Supreme Court of Canada
Town of Cobourg v. The Cyclone Woven Wire Fence Co., (1918) 57 S.C.R. 289
Date: 1918-10-08
The Town of Cobourg (Defendant) Appellant;
and
The Cyclone Woven Wire Fence Company (Plaintiffs) Respondents.
1918: June 14; 1918: October 8.
Present: Davies, Idington, Anglin and Brodeur JJ. and Falconbridge C.J. ad hoc.
ON APPEAL FROM THE APPELLATE DIVISION OF THE SUPREME COURT OF ONTARIO.
Lease—Option to purchase—Conditional payment of rent—Relinquishment of option.
The Town of Cobourg by an agreement giving a wire company an option for five years to purchase land leased the premises to the company for that period at an annual rental payable at its expiration if the purchase was not completed or, pro râta, at any earlier period at which the option was relinquished, such rent to be paid prior to removal from the premises of the company’s plant and machinery. At the end of three and one-half years the company sold some of its machinery and was negotiating with a junk dealer for sale of the rest when the town distrained for rent claimed as due under the agreement, and the contents of the company’s factory were seized and sold. In an action claiming damages for illegal distress
Held, that as the option to purchase had not been relinquished no rent was due and the distress was illegal.
APPEAL from a decision of the Appellate Division of the Supreme Court of Ontario reversing the judgment at the trial by which the action was dismissed.
The facts are sufficiently stated in the above head-note.
F.M. Field K.C. for the appellant.
Loftus for the respondent.
DAVIES J.—I concur in the opinion of Mr. Justice Anglin.
IDINGTON J.—The appellant as a municipal corporation entered into an agreement with respondent
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giving it an option for a term of five years to purchase certain property and meantime to lease the property.
The questions raised herein must be determined by the construction to be placed upon two clauses of said agreement which are as follows:—
The corporation offers to sell to the company the building and lands surrounding the same heretofore used as the Model School on the north side of University avenue in the Town of Cobourg comprising two acres of land be the same more or less for three thousand five hundred dollars at any time within five years from the day of the date hereof on the company tendering to the Mayor of the corporation within said period of five years a deed for execution by the corporation in accordance with the “Short Form of Conveyances Act:”
And the corporation offers to lease to the company the said premises until the completion of the sale thereof to the company according to the terms of the offer hereinabove set forth at an annual rental of two hundred dollars, to be paid by the company to the corporation at the expiration of the said period of five years, in the event of the company not completing the purchase within the said period, and at the same rate for any less period than five years, in the event of the company relinquishing this option prior to the withdrawal from the said premises of the plant and machinery of the company.
The respondent entered into possession of said premises and after holding same for three years and a half and about a year and a half before the expiration of said five years, without making any election or expressly declaring its intention to relinquish the option of purchase given by the agreement, its goods were distrained by the appellant for an alleged claim of $700 for rent under the said second clause.
The respondent, six months later, brought this action, alleging the seizure was illegal and claiming damages therefor.
Appellant attempted to justify its seizure by evidence of the removal by respondent of a great part of its machinery and stock in trade thereby tending to demonstrate that it had relinquished its option and hence become liable to pay rent for the time it had been in possession.
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I cannot see how the option to purchase can, under any fair or reasonable construction of the instrument, be determined in any such way. It was quite competent for the respondent to have removed every bit of its machinery and other personal property and awaited till the last day of the term of five years and then to pay the price named and the rental specified and take a conveyance.
Suppose there had been a rapid rise in value of real estate, and this property had become worth double by the end of the term what it was at the making of the agreement, could the option be held to have been relinquished by reason of any such evidence as adduced herein?
There was not a line in the agreement stipulating for occupation of the premises, much less imposing as a term thereof that it should bring goods and machinery to be used by it therein.
The only provisions made binding respondent in relation to the property were to keep it in repair, not to assign without leave, to insure and to pay school taxes on an assessment of $3,500.
It is not what conceivably may have been the understanding between the parties but what the writing expresses that we have to do with herein.
If appellant made an improvident agreement we cannot help it. If there was, outside of that, material for another case it should have been fought out otherwise than by distress.
I should not, even if I could get over the impassable barrier I have suggested arising from the construction of the instrument contemplating a five years’ option to purchase, be able, as a matter of course, to put the construction on the leasing clause standing alone that appellant contends for. There is no time named for
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the payment of rent except at the expiration of the said period of five years. The matter is left so indefinite in that regard that I doubt if any well-founded right to distrain could be held to have arisen at an earlier date than the end of the five year term. I need not, however, decide that in my view of the plain, obvious meaning of the instrument otherwise.
The real issue in law had, I fear, got beclouded by reason of giving heed to collateral issues and considerations that never could have, in themselves, laid a foundation for the right to distrain, otherwise I imagine this litigation would have terminated long ago.
The appeal should be dismissed with costs.
ANGLIN J.—After hearing an able and exhaustive argument of this appeal, I am, with deference, utterly at a loss to appreciate the considerations which led the Appellate Division to regard this case as a fit subject for special leave to appeal. The unanimous judgment of that court (the personnel being somewhat different), reversing that of Britton J., who had dismissed the action, held that the defendant had made an illegal distress, awarded the plaintiff $23.50 actual, and $5 nominal, damages, declared certain of the distrained goods which the defendant had “bought in,” at the bailiff’s sale, at prices aggregating $905.35, to be still the property of the plaintiff, and gave it the costs of the action and appeal on the Supreme Court scale.
The defendant now concedes that its purchases at the sale held under its own distress warrant would have been indefensible had the distress itself been unimpeachable. The matter in controversy on this appeal, therefore, apart from costs, is confined to a judgment for $28.50 and the sole question to be determined is whether there was or was not any rent due from the plaintiff to the defendant.
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The plaintiff was lessee of premises owned by the defendant, a municipal corporation, with an option to purchase the same at any time within five years for $3,500. The rental ($200 a year) was payable on the expiry of the five years should the plaintiff not complete the purchase within that period and at the same rate for any less period should the plaintiff relinquish its option to purchase, payment in that event to be made
prior to the withdrawal from the said premises of the plant and machinery of the company.
The circumstances in evidence, in my opinion, fully sustain these findings of the learned trial judge:
The plaintiff company went into possession pursuant to the agreement but the business carried on was of small character and as if there were not very much in it in Cobourg.
Prior to the 22nd of June, the plaintiff set about removing what was in the building, and on the 22nd of June the defendant issued a landlord’s warrant to distrain the chattels under a claim for rent to the amount of $700. The bailiff seized and sold part of the chattels so seized and bought in the residue.
I find that the company did form the intention of not purchasing the property and that it intended to remove the goods and chattels from the premises without paying any rent.
The defendant had reasonable ground for believing that the company did not intend to purchase the property or pay rent and upon that belief directed the seizure to be made.
It is true, as alleged by the defendant, that the plaintiff had to a great extent discontinued their business at Cobourg, The plaintiff company had been disposing of such of their manufactured goods as they had on hand, and had been stripping the premises of machinery and had been negotiating with a junk dealer for about a month prior to the 22nd of June, 1916, for the sale to him of such of the stock, machinery and plant as was left for $800.00 and at the very time of the seizure were concluding a sale thereof to the junk dealer for $625,00 with a view to abandonment of the property.
All that the defendant did was in good faith, and in the honest belief that the plaintiff company intended to resort to whatever might be necessary to avoid paying rent.
But does all this warrant the conclusion that the
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plaintiff had, at or prior to the 22nd of June—the date of the distress—relinquished its option to purchase? That it had determined not to take advantage of it seems abundantly clear.
The defendant’s Mayor wrote to the plaintiff on the 15th of June inquiring whether it intended to vacate the premises and, if so, what were its intentions regarding the option? The plaintiff’s manager replied on the 20th June explaining that it was removing and disposing of surplus machinery, intending to apply the proceeds on a bank overdraft:
This will enable the company in all probability to meet the difficulties caused by the war. I will be glad to keep you informed as to the progress the company is making at any time you request.
However evasive or disingenuous this reply, it is not susceptible of being construed as a relinquishment of the option, which was certainly still in force on the 15th June as the Mayor’s letter shews. There was no further communication between the parties prior to the distress.
Under the agreement, during the currency of the five years’ period only actual relinquishment of the option to purchase would make the pro râta rent for the elapsed portion of that period due and payable. An intention to relinquish, however definite and clearly established, would not suffice. Had a tender by the plaintiff on the 22nd of June of a conveyance of the property for execution accompanied by $3,500 been refused, the defendant, in my opinion, would have had no defence to an action for specific performance. With Mr. Justice Lennox, who delivered the judgment of the Appellate Division,
I am of the opinion that there is no evidence whatever to shew a relinquishment, in fact, but, on the contrary, the letter from the Mayor to an officer of the plaintiff company of the 15th June, shews quite
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clearly that upon the 15th June, at all events, there was no relinquishment, and there certainly is nothing to suggest that the parties came together in any way or did anything that would constitute a relinquishment of the option after that date. It is not necessary to determine a priori what documents or circumstances would be necessary to constitute a relinquishment as a matter of law of the right of the company to exercise the option within the five-year period limited by the agreement. It is sufficient to say that no fact or circumstance has been shewn which could be called a relinquishment or from which a relinquishment could be properly inferred.
The appeal fails and must be dismissed with costs.
BRODEUR J.—The object of the contract which we have to construe in this case was to assist the respondent company which intended to start an industrial establishment in the Town of Cobourg. It was represented to the civic authorities that a certain number of men would be employed and that the town then would profit in the establishment of that new industry.
With that end in view the Town of Cobourg agreed to give a lease of a building which they had at a rent of $200 per year and with the right of option on the part of the company to purchase the property within five years. No rent would be paid, however, during those five years, unless the company relinquished its option to purchase. The machinery and plant, however, of the company could not be removed prior to the rent being paid. That agreement was made on the 11th November, 1912, and the option then would have to be exercised on or before the 11th November, 1917.
The business of the company, however, was not prosperous. At the beginning they employed a certain number of men, but there was a decrease in number from time to time until, about the beginning of the year 1916, the number was reduced to one. The company failed to make a return of its affairs as required by the provisions of the provincial statute during the
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years 1914-1915 and 1916. No price lists were issued after the year 1913. In 1915 it gave to the bank a chattel mortgage covering all operating machinery on the premises. It is in evidence that only 1,110 lbs. of fence wire were brought during the year 1916. Then, in the months of April, May and June, they started to ship machinery and they negotiated with a junk dealer for sale of the balance of the machinery.
It is in evidence also that the total cost of power supplied from the 13th January, 1913, to the 26th of June, 1916, was $29.96.
The company was evidently not in a position to continue the business, and it was found by the trial judge that it had formed the intention of not purchasing the property, and it intended to remove the goods and chattels from the premises without paying any rent.
The trial judge found also that
the defendants had reasonable ground for believing that the company did not intend to purchase the property or pay rent and upon that belief directed the seizure to be made.
The Appellate Division reluctantly reversed his decision.
Everything pointed to the fact that the company was in a hopeless condition and could not purchase the property. But can the company be held as having relinquished its option to purchase? I am sorry to have to come to the conclusion that the evidence does not disclose such relinquishment. It is more than possible that the company would not be in such a financial condition that it could exercise its option; but, then, we cannot say that some rent was due when the writ for distress was issued.
The Town of Cobourg seems, however, to have acted all through in a straightforward way and I could not see the same line of conduct followed by the respondent company.
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I have come to the conclusion that the appeal should be dismissed with costs.
FALCONBRIDGE J.—I agree with the judgment of Mr.Justice Anglin.
Appeal dismissed with costs.
Solicitor for the appellant: Frank M. Field.
Solicitor for the respondents: John T. Loftus.
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