Supreme Court of Canada
Capital Life Assurance Co. of Canada v. Parker, (1915)
51 S.C.R. 462
Date: 1915-06-24
The Capital Life
Assurance Company of Canada (Defendants) Appellants;
and
Lydia A. Parker
(Plaintiff) Respondent.
1915: May 10, 11; 1915: June 24.
Present: Sir Charles Fitzpatrick C.J. and
Davies, Idington, Duff and Anglin JJ.
ON APPEAL FROM THE SUPREME COURT OF NOVA
SCOTIA.
Life insurance—Non-payment of
premiums—Misrepresentation to insured—Estoppel.
P., in payment of premiums on a life policy,
gave his note for one instalment and an overdue balance of another. Shortly
before it matured an official of the company, specially authorized to deal with
the matter, informed P. that his policy had lapsed owing to the inclusion in
the note of the overdue balance which was against the company rules. In
consequence of this representation P. did not pay the note nor tender the
amount of another instalment falling due before his death. In an action on the
policy by the beneficiary no rule of the company was proved avoiding the policy
as stated.
Held, affirming
the judgment appealed against (48 N.S. Rep. 404), Fitzpatrick C.J. and Davies
J. dissenting, that the company was estopped, by conduct, from claiming that
the policy lapsed on non-payment of the note and subsequent instalment.
Per Davies J.,
that the non-payment of the note could not be relied on as avoiding the policy,
but the estoppel did not extend to the failure to pay the quarterly premium
which afterwards became due.
APPEAL from a decision of the Supreme Court
of Nova Scotia,
affirming by an equal division the judgment at the trial in favour of the
plaintiff.
The material facts are stated in the above
head-note.
[Page 463]
J. J. O’Meara for
the appellants.
Mellish K.C. and Findlay MacDonald K.C.
for the respondent.
The Chief
Justice.—I would allow this appeal.
Davies J. (dissenting).—I do not think there was error in the court of appeal
in holding on the findings of the learned trial judge that the non-payment of
the note which the deceased, insured, had given for the payment of one of the
quarterly premiums of his policy and which note included a balance of a former
quarterly premium, did not operate to avoid his policy or cause it to lapse.
When the note in question was about maturing,
Mr. Sorey, the superintendent of agencies of the defendant company, in the
course of his travelling in the company’s business, met the deceased in Sydney
in the presence of two of his brothers and, after seeing the condition of his
health, informed him that his policy was no longer in force because “he had
allowed one part of an overdue premium to be carried forward with a note
covering the next premium, which is against the rules of the company.”
This statement of the company’s chief
representative took place between the 27th February and the 2nd March as found
by the trial judge and the note fell due either on the 4th or, allowing for
three days’ grace, on the 7th.
In consequence of the statement as above of the
policy being no longer in force the deceased did not pay his note and I am not
prepared to say that the
[Page 464]
company was not under the circumstances estopped
from setting up its non-payment as a ground for avoiding the policy.
I am, however, utterly unable to understand how
such a holding can apply to the non-payment of a subsequent quarterly premium
which fell due some time after the conversation before alluded to and before
the death of the deceased insured.
That such a quarterly premium did so fall due
and was not paid is proved and admitted.
Can it be contended for a moment that the
conversation alluded to released the defendant for the remainder of his life
from paying the premiums falling due upon his policy and estopped the defendant
in an action on the policy from setting up such non-payments?
If the argument cannot be accepted as covering
the whole period of the insured’s life, then for how long did it release the
defendant from payment of his premiums and estop the company from setting up
such subsequent defaults?
The conversation had reference to a particular
note then about falling due and to the effect which the inclusion in that note
of part of a former overdue premium had. It may well be held to have induced
the deceased not to have promptly paid his note until he had had time to
understand what his true position was, and to have estopped the company from
taking advantage of such default in its prompt payment to avoid the policy. But
it surely cannot be held to operate in the same way with respect to premiums
subsequently falling due; or to release deceased from his, obligation to pay
such subsequent premiums or to
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estop the insurance company from appealing to
the contractual result of such non-payment which was the avoiding of the
policy.
For this reason that there is no estoppel with
respect to such subsequent accruing premiums, I would allow the appeal and
dismiss the action with costs in all the courts.
Idington J.—This is an action on a policy of life insurance for a thousand
dollars. The defence set up is non-payment of premiums and consequent lapsing
of the policy. The appellant received through the hands of its local agent at
Sydney a promissory note for one premium and a small part of another. This note
was on a printed form evidently supplied by appellant for such uses. Its heading
in type is as follows:—
Renewal Premium
Note.
Note $..................... Due.........................
T. R. (if any) $....................., Ottawa……………........,
1914.
Balance $.....................
Interest $.....................
The part on right hand is filled in by writing
of date. That on left hand is filled in opposite word “note” by figures (39.20,
and opposite the letters “T. R.” in figures 20c, and opposite the word
“balance” (39.40, but nothing opposite the word “interest.” No explanation is given
in evidence or argument of what “T. R.” stands for. The figures opposite that
“T. R” and the words due date and balance seem to me from the ink to have been
done by a later filling in than the remainder of the filling in of the blank.
Without attaching undue importance thereto, I
think the fair inference, from the fact that this note
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was received in due course and never returned,
but retained till the trial by the company, is that this note was received and
accepted as payment.
The pretence that the small part of the note as
clearly indicated to those at the head office being for a part of a past due
payment must suffice to justify treating the policy as lapsed, seems idle. It
may have been competent for the company to have so treated it on receipt and
forthwith accordingly to have returned it and said so.
It was not competent for the head office to have
held on to the note and later on attempt to repudiate it. Neither in law,
justice nor common sense can such a position be maintained.
Another payment of premium fell due on the 20th
March, which remained unpaid at the death of the insured.
By the learned trial judge it is found as fact
that on a date between the 27th February and the 2nd March before the note fell
due, the appellant’s superintendent of agencies called on the insured and
finding him in such a physical condition that an early death must be expected,
told him, in language sworn to by two brothers of the insured, and not denied,
that the policy was not in force because one part of the premiums had been
carried forth into a note covering the next premium.
One of the brothers swears the premiums, but for
this assertion, would have been paid, and doubtless that is true. They and
deceased were thus dissuaded from tendering the amount of the note and of the
March premium. It is not pretended that if tendered such payments would have
been accepted. The
[Page 467]
repudiation of the policy in such distinct and
absolute terms dispensed with such tenders.
There was no justification under the circumstances
for appellant’s repudiation after accepting and retaining the note given in
payment and receipted for as such by the local agent.
The superintendent alleges he wanted information
or instructions from the head office of appellant before stating as alleged, so
there can be no doubt of his conduct being duly authorized or confirmed.
Even his dispute of the date of this repudiation
which was a leading question in contest at the trial, did not induce him to
produce and file in evidence the telegram or other written communication to the
head office or replies thereto.
The appeal should be dismissed with costs.
Duff J.—The controversy on this appeal reduced to its lowest terms
presents two questions of fact both of which are, as I think, conclusively determined
against the appellants by reference to two pieces of evidence; the letter of
August 29th addressed by the secretary to Mr. MacDonald, the respondent’s
solicitor, and the evidence relating to the interview between the assured and
Mr. Jorey, referred to in the judgment of Mr. Justice Ritchie, which the
learned judge finds took place between the 22nd of February and the 2nd of
March.
The letter is as follows:—
E.L. Ottawa,
Canada, August 29th, 1914.
Finley MacDonald, Esq.,
Barrister,
Solicitor, etc.,
Dillon Block,
Sydney, Nova Scotia.
Re William J. Parker.
Dear Sir,—Your
favour of the 24th instant received. Policy No. 624 called for a premium of
$27.65 payable four times yearly in
[Page 468]
advance, commencing Dec. 20th, 1912, At
Dec. 20th, 1913, there remained a balance of $10.70 unpaid on account of the
four instalments of premium due for the first policy year. This balance of
$10.70 with interest of 85 cents for delay up to that time was merged by our
agents with the next quarterly instalment due December 20th, 1913, and a note
for the combined amounts, in all $39.20, was taken by them. This note fell due
by its terms March 4th, with no payment whatever made thereon, and the policy
consequently lapsed automatically. It might have been reinstated upon payment
of the amount due, and submission of satisfactory evidence of health, but no
application was ever made. So far as official receipts of premiums are
concerned, these are handed to the insured upon his setting by cash or note. If
a note is given, the policy, by the terms of the note, lapses unless payment is
made on or before the due date thereof.
Yours truly,
M. D. Grant,
Secretary.
In itself this letter, a guarded letter, written
by the secretary of the company after the death of the insured and no doubt
framed in view of the probability of a claim being made under the policy, is
sufficient evidence that the note of the second of February was accepted in
payment, conditional payment, of course, of the moneys then due in respect of
renewal premiums and that the company had treated the policy as a policy in
force down to the maturity of the note. “No payment having been made” upon the
note, “the policy,” to quote the last letter, “consequently lapsed
automatically.” The letter, of course, is not conclusive evidence. It was open
to the company to shew at the trial that the secretary had made a mistake, or
to supplement the facts stated in the letter by other evidence shewing as was
contended by the appellant that the policy had lapsed in consequence of non-payment
of the premium due on the 20th September, or of that due on the 20th December;
that the agent at Sidney had acted in excess of his authority in taking the
note of the 2nd February, and that his action had not been
[Page 469]
ratified by the company. But no attempt was made
to do this, no testimony was offered to shew how the note was treated at the
head office of the company or what communications were made with respect to it
by the agent to the head office. The statement made by Mr. Jorey in the
conversation above referred to, to the effect that the note had been “put
through,” confirms the conclusion suggested by the perusal of the letter
itself.
I concur with the two courts below in thinking
that the proper conclusion of fact is that the note was accepted in payment and
— assuming (a point on which I am by no means satisfied) that on the 2nd
February when the note was received, the insured was in default and that the
company was entitled by reason of his default to treat the policy as a lapsed policy
— the company by accepting the note as payment manifested its election to treat
the policy as a policy in force and not to take advantage of the default of the
insured. The company being bound by its election the policy was, of course, at
the time of the interview between the insured and Mr. Jorey (some time before
the 2nd March, as the trial judge found) a policy in force, and the company was
bound on payment of the note at maturity and renewal premiums as they should
fall due to observe and carry out its contract of insurance according to the
terms of it. That was the state of affairs when the interview referred to took
place.
The learned trial judge has accepted the account
of that interview (which he has set out in his judgment) given in the evidence
of George Richard Parker and Thomas Parker. I see no reason for the slightest
doubt as to the correctness of his finding, and I think the proper
interpretation of that interview
[Page 470]
is the interpretation contended for in the
respondent’s factum and on the oral argument before us. The insured was in fact
told by Mr. Jorey (and it was upon this view of what he was told that he acted)
that his policy had lapsed; and that the company would accept no payment from
him except upon the condition that he furnished satisfactory evidence of
health. This condition Mr. Jorey admits was obviously an impossible condition
and the insured rightly interpreted the intention of the company’s
representative when he construed it as a refusal on the part of the company to
continue the insurance. The declaration of the company of its intention not to
carry out its contract was on well known principles an actionable breach of
contract. Frost v. Knight;
Hochster v. De La Tour;
Honour v. Equitable Life Assurance Society. The insured, as he was
entitled to do, treated it as a refusal to carry out the contract and a right
of action immediately arose.
It is no answer to say that he might have
tendered the amount of the promissory note and the renewal premiums. There is
no suggestion and it could not have been suggested that any such tender would
have been accepted and there is nothing in the law making it incumbent upon the
insured to go through any such idle formality. Indeed, considering the evidence
before us as to the state of health of the insured if the action had been
brought in March immediately after the repudiation of the policy by the company
the damages could have been but little less than the amount of the policy less
the amount of the note and such
[Page 471]
premiums as the insured might be expected to be
obliged to pay.
I think the judgment below is right and should
be affirmed.
Anglin J.—I entertain serious doubts whether upon the evidence before us
the assured was so in default when the local agent of the respondent company
took his note covering the premium due in December and a small balance of the
September premium that the company was then entitled to terminate his policy.
But if it was, I am satisfied that by what occurred in connection with that
note (it was promptly sent to the head office of the company, it was there “put
through,” we are told by the defendants’ superintendent of agencies, presumably
as a payment of the premium, it was held for nearly a month before the insured
was notified that there was any question as to its being accepted or as to his
policy being in force, he being left in the meantime under the belief that the
note had been accepted and that his policy was in good standing) the company is
estopped from alleging that it elected to terminate the policy for any default
prior to the taking of the note, and that if the amount of that note and of the
March premium had been paid at maturity or had been duly tendered to the
company there would have been no ground upon which they could have successfully
resisted payment. Very shortly before the maturity of the note, however, the
company, through a leading official (their superintendent of agencies),
specially sent from the head office to deal with this matter, notified the
assured that his policy was void because the local agent had exceeded his
authority in including in the note taken for the
[Page 472]
December premium the balance of the premium due
in September. The evidence, I think, supports the conclusion of the learned
trial judge that the statement of the company’s representative that the policy
was void led the insured to believe that payment of the note and of Subsequent
premiums would not be accepted, and caused him not to tender them. This was a
reasonable inference which the company’s representative should have
contemplated would be drawn by the insured. Although this misrepresentation
might not justify the insured refraining indefinitely from tendering premiums
or entitle his beneficiary after the lapse of a long period (how long it may be
difficult to say) to prefer a claim for payment of the policy, I think, the
conduct of the company’s representative precludes their setting up the failure
of the assured to pay his note and the March premium, which fell due only a few
days afterwards, as a defence to this action. National Mutual Ins. Co. v.
Home Benefit Society;
Hayner v. The American Popular Life Ins. Co.; Heinlein v. Imperial
Life Ins. Co.,
and other cases cited in May on Insurance, vol. 2, sec. 358, and 19 Am. &
Eng. Encyc, page 57, N. 4; and Webb v. New York Life Ins. Co.. Of course, the defendants
are entitled to deduct the amount of the note and of the March premium and also
of the July premium (which had accrued due before the death of the insured,
although the thirty days of grace had not expired) from the sum to be recovered
on the policy.
In another aspect of the matter, the assured
might have treated the declaration of the company’s
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representative as a repudiation of the contract
entitling him to maintain an action of damages for breach. Honour v. Equitable
Life Assurance Society.
Having regard to his precarious state of health, the amount of his damages —
the value of his policy at the date of the repudiation — would be little less
than the sum insured. Re Albert Life Ins. Co..
I am, for these reasons, of the opinion that
this appeal should be dismissed.
Appeal dismissed with costs.
Solicitor for the appellants: Colin Mackenzie.
Solicitor for the respondent: Finlay MacDonald.
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