Montreal Trust Co. v. Krisman, [1960] SCR 659

Supreme Court of Canada

Montreal Trust Co. v. Krisman, [1960] S.C.R. 659

Date: 1960-06-13

Montreal Trust Company and Tillie v. Lechtzier (Defendants) Appellants;

and

Clara Krisman, Jessie Gurevich and G. Sydney Halter (Plaintiffs) Respondents.

1960: April 26, 27; 1960: June 13.

Present: Kerwin C.J. and Cartwright, Martland, Judson and Ritchie JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR BRITISH COLUMBIA

Trusts and Trustees—Will containing insurance trust declaration—Whether to be regarded as separate documents—Widow preferred beneficiary—Direction to pay her annual sum out of insurance trust—Whether vested capital interest given to widow—Whether life interest only—The Insurance Act, R.S.B.C. 1948, c. 164, s. 110.

By an insurance trust declaration, contained in his will, the testator designated his wife as preferred beneficiary of all his life and accident insurance policies, and therefore under s. 110(1) of the Insurance Act, a trust was created in her favour. The proceeds of the policies were to be held in a separate fund and a specified annual payment was to be made to the wife until the fund was exhausted. The wife received other benefits under the will which provided also for the drawing from the residue of the estate if there was not enough in the insurance fund to make the last annual specified payment. The will further provided for further annual payments to the wife for life out of the residue of the estate, once the insurance fund was exhausted.

Held: The wife acquired an immediate absolute interest in the insurance fund, and not merely a life interest.

Per Kerwin C.J. and Judson J.: There was no contingency or limitation within the meaning of s. 110(3) of the Act. Whether or not the wife was entitled to receive all of the insurance money immediately upon the death of her husband, the ordinary rules as to payment of vested interests were not applicable. The case was to be determined under the Insurance Act. The provisions of the will and of the declaration were to be read separately, but the same conclusion would prevail in this case if the other clauses of the will were considered.

Per Cartwright, Martland and Ritchie JJ.: Regard should be had to the wording of both documents. On the true construction of the will the testator did not attach any contingency or limitation to the designation of his wife. The direction to pay an annual specified sum did not deprive the wife of the right to demand the whole fund at once. The rule in Saunders v. Vautier (1841) Cr. Ph. 240, that when a vested interest has once been given restrictions postponing the enjoyment of the gift after the donnee has become sui juris are ineffective, was applicable.

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APPEAL from a judgment of the Court of Appeal for British Columbia[1], reversing a judgment of Brown J. Appeal dismissed.

J. R. Nicholson and J. Austin, for the defendants appellants.

D. McK. Brown, for the plaintiffs, respondents.

The judgment of Kerwin C.J. and of Judson J. was delivered by

THE CHIEF JUSTICE:—The executors and trustees of the will of Isidor Jacob Klein, who, as will be explained, are also trustees under an insurance trust declaration contained in the will, appeal from a judgment of the Court of Appeal for British Columbia[2], DesBrisay C.J. and O'Halloran J.A. (Sidney Smith J.A. dissenting), which reversed in the main a judgment of Brown J. after the trial of an action in which the present respondents, the executors and trustees of the will of Bessie Klein (the widow of Isidor) were plaintiffs and the appellants were defendants.

The action was to recover the proceeds of certain insurance policies, including interest and accretions, effected by Isidor Jacob Klein on his life as follows:

New York Life Insurance Company

No. 7933984	$ 25,000
No. 7057586-D	2,034
No. 7057587-D	3,078

Canada Life Assurance Company

No. 284683	15,000
No. 294637	10,000

Sun Life Assurance Company of Canada

No. NW-10939

5,000

Mutual Life Insurance Company of New York

No. 2768854

5,000

Crown Life Insurance Company

No. 319659

5,000

The Mutual Life and Crown Life policies for $5,000 each were by their terms payable to the insured's wife, Bessie Klein; the other policies were payable to the insured's estate.

Mr. Klein died on June 14, 1955, having made his last will and testament dated March 1, 1955, whereby he appointed executors and trustees to whom he devised and

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bequeathed all his real and personal estate in trust. The clause providing for payment of his debts, funeral and testamentary expenses, succession and probate duties payable in respect of all gifts, devises and bequests and legacies concluded:

and to pay and satisfy any and all succession and probate duties with regard to or occasioned by the proceeds of any insurance policies, the subject of the Insurance Trust Declaration hereinafter contained.

There was then a direction to transfer all personalty to his wife, to permit her to occupy his residence for life and to pay her the sum of $10,000. There were also certain charitable donations and gifts to three employees. The will then continued:

(f) to hold and dispose of all the rest and residue of my estate for the following purposes:—

(i) If there be not sufficient left in my Insurance Trust Fund to make the last annual payment of Fifteen Thousand ($15,000.00) Dollars, as is specified in my Insurance Trust Declaration hereinafter contained, then in such case I DIRECT my trustees to draw from my residuary estate, either from income or capital if need be, a sum sufficient to augment the balance of Insurance Trust Fund monies up to the said sum of Fifteen Thousand ($15,000.00) Dollars to permit the said last annual payment.

(ii) After the Insurance Trust Fund shall have been exhausted by the last of the annual payments of Fifteen Thousand ($15,000.00) Dollars as is hereinafter provided in my Insurance Trust Declaration, then upon such exhaustion my trustees shall pay to my wife during her life, by instalments or otherwise, all the income of the said residue of my estate up to but not exceeding an annual sum of Fifteen Thousand ($15,000.00) Dollars, but if such amount in any year payable to my wife shall fall below Ten Thousand ($10,000.00) Dollars my trustees shall pay out of capital a sum sufficient to pay her Ten Thousand ($10,000.00) Dollars in that year.

In clause (f) it was also stated that during the lifetime of the testator's wife his sister and two nieces were to receive annual sums for their respective lives.

The insurance trust declaration reads as follows:

INSURANCE TRUST DECLARATION

I HEREBY DECLARE AND DESIGNATE my wife, Bessie Klein, to be the preferred beneficiary within the meaning of the "Insurance Act" of British Columbia of the Life Insurance policies effected by me in the New York Life Insurance Company numbered 7933984 for $25,000.00; 7057586D for $2,034.00 and 7057587D for $3,078.00; in the Canada Life Assurance Company numbered 284683 for $15,000.00 and 294637 for

[Page 662]

$10,000.00; in the Mutual Life Insurance Company of New York numbered 2768854 for $5,000.00 and in the Sun Life Assurance Company of Canada numbered N.W. 10939 for $5,000.00 and in the Crown Life Insurance Company, Group G. 145 Certificate No. 4, for $5,000.00, and of all and any life and accident insurance policies taken out by me upon my life and payable to her in the event of my death; I HEREBY DIRECT that the proceeds of all the before mentioned policies are to be held in a separate trust fund to be called my Insurance Trust Fund, the Trustees thereof to be the Trustees hereinbefore named in this my Will who are hereby charged with the administration thereof; AND I DIRECT that my trustees pay to my wife, Bessie Klein, the sum of Fifteen Thousand ($15,000.00) Dollars per year out of the capital or accumulated revenue of the aforesaid Insurance Trust Fund; said year to commence upon the day of my death and the said payments of Fifteen Thousand ($15,000.00) Dollars per year to continue until the entire capital and income of the said fund is used up.

It will be noted that the trustees of the insurance trust fund are the same as the trustees of the will. By virtue of various renunciations probate of the will was issued to Montreal Trust Company and Tillie V. Lechtzier. It was not noticed that the renunciations did not apply to the insurance trust fund and therefore the proceeds of all insurance policies mentioned therein, including interest and accretions, were paid by the several companies to the appellants who, at the trial, by their counsel, agreed that all parties would be bound by the final judgment in these proceedings, and in fact the appellants are described not only as executors of the estate of Isidor Jacob Klein but also as "trustees of the insurance trust fund declared in the last Will of the said Isidor Jacob Klein, deceased".

In addition to referring to the trust declaration and the provisions of the will mentioned above, counsel for the appellants relied upon the fact that the testator appointed the same trustees for his will as for the fund and also to the fact that nothing was given by the will to the wife's relations. Bessie Klein, the wife of Isidor, died on January 9, 1956, having been paid by the appellants one payment of $15,000 on November 8, 1955.

The trial judge decided that the proceeds of what are known as the "wife policies", i.e., the two policies for $5,000 each, which, by their terms had been payable to the wife, should be paid by the defendants to the plaintiffs but that the action as to the proceeds of the other policies be dismissed. The plaintiffs' appeal to the Court of Appeal was allowed and the defendants' cross-appeal as to the two

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"wife policies" dismissed. The defendants do not now attack the disposition by the two Courts of the proceeds of the "wife policies".

The appeal is to be decided in accordance with the true meaning of the relevant provisions of the British Columbia Insurance Act, R.S.B.C. 1948, c. 164. Under s. 104(2), Bessie Klein, as the wife of Isidor, was a preferred beneficiary. By s. 77:

"Declaration" means an instrument in writing, signed by the insured, attached to or endorsed on a policy, or an instrument in writing, signed by the insured, in any way identifying the policy or describing the subject of the declaration as the insurance or insurance fund or a part thereof or as the policy or policies of the insured or using language of like import, by which the insured designates or appoints a beneficiary or beneficiaries, or alters or revokes the designation or appointment of a beneficiary or beneficiaries, or apportions or reapportions, or appropriates or reappropriates, insurance-money between or among beneficiaries;

By s. 107(1), "Subject….. to the provisions of this Part relating to preferred beneficiaries, the insured may designate the beneficiary by the contract or by a declaration", and by subs. (2) it is enacted that, subject to subs. (1), a beneficiary or a trustee appointed pursuant to s. 132 may at the maturity of the contract enforce for his own benefit or as such trustee the payment of insurance money appointed to him by the declaration and in accordance with the terms thereof. Subsections (1) and (3) of s. 110 are important and read as follows:

110. (1) Where the insured, in pursuance of the provisions of section 107, designates as beneficiary or beneficiaries a member or members of the class of preferred beneficiaries, a trust is created in favour of the designated beneficiary or beneficiaries, and the insurance-money, or such part thereof as is or has been apportioned to a preferred beneficiary, shall not, except as otherwise provided in this Part, be subject to the control of the insured, or of his creditors, or form part of the estate of the insured.

***

(3) The provisions of this section are subject to any vested rights of beneficiaries for value and assignees for value, to the provisions hereinafter contained relating to preferred beneficiaries, and to any contingency or limitation stated in the instrument by which the insured designates a preferred beneficiary: Provided that no provision in any instrument reserving to the insured the right to revoke or abridge the interest of a preferred beneficiary shall be effective so as to enable the insured to revoke or abridge that interest in favour of a person not in the class of preferred beneficiaries.

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By the insurance trust declaration Isidor Jacob Klein declared and designated his wife Bessie as the preferred beneficiary within the meaning of the Insurance Act and therefore under subs. (1) of s. 110 a trust was created in her favour. Under the circumstances there is nothing "otherwise provided in this Part" within the meaning of these words as used in s. 110(1), because the words in subs. (3) relied upon by counsel for the appellants "the provisions of this section are subject….. to any contingency or limitation stated in the instrument" have no application. There is no contingency or limitation. It is true that in the declaration the trustees are directed to pay to the wife $15,000 per year out of the capital or accumulated revenue of the trust fund. I agree with the Chief Justice of British Columbia that this direction does not have the effect of limiting Mrs. Klein's interest in the insurance money to a life interest. Counsel for the respondents submitted that Bessie Klein was not entitled to receive all of the insurance money immediately upon the death of her husband, pointing to the words underlined above in s. 107(2) "and in accordance with the terms thereof". Whether this be so or not, I agree with his contention that the ordinary rules as to payment of vested interests are not applicable. They, including the decision in Busch v. Eastern Trust Company[3], as explained in Browne v. Moody[4], can have no application to the present case which must be determined under the provisions of the British Columbia Insurance Act.

Notwithstanding the argument of counsel for the appellants, in my view the provisions of the will and of the declaration must be read separately as if they appeared in different documents. However, even if one takes into consideration all the other clauses in the will, there is nothing in them to vary the proper construction of the declaration.

The appeal should be dismissed with costs.

The judgment of Cartwright, Martland and Ritchie JJ. was delivered by

CARTWRIGHT J:—The facts and the terms of the will of the late Isidor Jacob Klein, hereinafter referred to as "the testator", including the "Insurance Trust Declaration"

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therein contained so far as they are relevant to the questions raised on this appeal are set out in the reasons of the Chief Justice.

The answer to the question which we have to decide appears to me to depend upon the true construction of the testator's will.

In my opinion, we should have regard not only to the words of the "Insurance Trust Declaration" but to those of the whole will, particularly clauses (i) and (ii) of paragraph (f) which are quoted in the reasons of the Chief Justice. In view of the differences of opinion on this point in the courts below and the arguments addressed to us upon it I think it proper to refer to a few authorities which appear to me to be applicable.

In Barton v. Fitzgerald[5], Lord Ellenborough C.J. says:

It is a true rule of construction that the sense and meaning of the parties in any particular part of an instrument may be collected ex antecedentibus et consequentibus: every part of it may be brought into action in order to collect from the whole one uniform and consistent sense, if that may be done.

In Hayne v. Cummings[6], Byles J. says:

I apprehend it is a sovereign rule in the construction of all written documents, to give effect to the intention of the parties as expressed in the instrument itself, and to give effect if possible to every word, or at all events to every provision.

In In re Jodrell3[7], Lord Halsbury L.C. says:

For myself, I am prepared to look at the instrument such as it is; to see the language that is used in it; to look at the whole of the document, and not to part of it; and, having looked at the whole of the document, to see (if I can) through the instrument what was the mind of the testator. Those are general principles for the construction of all instruments—and to that extent it may be said that they are canons of construction.

Even if the "Insurance Trust Declaration" and the remainder of the will were to be regarded as separate documents it would be my opinion that both should be looked at since the will refers to and is in some respects dependant upon the terms of the Declaration. In Anderson's Case4[8], Jessel M.R. said at page 99:

Where there are two contemporaneous documents executed and assented to by the same persons at the same time (and these really are so substantially, and are therefore to be treated as contemporaneous documents), it

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appears to me that the ordinary rule applies, according to which contemporaneous documents are to be read together, so that if there is any ambiguity in one it may be explained by the other;

In the course of the full and able arguments addressed to us reference was made to a number of sections of the Insurance Act and some questions, as to the effect that these might have in varying circumstances, were debated which do not seem to require decision in this case.

No question is now raised as to the two policies in which the widow of the testator was named as beneficiary.

As to the remaining policies all of which were payable to the estate of the testator it is clear that he had the right to dispose of their proceeds either by will or by declaration in any way in which he saw fit. In particular if he saw fit to designate his wife as beneficiary he could in the instrument by which he so designated her have stated such contingency or limitation as he wished. He could, for example, have provided that she should receive $15,000 on his death if she were then living and $15,000 on each anniversary of his death on which she was still living, and that on her death any balance remaining should go to other persons or fall into the residue of his estate.

In my opinion on the true construction of the will the testator did not attach any contingency or limitation to the designation of his wife. The opening words of the "Insurance Trust Declaration" are as follows:

I HEREBY DECLARE AND DESIGNATE my wife, Bessie Klein, to be the preferred beneficiary within the meaning of the "Insurance Act" of British Columbia of the Life Insurance policies effected by me… (here follow words identifying all the policies).

These words appear to me to be unequivocal words of absolute gift which, upon the declaration taking effect, gave the wife an immediate vested interest in the whole of the proceeds of the policies. These words are followed by a semi-colon and the clause continues:

I HEREBY DIRECT that the proceeds of all the before mentioned policies are to be held in a separate trust fund to be called my Insurance Trust Fund, the Trustees thereof to be the Trustees hereinbefore named in this my Will who are hereby charged with the administration thereof; AND I DIRECT that my trustees pay to my wife, Bessie Klein, the sum of Fifteen Thousand ($15,000.00) Dollars per year out of the capital or accumulated revenue of the aforesaid Insurance Trust Fund; said year to commence upon the day of my death and the said payments of Fifteen Thousand ($15,000.00) Dollars per year to continue until the entire capital and income of the said fund is used up.

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No doubt the whole of the declaration is to be considered, but I am quite unable to construe the words last quoted as cutting down the absolute gift made in the opening words to a gift of an annuity payable contingently on the wife surviving from year to year until the fund is exhausted.

In my view, on the true construction of the whole clause, upon the death of the testator the legal title to the fund made up of the proceeds of the policies in question vested in the trustees and the beneficial title to the whole fund vested indefeasibly in the widow. The direction to pay the fund to the widow at the rate of $15,000.00 a year did not deprive her of the right to demand the whole fund at once, or at any time, had she seen fit to do so.

It has often been said that the difficulty in cases of this sort, where words of immediate gift are followed by a direction to pay at a time or times in the future, is to decide whether there is a substantive gift followed by a direction to pay, or whether the only gift is in the direction to pay. In the case at bar I have already stated my view that there is a clear gift in the opening words of the declaration which is not cut down by any other provision in the will.

From reading the whole of the Declaration in the light of the provisions of clauses (i) and (ii) of paragraph (f) it is obvious that the testator did not intend or anticipate that his widow should receive immediate payment of the whole fund. His expressed intention is that she should receive it in annual instalments of $15,000.00. This intention is defeated not by reason of any difficulty in construction of the terms of the will but by the operation of the rule of law usually referred to as the rule in Saunders v. Vautier[9], which makes it clear that when a vested interest has once been given restrictions postponing the enjoyment of the gift after the donee has become sui juris are ineffective.

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I would dismiss the appeal with costs.

Appeal dismissed with costs.

Solicitors for the defendants, appellants: Guild, Nicholson, Yule, Schmitt, Lane & Collier, Vancouver.

Solicitors for the plaintiffs, respondents: Russell & DuMoulin, Vancouver.