Comer v. Bussell et al., [1940] SCR 506

Supreme Court of Canada

Comer v. Bussell et al., [1940] S.C.R. 506

Date: 1940-06-07

John Comer (Plaintiff) Appellant;

and

F.R. Bussell and Others (Defendants) Respondents.

1940: June 6, 7.

Present: Duff C.J. and Crocket, Davis, Hudson and Taschereau JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Automobile Insurance—Action under s. 205 of Insurance Act, R.S.O., 1937, c. 256, to recover from alleged insurers the amount unpaid of judgment recovered against driver of motor car for damages for injuries—Question whether driver was insured by “owner’s policy” because driving with consent of “person named” therein (s. 198 of said Act)—“Owner’s policy” (s. 183 (g))—Question whether motor car “owned” by “person named” in policy.

The action was brought under s. 205 of the Ontario Insurance Act, R.S.O., 1937, c. 256, to recover from defendants, as insurers, the unpaid amount of a judgment recovered in a previous action by plaintiff against K. and J. for damages for injuries caused by a motor car. The insurance policy was issued in the name of S. The ground of

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the plaintiff’s claim in the present action was that K., the driver of the motor car, though not named in the policy, is thereby “insured” (within the meaning of said s. 205) in virtue of s. 198 of said Act.

Held: The dismissal of the action by the Court of Appeal for Ontario ([1940] 1 D.L.R. 97) should be affirmed. K. was not a person entitled by said s. 198 to indemnity under the policy. In considering the question of the application of s. 198 to the facts of the case, that section must be read as subject to the definition of “owner’s policy” in s. 183 (g). Plaintiff’s contention that K. came within s. 198 (1) by virtue of the fact that he was driving the car with the consent of S., the “person named” in the policy within the meaning of s. 183 (g) (that is, “named in” the “owner’s policy” under which the action is brought), rests, by the definition of “owner’s policy,” upon the proposition that the car was “owned” by S. in the sense of that definition (s. 183 (g)); and, on the evidence, the decision of the Court of Appeal negativing such ownership by S. should not be reversed.

APPEAL by the plaintiff from the judgment of the Court of Appeal for Ontario[1] which (reversing the judgment of Kelly J. at trial) dismissed the action, which was brought under s. 205 of The Insurance Act, R.S.O., 1937, c. 256, to recover from defendants (commonly known as Lloyd’s), as insurers, the unpaid amount of a judgment recovered against certain persons for damages for injuries caused by a motor car.

One George Johnson bought from one Seaman a taxi-cab business at Fort Frances, Ontario, and his son, Fredolph Johnson, took charge of its operation. It was found that Fredolph Johnson could not have a licence from the town to operate the taxi-cab business, as he lived a short distance outside the town limits and therefore did not fulfil the town’s residential requirements. Therefore it was decided to apply for a licence in Seaman’s name and Fredolph Johnson went through the form of executing a transfer of the business to Seaman (a chattel mortgage being given by Seaman to the Johnsons for their protection), and the motor car in question and another motor car, both used in the said taxi-cab business, were registered under the Ontario Highway Traffic Act in Seaman’s name.

On an application signed by Seaman an insurance policy of defendants was issued to him upon the motor car in

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question, agreeing to indemnify against liability for injuries to the person or property of others. The policy contained an agreement by the insurer

to indemnify the Insured, his executors or administrators, and, in the same manner and to the same extent as if named herein as the Insured, every other person who, with the Insured’s consent, uses the automobile, against the liability imposed by law upon the insured or upon any such other person for loss or damage arising from the ownership, use, or operation of the automobile within Canada, * * *

(See also s. 198 of The Insurance Act, R.S.O., 1937, c. 256, quoted in the judgment now reported).

Subsequent to the transactions aforesaid the plaintiff was injured by the motor car in question which was at the time of the injury driven by one Kowaluk who was an employee in the said taxi-cab business. In an action for damages the plaintiff recovered judgment against Kowaluk and George Johnson[2], and later brought the present action under said s. 205 of The Insurance Act to recover from the present defendants the unpaid amount of his judgment.

The trial judge, Kelly J., gave judgment for the plaintiff. This was reversed by the Court of Appeal for Ontario[3], which dismissed the action. The plaintiff appealed to the Supreme Court of Canada.

C.L. Yoerger for the appellant.

C.K. Guild K.C. for the respondents.

After hearing the argument of counsel for the appellant, the Court, without calling on counsel for the respondents, delivered judgment orally dismissing the appeal with costs.

THE CHIEF JUSTICE—We do not think it necessary to call upon you, Mr. Guild. We desire to express our appreciation of the able argument on the part of the appellant by Mr. Yoerger; we are nevertheless of opinion that no purpose would be served by prolonging the argument.

This is a creditor’s action under section 205 of the Insurance Act, the first subsection of which is as follows:—

Any person having a claim against an insured, for which indemnity is provided by a motor vehicle liability policy, shall, notwithstanding that such person is not a party to the contract, be entitled, upon recovering a judgment therefor against the insured, to have the insurance money

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payable under the policy applied in or towards satisfaction of his judgment and of any other judgments or claims against the insured covered by the indemnity and may, on behalf of himself and all persons having such judgments or claims, maintain an action against the insurer to have the insurance money so applied.

The appellant has no judgment against Seaman, who, it is argued, is the owner of the car within the meaning of certain other sections of the Statute.

The ground of the appellant’s claim is that Kowaluk, the driver (against whom he has a judgment), though not named in the policy, is thereby “insured” (within the meaning of section 205) in virtue of section 198; and that is the question of substance in this appeal.

There was no contractual relationship between Kowaluk and the Insurance Company, and, therefore, the provisions in the policy taken out by Seaman (apart from the enactments of the Insurance Act) could give Kowaluk no status to sue. Mr. Yoerger, of course, does not dispute this. The point is settled by the judgment of the Privy Council in Vandepitte v. Preferred Accident Insurance Corporation of New York[4].

The precise point to be decided is whether the driver, against whom the appellant has a judgment, is one of the persons entitled to indemnity under the policy by force of section 198. Section 198, in so far as pertinent, is in these words:—

(1) Every owner’s policy shall insure the person named therein, and every other person who, with his consent, uses any automobile designated in the policy, against the liability imposed by law upon the insured named therein or upon any such other person for loss or damage,—

(a) arising from the ownership, use or operation of any such automobile within Canada or the United States of America, or upon a vessel plying between ports within those countries; and

(b) resulting from

(i) bodily injury to or death of any person; or

(ii) damage to property; or

(iii) both. 1932, c. 25, s. 2, part; 1935, c. 29, s. 32.

(2) Any person insured by but not named in a policy may recover indemnity in the same manner and to the same extent as if named therein as the insured, and for that purpose shall be deemed to be a party to the contract and to have given consideration therefor. 1932, c. 25, s. 2, part.

It is obvious from inspection that by this section any person insured in a policy within the scope of subsection

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(1), though not named therein, may, by force of subsection (2), recover indemnity as if named therein as insured.

In order to apply these enactments to the facts of this case we must read them as subject to the definition of “owner’s policy” given in section 183, subsection (g):—

“Owner’s policy” means a motor vehicle liability policy insuring a person named therein in respect of the ownership, operation or use of any automobile owned by him and designated in the policy.

It is contended that Kowaluk, the driver, comes within section 198 (1) by virtue of the fact that he was driving the automobile with the consent of Seaman, who was the “person named” in the policy within the meaning of section 183 (g); that is to say, “named in” the “owner’s policy” under which the action is brought. By the definition of “owner’s policy” that contention rests upon the proposition that the automobile was “owned” by Seaman in the sense of that definition (section 183 supra). The Court of Appeal has taken the view that this question must be answered in the negative. We are satisfied that the decision of the Court of Appeal on this point ought not to be reversed. Accordingly, the appeal will be dismissed with costs.

Appeal dismissed with costs.

Solicitor for the appellant: C.R. Fitch.

Solicitor for the respondents: A.G. Murray.