Supreme Court of Canada
The Commerciai Union Assurance Company v. Margeson (1899) 29 SCR 601
Date: 1899-06-05
The Commercial Union Assurance Company (Defendant)
Appellant
And
Fen Wick Margeson and Constantine Salstonstall Miller (Plaintiffs)
Respondents
1899: May 2; 1899: June 5.
Present:—Sir Henry Strong C.J. and Taschereau, Gwynne, King and Girouard JJ.
ON APPEAL FROM THE SUPREME COURT OF NOVA SCOTIA.
Fire insurance—Construction of contract—"Until"—Condition precedent—Waiver—Estoppel—Authority of agent.
Certain conditions of a policy of fire insurance required proofs, etc., within fourteen days after the loss, and provided that no claim should be payable for a specified time after the loss should have been ascertained and proved in accordance with this condition. There were two subsequent clauses providing respectively that until such proofs were produced, no money should be payable by the insurer and for forfeiture of all rights of the insured if the claim should not, for the space of three months after the occurrence of the fire, be in all respects verified in the manner aforesaid.
Held, that the condition as to the production of proofs within fourteen days was a condition precedent to the liability of the insurer; that the force of the word "until" in the subsequent clause could not give to the omission to produce such proofs, within the time specified, the effect of postponing recovery merely until after their production, and that the clause as to forfeiture after three months did not apply to the conditions specially required to be fulfilled within any lesser period.
Neither the local agent for soliciting risks nor an adjuster sent for the purpose of investigating the loss under a policy of fire insurance, has authority to waive compliance with conditions precedent to the insurer's liability or to extend the time thereby limited for their fulfilment, and as the policy in question specially required it, there could be no waiver unless by indorsement in writing upon the policy signed as therein specified. Atlas Assurance Co. v. Brownell (29 Can. S. C. R. 537) followed.
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Appeal from the judgment of the Supreme Court of Nova Scotia refusing the defendant's application to have the judgment entered for the plaintiffs set aside and the action dismissed, or for a new trial.
The facts of the case and questions at issue on this appeal sufficiently appear from the statement given in the judgment of the court delivered by His Lordship Mr. Justice King.
Drysdale Q.C. for the appellant. It was a condition precedent that assured, within fourteen days after the loss, should deliver a particular statement and account of the loss; no attempt was made to comply with this requirement until at least thirty-seven days after the fire. There could be no waiver except by indorsement upon the policy signed by the agents of the company at Halifax; there was no waiver in the manner provided, and waiver is out of the question in the action. The findings of the jury do not aid the plaintiffs, and under the contract they are irrelevant and notwithstanding such findings, the appellant is entitled to judgment. The finding that the delay in respect to the proofs were reasonable, has nothing to do with the position of the parties under the contract. The finding that the adjuster knowingly caused Margeson, to believe up to a period later than fourteen days after the fire, that it was not necessary to prepare proofs of loss, does not contain the elements of estoppel, as there is no finding that acting or relying upon such belief and by reason thereof he failed to put in his proofs. The finding that Margeson, after the fourteen days had expired, proceeded with diligence in the preparation of proofs, is immaterial. There was no evidence to warrant any suggestion or finding of waiver by, or estoppel as against, the company in connection with condition 14. The adjuster had no
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authority to bind the company, he was not an officer of the company having authority to waive conditions in the policy; Logan v. Commercial Union Insurance Co.; Western Assurance Co. v. Doull; Caldwell v. The Stadacona Fire and Life Ins. Co.; Employers Liability Assurance Corporation v. Taylor; Atlas v. Brownell, and cases there cited.
Borden Q. C. for the respondents. The company prevented the making of proofs and cannot set up the delay as a defence to plaintiffs' claim. The law does not require performance if it has been prevented by the person sought to be fixed with liability. Edwards v. Aberayron Mut. Ship Ins. Soc., at p. 580; Leake on Contracts (3 ed.) pp. 379, 380; Hotham v. East India Co.; Goldstone v. Osborn; Tredwen v. Holman; Thomas v. Fredricks. Refusal by the insurer to appoint an appraiser or a denial of liability under the policy relieves the insured. Uhrig v. Williamsburgh City Fire Ins. Co.; Phoenix Ins. Co. v. Stocks; 4 Joyce on Insurance; secs. 3255, 3257 and cases there cited; 2 May on Insurance (3 ed.) sec. 496 b.; 1 Hudson, Building Contracts, 321, 327, 330; Mackay v. Dick; Roberts v. Bury Commissioners, at pp. 320, 326 and 330.
The non-delivery of proofs within fourteen days did not occasion a forfeiture of plaintiffs' rights under the policy the only provision for such a forfeiture being that "if the claim shall not for the space of three months after the occurrence of the fire be in all respects verified, in manner aforesaid, the insured
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shall forfeit every right to restitution or payment by virtue of this policy and time shall be the essence of the contract." The plaintiffs refer to Lafarge v. Liverpool, London & Globe Ins. Co.; Hutchinson v. Niagara District Mut. Fire Ins. Co.; Weir v. Northern Counties of England Ins. Co.; 2 Beach on Insurance, sec. 1203, 1210; 2 May on Insurance, (3 ed.) sec. 465; 4 Joyce on Insurance, sec. 3282 and cases cited. In the fourteenth condition the following provision is found, after the provision requring proofs of loss: "And until such accounts, etc., are produced * * * "no money shall be payable under this policy." Upon a reasonable construction of this provision in connection with that requiring proofs within 14 days and that creating a forfeiture if the proofs are not delivered within three months, the delivery of proofs within 14 days cannot be a condition precedent, otherwise the provision just quoted, as well as that creating a forfeiture, would be unnecessary, inconsistent and useless.
If the delivery of proofs of loss within 14 days is a condition precedent, the defendant is estopped from setting it up. The findings are conclusive on this point. The company induced plaintiff to refrain from preparing proofs of loss, promised that its adjuster should prepare the necessary proofs, and sent him to plaintiffs for that, among other purposes. It is significant both as to the adjuster's authority and as to his intention that upon his second visit he took blank proofs of loss with him; forms supplied by the company suited to the conditions of its own policy. See Western Assur. Co. v. Doull per Strong J. at p. 456; Jennings v. Metropolitan Life Insurance Co. at p. 65; Goodwin v. Roberts; Indiana Insurance Co. v.
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Capehart; Heath v. Franklin Insurance Co.; Clark v. New England Mutual Fire Ins. Co.; Shannon v. Hastings Mutual Fire Ins. Co.; Smith v. Commercial Union Ins. Co.; 2 May on Insurance, (3 ed.) secs. 497, 498, 499. The nineteenth condition requiring indorsement of waiver does not apply to waiver of the provisions relating to appraisal or to proofs of loss; Blake v. Exchange Mutual Ins. Co. of Philadelphia; 1 Joyce on Insurance, sec. 437, and the cases cited, and May on Insurance (3 ed.) sec. 511.
The judgment of the court was delivered by:
KING J.—This is an appeal by defendants from a judgment of the Supreme Court of Nova Scotia in an action on a policy of insurance against fire upon a stock of merchandise In the clause of the policy binding the company to pay the amount of a loss, it is expressed that the obligation shall be subject to the conditions and stipulations indorsed on the policy.
By the 14th of such conditions and stipulations, persons sustaining loss or damage are forthwith to give notice thereof in writing at the office of the company at Halifax or to the local agent, and are, within fourteen days after the loss, to deliver in writing in duplicate a particular statement and account of their loss or damage, specifying a number of particulars, and also stating when and how the fire originated as far as the insured may know or believe. It is further required that the insured shall verify such statement and account by the production of books of account and vouchers and by his affidavit, and when practicable by the testimony of domestics, servants or clerks. He is further required to procure a certificate of two
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magistrates most contiguous to the place of the fire, stating their belief that the loss was an honest one, and, if required, he is to submit to an oral examination under oath as to the loss and his claim; and is (amongst other things) also to supply such other vouchers and produce such further evidence and give such other explanation as the company may reasonably require to prove his account of the loss or damage and of his right to recover the amount claimed. It is then stipulated that
until such accounts, declaration, testimony, vouchers and evidence as aforesaid are produced and examination (if required) and such explanation given no money shall be payable by the company under this policy. * * And if the claim shall not, for the space of three months after the occurrence of the fire be in all respects verified in manner aforesaid the insured shall forfeit every right to restitution or payment by virtue of this policy, and time shall be of the essence of the contract.
By the 16th condition it is declared that
payment of losses shall be made within sixty days after the loss shall have been ascertained and proved in accordance with these conditions.,
The fire occurred on the 22nd day of February, 1897. Notice in writing was forthwith given by the assured, in a formal way that showed that he was acting under the condition of the policy; but no statement or account of loss was furnished withing the fourteen days, nor was it furnished until about thirty-seven days after the fire.
In reply to the defence of the company setting up this breach of condition, the insured claims that the company are estopped from availing themselves of such defence upon the alleged ground that he was induced to delay making the statement and proof through the action and representations of the local agent of the company and of their adjuster. Upon findings of the jury to this effect, the court below
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affirmed a judgment of the trial judge entered for the plaintiffs.
In the course of his argument for the respondent,( Mr. Borden contended that the requirement of the contract as to the furnishing of statement of loss, etc., within fourteen days, is not a condition precedent to recovery.
The question whether stipulations are to be held to be dependent or independent is to be determinedly the intention of the parties as it appears on the instrument, and by the application of common sense to each particular case; to which intention, when once discovered, all technical forms of expression are to give way. Stavers v. Curling.
Where, from a consideration of the whole instrument, it appears that the one party relied upon his remedy and not upon performance of the condition by the other, the performance is not a condition precedent; but where it appears that the intention most probably was to rely substantially upon the performance of the condition rather than upon a remedy in damages for its breach, then the reasonable view is that performance is a condition precedent. Roberts v. Brett.
Looking at the nature of the requirement here, and the close connection between its performance and the principal obligation of the company, it does not seem at all likely that the company was stipulating for an independent advantage, or intending to rely on what in any event must prove a barren remedy. The more reasonable construction is that performance was meant to be a condition of the obligation which in the body of the policy was expressly stated to be subject to it; not that these latter words would of themselves suffice to make of a stipulation a condition precedent, unless
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upon consideration of the whole contract such appears to be its effect.
Two clauses are, however, relied upon by the respondent. One, already cited, is that
until such accounts, declaration, testimony, vouchers and evidence, etc., are produced, no money shall be payable by the company under this policy;
and it was contended that by force of the word "until," as distinguished from "unless," the effect of an omission to give the particular statement or account within the fourteen days is merely that recovery is postponed until it is given, citing Weir v. Northern Counties Ass. Co.. It was pointed out by Mr. Drysdale that it was there stipulated that in default of the proofs no action should lie "until" etc. In Whyte v. Western Ass. Co., the Judicial Committee held that a clause requiring proofs to be made within a prescribed time was a condition precedent to recovery in a contract where a subsequent clause restrained recovery until proofs made. In point of construction the clause relied upon by respondent is a general one covering a number of things variously dealt with by the preceding clauses, and makes their performance in the way previously indicated a condition precedent to the company's liability. If the word "accounts" as used in it includes the statement or account in question, there is nothing in the general words which purports to render the particular provision as to its production within fourteen days wholly useless and superfluous.
The other clause relied on is this, that
if the claim shall not for the space of three months after the occurrence of the fire be in all respects verified in manner aforesaid, the insured shall forfeit every right to restitution or payment by virtue of this policy and time shall be of the essence of the contract.
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This does not mean that the three months are given for the performance of any act of proof whatever, but that all that is required to be done in the way of verifying the claim shall be done within the three months. Proof required to be given within a lesser prescribed time is to be so given; and, as to things in respect of which no time is specifically fixed, these also are to be done within the three months, so as that, within such time, everything in the way of verifying and perfecting the claim shall be then completed.
The 16th condition declaring that
payment of losses shall be made within sixty days after the loss shall have been ascertained and proved in accordance with these conditions
clearly makes the giving of the proofs in accordance with the conditions a condition precedent to the liability of the company, and leaves the only question to be one as to the construction of the terms of the condition precedent. If the giving of the principal statement or account is a condition precedent, the giving of it within the fourteen days is equally so. See also Mason v. Harvey; Roper v. Lendon; Employers Liability Assurance Corporation v. Taylor.
Next as to the alleged estoppel. The plaintiff says that after the fire he had a conversation with a local agent as to what was to be done, and that the latter said
to keep quiet until the adjusters arrived, that nothing could be done until they arrived.
Upon receiving notice of the loss the company sent their adjuster, Mr. Butcher, to the spot. He reached the plaintiffs' on February 25th.
Condition 15 provides that
where merchandise or other personal property is partially damaged, the insured shall forthwith cause it to be put in as good order as the
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nature of the case will admit assorting and arranging the various articles according to their kinds, and shall cause a list or inventory of the whole to be made naming the quantity and cost of each kind. The damage shall then be ascertained by the examination and appraisal of said damage on each article by disinterested appraisers mutually agreed upon whose detailed report in writing shall form part of the proofs required to be furnished by the insured.
These proofs are not part of the particular statement or account required to be furnished within fourteen days after the fire.
Butcher first set about getting the articles sorted out so as to expedite the work of appraisal. The plaintiff says:
The morning Mr. Butcher arrived he said he wanted the goods all arranged so that they could list them. He wanted to go back that week. He said the company always paid losses in full and expected to pay mine. * * * After that I proceeded with the sorting of the goods. I had not got through when Mr. Butcher went away on Saturday. Before he went away he said that when the goods were assorted and listed he would return and make out the proofs of loss. He wished me to let the local agents know when we got through. I got through the following Thursday or Friday, and I then notified the local agent. * * * After I gave the notice to the local agent, Mr. Butcher returned the first of the following week. That would be a fortnight from the day of the fire. * * * That time he remained three days, I think. During that time he examined the goods and made out a list. When he got through with making out the list he did not come to see me or give me a copy of it. He went away without showing me the list.
Q. (By plaintiffs' counsel) Tell me why it was—I am speaking of the second time Butcher went away—why it was that before that you had not got the proofs of loss completed and put in?—A. I thought Mr. Butcher came there for the purpose of helping to make up the proofs of loss. I did not do so because they had a list of the goods and I thought the proofs of loss could be made up from the appraisement they were making.
Mr. Butcher denies that he said that he would make out proofs of loss, but he admits that if he could have got the prices arranged (which according to him was
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prevented by plaintiff,) he would have made out the proofs of loss and sent them to the company.
On leaving Kentville on the first occasion he wrote the following letter to plaintiff, dated 26th February:
In confirmation of my verbal instructions of this morning, I require you to conform to the conditions printed in your policy with the Commercial Union Assurance Co. When your stock is ready for appraisement please notify Mr. Roscoe, agent here at Kentville.
The plaintiff says that after receiving this letter he looked over the conditions of the policy, and that sometime during the week following the fire (which occurred on Monday) he consulted a Mr. Shaffner about making out proofs of loss; and he further says
It was about the time I got Butcher's letter that I went to Shaffner. I could not say whether it was before or after. I did not take the policy to him. I read the conditions all over at that time. I knew very little about proofs of loss before reading these. I knew that they were required. I had a slight idea of that from the first. I always supposed I would have to prove the loss. I had a discussion with the adjusters about the appraisement, not about the proof, on their first visit.
The following question (amongst others) was left to the jury:
Did the acts and words of the local agent and adjuster of the defendant company before the adjusters left Kentville the first time, reasonably cause the failure of plaintiff to deliver proofs of loss before March 31, 1897? If so, state in detail what were such acts and words.
And the jury answered:
Yes. The local agent informed plaintiff to keep quiet until adjuster arrived, that nothing could be done until then. That plaintiff was told by Butcher that he would make up proofs of loss on his return.
Assuming that Butcher's letter of 26th February primarily referred to the assorting of the goods, it contains a clear intimation to the insured that he is to look to his contract and comply with its conditions. And that he so understood it himself is clear, for he thereupon read the conditions all over and appears to
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have consulted a Mr. Shaffner about making out proofs of loss. It is idle, therefore, for the plaintiff to say that the reason he did not make out the proofs of loss was because he thought that Butcher had come for the purpose of helping to make out such proofs (supposing that this is a sufficient reason.) Again, and as an alternative answer to the question of his counsel as to why he did not make out the proofs of loss, he says:
I did not do so because they (i.e. Butcher and one Jarvis, the adjuster for another company) had a list of the goods and I thought the proofs of loss could be made up from the appraisement they were making.
This (if it amounts to anything) clearly relates to a time after the expiration of the fourteen days prescribed for furnishing the particular statement or account. It consequently appears that there was no substantial evidence upon which the jury could reasonably find as they did upon this question, and the plaintiff is in the position of having omitted to comply with a condition precedent to his right of recovery. The implied authority of a person acting in Mr. Butcher's capacity was considered under somewhat similar circumstances in Atlas Ins. Co. v. Brownell decided this term.
Were the evidence much stronger than it is, the plaintiff under the circumstances of this case, would find himself precluded from availing himself of any waiver on the part of Mr. Butcher by the full and explicit provisions of the 19th condition stipulating that
no one of the foregoing conditions or stipulations, either in whole or in part, shall be deemed to have been waived by or on the part of the company unless the waiver be clearly expressed in writing by indorsement upon this policy signed by the agent of the company at Halifax, N. S.
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There were other substantial objections to recovery argued upon the appeal which it is not necessary to decide upon.
The result is that the appeal is allowed, the judgments of the Supreme Court of Nova Scotia and of the Honourable Mr. Justice Meagher are reversed and set aside, and the action is dismissed with costs to the appellant in all the courts.
Appeal allowed with costs.
Solicitor for the appellant: Hector McInnes.
Solicitor for the respondents: Joseph A. Chisholm.
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