Montreal Investment and Realty Co. v. Sarault, (1918) 57 SCR 464

Supreme Court of Canada

Montreal Investment and Realty Co. v. Sarault, (1918) 57 S.C.R. 464

Date: 1916-06-19

The Montreal Investment and Realty Company (Defendant) Appellant;

and

Anna Sarault (Plaintiff) Respondent.

1916: February 9, 10; 1916: June 19.

Present: Sir Charles Fitzpatrick C.J. and Davies, Idington, Duff and Anglin JJ.

ON APPEAL FROM THE COURT OF KING'S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC.

Sale—Misrepresentations—Knowledge of fraud—Forfeiture clause— Assent—Ratification.

The appellant owned a farm subdivided into lots; and the respondent, member of a syndicate, took an action to set aside an agreement of sale entered into by appellant with the syndicate on the ground that assent to it was procured by fraudulent representations as to the situation of the lots bought. But the respondent, with full knowledge of such fraud and apparently under pressure of a forfeiture clause, gave an option on these lots to a third party and paid without protest to the appellant an instalment due under the contract.

Held, Davies and Anglin JJ. dissenting, that, upon the evidence, the acts of the respondent did not constitute ratification or confirmation of the contract.

Per Fitzpatrick C.J.:—When the validity of a contract is attacked on account of an error as to the identity of its object, the question of confirmation cannot arise, as there can be no confirmation of a thing which has never existed.

Per Anglin J. dissenting:—Where a purchaser knows facts that render his obligation voidable, payment of purchase money and giving options on the property are unequivocal acts of confirmation. While error of law may render such acts inefficacious for that purpose, the person alleging such error must prove it; and the mere presence of a forfeiture clause in an agreement known to be voidable does not constitute moral restraint which will make them involuntary.

Appeal from the judgment of the Court of King's Bench, appeal side[1], confirming the judgment of the Superior Court, District of Montreal, Panneton J., and maintaining the plaintiff's action with costs.

[Page 465]

The material facts of the case are fully stated in the above head-note and in the judgment now reported.

Lafleur K.C. and Rinfret for the appellant.

Belcourt K.C. and Prudhomme for the respondent.

The Chief Justice.—The appellant company, defendant below, is the owner of a farm at Pointe-aux-Trembles, on the Island of Montreal, which is subdivided into lots and offered for sale to the public. The respondent, plaintiff below, is a member of a syndicate formed to purchase a certain number of those lots.

The action is brought to set aside a contract entered into by the appellant with the syndicate which was intended to operate merely as a promise to sell the lots in question. The respondent's contention is that she was induced to enter into the contract by fraud, treachery and false representations. A preliminary question having reference to the right of the respondent to bring such action without citing the other parties to the syndicate agreement was raised for the first time in the court appealed from. No notice appears to have been taken of this objection in the formal judgment of that court and neither of the two judges whose notes are in the record refer to it. In the appellant's factum the point is dealt with in a few lines, and I do not feel that, under such circumstances, it is necessary for me, in the view which I take of the case, to do more than say that this question of procedure, which certainly suggests difficulties of a serious nature, has not been entirely overlooked.

Dealing with the merits. The false and fraudulent representations complained of relate to statements made by the appellant's agent as to the situation of the lots with respect to Bleau street, the River St. Lawrence,

[Page 466]

the cement factory and the tramway proximity to which would presumably increase their value for speculative purposes. Some point is also made of the fact that' one of the members of the syndicate, and the most active, was, unknown to the respondent, the selling agent of the owners of the property and as such in receipt of a secret commission.

It is important, in considering the case, to bear in mind that the respondent was one of a group who jointly purchased a certain number of lots in each one of which all would have an undivided interest, a fact which, in my judgment, adds to the difficulties in one aspect of the case.

If the respondent attached much importance to the precise location of the lots, she would, I think, have taken more trouble to ascertain their exact position. A reference to paragraph 8 of respondent's declaration makes it abundantly clear, however, that she never intended to become a purchaser of any one or more of the lots separately, but rather to acquire an undivided interest in the whole property included within the cadastral area, to be held and disposed of for purely speculative purposes. And the impression left on my mind, after a very careful examination of the whole record, is that the respondent sought to repudiate the transaction and to obtain relief from her obligations thereunder after she realised that the bottom had dropped out of the real estate boom and that her venture would, in all probability, prove unprofitable. To some extent the courts below seem to have been influencedin the conclusion they reached by a desire laudable in itself to discourage a tendency amounting almost to a mania for wildcat speculations in real estate which seems to have developed in the Montreal district. But I am convinced that in so far as courts are concerned with

[Page 467]

such matters the object in view can be more effectively accomplished by holding steadfastly to the rule that men and women also are expected to

keep sacred their covenants.

and that they will be held to a strict fulfilment of their obligations legally contracted. Our duty is, in last analysis, to render justice, not ideal justice, but justice

according to law.

To make my point perfectly clear I will refer to the facts.

On or about the 28th. May, 1912, the syndicate agreement, which it is now sought to set aside, was signed. On or about 22nd July following the promise of sale was executed in triplicate. The respondent did not, at the outset, attach much importance to the exact location of the lots because it is impossible to understand from her evidence whether she visited the locus before signing the syndicate agreement. In her evidence, she makes two contradictory statements within five lines as to this point. It seems perfectly clear, however, that she did not go on the ground with Mrs. Bessette before signing the promise of sale but was content to pass through the property on a tram car without even taking the trouble to leave her seat. Mrs. Bessette, by a wave of the hand, indicated the approximate location of the lots in question at the upper end of a forty-acre field. Further, it is to be borne in mind, that in the promise of sale the lots are described by reference to a plan which is not disputed, and in the interval between the two agreements the respondent visited the property with Langelier, the selling agent of the appellant. Moreover, before signing the promise of sale, the respondent insisted upon consulting Mr. Charruau, whom she described as her "homme de confiance," and it was only after obtaining his assurance

[Page 468]

that she was making a good bargain that she signed the document. At the time she sought the independent advice of Mr. Charruau she certainly seems to have been placed in possession of all the information she thought necessary to have, and subsequently she gave her cheque for $1,000, and signed the promise of sale.

There were meetings of the syndicate held in early October, 1912, when all the facts were admittedly known and an option was then given Mrs. Boutillier, and another option was given the Charruau Realty Co. In November following a payment on account of the purchase price was made. All this tends to confirm my impression that the respondent sought to repudiate the transaction only after she was satisfied that her venture would not be immediately profitable and the only real error made was in her calculation of the probable result of her investment.

The appellant relied largely on the fact that with full knowledge of the deceit practised on her the respondent subsequently adopted and ratified the contract.

There can be in this case no question of ratification in the sense in which that term is used in the civil law. Planiol says:—

ce mot ratification désigne spécialement l'approbation donnée par le maître aux actes du gérant d'affaires.

In my view of the case, the question of confirmation does not arise either. The alleged error or mistake was with respect to the subject matter of the contract, that is, the identity of the lots. The respondent puts his case on the facts in those words:—.

Quelque temps après, Ton a découvert que la terre s'étendait bien au delà du petit bois qui bornait la vue et que les lots qu'on avait indiqués comme étant situés en deçà dv bois se troinaient situés partie dans le bois et partie au delà du bois, aboutissait au trait carré des terres de St. Léonard de Port Maurice, c'està-dire à quatre ou cinq arpents plus

[Page 469]

loin que l'endroit que la compagnie appelante avait indiqué à l'intimée et aux autres syndicataires.

The judgment of the Superior Court has this considerant:—

Considérant que la demanderesse n'eut pas acheté sa part dans les dits lots si elle eut su qu'ils n'étaient pas à l'endroit indiqué par l'agent et la sous-agente de la défenderesse.

Mr. Justice Crosslin the Court of Appeal, says:—

Her grounds of action are that her consent to the contract was obtained by fraud, trickery and false representations that it was represented that the lots were on Bleau street whereas they are a long distance from it in a forest at the rear of the farm in the Parish of St. Léonard; that it was represented that the lots were near certain cement works, about ten arpents from the River St. Lawrence, whereas they are more than 20 arpents from there and far distant from and without access to the lower part of the farm of which they form part.

And Mr. Justice Pelletier says:—

Cependant il y a plus. It est établi au dossier que les lots en question ne sont pas situés à l'endroit où on a représenté qu'ils étaient et où on a prétendu les montrer.

If the mistake was brought about by fraud one can regard either the mistake or the fraud, but, in my opinion, the alleged error might have been avoided if the respondent had taken reasonable care and, as I have already said, she did not take care. She was not interested in any one or more lots but in the general scheme. Of course, if one contracting party is induced to enter into a contract by fraud on the part of the other, he can either confirm the contract or impeach its validity But here the respondent says there was no contract because there was error with respect to the identity of the lots and both courts below have so found and therefore the question of confirmation does not arise.

There are some differences of opinion among the authors as to the circumstances under which confirmation must take place, but of course all agree there can be no confirmation of something which never existed.

[Page 470]

"On ne confirme pas une nullité." Planiol, vol. II., Nos. 1293 and following, in a few paragraphs, states the generally accepted opinion.

In last analysis one must bear in mind in a case like this that all the surrounding circumstances must be looked at and the trial judge, who not only sees the witnesses but also breathes the very atmosphere in which the transaction was entered upon, enjoys a position of exceptional advantage. He, no doubt, was to some extent influenced by what Planiol describes as

la physionomie de l'audience qui est un des éléments impondérables de la jurisprudence.

I am, reluctantly, to confirm and agree to do so because of the concurrent findings below.

Davies J. (dissenting)—I think this appeal must be allowed with costs.

There was, no doubt, such misrepresentation of material facts with respect to the location of the lands agreed to be purchased as would have justified the respondent when she discovered the true facts in repudiating the bargain she had made.

The contract, however, was not a void but a voidable one, and when she made the discovery as to the true location of the lands she could, within a reasonable time, have repudiated it. It was within her power, on such discovery, either to adopt or to repudiate the contract.

Now she took plenty of time to reach a decision. She consulted with all those who, like herself, had bought one or more of the lots as to the best course to adopt. They were all speculators sailing in the same boat. They did not buy the lands to use themselves but to sell at a profit.

[Page 471]

Several meetings were held at which the question was discussed. The main point as to which they hesitated was as to the chances of a rise in value of the lots.

In the ultimate result, the scales turned in favour of a probable rise in value and the respondent, with full knowledge of all material facts, elected to adopt the contract and paid a further instalment of her purchase money.

Her expectations were not realised, the value of the land did not rise on the market, quite the contrary, and then defendant, respondent, attempted to reverse her election and repudiate her contract.

In my judgment she was then too late. She had already, with knowledge of the facts, elected and was bound by her election.

Idington J.—Mr. Lafleur, of counsel for appellant, having properly conceded at the outset of his argument that, having regard to the jurisprudence of this court, it did not seem open to him to ask a reversion of the concurrent findings of fact by two courts below, but submitted that notwithstanding such findings there was, on undisputed facts, a ratification and adoption by respondent of the contract notwithstanding its originally being liable to repudiation.

I cannot say that under all the peculiar circumstances in which respondent was placed her assenting to the several nominees of the syndicate making attempts to resell was conclusive evidence of an intention on her part to ratify and abide by the contract.

If she alone had bargained and been caught in such a difficult situation I do not think an effort on her part to resell before launching upon a sea of litigation must of itself be held to be proof of ratification.

Again the payment of the November instalment was demanded and pressed for and she had to choose between

[Page 472]

the risk of forfeiting the $1,000 she had already paid before discovering that she had been misled or of making the payment pending the expiration of the time given one of the said nominees to procure a sale.

These two circumstances of assenting to the attempt to resell and the payment of the money in November are thus so connected and dependent upon each other, that it comes back to a question of holding that such attempts as made to avoid litigation were conclusive proof of ratification.

I do not think she can be properly held to have finally determined to abandon her right of revocation.

The few months that elapsed after the payment and expiration of the option to resell before entering this action adds materially very little to the other circumstances.

It is not the length of time alone that is to be looked at for that might not count for much, but that is to be taken in connection with the other circumstances which, in such like cases, must be weighed.

On the whole, all taken together in light of the surrounding facts and circumstances existent herein, and with which I need not labour, do not satisfactorily establish an intention on respondent's part to ratify the contract or waive her right.

In my opinion the appeal should be dismissed with costs.

Duff J.—In the special circumstances of this case I am satisfied that the judgment below cannot properly be reversed. This conclusion involves no point of general application.

Anglin J. (dissenting) — The plaintiff, Dame Sarault, sues to have an agreement made by herself and others for the purchase of suburban land near

[Page 473]

Montreal declared void on the ground that her assent to it was procured by fraudulent misrepresentation, and for the return of the sums of $1,037.06 and $148 paid by her on account of the purchase money. Denying the misrepresentations alleged, the defendant also pleads prescription, nonjoinder of necessary parties and confirmation.

The making of the representations, their untruth, their fraudulent character, and that they induced the contract—all these facts have been found by the learned trial judge, whose judgment for the plaintiff was unanimously affirmed by the Court of King's Bench. While not altogether satisfied that, if sitting as a trial judge, I should have reached all these conclusions, there is enough evidence in support of them in the record to render the appeal upon this branch of the case hopeless; and it was practically not pressed.

The plea of prescription is ill founded, the case, being governed, as Mr. Justice Pelletier points out, not by art. 1530 C.C., but by art. 2258 C.C.

It may be that joinder of the plaintiff's co-purchasers as parties is not required, if, as she contends, the relief sought by her will merely have the effect of vesting her interest in the defendant. In the view I take of the merits it is unnecessary to pass upon this question, which may be somewhat formidable in view of the joint character of the purchasers' obligations. Arts. 521 and 177 (8) C.P. But see arts. 1124 and 1125 C.C.

The defence of confirmation involves very important questions. That this defence was first raised by a supplementary plea seems to me immaterial. The facts upon which it depends, as accepted by the learned trial judge and in the Court of King's Bench, are that after the plaintiff had obtained full knowledge of the

[Page 474]

untruth of the misrepresentation on which she now relies to obtain rescission of the contract, she and her co-adventurers gave to two persons successively options upon or exclusive agencies to sell the lots in which they were interested and that she also made payment to the defendant of an instalment of the purchase money due by her under the contract.

The trial judge deals with this aspect "of the case in a single paragraph:—

Considérant en ce qui regarde la confirmation subséquente de la vente que vu que la défenderesse refusait d'annuler la promesse de vente, la demanderesse n'a fait des démarches pour vendre ces lots que pour éviter un procès en annulation, si elle pouvait ainsi vendre sans perdre beaucoup d'argent, et que le paiement qu'elle a fait en octobre, 1912, l'a été pour se protéger contre le droit qu'avait la défenderesse de résilier le contrat en gardant le paiement qu'elle avait reçu comptant.

Upon examining the record I have failed to find any evidence of a refusal by the defendant to cancel the contract, if that be material. No demand for rescission appears to have been made until long after the options had been given by the plaintiff and her co-adventurers and the payment relied upon had been made by her.

In the Court of King's Bench reasons for judgment were delivered only by Cross and Pelletier JJ. Mr. Justice Cross deals with the defence of confirmation in these two sentences:

In regard to the plea of adoption of and adhesion to the contract after having had full knowledge of the facts, it is to be said that what the respondent did in the way of joining in an attempt to sell the lots does not necessarily shew an intention to abandon the right to ask for rescission. It is to be remembered that she stood confronted by a stiff covenant for forfeiture of all she had paid in, if she did not' keep on paying.

Mr. Justice Pelletier discusses the question at greater length.' In substance he says the payment relied upon was made by the plaintiff under pressure of a forfeiture clause in the agreement and was not accompanied by a protest because she was without professional advice

[Page 475]

and a former protest had been of no avail. In making this payment the plaintiff sought only to guard against another danger—the loss of the money she had already invested. That is not acquiescence; it lacks the feature of positive abandonment of the right to rescind which is essential. As to the effort made to sell, it was merely an attempt to get rid of the property without litigation which certainly did not imply acquiescence.

With great respect, I have not found any evidence of a former protest; absence of professional advice also seems to have been assumed. The learned judge's reference to the necessity for

un acte positif abandonnant les droits qu'on a

might seem to imply that in his opinion there could not be tacit or implied confirmation; but he, of course, did not intend that. There is not a single authority cited upon this branch of the case in any of the judgments.

The supplementary plea raising the defence of confirmation is as follows:—

2. Même si cette erreur eût existé, ce que la défenderesse nie la demanderesse a persisté dans le contrat après que, de son propre aveu, tous les faits lui furent connus, et a fait des actes de propriétaire, en chargeant certaines personnes, ou agents d'immeubles, de vendre les lots pour elle, entr'autres le 3 octobre et le 31 octobre 1912.

3. En plus, même après que la demanderesse se fut aperçue de cette prétendue erreur, elle a néanmoins ratifié et confirmé le contrat en faisant des paiements trimestriels subséquemment, sans réserve ni restriction.

The plaintiff's answer is in the following terms:—

1. La demanderesse nie les paragraphes 1, 2, et 3 de la défense; Et elle ajoute ce qui suit:

2. Qu'elle n'a chargé aucun agent d'immeubles ou autres de vendre les lots vu qu'elle s'est toujours plainte à la défenderesse et à ses agents qu'elle avait été trompée et qu'elle n'avait pas les lots qu'elle avait voulu acheter et que c'était, dans le but simplement de tâcher de rentrer dans les déboursés qu'elle avait faits vu que les agents ne voulaient pas lui remettre son argent;

[Page 476]

3. Elle n'a jamais ratifié ni confirmé en aucune manière que ce soit la promesse de vente qui est maintenant attaquée et si elle a fait un paiement supplémentaire, c'était sous l'empire de l'erreur dans laquelle elle était, ne sachant quoi faire pour préserver le montant de $1,000 qu'elle avait déjà deboursé, grâce aux fausses représentations de la défenderesse et de ses agents.

As will have been perceived the grounds on which the plea of confirmation has been rejected are that the plaintiff attempted to dispose of the lots merely to avoid litigation and loss of her money, and that she made the payment relied upon by the defendant to prevent the latter acting on a forfeiture clause enabling it to cancel the contract, retaining the money which had been already paid on account. The allegation of the plaintiff 's answer that when she did the alleged confirmatory acts she was labouring under mistake (sous l'empire de l'erreur) is ignored both by the trial judge and in the court of appeal. If by it the plaintiff means that she was still without knowledge of the defendants' fraud, her allegation is directly contrary to her own evidence and that of her friends, and a finding upon it in her favour could not be supported. If she means that she acted under misapprehension as to the effect of the defendant's fraud on her obligation under the contract, or as to her own legal rights (which was the main contention presented on her behalf in this court) unless it is involved in the holding that she made the second payment under pressure of the forfeiture clause, she has failed to obtain a finding of these facts. The judgment in her favour does not rest upon this plea.

Perhaps a few of the leading features of the law of confirmation may be noticed without inviting a charge of pedantry or incurring the reproach of dwelling upon the elementary.

In Art. 1214 the Civil Code states the essential features of an express act of confirmation. It makes no allusion to implied or tacit confirmation such as is

[Page 477]

found in art. 1338 C.N. That, no doubt, was merely because to do so was deemed unnecessary. 4 Langelier, p. 201; 6 Mignault, 31n.

Although the Code apparently ignores the distinction (art. 1214 C.C.), confirmation differs from ratification. 6 Mignault, p. 31; 4 Aubry & Rau, 1902, p. 430; Baudry-Lacantinerie, Des Oblig. III., No. 1985; 6 Larombière, Oblig., Art. 1338, No. 3; 8 Huc, No. 276. There can be no confirmation of the null and void; confirmation applies only to the voidable or annullable. 5 Marcadé, art. 1338, sec. 1, p. 94; Baudry-Lacantinerie, Des Oblig., III., No. 1992; 4 Aubry & Rau, 1902, p. 429; 8 Huc, No. 276.

While error and fraud are causes of nullity in contracts (art. 991 C.C.), they are not causes of absolute nullity; they only give a right of action or exception to annul or rescind them (art. 1000 C.C.) Error in the object of a contract amounting to mistake in its identity precludes consent with the result that the obligation is non-existent, or absolutely null. Error concerning the object short of this, however substantial, does not preclude consent and therefore an obligation results, although voidable and subject to rescission. It is with this kind of error that the Code deals in the articles cited. 5 Mignault, p. 212; 15 Laurent, No. 84; Baudry-Lacantinerie, Des Oblig. III., Nos. 52-53 et seq.; Pothier, Des Oblig. No. 17; 4 Marcadé, art. 1110, Nos. 1 & 2; Fuzier-Herman, Rep. Vbo. "Erreur," No. 21 & No. 26; Dalloz, Rép. Pratique, "Contrats et Conventions en général," Nos. 72 (2), 75 (tr.). In the plaintiff's declaration error is referred to not as a ground for relief but as a consequence of the fraud relied upon. Voidability is claimed not on account of error but fraud. The error shewn at the trial was not as to the identity of the property, but only as to whether it all lay between

[Page 478]

the road and a clump of trees or whether part of it lay beyond these trees, and as to its proximity to a cement manufactory.

In answer to the plea of confirmation the plaintiff alleged not that the contract was not susceptible of confirmation because of absolute nullity entailed by mistake as to the identity of the object, but that the circumstances under which the alleged confirmatory acts were done rendered them ineffectual as confirmation The judgments at the trial and in the Court of King's Bench deal with the question of the sufficiency of the confirmation. There is no suggestion of absolute nullity on account of error as to the identity of the object. Nor was any such argument presented in this court. The evidence establishes that while there was no doubt error, induced by fraud, as to features of the property dealt with, which formed the principal consideration for making the contract (art. 992 C.C.) there was not in fact mistake as to the identity of the property such as would preclude consent. The contract was not void or absolutely null; it was voidable or annullable under arts. 991-2-3 and 1000 of the Civil Code, and it was as such a contract that the plaintiff presented it claiming a declaration that it had been obtained illegally and fraudulently.

The existence in Quebec law of the doctrine of implied confirmation and the conformity of some of its main features to those of the corresponding doctrine in English law was recognised by the Judicial Committee in United Shoe Machinery Co. of Canada v. Brunet[2].

It is clearly logical, says Laurent (XVIII. No. 624), that the requisites of tacit confirmation should be the same as those of express confirmation, since confirmation

[Page 479]

however evidenced, is one and the same juridical fact (fait juridique).

Under both the English and the French systems of law the essential features of confirmation are that the act invoked as confirmatory must be done voluntarily, with knowledge of the voidability of the principal act or obligation which is to be confirmed, and with the intention of confirming it. Comp. 5 Marcadé, sec. 5, No. IV., p. 98; Aubry & Rau (1902), sec. 337, 2° and n. 21, p. 438, with Murray v. Palmer[3]; and Moxon v. Payne[4].

Although Toullier (VIII. 519) and Merlin (Quest-Vbo, Ratification, sec. 5, No. 5) were of the opinion that where an act in execution or fulfilment of a voidable obligation is relied upon as confirmatory, the party so preferring it is called upon only to prove that it was done voluntarily (in the sense of freely), the modern writers agree that he must, at least in the first instance, also satisfy the court that it was done with knowledge of the voidability of the principal act and with the intention of confirming. Baudry-Lacantinerie, Des Oblig. III., No. 2010; 6 Larombière (1885), art, 1338, No. 37, p. 346; 4 Aubry & Rau, 1902, p. 439, n. 22.

The burden of establishing knowledge by the obligor or debtor of all facts essential to confirmation always rests upon the obligee or creditor, Fuzier-Herman, Rep. Vbo. Confirmation, No. 172.

The inference of knowledge of voidability must be of actual knowledge and not merely of constructive knowledge through being put upon inquiry and having possession of the means of acquiring actual knowledge, 18 Laurent, 630; 7 Rolland des Villargues, Notariat, Vbo. Ratification, No. 63-4; Fuzier-Herman, Rep. Vbo. Confirmation, No. 132; Dalloz (1856), 1, 292.

[Page 480]

Compare Allcard v. Skinner[5], per Lindley L.J. at p. 188, and per Bowen L.J. at pp. 192-3. In eases of doubt neither the inference of knowledge of voidability nor that of intention to forego the right of rescission will be drawn. 2 Solon, op. cit., No. 421; 2 Bedarride, Traité du Dol, No. 598. Moreover there must be actual execution; partial execution, however, will suffice, 4 Aubry, & Rau, 1902, p. 442, No. 26; but not a mere expression of intention to execute nor mere conservatory or other equivocal acts, 29 Demolombe 778; 6 Larombière, art. 1338, No. 35; 2 Bedarride, No. 600; Fuzier-Herman, Rép. Vbo. Confirmation, Nos. 155-165. Compare Morrison v. The Universal Marine Ins. Co.[6].

It must always be borne in mind, however, that mistake in law affords a ground for relief, under the Civil Codes of France and Quebec where it would not avail under English law: art. 1047 C.C.; 20 Laurent, No. 354; 13 Duranton, No. 682; 10 ibid. No. 127; Bain v. The City of Montreal[7].

I propose now to consider slightly more in detail the contention of the respondent, doubtfully raised in her supplementary answer, but strongly urged at bar, that the acts relied upon do not import confirmation because, though fully apprised of the facts, she was ignorant of her legal rights, and the finding, which she has secured in the provincial courts, that those acts were not voluntary.

The plaintiff's knowledge at the time she performed the alleged acts of confirmation, of the facts upon which her right of rescission depends is affirmatively established by admissions of herself and her associates. When the options were given and the November payment was made they were fully apprised of the fraudulent

[Page 481]

deception on which they now rely to avoid their contract.

The requisites of an effectual confirmation may be established by presumptions as well as by direct testimony. These presumptions may be founded on the nature of the vice or defect in the principal obligation and the character of the act preferred as confirmation. 4 Aubry & Rau (1902), s. 337, No. 22; 5 Marcadé (7 éd.), Art. 1338, s. 5, No. 4; 2 Solon, Théorie de la Nullité, No. 414 et seq. On this point Larombière says (vol. 6, art. 1338, No. 39):—

Du reste, les tribunaux peuvent résoudre par l'appréciation des circonstances, les deux questions relatives, soit à la connaissance du vice, soit à l'intention de le réparer.

La nature du vice qui entache l'obligation ou de l'execution volontaire qu'on oppose comme confirmation peut servir elle-même à les résoudre. Tel est le cas où, le vice étant personnel et apparent, celui qui confirme ne peut, avec apparence de raison prétexter cause d'ignorance, et où les actes d'exécution sont tellement énergiques et caractérisés, qu'il est impossible d'admettre qu'il n'ait pas eu l'intention de purger et de couvrir tous vices quelconques, en pleine et entière connaissance.

Whether knowledge of voidability will be presumed or inferred depends upon the nature of the facts of which it appears that the obligor was cognisant, i.e., whether they are such that a person knowing them would be likely to be aware of the consequent right of rescission, Dalloz, 1853, 2, 223. The presumption of the intention to confirm will likewise depend upon the degree of significance which attaches to the act of execution, 29 Demolombe, No. 774. Laurent, Vol. 18, No. 620, says that execution by a person having capacity to renounce the right of rescission, with knowledge of the vice' or defect which gives him that right, necessarily implies the intention to confirm. See also 2 Solon, op. cit. Nos. 415, 418, 420; Rolland de Villargues, Notariat, Vbo. Ratification, art. 3, No. 58. That

[Page 482]

such fraud as the plaintiff was fully informed had been practised in this case renders a contract affected by it voidable and gives a right of rescission to the party thus imposed upon are consequences so well known that it is scarcely conceivable that the plaintiff and her associates were ignorant of them. Such knowledge is properly presumed (2 Bedarride, Traité du Dol, No. 603. Compare Carter v. Silber[8]; Carnell v. Harrison[9]), if not conclusively, as it should be in the opinion of M. Bedarride, at least until lack of it is satisfactorily shewn. That such an act of execution of his obligation as voluntary payment to his creditor by the debtor cognizant of its voidability imports an election to accept that obligation and to forego the right of rescission is the view held by all the text writers of repute. While any act implying intention to renounce the right of rescission will, if unequivocal, suffice as confirmation (18 Laurent, 623; 4 Aubry & Rau, p. 443, n. 31, b., t., & q; Dalloz, 1887, 1, 228: compare Clough v. London & North Western Rly. Co. Ltd.[10]), Demolombe (vol. 29, No. 780) says:—

l'exécution, proprement dite, d'une convention consiste pour le débiteur dans le paiement de ce qu'il doit.

See, too, 4 Aubry & Rau, 1902, p. 442, par. (a); 2 Solon, op. cit. No. 427; 18 Laurent, No. 624, Pineau v. La Compagnie Neigette[11]; Fuzier-Herman, Rep. Vbo. Confirmation, Nos. 117, .140. We have in the present case this typical act of implied confirmation. Comp. Webb v. Roberts[12]; Ex parte Shearman[13].

Although some acts of execution accompanied by a clear (Fuzier-Herman, Rep. Vbo. Confirmation, No.

[Page 483]

142, compare Mutual Reserve Life Ins. Co. v. Foster[14]), protest and reservation of rights will not amount to confirmation, the intention to confirm may be so unmistakably involved in the act itself that the most formal and explicit protest cannot avail; Journal du Palais, 1829, vol. 22, 2nd Part., p. 1287; 18 Laurent 637; 8 Huc, No. 275; Aubry & Rau, 1902, p. 442, n. 25; 2 Solon, op. cit. No. 436; 2 Bedarride, No. 609; Baudry-Lacantinerie, Des Oblig. III. No. 2005 (2). Here we have payment with presumed, if not actual, knowledge of the voidability of the obligation and without protest or reservation of any kind—a precaution (if it could be effectual), of which the absence is not adequately explained by the suggested lack of professional advice. Bain v. City of Montreal[15]. The very fact of making a protest would involve an admission that the obligor knew of the voidability of the obligation and that her act of payment was of a nature implying an intention to confirm.

The presumption of intention to confirm arising from dealing with the property as owner—giving options upon it or creating exclusive agencies to sell it —is in English law equally as strong as that arising from payment. In Vigers v. Pike[16], Lord Cottenham said:—

In a case depending upon alleged misrepresentation as to the nature and value of the thing purchased the defendant cannot adduce more conclusive evidence or raise a more effectual bar to the plaintiff's case than by shewing that the plaintiff was from the beginning cognizant of all the matters complained of or, after full information concerning them, continued to deal with the property. * * * As parties to these transactions and cognizant of the facts during the time they were acting upon the arrangement now complained of, using and appropriating the property they derived under it, they were precluded from asking any relief to which they might otherwise have been entitled, I confine my observations to the part of the relief which prays the rescinding of the transactions.

[Page 484]

See, too, Campbell v. Fleming[17]; Ex parte Briggs[18]. Compare Baudry-Lacantinerie, Des Oblig. III. No. 1991 (a); 29 Demolombe, No. 782, and 6 Larombière, art. 1338, No. 44.

In English law we are familiar with these presumptions. Indeed English jurists are perhaps in some cases inclined to regard them as conclusive more readily than the French. Instances have just been referred to. Others are to be found in such cases as Carter v. Silber[19]; Carnell v. Harrison[20]; Seddon v. North Eastern Salt Co.[21]; Croft v. Lumley[22].

No doubt there are several leading text writers who incline to the view that notwithstanding the presumption in favour of confirmation which arises from acts such as we are dealing with, where the voidability of the obligation is obvious from facts known to the obligor, a bare allegation in his plea that he was ignorant of the legal effect of those facts upon his obligation, or of his right to rescission, or of the confirmatory operation of his own subsequent acts, casts upon the obligee the burden of proving by positive testimony that the obligor was in fact fully cognizant of all these matters. 18 Laurent, 632, 3;. 650-1, 2; Baudry-Lacantinerie, Des Oblig. III. No. 2111. I am, with respect, unable to accept that view. It would render the establishment of tacit or implied confirmation impracticable. The reasoning of the writers who uphold the contrary opinion (4 Aubry & Rau, 1902, p. 440, n. 23; 6 Larombière, Art. 1338, No. 38; 2 Bedarride, Traité du Dol, No. 603; Fuzier-Herman, Rep. Vbo. Confirmation, Nos. 136, 137, 177) commends

[Page 485]

itself to my judgment and is, I think, more in harmony with the view taken by the Judicial Committee in the Brunet Case[23]. M. Solon (2 No. 415, p. 375 to No. 420, p. 383) would preclude the obligee in cases of apparent or patent voidability from setting up error of law in answer to a plea of confirmation. He will not be allowed to prove that he was unaware of the voidability unless he can shew some error of fact. But it is otherwise in cases of concealed or latent voidability.

In the foot-note to the report of Lenoble v. Lenoble in Sirey, 1860, p. 35, we find the following:—

L'exécution d'un acte nul peut avoir été consentie dans des circonstances et dans des termes tels que La preuve de la connaissance de la nullité paraisse en ressortir; c'est alors à celui qui prétend que cette connaissance n'existait pas à prouver son allégation, surtout quand il s'agit d'une nullité de droit, comme celle dont se trouvait viciée la donation attaquée dans l'espèce. Il peut arriver, au contraire, que rien n'indique que la cause de nuilité ait été connue de celui qui a exécuté l'acte nul; et alors, c'est à celui qui prétend qu'il y a ratification à prouver que la ratification a eu lieu avec connaissance de la cause de nuilité.

In English jurisprudence the line between mistake in law and mistake in fact is not so clearly and sharply drawn in equity as at common law: Daniell v. Sinclair[24]. But see. Stanley Bros. Ltd. v. Corporation of Nuneaton[25]. A mistake in regard to a legal right dependent upon the doubtful construction of a grant or will, or having an obscure or uncertain legal foundation, will be a ground for relief in equity (Earl Beauchamp v. Winn[26]; Livesey v. Livesey[27]; McCarthy v. Decaix[28]), while ignorance of the legal consequences of known facts dependent upon a well-established rule of law will not (Carnell v. Harrison[29]; Midland Great

[Page 486]

Western Rly. Co. v. Johnson[30]; Worrall v. Jacob[31]; Harriman v. Cannon[32]) unless it is so gross as to warrant an inference of imbecility, surprise, or blind and credulous confidence calling for the protective intervention of a Court of Equity (Story's Equity, 2nd Eng. ed., ss. 122, 124, 128), or is accompanied by other circumstances affording equitable grounds on which relief should be granted. Rogers v. Ingram[33]. (But see criticism of the distinction between well-known and other rules of law, in Story's Equity, 2nd Eng. ed., ss. 126-7, where it is suggested that a distinction between action taken in entire ignorance of title or right and action when there is doubt or controversy rests on more solid foundation.) It may be necessary in some cases of private rights of the class dealt with in Beauchamp v. Winn[34], to prove affirmatively that the party alleged to have confirmed a voidable obligation had actual knowledge of his rights (Cockerell v. Cholmeley[35]); but ordinarily the presumption is that every person is acquainted with his own rights. (Story, 2nd Eng. ed., sec. 111; Lindsay Petroleum Co. v. Hurd[36]; La Banque Jacques Cartier v. La Banque D'Epargne de la Cité et du District de Montreal[37]).

Such mistakes are not commonly easy of clear proof and courts of equity, in assuming to correct alleged mistakes, must of necessity require the very clearest proof, lest they create errors in attempting to correct them. There is, too, great opportunity for the practice of fraud through alleged mistakes of law, when courts listen readily to such grounds (Story, 2nd Eng. ed., s. 138a).

Assuming, as is the view of MM. Laurent and Baudry-Lacantinerie, that the presumption juris et de jure that everybody knows the law exists only in

[Page 487]

regard to matters of public interest and does not ordinarily apply to matters of merely private right (compare Cooper v. Phibbs[38]), knowledge of private rights, as a presumption of fact, may and should be inferred where, as here, the circumstances are such that an ordinary man of the world would have been aware of those rights. (Carnell v. Harrison[39]). When with that knowledge an obligor does an act in fulfilment of a voidable obligation of a nature which ordinarily implies an intention to accept the obligation and to forego any right of cancellation or rescission (the payment made by Mme. Sarault and the options given to Mme. Bouthillier and the Charruau Realty Co. were undoubtedly such acts), the intention to confirm should also be inferred. In some cases these inferences may be so cogent that an assertion of error in law made to rebut them will not be tolerated. But the weight of authority favours the view that to an alleged confirmation error of law may usually be set up as an answer, though proof of it lies upon the person alleging it and may be very difficult.

As Demolombe puts it (vol. 29, No. 775):—

A supposer maintenant que le débiteur puisse fournir la preuve que l'erreur de droit, dans laquelle il était, a eu pour résultat d'empêcher l'effet confirmatif de l'exécution de l'obligation, du moins est-il nécessaire qu'il la fournisse.

See, too, Bedarride, No. 603; Fuzier-Herman Rep. Vbo. "Confirmation," No. 130; Bain v. City of Montreal[40].

As already pointed out it is very doubtful whether the plaintiff has in her pleading alleged error of law on her part. It is certainly impossible from her answer to the defendant's supplementary plea to determine in what respect she has alleged that she was ignorant whether

[Page 488]

of the legal consequences of fraud, of her right of rescission, or of the confirmatory effect of the acts now invoked against her. There is really no evidence that she was not fully informed as to all these matters and there is nothing to shew that her conduct was determined by any mistake as to her legal rights. Stone v. Godfrey[41]. Under these circumstances the contention that what she did does not amount to confirmation because of error of law on her part, in my opinion, fails.

The evidence in support of the finding that the alleged confirmatory acts were not voluntary is very slight indeed. In view of the proof that the facts as to the fraud of the defendant were fully known to the plaintiff and the presumption of her knowledge of the voidability of her contract and of" her consequent legal rights (Fuzier-Herman, Rep. Vbo. Confirmation, No. 119; 18 Laurent, 631-3; 8 Huc., 274) and of the undoubtedly confirmatory character of her subsequent acts, the only aspect of voluntary execution still to be considered is whether the plaintiff was subject to such pressure that in doing the alleged acts of confirmation she acted under constraint and therefore not voluntarily.

No action to compel payment was brought either against the plaintiff or against any of her associates: nor was any such action threatened. The secretary of the defendant company merely telephoned to the plaintiff notifying her that her second payment was due. She asked him to call at her house and upon his doing so, without complaint or protest, gave him her cheque dated the 22nd November, 1912, for $148, the amount for which he asked. The fraud had then been

[Page 489]

fully known for some time. It had been considered at more than one meeting of the syndicate. At these meetings the deception practised was discussed and at one of them Mme. Bessette, a sub-agent of the defendant, and MM. Langelier and Beauchemin, its agents, who were present, were charged with the deceit of which the purchasers complained. The chief purpose of these meetings, however, seems to have been to consider the possibility of selling the property on terms which would be profitable or would at least save the members of the syndicate from loss. At one of them Isaie Denis, a member of the syndicate, tells us that, in reply to Mme. Bessette who urged them to hold out for $25,000 (their purchase price had been $16,600), he said:—

If you can find $20,000, sell as fast as you can.

Mme. Casavant, another member, speaking of the third meeting of the syndicate held at the residence of M. Denis, on the 3rd October, 1912, says that it was called to discuss the best means of getting rid of the lands as quickly as possible; that Mme. Bouthillier was urged to undertake the sale of the property, that she was unwilling to do so, but that she finally yielded to the pressure of the members of the syndicate and accepted a written option or authorisation to sell as agent which the members of the syndicate signed. Mme. Bouthillier confirms these statements. When giving evidence several members of the syndicate denied having given this option. But when Mme. Bouthillier produced the document bearing their signatures they found themselves obliged to admit it. The plaintiff was one of the signatories. They had previously engaged Mme. Bessette to sell on their behalf. Pursuant to the mandate given her, Mme. Bouthillier, with the concurrence of members of the syndicate, on the 31st October,

[Page 490]

placed the property in the hands of the Charruau Realty Company with an exclusive right of sale. It is true that Mme. Sarault says in a vague and indefinite way that the reason she made the payment of $148 in November was because she feared that if she did not make it she would lose the $1,000 which she had already put into the property. But upon all the evidence it is, I think, reasonably clear that the members of the syndicate who had bought for speculation, although they knew they had a right of rescission, deliberately decided to hold the property in the hope of realising a profit by selling it and the plaintiff paid her second instalment rather for this reason than because of any duress or pressure due to the forfeiture clause in the contract. The suggestion of constraint seems to have been an afterthought.

I am unable to find in the evidence proof of such pressure or constraint as would vitiate the acts of confirmation relied upon or would justify a court in finding that they were not performed voluntarily. Certainly pressure due to fear of litigation or of losing the money already invested was not the sole inducement for the giving of the agency or option to Mme. Bessette and afterwards to Mme. Bouthillier. The possibility of disposing of the property to advantage affected the action of the syndicate in taking both these steps.

In a number of the French authors we find it stated that the execution of an obligation cannot be considered voluntary where it has taken place in order to escape action or suit by the creditor (pour échapper aux poursuites exercées par le créancier). Aubry et Rau (1902) p. 443; 29 Demolombe, No. 777; Fuzier-Herman, Rep. Vbo. Confirmation, No. 154. Indeed Baudry-Lacantinerie (Des Oblig. III., No. 2005) says

[Page 491]

that "moral pressure" will suffice to render an act of execution involuntary," As an instance of such pressure, however, he gives an action or suit by the creditor.

Bedarride very forcefully and effectively combats the view that the mere threat, or even the actual institution by the creditor, of an action to compel performance, to which the debtor knows he has a complete defence (ex hypothesi that is the case here), can amount to such pressure or constraint as will render his execution of a voidable obligation ineffectual as confirmation. Traité du Dol II., No. 604-5. See, too, Bain v. City of Montreal[42].

Larombière (vol. 6, art. 1338, No. 41), says:—

41. L'exécution doit enfin être volontaire, c'est-à-dire qu'elle ne doit être ni surprise par dol, ni arrachée par violence, ni forcée par les voies de droit. Elle ne serait pas volontaire si elle était entachée de vices qui invalident le consentement, ou si elle n'avait eu lieu qu' à la suite et en execution d'une poursuite judiciaire ou d'une contrainte légale, ou dans le seul but de s'y soustraire.

See also 8 Toullier, No. 512.

Payment under or to escape process of law, is the typical instance of performance under legal compulsion. Short of this there may be constraint of law, or "moral violence" sufficient to destroy the freedom of consent or liberty of action essential to a voluntary act, Story's Equity (12 ed.), s. 239. But the mere presence of a forfeiture clause in an agreement known to be vitiated by fraud in my opinion cannot, at all events, in the absence of evidence that the obligor was ignorant of her legal position and rights, warrant the conclusion that such significant acts of execution as the payment of purchase money and dealing with the land under the contract in a manner consistent only with an affirmance of it, unaccompanied by protest or reservation of any sort, were done involuntarily.

[Page 492]

The peculiar position of Mme. Bessette, who, while acting as a paid sub-agent for the vendors, posed before the members of the syndicate as a fellow-purchaser, having interests with their own, might have afforded the plaintiff another ground for rescission. But she does not allege these facts in her declaration and, although evidence of them was given at the trial, they were not alluded to in the judgments either in the trial court or in the Court of King's Bench. Presumably in those courts, as here, they were not urged as entitling the plaintiff to relief. There is nothing to shew when the members of the syndicate first learned of Mme, Bessette's sub-agency. It may be that it was known to them when the confirmatory acts relied upon were done, and if so, it would, of course, be affected by those acts in the same way as the misrepresentations on which the plaintiff has based her claim.

I am, for these reasons, with great respect, of the opinion that this appeal should be allowed with costs in this court and in the Court of King's Bench and that judgment should be entered for the defendant dismissing the action with costs.

Appeal dismissed with costs.

Solicitors for the appellant: Perron, Taschereau, Rinfret, Vallée & Genest.

Solicitors for the respondent: Loranger, Loranger & Prud'homme.