Supreme Court of Canada
Carroll v. Erie County Natural Gas and Fuel Co., (1899) 29 S.C.R. 591
Date: 1899-06-05
Samuel S. Carroll and William E. Carroll (Plaintiffs) Appellants;
and
The Erie County Natural Gas and Fuel Company and The Provincial Natural Gas and Fuel Company of Ontario (Defendants) Respondents.
1899: March 28; 1899: June 5.
Present: Sir Henry Strong C.J. and Gwynne, Sedgewick, King and Girouard JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Res judicata—Rectification—Damages.
In an action relating to the construction of a deed the plaintiff claimed the benefit of a reservation contained in a prior agreement, but judgment was given against him on the ground that the agreement was superseded by the deed. He then brought an action to reform the deed by inserting the reservation therein.
Held, that the subject matter of the second action was not res judicata by the previous judgment.
In an action for rectification of a contract the plaintiff may be awarded damages.
APPEAL from a decision of the Court of Appeal for Ontario reversing the judgment at the trial in favour of the plaintiffs.
[Page 592]
A former action between the same parties was brought to enforce an agreement for the supply of gas to the plaintiff embodied in a deed executed on April 20th, 1891. In that action the plaintiff claimed the benefit of a reservation in an agreement entered on April 6th, but failed to secure it, the courts holding that only the deed could be looked to and that did not contain such reservation. The plaintiff then brought an action to reform the deed by incorporating the reservation therewith and recovered judgment on the trial before Armour C.J. That judgment was reversed by the Court of Appeal which held that the question was res judicata by the judgment in the previous action, and that no notice of the error had been brought home to the defendants. Burton C.J.O. dissenting in the Court of Appeal, held that the evidence was sufficient to charge defendants with notice. The plaintiffs appealed to this court.
Aylesworth Q.C. for the appellants. The action in this case was for rectification of the deed of April, 1891, which is not res judicata by the judgment in the former case. Cooper v. Molsons Bank.
Defendants cannot rely on res judicata when they did not plead it. Farwell v. The Queen.
Douglas for the respondent. Erie Natural Gas Company, referred to Kerr on Fraud, (2 ed.) p. 102; Dominion Loan Society v. Darling; Ferguson v. Winsor; Bentley v. Mackay.
Cowper for the respondent. Provincial Natural Gas Co.
The judgment of the court was delivered by:
THE CHIEF JUSTICE.—This case came before this court on an appeal which is reported in the 26th volume of the Supreme Court reports.
[Page 593]
The judgment there given contains a full statement of the facts and of the questions arising between the parties in that action which related to the construction of the deed of the 20th of April, 1891, there stated, and referred to a reservation in favour of the present appellants contained in a preceding executory agreement of the 6th of April, the question being whether that reservation was to be considered as still in force or was to be treated as having been superseded by the later deed. In that action as is observed in the judgment no case for rectification of the deed was made. The present action has been brought for the purpose of having the deed in question reformed by the insertion of the reservation referred to. The cause was tried before the Chief Justice of the Queen’s Bench Division who gave judgment for the appellants directing the rectification asked for. On appeal this judgment was reversed by a majority of the Court of Appeal (Osler and Maclennan JJ.), the Chief Justice dissenting. This latter judgment proceeded upon two grounds; first, the question was considered to be res judicata having, as it was held, been concluded by the judgment in the former action; secondly, it was considered that no notice of the error had been brought home to the respondents, The Provincial Natural Gas & Fuel Co. of Ontario, and that that company were therefore bonâ fide purchasers for value without notice.
No case for rectification having been made by the first action, as was there most distinctly held, it is impossible upon any recognised principle applicable to the defence of res judicata to hold that such an answer to the action can be maintained. I need not go fully into that question as we all agree entirely in the judgment of the Chief Justice of Ontario on that head. It is not material to say that the appellants might, if they had so elected, have made an alternative
[Page 594]
case for relief on the ground of mistake in their first action; it is sufficient to say that they did not in fact do so and that no such question was there in issue.
Upon the second point, that of notice, we agree with what is said in the judgments delivered by both the learned Chief Justices who decided in the appellants’ favour, and we adopt in their entirety the observations on that part of the case made in the dissenting judgment delivered in the Court of Appeal.
As to the right to recover damages in an action for rectification, I see no objection to it. It was formerly held that a party could not have a decree for specific performance in the suit for rectification, that is specific performance of the agreement as altered by the decree, but no sound reason was ever given for this doctrine and it is no longer law. Olley v. Fisher.
The appeal must be allowed, the judgment of the Court of Appeal vacated and that of Chief Justice Armour restored with costs to the appellants in all the courts.
Appeal allowed with costs.
Solicitors for the appellants: German & Crow.
Solicitors for the respondents: Harcourt, Cowper & Macoomb.
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