Supreme Court of Canada
Cox v. Hourigan, [1941] S.C.R. 251
Date: 1941-02-04
Charles W. Cox (Defendant) Appellant;
and
George F. Hourigan (Plaintiff) Respondent.
1940: December 2, 3; 1941: February 4.
Present: Duff C.J. and Crocket, Davis, Kerwin and Hudson JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Contract—Evidence—Action to recover for alleged failure to return plant and equipment in accordance with agreement under seal—Long lapse of time since said alleged breach—Subsequent occurrences and course of conduct—Alleged oral settlement as discharging cause of action by accord and satisfaction—Corroboration under s. 11 of The Evidence Act, R.S.O., 1937, c. 119.
In an action for the value of plant and equipment alleged by plaintiff to have been loaned to defendant and not returned in accordance with an agreement under seal, and for damages for the alleged failure to return the same, this Court restored the judgment of the trial judge (which had been reversed by the Court of Appeal for Ontario) dismissing the action, in view of the many years which had elapsed since the alleged breach of contract, the subsequent occurrences and course of conduct, and the defendant’s evidence, accepted by the trial judge, as to an oral agreement of settlement, fulfilled by him, of which evidence there were circumstances in support.
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Per Crocket and Kerwin JJ.: A cause of action arising from the breach of a contract may be discharged by accord and satisfaction, which need not be in writing or under seal even where the original contract was under seal (Blake’s Case (1605) 6 Co. Rep. 43B; Steeds v. Steeds, 22 Q.B.D. 537).
Corroboration within the meaning of s. 11 of The Evidence Act, R.S.O., 1937, c. 119, must be evidence of a material character supporting the case to be proved but it may be afforded by circumstances (McDonald v. McDonald, 33 Can. S.C.R. 145; Thompson v. Coulter, 34 Can. S.C.R. 261).
APPEAL by the defendant from the judgment of the Court of Appeal for Ontario reversing the judgment of Urquhart J. dismissing the action in which the plaintiff claimed for the value of plant and equipment alleged to have been loaned to defendant and not returned in accordance with a certain agreement under seal dated December 27th, 1919, and for damages for the alleged failure to return the same. The original plaintiff in the action, which was begun on October 18, 1927, was James Horrigan Company Ltd. (sometimes in the reasons for judgment referred to as the respondent company), and after certain proceedings, transactions and events, the action was, by order to proceed made on March 10, 1937, continued at the suit of the present plaintiff (respondent). The material facts and circumstances of the case are sufficiently stated in the reasons for judgment in this Court now reported. The appeal was allowed and the judgment of Urquhart J. restored with costs throughout.
A.W. Roebuck K.C. and H.F. Parkinson K.C. for the appellant.
Hamilton Cassels K.C. and Arthur Kearns for the respondent.
THE CHIEF JUSTICE—I concur in the result.
The judgment of Crocket and Kerwin JJ. was delivered by
KERWIN J.—The writ of summons in this action was issued at the suit of James Horrigan Company, Limited, against Charles W. Cox on October 18th, 1927. The action was based upon an agreement, under seal, between the Company and Cox, dated December 27th, 1919, and was brought to recover the sum of $4,030.20, alleged to be due
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under the terms of that agreement, and interest thereon, and also the value (claimed to be in excess of $10,000) of certain lumbering plant and equipment stated to have been delivered by the Company to Cox and which, contrary to his covenant contained in the agreement, it was alleged that Cox had failed to return. The action was not tried until May, 1939.
In the interval, many events had occurred to some of which it is necessary to refer. For some unexplained reason Cox allowed default judgment to be signed and a writ of fieri facias to be issued but these were soon set aside, pleadings delivered, and the action ready for trial in December, 1927. However, an arrangement for the adjournment of the trial was made whereby Cox paid to the Company, or for its benefit, sums totalling approximately $3,930, or almost the amount of the item of $4,030.20 claimed in the action,—without any allowance for interest. (It might here be stated that we agree with the trial judge and the Court of Appeal that these sums must be taken as payment of the item referred to and interest,—leaving outstanding merely the claim for the plant and equipment.) It was also part of the arrangement for the adjournment of the trial that the Company should assign its claim to John O. Hourigan, the principal shareholder in the Company, and an agreement dated December 12th, 1927 (known as the arbitration agreement) was entered into between John O. Hourigan and Cox wherein, after reciting the Company’s intention to assign the claim, provision was made for an arbitration if the parties were unable to settle the claim within six months.
On March 7th, 1928, the Company purported to assign the claim to John O. Hourigan, such claim then being, as indicated above, merely with reference to the plant and equipment. John O. Hourigan died intestate December 5th, 1930, leaving as his next of kin two sisters and two brothers, of whom George F. Hourigan was one. He and the Royal Trust Company were appointed administrators and on September 9th, 1933, they assigned to George F. Hourigan all the “unrealized or non-liquid assets” of the estate. While a schedule was attached to that assignment, the claim against Cox is not listed, and while the assignment contains a clause providing that nothing in the
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schedule should limit the generality of the words “unrealized or non-liquid assets,” the omission is significant and will be adverted to later. At the same time it has not been overlooked that George F. Hourigan already had a transfer of his surviving brother’s one‑quarter interest in the estate and that so far as his sisters were concerned, he was merely a trustee for their share of any of the unrealized assets. No argument has been addressed to us as to the efficacy of these assignments and the appeal has proceeded as if George F. Hourigan would be entitled to secure judgment against Cox if the liability of the latter under the original agreement of December 27th, 1919, were established.
Various steps were taken by George F. Hourigan to nominate an arbitrator under the arbitration agreement but the only importance in connection therewith is that December 24th, 1935, being the approximate date when a notice was served on George F. Hourigan’s behalf on Cox, was the first time in about eight years that any demand had been made on Cox by anyone for any claim under the original agreement of December 27th, 1919. In that demand, notice was given of the assignment by John O. Hourigan’s administrators. The attempted arbitration proving abortive, George F. Hourigan, on September 26th, 1936, commenced a new action in his own name against Cox, advancing similar claims to those made in the present action. Upon Cox’s application, proceedings in the new action were stayed and by an order to proceed, dated March 10th, 1937, the present action was continued at the suit of George F. Hourigan as party plaintiff.
The pleadings were amended and in the amended statement of defence Cox set up that there had been an accord and satisfaction of the claim for the plant and equipment. At the trial Cox’s evidence in chief was that an oral agreement had been made between himself and John O. Hourigan subsequent to the date of the arbitration agreement of December 12th, 1927, whereby in consideration of Cox agreeing to purchase supplies for his future lumbering, operations from Marks & Co., in which John O. Hourigan was substantially interested, the claim under the agreement of December 27th, 1919, was satisfied. Cox also testified that he accordingly made all his purchases from Marks & Co. until it sold out its business to another con-
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cern about a year before the death of John O. Hourigan.
In cross-examination, counsel for the plaintiff put to Cox Question 10 on the latter’s cross-examination on an affidavit filed on one of the motions in this action:—
Mr. MCCOMBER: I want to read question 10:
“Q. After the date of that agreement, Exhibit 1 made between you and Mr. John O. Hourigan, December 12th, 1927, did you and Mr. Hourigan ever come to a settlement?
A. We discussed it at various times, but there was never a definite settlement made.”
Is that answer correct?
A. If it is there, that is correct, yes; it is correct, substantially correct.
After some discussion between counsel, the cross-examination continued:—
By Mr. MCCOMBER:
Q. Now, you told us many times, yesterday, Mr. Cox, that you had discussed with John O. Hourigan, that you had discussions with John O. Hourigan in which there was an understanding that this action would not be gone on with. The fact of the matter is that there was no agreement to that effect; isn’t that correct? A. No agreement?
Q. Will you just answer the question; you have just said that the answer is no; the answer which I have just read: “We discussed it at various times, but there was never a definite settlement made.”
Now is that correct, that there was no definite settlement made?
A. Well, there was no formal document drawn up; there was a definite understanding.
Q. There was a definite understanding, but no definite settlement made; what do you mean by “no definite settlement made”?
A. Well, there was no cash transaction, immediate cash transaction involved, and my paying anything to John Hourigan, but there was a clear-cut and definite understanding, but no formal document drawn up.
Q. What is the meaning of this: “There was never a definite settlement made”?
A. That is what I mean by that, there was no formal document, nothing of that character; there was a definite understanding.
Q. But, you say, there was a definite understanding.
A. Very definite.
Q. But it didn’t amount to a settlement?
A. Well, absolutely, yes. The understanding was the settlement.
Q. So that when you answered “We discussed it at various times, but there was never a definite settlement made,” you didn’t mean just what that implies?
A. Well, it means just what it implies, depending on the interpretation; there was no document drawn up, but there was a definite understanding.
Q. Was the action dismissed? A. The Court action?
Q. Was the action that was then pending when you were having those discussions with Hourigan, that is, after the arbitration agreement was drawn, was the action ever dismissed?
A. Well, that was a part of the understanding, and Hourigan and I got together before the arbitration in order that we could make some disposition of the case, then on the understanding that it would be withdrawn from Court.
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On this all important point, the trial judge found that the arrangement was made as testified to by Cox in the witness box, saying in the course of his judgment, delivered immediately after the trial:—
Now, in this examination, in 1937, Cox made this statement: It is to be found on page 2, question 10 of this examination, that the date of the agreement between him and John O. Hourigan, was on December 12th, 1927; the question was asked, “Did you and Mr. Hourigan ever make a settlement,” or words to that effect, and Cox said, “We discussed it at various times, but there never was a definite settlement made.” Cox was pressed on that, and he said in his evidence something to this effect, that what he meant by that, (and this was in cross-examination, I think) was that no formal document was ever drawn up; but that there was a clear-cut understanding or agreement. On the evidence I find that there was that understanding between Cox and Hourigan;
The Court of Appeal took the view that this finding was not justified but this was peculiarly a matter of the credibility of Cox and one as to which the trial judge was in the best position to decide. This Court had to consider the duty of an appellate court in dealing with findings of a trial judge in Lawrence v. Tew, where the most recent cases upon the subject are considered.
It appears that in addition to referring to Cox’s examination-in-chief and that part of his cross‑examination mentioned above, the Court of Appeal relied on two affidavits made by Cox, for use on a motion by him in the second action brought by George F. Hourigan, proceedings in which had been stayed. Mr. Justice Fisher states that “all affidavits and cross‑examinations were filed as exhibits at the trial.” The question as to whether this was an error was discussed at bar, and after Mr. Cassels, who had not been at the trial, had telephoned to Mr. McComber, we determined, after a very complete argument, that the affidavits referred to were not put in as evidence at the trial, that they were not in point of law before the Court of Appeal, and that they could not be used. It appears advisable to indicate the reasons for this conclusion.
Mr. W.F. Langworthy was called as a witness for the plaintiff. He had acted as solicitor for George F. Hourigan in connection with the attempted arbitration and had issued the writ in the second action. He testified:—
Q. Well then, what was the next step that you took on behalf of the Plaintiff?
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A. The next step was I issued a writ on the 26th of September, 1936, at the suit of George F. Hourigan against Charles W. Cox.
Q. And what became of that action?
A. I dropped out of it then; I don’t know what happened after that.
Q. This is the writ you referred to?
A. That is the original writ, affidavit of service, and so on.
His LORDSHIP: That will be Exhibit No. 28.
Exhibit No. 28: Writ, affidavit of service and so on.
Q. And do you know anything more about this matter? A. No, I don’t know anything more; I dropped out then.
Mr. PARKINSON: No questions.
The only importance of Mr. Langworthy’s evidence at that point was that the writ in the second action was issued on September 26th, 1936, and notwithstanding the words “and so on” the registrar of the trial court, in making up the list of exhibits, listed as Exhibit 28 merely “Original writ and Proof of Service September 26, 1936,” and that is all that was marked as Exhibit 28. Near the conclusion of the plaintiff’s case, the following discussion occurred:—
Mr. MCCOMBER: Now, my lord, I would like to read from the examination of the defendant on his affidavit, sworn to on the 22nd of March, 1937.
Mr. PARKINSON: My lord, cross-examination on an affidavit is not examination for discovery on file, and is not admissible as part of my friend’s case.
Mr. MCCOMBER: I have heard of it being read.
His LORDSHIP: You have to read the whole document.
Mr. MCCOMBER: Pardon, my lord.
His LORDSHIP: You will have to read the whole document.
Mr. MCCOMBER: Well, then, I will file the whole document. This was the regular court reporter, Miss McBrady, who takes all the evidence here, my lord.
His LORDSHIP: I suppose she is still here.
Mr. MCCOMBER: Well, she is not here today.
His LORDSHIP: You see, it can only go in as admissions that he made, and someone that heard him make the admissions would have to come and swear that they heard them.
Mr. MCCOMBER: Mr. Cox is going to take the witness box.
Mr. PARKINSON: I know, but I don’t want to be left in that position.
His LORDSHIP: You said there was no examination for discovery.
Mr. MCCOMBER: Yes, just a few weeks ago.
His LORDSHIP: Well, isn’t that here?
Mr. MCCOMBER: Yes, it is here.
His LORDSHIP: Well, doesn’t that cover the points in his affidavit?
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Mr. MCCOMBER: No. This examination I refer to was held in March, 1937.
His LORDSHIP: Well, show me the rule that says you can use it.
Mr. MCCOMBER: I would like to be understood to be anxious to file it, or to read it into the record.
His LORDSHIP: But that is not the point.
Mr. ROEBUCK: You can read it as soon as Mr. Cox goes in the box.
When the defendant was in the box that part of his cross-examination on his affidavit, sworn to March 22nd, 1937, referred to, was read to him. No other cross-examination or affidavit was referred to and now that the matter has been fully investigated, it is clear that the affidavits which must have been sent to the Registrar of the Court of Appeal in error were never part of the evidence at the trial.
A cause of action arising from the breach of a contract may be discharged by accord and satisfaction and this need not be in writing or under seal even where the original contract was under seal. Blake’s Case; Steeds v. Steeds. It has been held by the Court of Appeal in England in British Russian Gazette and Trade Outlook Ltd. v. Associated Newspapers Ltd., that where accord and satisfaction consisted in mutual promises there would be “satisfaction” in law even if the party who was to be released did not fulfil his promise. It is not here necessary to express any opinion upon that point, as Cox not only made the promise but executed it. Accord and satisfaction having been proved by testimony which the trial judge believed, we can find no ground upon which that finding may be set aside.
It was urged, however, that Cox’s evidence required corroboration under section 11 of The Evidence Act, R.S.O., 1937, chapter 119:—
In an action by or against the heirs, next of kin, executors, administrators or assigns of a deceased person, an opposite or interested party shall not obtain a verdict, judgment, or decision, on his own evidence, in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.
George F. Hourigan being treated as explained above, as having secured by assignment from the administrators of John O. Hourigan the right to sue, he is an assign within the meaning of the section. In McDonald v. McDonald
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and Thompson v. Coulter, this Court established that corroboration must be evidence of a material character supporting the case to be proved but it may be afforded by circumstances. The working out of this rule is exemplified in the numerous cases in Ontario, to which our attention has been called.
In the present case, John O. Hourigan took no steps to arbitrate the claim after the six months’ period mentioned in the arbitration agreement had expired; he made no demand of any kind upon Cox; his administrators made no claim; the assignment by the administrators (of whom George F. Hourigan was one) of what is described as non-liquid assets, made no reference to it and it was only in 1935 that George F. Hourigan presented a claim; W.T. McEachern, a former president of James Horrigan Company, Limited, whose evidence was taken de bene esse on behalf of the plaintiff, testified on cross-examination that John O. Hourigan had been anxious to retain Cox’s business with Marks & Co.; and the respondent himself testified that Cox did continue to deal with Marks & Co. as long as it continued in business. In these facts and circumstances is found ample corroboration of the defendant’s testimony that the arrangement he pleads was actually made and his promise fulfilled.
The appeal will be allowed and the judgment at the trial restored, with costs throughout.
The judgment of Davis and Hudson JJ. was delivered by
DAVIS J.—On December 27th, 1919, the appellant entered into an agreement under seal with the respondent company whereby he acquired the right to cut pulpwood on the company’s timber limits near Port Arthur, Ont., during the cutting season 1919-1920. The appellant did in fact cut and remove a large quantity of the standing timber under the terms of the agreement but nothing turns on this appeal upon the pulpwood end of the agreement. The said agreement, however, had provided that the company would allow the appellant the use, free of any rental charge, of any part of its plant and equipment usually used in cutting and towing operations. Such plant and equipment as was taken was to be returned to the com-
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pany on or before June 16th, 1920, in the same condition and state of repair as the same was on the 1st day of September, 1919, less ordinary wear and tear; except that the booms and boom chains were to be returned as soon as the appellant had no further use for them in connection with his operations for the season 1919-1920. The plant and machinery was checked by the parties and an inventory thereof was made and attached to the agreement. Some 2,500 or more separate articles were listed in the inventory. The appellant admits that he took some but not a substantial portion of the plant and equipment and says he returned in due course that which he took, except a portion thereof which he was prohibited from returning by a notice served upon him by the Department of Lands and Forests of Ontario which made some claim at the time against the respondent company in respect of its Crown timber licences. The respondents say that the appellant took all the plant and equipment and did not return any of it.
The writ in this action, whereby the respondent company sought damages for the alleged failure of the appellant to return the plant and equipment, was not issued until October 18th, 1927. The claim became assigned by the company to John O. Hourigan on March 7th, 1928, and the latter died intestate on December 5th, 1930. The respondent George F. Hourigan, a brother of John O. Hourigan then deceased, as next of kin and as assignee of the other next of kin (a brother and two sisters), obtained on March 6th, 1937, an order of revival to proceed in his own name with the action. The action finally got down to trial in May, 1939. Urquhart J., the trial judge, dismissed the action with costs. On appeal the Court of Appeal for Ontario on February 16th, 1940, set aside the judgment at the trial and directed a reference to the Local Master at Port Arthur to take an account “of what, if anything, is due” to the respondent in respect of the claim for breach of contract to return the plant and equipment. The present appellant (defendant) then appealed to this Court.
If this appeal is dismissed it means that the Local Master at Port Arthur will be required to commence an inquiry to ascertain, (1) what part or parts of the said plant and equipment were taken by the appellant during
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the cutting season 1919-1920; (2) what part or parts so taken were not returned to the company on or before June 16th, 1920, except as to the booms and boom chains, and as to those, what booms and boom chains that were taken were not returned as soon as the appellant had no further use for them in connection with his operations for the season 1919‑1920; (3) the value of the part or parts taken and not so returned as the same stood on September 1st, 1919, less ordinary wear and tear.
What an inquiry this would be after so many years! I pick at random a few of the articles listed in the inventory merely to indicate the nature of such an inquiry: 9 sets of heavy team harness, 2 sets of driving harness, 17 horse collars, 17 sets of heavy log sleighs, 613 boom chains, 219 pairs of blankets, 26 lanterns, 28 lamps, 26 snow shovels, 1 blacksmith outfit (44 pieces), 107 granite plates, 106 granite tea cups, 6 enamel pails, 16 galvanized pails, 16 bread pans, 142 knives, 135 forks, 114 table spoons, 128 large spoons, 69 tea spoons, 16 wash basins, 19 milk jugs, 21 single bitted axes, 34 double bitted axes.
The law is well employed when it puts an end to such an inquiry being commenced after the lapse of over 21 years. Had the reference been directed at the trial, as the Court of Appeal thought it should have been, that was 19 years after the alleged breach. The appellant testified that he had settled the action years ago with the deceased Hourigan, and this evidence was accepted by the learned trial judge, who accordingly dismissed the action. While laches may not be a defence to a common law action, such delay as occurred here, taken with the numerous facts and circumstances related at the trial, tends in itself to make very probable the statement of the appellant that he had settled the claim with Hourigan years ago.
I should allow the appeal and restore the trial judgment dismissing the action, with costs throughout.
Appeal allowed with costs.
Solicitors for the appellant: Roebuck, Bagwell, McFarlane, Walkinshaw & Armstrong.
Solicitors for the respondent: McComber & McComber.
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