boston, and a policy of insurance on the cargo provided that "the insurers shall not be liable for any claim for damages on * * * lumber * * but liable for a total loss of a part if amounting to five per cent on the whole aggregate value of such articles." A certificate given by the agents of the insurers when the insurance was effected had on the margin the following memo. in red ink: "Free from partial loss unless caused by stranding, sinking, burning, or collision with another vessel, and amounting to ten per cent." On the voyage a part of the cargo was swept off the vessel during a storm, the value of which M. claimed under the policy.
Held, reversing the decision of the Supreme Court of New Brunswick, Taschereau J. dissenting, that M. was entitled to recover; that though by the law of insurance the loss would only have been partial, the insurers, by the policy, had agreed to treat it as a total-loss; and that the memo. on the certificate did not alter the terms of the policy, the words "free from partial loss," referring not to a partial loss in the abstract applicable to a policy in the ordinary form, but to such a loss according to the contract embodied in the terms of the policy.
Held, further, that the policy, certificates and memo. together constituted the contract and must be so construed as to avoid any repugnance between their provisions and any ambiguity should be construed against the insurers, from whom all the instruments emanated.
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Appeal from a decision of the Supreme Court of New Brunswick, in favour of the defendant on a special case.
The material facts of the case are thus stated by Mr. Justice Tuck in giving judgment in the court below. A special case has been agreed upon and stated between the parties in order that this court may determine the rights of the plaintiff and defendant.
It appears that the plaintiff was the owner and shipper of 15,400 railway ties, which were shipped in August, 1893, from Douglastown, Gaspé, on board the schooner "Deer Hill," bound to Boston, and were loaded both on and under deck; that the schooner sailed from Douglastown on the 17th of August, 1893; that on the voyage to Boston a squall struck the schooner carrying overboard a part of the deckload of sleepers, namely, 4,158 pieces, which were wholly lost. That there were discharged from the under-deck of the vessel 6,704 ties, and from on deck 4,538, and there were lost overboard 4,158 sleepers, and the whole shipment was 15,400 pieces. Both the on deck and under deck cargo were insured with the defendant company, as hereinafter stated. As the whole cargo consisted of 15,400 pieces, and there were discharged from under deck 6,704 there must have been on deck 8,696 pieces. The on deck cargo was insured for $800, and if the plaintiff is entitled to recover as for a total loss, the amount he ought to receive is $382.52, or in the proportion that 4,158 bears to 8,696—$800 being the whole amount of insurance. The sleepers were worth at the place of shipment 13 cents each, and were insured under two certificates of insurance, which were under and subject to an open policy. The two certificates are set out in the case, and are alike in form, except that one insures $200 under
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and $500 on deck and the other $200 under and $300 on deck.
One of the said certificates reads as follows:—
"Grant, Oxley & Co., Insurance Brokers, Halifax, Nova Scotia.
"No. 134,234, $200 under
500 on deck
"Agency of the Boston Marine Insurance Company, Boston.
"Capital, $1,000,000.
"Rate, 1¼ per cent. 3½ per cent. Premium $20.00.
"This certifies that Grant, Oxley & Co. insured under and subject to conditions of open policy, no. 29,030, of the Boston Marine Insurance Company the sum of $700 on———general———under deck on board schooner Deer Hill at and from Douglastown to Boston. Loss payable to the order of J. P. Mowat. This certificate to be surrendered on payment of loss."
"J. TAYLOR WOOD, Agent.
"Halifax, Aug. 2nd, 1893."
Stamped across the face of each certificate in red ink in letters not exactly distinct, but very small, are the following words: "Free from partial loss unless caused by stranding, sinking, burning or collision with another vessel, and amounting to 10 per cent."
Mr. Palmer for the plaintiff contends that he had no notice of what is stamped in "red" on the certificate because of its indistinctness, and to the ordinary observer almost illegibility. There is no evidence as to want of notice. While the words stamped on the certificate are somewhat indistinct and difficult to read, yet I think the plaintiff's attention would naturally be called to them from the very fact that they are in red ink, and in a conspicuous place. They must be taken to be part of the contract.
The open policy is set out in the printed case. The only part I think material here is as follows:—
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Provided that the insurers shall not be liable for any partial loss on salt, grain, fish, fruit, hides, hide cuttings, horns, hops or other goods that are esteemed perishable in their own nature, or the freight thereon, unless it amount to 7 per cent on the whole aggregate value of such articles, and be caused by stranding, nor for leakage of oil, molasses or other liquids or the freight thereon, unless it be occasioned by stranding or collision with another vessel, nor for any claim for damage on railroad iron or steel rails, lumber, dry goods, coal, marble, stone, slate or bricks, but liable for a total loss of a part if amounting to 5 per cent on the whole aggregate value of such articles."
According to the case the plaintiff claims $378.17 from the defendants. On the other hand, the defendant claims that by reason of the wording of the certificate, namely, "free from partial loss unless caused by stranding, sinking, burning or collision with another vessel, and amounting to 10 per cent," it is exempt from liability as the loss was not occasioned by stranding, sinking, burning or collision with another vessel. They contend also that if liable at all it is only for $323.90.
The plaintiff's contention is that the stamped words on the certificate, and the condition of the open policy above quoted, when taken together, do not show this to be a partial loss within the terms of the contract. When properly construed they show a total loss of part of the cargo as it amounted to more than 5 per cent of the whole, and further, the defendants contend that the legal meaning of the words "partial loss" is changed by the terms of the policy.
Palmer Q.C. for the appellant. If the memo is a part of the contract it cannot control the terms of the policy. Bell v. Hobson; Duncan v. Sun Ins. Co..
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If the language of the contract is doubtful it must be construed against the company. Anderson v. Fitzgerald.
Weldon Q.C. for the respondent referred to McLaughlin v. Atlantic Ins. Co.; Hydames Steamship Co. v. Indemnity Mutual Marine Assur. Co..
THE CHIEF JUSTICE.—This is an appeal from the judgment of the Supreme Court of New Brunswick on a special case agreed upon by the parties. The facts are fully and accurately set forth in the statement with which Mr. Justice Tuck prefaces his judgment and need not be repeated here. As regards the law I entirely agree in the proposition laid down by Mr. Justice Tuck that, under the terms of the open policy per se, the loss would have been recoverable as for a total loss of part of the cargo insured "amounting to five per cent of the whole aggregate value" of such cargo. It was conceded on the argument that the railway ties, which formed the subject of insurance, came within the description of "lumber" in the open policy.
The law applicable to the case is stated in the judgment of the Court of Exchequer Chamber in the case of Ralli v. Janson, as follows:
Where memorandum goods of the same species are shipped, whether in bulk or packages, not expressed by distinct valuation or otherwise in the policy to be separately insured, and there is no general average and no stranding, the ordinary memorandum exempts the underwriters from liability for a total loss or destruction of part only, though consisting of one or more entire package or packages, and although such package or packages be entirely destroyed or otherwise lost by the specified perils.
In Arnould on Marine Insurance it is said:
There are three cases frequently occurring in practice, touching the insurance of memorandum articles: (1) where a cargo or quantity of
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memorandum articles of the same species is shipped in bulk, valued in bulk, and insured in bulk; (2) where it is shipped in separate packages but not expressed in the policy, by distinct valuation or otherwise, to be separately insured: (3) where, being shipped in separate packages it is expressed by distinct valuation or otherwise to be separately insured.
Then, it is farther said by the same writer that the first case is one which never admitted of any reasonable doubt, and the case of Hills v. The London Assurance Co. is referred to. In that case wheat was shipped and insured in bulk by one entire insurance, and there was a loss of a quantity which was pumped up out of the hold during a storm and totally lost; it was held that this was an average not a total loss. The case of Ralli v. Janson, settled the law in the second case in favour of the underwriters. The case now before us would undoubtedly come under the. first head and but for a particular clause in the policy clearly could not be treated as a total loss.
The parties may, however, so modify the terms of their contract of insurance as to take themselves out of the rule laid down in Ralli v. Janson (2) and acted on in Hills v. London Assurance Co. (1), by providing that such an entire loss or destruction of part of goods of the same species, shipped and insured in bulk, shall be treated as a total loss, and shall be recoverable for as a total loss. This is shown by the passage from the judgment in Ralli v. Janson (2), which I have quoted. Then, this has been done most explicitly by a clause in the open or covering policy under which this insurance was effected, and which is worded as follows:
But liable for a total loss of a part of, amounting to five per cent on the whole aggregate value of such articles.
If, therefore, there had been nothing more than the terms of the open policy, there could be no difficulty
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in holding that the appellant was entitled to recover. It is contended, however, by the respondents, that the policy and the certificates given by the respondent's agents to the appellant's agents, when the insurance was effected, must be read as the final contract, and that the clause of the policy before set out is controlled by a memorandum written in red ink in the margin of the certificates.
This memorandum is as follows:
Free from partial loss unless caused by stranding, sinking, burning, or collision with another vessel, and amounting to ten per cent.
The court below has held that this alters the terms of the policy and disentitles the appellant to recover. I am compelled to dissent from this opinion. I am led to the opposite conclusion by the consideration that the memorandum in question has reference only to a partial loss, and that this means not a partial loss in the abstract, under the general law applicable to a policy in the ordinary form, but a partial loss according to the contract between the parties embodied in the open policy. Then this policy, by the clause before set out, makes, in my opinion, express provision that the total loss of part shall not constitute a partial but a total loss. We must therefore construe the words "partial loss" in the policy as applying only to losses not coming within the terms of the policy providing for the underwriters' liability in the case of a total loss of part. The policy, certificates and memorandum together constitute the contract between the parties, and we must read them together as if they had been embodied in the same instrument, and doing this we are bound to construe them, so far as we reasonably can, in such a way as to avoid any repugnancy between the provisions of the several instruments in which the parties have thus formulated their entire contract. By adopting the construction
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indicated all the terms are reconciled and all repugnancy is avoided, but if we were to adopt the principle upon which the judgment under appeal proceeds, we should attribute to the parties an intention to enter into a contract which contained conflicting terms, which is never to be done unless such an intention is clear beyond doubt. Here I think we are safe in saying that it was not the intention to cut down the provisions of the policy in favour of the insured by the memorandum. If we were to say that they intended to annul the clause of the policy under which the appellant claims the right to recover, we should not only be attributing to the parties an intention which they have not clearly indicated, but we should be putting a forced construction on the word "partial" in the marginal memorandum, by making it include a loss which they had themselves expressly declared should not constitute a partial, but a total loss.
Further, on well established principles, the whole contract of insurance to be gathered from the policy, certificate and memorandum must, so far as there is any ambiguity, be construed as against the underwriters in whose language it is expressed, for all these three instruments emanated from them.
I am of opinion that the appeal should be allowed with costs, and judgment must be entered in the court below for the appellant for $382.52, with interest and costs.
TASCHEREAU J.—The judgment of the Supreme Court of New Brunswick appealed from was rendered upon a special case agreed to between the plaintiff, appellant, and the respondent, to settle their respective rights upon the state of facts described in the court appealed from, as follows:
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It appears that the plaintiff was the owner and shipper of 15,400 railway ties, which were shipped in August, 1893, from Douglastown, Graspé, on board the schooner "Deer Hill," bound to Boston, and were loaded both on and under deck; that the schooner sailed from Douglastown on the 17th of August, 1893; that on the voyage to Boston a squall struck the schooner, carrying overboard a part of the deckload of sleepers, namely, 4,158 pieces, which were wholly lost. That there were discharged from under deck of the vessel 6,704 ties, and from on deck 4,538, and there were lost overboard 4,158 sleepers, and the whole shipment was 15,400 pieces. Both the on deck and under deck cargo was insured with the defendant company, as hereinafter stated. As the whole cargo consisted of 15,400 pieces, and there were discharged from under deck 6,704, there must have been on deck 8,696 pieces.
The on-deck cargo was insured for $800, and if the plaintiff is entitled to recover as for a total loss the amount he ought to receive is $382.52, or in the proportion that 4,158 bears to 8,696, $800 being the whole amount of insurance. The sleepers were worth at the place of shipment 13 cents each, and were insured under two certificates of insurance, which were under and subject to open policy. The two certificates are set out in the case, and are alike in form, except that one insures $200 under and $500 on deck, and the other $200 under and $300 on deck.
One of the said certificates reads as follows:—
Grant, Oxley & Co., insurance brokers, Halifax, Nova Scotia.
No. 134,234...........................................$200 under.
500 on deck.
Agency of the Boston Marine Insurance Company, Boston:—
Capital, $1,000,000.
Rate, 1¼, 3½; premium, $20.00.
This certifies that Grant, Oxley & Co. insured under and subject to conditions of open policy, no. 29,030, of the Boston Marine Insurance
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Company, the sum of $700 on........general........under deck on board schooner "Deer Hill," at and from Douglastown to Boston. Loss payable to the order of J. P. Mowat. This certificate to be surrendered on payment of loss.
J. TAYLOR WOOD, Agent.
Halifax, Aug. 2nd, 1893.
Stamped across the face of each certificate in red ink and in letters not exactly indistinct, but very small, are the following words:
Free from partial loss unless caused by stranding, sinking, burning or collision with another vessel, and amounting to 10 per cent.
The material clause of the open policy is as follows:
Provided that the insurers shall not be liable for any partial loss on salt, grain, fish, fruit, hides, hide cuttings, horns, hops or other goods that are esteemed perishable in their own nature or the freight thereon, unless it amounts to 7 per cent on the whole aggregate value of such articles, and be caused by stranding, nor for leakage of oil, molasses or other liquids or the freight thereon, unless it be occasioned by stranding or collision with another vessel, nor for any claim for damages on railroad iron or steel rails, lumber, dry goods, coal, marble, stone, slate or bricks, but liable for a total loss of a part if amounting to 5 per cent on the whole aggregate value of such articles.
According to the case the plaintiff claims $378.17 from the defendant. On the other hand, the defendant claims that by reason of the wording of the certificate, namely—
free from partial loss unless caused by stranding, sinking, burning or collision with another vessel, and amounting to 10 per cent—
it is exempt from liability as the loss was not occasioned by stranding, sinking, burning or collision with another vessel. They contend also that if liable at all it is only for $323.90.
Was this loss a total loss of a part, or a partial loss of the whole?
If the loss of the 4,158 pieces, part of the deckload insured, etc., is to be considered within the terms of the insurance a total loss, the appellant is entitled to recover, but if it is only a partial loss then it is within
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the exception, and the appellant has no claim, as the loss did not happen by stranding, sinking, burning or collision.
The court below unanimously held that it was a partial loss and that the defendant is not liable. In this determination, the appellant has failed to convince me that there is any error.
GWYNNE, KING and GIROUARD JJ. concurred in the judgment prepared by the Chief Justice.
Appeal allowed with costs.
Solicitor for the appellant: C. A. Palmer.
Solicitors for the respondent: Weldon & McLean
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