Gresham Life Assur. Soc. Ltd. v. La Banque d'Hochelaga, [1926] SCR 313

Supreme Court of Canada

Gresham Life Assur. Soc. Ltd. v. La Banque d'Hochelaga, [1926] S.C.R. 313

Date: 1926-03-13

The Gresham Life Assurance Society, Ltd. (Defendant) Appellant;

and

La Banque D’Hochelaga (Plaintiff) Respondent.

1926: February 16, 18; 1926: March 13.

Present: Anglin C.J.C. and Duff, Mignault, Newcombe and Rinfret JJ.

APPEAL FROM THE COURT OF KING’S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC

Insurance—Life—Representations—Warranty—Answer by assured—Sober and temperate habits—Onus

The respondent bank, as assignee, sued the appellant company for the amount of an insurance policy on the life of M. The company resisted the claim on the ground that the assured had answered falsely to the question whether he was, at the time of the issue of the policy and for some years before, of sober and temperate habits. The policy contained a clause to the effect that the declarations made by the assured were, in the absence of fraud, to be considered as representations, and not as warranties.

Held that, according to the law of Quebec, the onus rests upon the insurer to establish misrepresentation of a fact of a nature “to diminish the appreciation of the risk or to change the object of it” and further, that he was induced to enter into the contract by such misrepresentation.

Held, also, that the appellant company had not sufficiently discharged the onus of establishing that the assured was not of sober and temperate habits.

Judgment of the Court of King’s Bench (Q.R. 38, K.B. 529) aff.

APPEAL from a decision of the Court of King’s Bench, appeal side, province of Quebec[1], affirming the judgment of the Superior Court and maintaining the respondent’s action.

The material facts of the case and the questions at issue are fully stated in the judgments now reported.

John T. Hackett K.C. for the appellant.

Geoffrion K.C. and Prud’homme K.C. for the respondent.

The judgment of the majority of the court (Duff, Mignault, Newcombe and Rinfret JJ.) was delivered by

Duff J.—This appeal is concerned with a claim by the respondent bank as the assignee of a policy of insurance on the life of the late Joseph Emile Octave Morin, who died at some date between October, 1920, and April, 1921.

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The appellant company resisted the claim on the ground that the applicant’s answer to one of the questions in the application was untrue. The question was:—

Avez-vous maintenant et avez-vous toujours eu des habitudes de sobriété et de tempérance?

and to this, the applicant answered “Oui.”

The policy contains a clause to the effect that the declarations made by the assured are, in the absence of fraud, to be considered as representations, and not as warranties. The effect of such a clause was considered in Kiernan v. Metropolitan Life Insurance Co.[2], and the result of the examination of the law there is that in the province of Quebec the onus rests upon the insurer to establish misrepresentation of a fact of a nature

to diminish the appreciation of the risk or to change the object of it,

and further, that he was induced to enter into the contract by such misrepresentation.

The learned trial judge, applying himself to the issues of fact, first, whether the representation complained of was an untrue statement of fact; second, whether, if untrue, it was calculated to “diminish the appreciation of the risk,” expresses himself satisfied that the assured, Morin, had enjoyed the confidence and esteem of his fellow-citizens; that he had always “passé,” first, in his village of St. Jean Port Joli, and afterwards at Vilmontel and Amos,

comme un homme ayant plutot des habitudes de tempérance ou sobriété;

that it had not been established, and indeed that there was nothing to shew that his representations on this subject were calculated to diminish the appreciation of the risk; and that Morin might honestly have made the representations complained of. Nevertheless, after observing upon the difficulty of drawing the line of demarcation between people who can be described as being sober and temperate and those whose habits fall within the description “intemperate,” he would not be disposed to say either that Morin’s habits were those of sobriety and temperance or that he was an habitual drunkard.

The appreciation of the findings of the learned trial judge is, perhaps, a task of a little delicacy. His view, I think, may not unjustly be summed up thus: Morin was

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a man given to the habitual moderate use of intoxicating liquor, and at times to the excessive use of it. He was classed by his neighbours and by those familiar with his life as a man rather temperate in his habits, and although’ strictly the learned trial judge himself was not disposed to characterize his habits as “sober and temperate,” he considered that the departure from accuracy in the statement of the assured was not sufficiently serious to prejudice an insurer in his appreciation of the risk; in other words, if a reasonable insurer had known the facts as the learned judge conceived them to be, the judgment of the insurer would not thereby have been influenced adversely to the application.

In the Court of King’s Bench, three of the learned judges appear to have taken the view that in substance there was no misrepresentation. One, Mr. Justice Green-shields, expresses no opinion as to the proper characterization of Morin’s habits, but finds as a fact that, assuming there was misrepresentation, the company was not induced thereby to issue a policy. The fifth of the learned judges of the Court of King’s Bench, Mr. Justice Howard, thought the company was entitled to succeed on the ground that, although at the time the policy was issued, and for several years before, Morin had been of sober and temperate habits, such epithets could not properly be applied to his habits at an earlier period—in 1913, 1914 and 1915—when he was a member of the Quebec legislature; and on that ground, as well as on the ground that the representations constituted warranties, he dissented from the judgment of the court.

The question addressed to Morin had relation to his habits. Occasional excess is not necessarily, within the meaning of the words employed, inconsistent with an affirmation that the habits of the applicant are temperate, and, in applying the standard indicated by the question, as the Law Lords pointed out in Weins v. Standard Life[3]. it would be useless to attempt a precise definition of such terms. What would be excess in one might be moderation in another. Differences in the capacity for imbibing strong drink are such that quantity does not in itself necessarily

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afford a test. Then, as Lord Watson says, at p. 797, in judging of a man’s sobriety for the purposes of applying such a standard, his occupation and position in life and the habits of those among whom he lives and works must always be taken into account.

There is virtual unanimity in the Court of King’s Bench upon the character of Morin’s habits at the time the policy was issued and for some years before. In support of this view, there is a very weighty body of evidence, and of special weight is the evidence given by the agent of the respondent bank at Amos, Rivard. It was Rivard’s duty, and he says he was exact in discharging that duty, to report to his head office upon the habits of the customers of the bank, if there was anything in those habits worthy of remark. Morin was one of his customers, and although he was in the habit of drinking in moderation, Rivard considered him on the whole a temperate, hard-working man. He had made two reports upon him, the second of which he produced, and in which there was no reference to Morin’s habits. The first report, fifteen months earlier, was not produced, and he was unable to speak positively as to its contents, but said that if there had been any reference to Morin’s habits in the first report, it probably would have been repeated in the second. Rivard may properly be considered a witness not wholly disinterested, but his testimony as to Morin’s habits is corroborated by the nature of his reports to the head office, and to his evidence importance must be attached.

To the same effect is the evidence of Dr. Bigué, the respondent company’s medical examiner at Amos, of Joseph Germain, the respondent company’s local agent, and of Mons. Paré, a King’s Counsel there; and this evidence is supported by that of other respectable witnesses.

As against this evidence, there is testimony given by one witness, a total abstainer, and obviously not without bias,-and by another who, admittedly, was not on friendly terms with Morin during his lifetime. The testimony of these two witnesses cannot be reconciled with the other evidence as to Morin’s habits, during the period of which they speak, nor can it be reconciled with the learned trial judge’s finding, as to Morin’s reputation in Vilmontel and in Amos. There is really no sound juridical reason for

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rejecting the testimony of those witnesses who aver that, during his residence at Vilmontel, Morin was not a man of intemperate habits within the contemplation of the question.

Much more serious was the attack made upon Morin’s habits at an earlier period; that is to say, from 1912 to 1915; during the greater part of which period he was a member of the Quebec legislature. The most important witnesses called by the appellant company were Lavallée and Roy. As to these witnesses, Lavallée is obviously unreliable. As for the evidence of Roy, who was the barkeeper at the Mountain Hill hotel in Quebec, it must be contrasted with that of Fortin, who was the owner of the hotel, who knew Morin intimately, and declares that his use of liquor was moderate. On this statement, Fortin was not cross-examined.

The evidence of both these witnesses, Lavallée and Roy, must, moreover, be appraised in light of the finding of the learned trial judge, that there was nothing in the evidence to shew that any departure from strict accuracy in Morin’s answers was calculated to diminish the company’s appreciation of the risk. The learned trial judge rightly emphasized the fact that the company was informed that Morin indulged in the moderate use of liquor, and the conduct of the company in accepting the risk with this knowledge may properly be regarded as satisfactory evidence that such a use of intoxicants would not necessarily be incompatible with temperate habits, within the meaning of the application, as understood by the company. The learned trial judge’s finding, coupled with his findings as to Morin’s reputation at the village at which he lived during the same period, seem to shew that the learned judge did not consider that the evidence of these witnesses could be accepted without substantial qualification, and that this evidence, in so far as he accepted it, did not, in his view, justify the conclusion that, in the answer complained of, Morin had fallen into any serious misrepresentation.

The judgment of the Court of King’s Bench ought not to be disturbed.

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Anglin C.J.C.—I have had the advantage of reading the opinion prepared by my brother Duff. I fully concur in his view that the evidence sufficiently establishes that the habits of the insured at the time the policy was issued and for some years before were sober and temperate. But the evidence as to the earlier period, 1913-15, is far from satisfactory. That the insured’s habits were then those of a sober and temperate man is in my opinion not established. A very slight addition to the evidence adduced by the defendant would, I think, warrant the determination of this issue in the negative and, if it had been proven that during that period the insured was not a man of sober and temperate habits, I should hesitate long before regarding the misrepresentation thus shewn as not material in the sense indicated in Kiernan’s case. But the burden of convincing the Court that the deceased was not of sober and temperate habits rested on the defendant. Not being entirely satisfied with the proof adduced to discharge that onus, I concur in the dismissal of the appeal.

Appeal dismissed with costs.

Solicitors for the appellant: Foster, Mann, Place, MacKinnon, Hackett & Mulvena.

Solicitors for the respondent: Geoffrion, Geoffrion & Prud’homme.