Supreme Court of Canada
Raymond v. United States Fire Insurance Co., [1973] S.C.R. 522
Date: 1971-12-20
Albert Raymond (Plaintiff) Appellant;
and
United States Fire Ins. Co. (Defendant) Respondent.
1971: October 22; 1971: December 20
Present: Fauteux C.J. and Abbott, Martland, Hall and Pigeon JJ.
ON APPEAL FROM THE COURT OF QUEEN’S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC
Insurance—Fire—Loss of the insured thing—Valuation and description—Contract between insurer’s agent and insured—Civil Code, art. 2575.
The defendant, on the basis of a valuation made by an expert of its own choosing, had issued through its agent a policy for all-risk insurance on a work of art which was the property of the plaintiff. The insured thing having been destroyed in a fire, the plaintiff obtained a judgment condemning the defendant to pay him the amount as set in the contract. The former appealed from this judgment contending that the insured thing was not a work of art because this was a model and consequently the sum insured was excessive. The Quebec Court of Appeal allowed the appeal and reduced the amount to be paid to the plaintiff. Hence the appeal to this Court.
Held: The appeal should be allowed.
There is a decisive objection against the defendant’s contention that the insured thing was not a work of art: this is the fact that the insurer had agreed to insure it with that description. It does not appear necessary to decide whether the reference to the description by the expert in the insurance agreement is “a special valuation in the policy” within the meaning of art. 2575 C.C. The defendant agreed to contract on the basis of a valuation made by an expert of its own agent’s choosing and on the basis that the article insured was a work of art. When the insurer or its agent is party to an appraisement of the property for the purpose of the insurance, the amount so settled is prima facie proof of value.
APPEAL from a judgment of the Court of Appeal, province of Quebec, allowing an appeal from a judgment of the Superior Court. Appeal allowed and judgment at trial restored.
[Page 523]
M. du Mesnil for the plaintiff, appellant.
J. Martineau, Q.C., and J.P. Cardinal, Q.C., for the defendant, respondent.
The judgment of the Court was delivered by
PIGEON J.—The appeal is from a decision of the Quebec Court of Appeal, which lowered to $6,000 the amount of $85,000 that respondent had been ordered to pay appellant by judgment of the Superior Court, on account of an insurance policy on a model of the Notre‑Dame Cathedral of Paris. The model was the work of an artisan who, from 1923 to 1938, spent thousands of hours of work and carved more than five hundred statues and ninety gargoyles in wood. In 1939 he ceded to the appellant for a nominal sum this cumbersome object, which was fifty-one inches long by twenty-one inches wide, with a steeple rising thirty-eight inches above the base.
In 1957 appellant, who had already exhibited the work elsewhere on some occasions, agreed to show it on the premises of one Bilodeau at Ste-Anne-de-Beaupré. He approached a broker for special insurance, and the latter in turn went to Robert Hampson & Son Limited, general agents in Canada for the respondent. According to the broker the agents suggested he obtain a valuation, either from the curator of the Montreal Museum of Fine Arts or from Fraser Brothers. The evidence on this point was contradictory, but the trial judge stated that he had “no hesitation” in accepting the broker’s testimony. After examining the work Fraser made a written report valuing it at $85,000. The broker sent a copy of this to respondent’s agents on July 25, 1957, the date shown on the insurance policy which the said agents subsequently issued.
The policy provides for all-risk insurance of a special kind. The essential part of the insurance agreement, typed on an attached sheet, reads as follows:
[Page 524]
$85,000—[TRANSLATION] On the property of the Insured, consisting of a model of the Notre-Dame Church of Paris, scale one-eighth inch to the foot (description by Fraser Brothers submitted to our office), while this model is in transit within the territorial limits of Canada and the United States, and until it is returned to its point of origin, or until expiration of this contract, whichever comes first.
Robert Hampson & Son Limited
(signed) André Perron
Property Insurance Department
The “description by Fraser Brothers” is obviously the valuation report indicating this sum of $85,000, and reading as follows:
VALUATION, INVENTORY of Art
Treasure …
FOR FIRE INSURANCE PURPOSES
TO SCALE HAND CARVED REPLICA OF THE
NOTRE-DAME CATHEDRAL OF PARIS
This model has been constructed and hand carved out of 250,000 pieces of wood assembled with special glue and copper wire, by Mortise Tenon Joints.
It required 45,000 hours of work extending from April 2nd 1923 to April 15th 1938.
The scale is 1/8 inch to the foot; the model is 51″ long and 21″ wide with towers 27 3/4 high and the central steeple 38″ high. $85,000.00
The author of this report testified at the hearing in support of the correctness of his valuation. He asserted that it was an art object, and that he had made a long and careful examination of it. He added that he had wide experience in valuing works of art. Recalled at the end of the trial, he asserted that he would have arrived at the same amount simply on the basis of its artistic worth, without regard to the number of hours of work which he had been told were spent on it. Despite the conflicting evidence presented by the insurer, the trial judge allowed the action for the amount claimed, stating:
[Page 525]
[TRANSLATION] Confronted with conflicting testimony, the Court accepts the testimony of the expert Robert A. Fraser whose reputation is of the highest order, who was the only expert witness to see the work, and who maintains his valuation.
It was pointed out on appeal that the figure of forty-five thousand hours mentioned in the expert report was undoubtedly exaggerated, since this would have meant eight hours of work per day, three hundred and sixty-five days a year, for fifteen years and four months. Further, it was emphasized that in his testimony the artisan had stated that he had spent a minimum of only fourteen thousand hours to complete the work. It was then contended that because this was a model, it was not a work of art: it was asserted that [TRANSLATION] “the essence of a work of art is creativity”. Observing that in the final analysis the expert Fraser had based his valuation on his appraisal of the work as a work of art, since the figure of forty-five thousand hours was incorrect, reference was made to the amount of $6,000 a carver had indicated as the price for a commercial job with mass produced statues. As the insured object was destroyed in a fire, this witness was never able to examine it. He only saw photographs, from which he could see, however, that the artisan had frequently not followed the scale in every detail.
In my opinion there is a decisive objection in this case against respondent’s contention that the insured object was not a work of art: this is the fact that the insurer had agreed to insure it with that description. The insurance agreement prepared by its agents refers to the “description by Fraser Brothers”. This description is entitled “Valuation—Inventory, of Art Treasure”, “FOR FIRE INSURANCE PURPOSES”. It was prepared at appellant’s request, but by an expert suggested by respondent’s agents who agreed, on behalf of respondent, to contract on that basis.
This was not a fire insurance contract concluded in the usual way and in the usual form.
[Page 526]
The parties recognized that the article to be insured was not an everyday thing the value of which could be easily established. It was clearly an article for which there was no market in the ordinary sense of the term. The disparity between the expert Fraser’s opinion and that of the carver who testified for respondent clearly indicates the differences of opinion that may be expected in such a situation. Was it a work of art or just a crude model?—obviously, this could be the subject of debate.
So, it was agreed that the opinion of an expert acceptable to both parties would first be obtained, and the contract was then drawn up on that basis. Can we believe that if respondent’s agents, on receiving the valuation from Fraser Brothers, had said to appellant, “If your model is destroyed the company will pay only $6,000”, he would have agreed to pay a premium of $2,550? However, that is the agreement which respondent claims to have made with him.
In ordinary cases where the insurance amounts are set without a valuation being approved by the insurer, the insured party takes the risk of paying a premium on an excessive amount. That is not the situation here. The question is whether the insurer, after agreeing to treat the insured article as a work of art in fixing the premium paid to it, can, after the loss, take the stand that it was not a work of art.
At the hearing a great deal was made of art. 2575 of the Civil Code, which reads as follows:
2575. The sum insured does not constitute any proof of the value of the object of the insurance; such value must be established in the manner required by the conditions of the policy and the general rules of proof, unless there is a special valuation in the policy.
The following statement in the printed portion of the policy was also relied on:
[TRANSLATION] Except where otherwise hereinafter stated, the amount of such loss or damage shall be estimated in accordance with the actual value of the
[Page 527]
property at the time of the loss or damage, allowing for depreciation however caused, up to an amount, for each item on the form or forms attached hereto, not exceeding the sum shown opposite such item, and not exceeding in all the total insured sum stated above, or the interest of the Insured in such property.
On this basis it was contended, despite the reference to the “description by Fraser Brothers”, that the contract was not a valued policy. It does not appear necessary in this case to decide whether this reference is “a special valuation in the policy” within the meaning of art. 2575 of the Civil Code. The least that can be said is that since the respondent had agreed to contract on the basis of a valuation made by an expert of its own choosing, and on the basis that the article insured was a work of art, the trial judge was fully justified in preferring that expert’s opinion over the opinion of the witness called at the hearing by respondent, and in treating the insured article as a work of art despite the opposite opinion from an art professor. It is worth noting that MacGillivray says, at para. 1789 (On Insurance Law, 5th ed.):
When the insurers are or their agent is party to an appraisement of the property for the purpose of the insurance, the amount so settled is probably prima facie proof of value, but otherwise the amount stated in the policy as the amount insured on any particular subject is not even prima facie evidence of the value.
The trial judge had good reason to be incensed by the malevolent insinuations made by the insurer in his statement, when supporting evidence was entirely lacking. It is unfortunately necessary to mention this again, as the offence was repeated in this Court. Needless to say, insurers are no more entitled than other litigants to resort to damaging insinuations, made without any evidence, in an attempt to justify the raising of unfair objections to the fulfilment of their contractual obligations. Such an attitude can only bring discredit on the free enterprise system in the insurance field.
[Page 528]
I would allow the appeal, quash the decision of the Court of Appeal and restore the judgment of the Superior Court with costs in all Courts against the respondent.
Appeal allowed with costs.
Solicitors for the plaintiff, appellant: Du Mesnil, Maillot & Desaulniers, Montreal.
Solicitors for the defendant, respondent: Bumbray, Carroll, Cardinal & Dansereau, Montreal.
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