Supreme Court of Canada
Blanchette v. C.I.S. Ltd., [1973] S.C.R. 833
Date: 1973-05-07
Laurier Blanchette (Plaintiff) Appellant;
and
C.I.S. Ltd. (Defendant) Respondent.
1972: May 30, 31; 1973: May 7.
Present: Martland, Judson, Ritchie, Spence and Pigeon JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR SASKATCHEWAN
Insurance—Composite application form—Parts left in blank—Agent authorized by telephone to complete—Applicant not bound by agent’s failure to complete properly—Assurer bound by agent’s acts.
Courts—Judges—Reasonable apprehension of bias—Ground for disqualification.
One R, a representative of the respondent company, at the request of the appellant B called at his farm for the purpose of discussing insurance and at this time B signed an application form for fire insurance on his granary and public liability insurance. The form was of a composite character containing applications for different kinds of insurance. R told B that the two types of insurance applied for would go into effect at once and B thereupon paid the premium.
The answers to a number of questions were completed by R and B then signed the form without reading those answers. A question with respect to prior losses was incorrectly answered. The following declaration appeared immediately over the appellant’s signature at the end of the form: “I do hereby declare that the statements made in this application are true and correct and I hereby apply for a contract of insurance to be based on the truth of these statements.”
A day or two later B called R to come back in order to cover certain tractors but R said that this was unnecessary and it could be done by telephone conversation. Nothing was said as to when the policy would take effect and the premium was agreed to be paid by R in partial discharge of a debt he owed B. The form relating to the tractors contained two questions to which the answer “no” was filled in by R after the telephone conversation. One of the answers constituted a material misrepresentation.
Shortly thereafter one of the tractors was damaged by fire and in a subsequent action wherein B alleged that the tractor was insured by the respondent, the
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trial judge held in B’s favour. On appeal, the Court of Appeal reversed the trial judgment and dismissed B’s claim. B then appealed to this Court.
Held (Ritchie J. dissenting): The appeal should be allowed, the judgment of the Court of Appeal reversed, the judgment of the Court of Queen’s Bench set aside and a new trial ordered.
Per Martland, Judson, Spence and Pigeon JJ.: Concerning the answer “no” to the question as to prior losses the misrepresentation or omission, if any, was material to the liability risk only, not to the fire coverage of the tractors and the effect of statutory condition 1 (which provides that in case of misrepresentation or fraudulent non-disclosure “the contract shall be void as to any property in relation to which the misrepresentation or omission is material”) was not altered by the declaration over B’s signature at the end of the application form.
The fact that R at the time of the telephone conversation did not repeat the statement that B would be covered immediately made no difference. The previous statement was clearly the enunciation of an established policy and should be understood to apply to the tractors as well as to the other risks.
R was not a mere soliciting agent, he had some authority to bind the company and the latter should be held to whatever authority he professed to exercise and was reasonably believed to have. The signed form was already in the hands of the agent when he told B that the additional coverage could be obtained by his making the necessary additions on the basis of the information given him by telephone. When B agreed not to insist on R returning to his home for the purpose of adding the tractor coverage on the insurance application, he had no means of verifying the correctness of the form as completed. It was unfair to hold that he should suffer the consequences of R’s failure to complete the form properly.
The trial judge improperly rejected the defendant’s application requesting him to disqualify himself on account of apprehension of bias and there should therefore be a new trial.
Per Ritchie J., dissenting: The appellant was in the same position at law as an applicant who has signed a form without having read the answers which have previously been entered upon it by an agent. As stated in 22 Hals., 3rd ed., pp. 204-5: “…where the proposer himself signs the proposal form… by sign-
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ing he adopts whatever answers the agent has inserted and makes them his own. This is clearly the case where he reads and approves the answers before signing: but the position is the same if he chooses to sign the proposal without reading them, or if he signs the form when it is blank, leaving it to the agent to insert the answers later.… if the result is that inaccurate or inadequate information is given on material matters, or that a contractual stipulation as to accuracy or adequacy of any information given is broken, it is the proposer who has to suffer.”
Stone v. Reliance Mutual Insurance Society Ltd., [1972] 1 L1.L.R. 469; Newsholme Bros. v. Road Transport and General Insurance Co., [1929] 2 K.B. 356; Bawden v. London, Edinburgh and Glasgow Assurance Co., [1892] 2 Q.B. 534, referred to; Ghirardosi v. Minister of Highways for British Columbia, [1966] S.C.R. 367, applied.
APPEAL from a judgment of the Court of Appeal for Saskatchewan, allowing an appeal from a judgment of Davis J. Appeal allowed, Ritchie J. dissenting.
G.E. Noble, Q.C., for the plaintiff, appellant.
R.H. McKercher, Q.C., and W. Pinckney, for the defendant, respondent.
The judgment of Martland, Judson, Spence and Pigeon JJ. was delivered by
PIGEON J.—The facts of this case are summarized in the reasons of my brother Ritchie, but I am taking a different view for the following reasons.
Concerning the answer “No” to the question “Have you ever had a loss of any nature under any of the classes of the insurance for which you are now applying?”, I find it unnecessary to decide whether “loss” may include a claim for which no payment has been made or liability admitted. Statutory condition 1 provides that in case of misrepresentation or fraudulent non‑disclosure “the contract shall be void as to any property in relation to which the misrepresenta-
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tion or omission is material”. In my view the misrepresentation or omission, if any, was material to the liability risk only, not to the fire coverage of the tractors and the effect of the statutory condition is not altered by the declaration over appellant’s signature at the end of the application form.
It is common ground that when the appellant signed this application at his home on May 1, 1968, it was not in the form in which it now stands. Additions and alterations were admittedly made subsequently by Raiche, the agent. According to the appellant the only risks described were the granary on page 1 and the liability on page 2. There was, he said, no mention of any tractor on page 1 under the heading “Coverage B”, and nothing was written at the foot of page 2 under the heading “Farm Equipment Floater”, below which, after the instruction: “Itemize under Coverage B of application”, the following questions are printed:
1. Will any farm equipment be hired out for custom work?
2. Will any farm equipment be used for logging, forestry, brush cutting or sawmill operations.
3. If “yes”, state type of work.
Appellant’s statement in this respect is borne out by the fact that, at the top of page 2 opposite the words “Total Premium Coverages A & B”, there was at first the amount of $10 written, being the premium for the granary. If, as Raiche says, a tractor had been mentioned on page 1 with the serial number to be filled in subsequently, the total premium would logically have been left blank. This is not what was done. Not only was a total of $10 for coverages A & B written in at the top of page 2, but a total premium of $51.61 was written at the foot of that page, the premium for the liability coverage on page 2 being $41.61. Also Raiche admittedly took from the appellant a cheque, dated May 1, 1968, for that same total amount of $51.61. This cheque is made out to the order of Co-Op
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Fire and Casualty. It must then be noted that the application, made out to Co-Operative Fire and Casualty Company, is for a new policy “From Noon, May 1, 1968”. The appellant said that Raiche told him that he was insured immediately:
“He said I was insured as soon as I signed the paper and then it went into the underwriter and if they refused the policy they would send me a registered letter and fifteen days after I received the registered letter my insurance was cancelled.”
It is not clear that Raiche was authorized to make this particular statement in that form. However, it is certain that he had some authority by virtue of the company’s practice that was described by one Lafontaine, who testified on discovery as being by agreement the representative of the company. This witness, after saying that Raiche was an agent of the company, that he had certain authority, that his job “would be to write up applications and submit them to the office”, gave the following answers:
Q. Now here, what is the policy of your company, with respect to applications of the kind that I have just showed you, together with—that has been signed by the applicant, and which is accompanied by some form of payment, of the premium. Does the company then consider that to be a policy that is insurance, in effect, when they receive it?
A. If a policy is issued, it would be accepted from the date, effective from the date that it was applied for.
Q. But if, when the person applied, and actually in effect makes an application, and pays the premium, is he not covered, until that policy is rejected by the company?
A. Yes, he would be, as long as the information, is, of course, in order.
Raiche himself also said on cross-examination:
Q. Just for a moment, with respect to the agency Mr. Raiche, as I understand it the Company supply you with application forms?
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A. Yes.
Q. And empower you with the right to seek out prospective policyholders and fill in the application?
A. Yes.
Q. And accept money from the applicant?
A. On behalf of the Company, yes.
Q. And issue receipts?
A. Yes, I do issue receipts.
Q. On behalf of the Company?
A. Yes.
Q. They supply you with all their rate manuals?
A. Yes.
Q. And whatever information form the Company with respect to the types of policies they sell? They supply you with all that information?
A. Yes.
Q. So you do have authority then to take the application, take the money, and issue a formal receipt to the applicant, is that right?
A. Yes.
From the above, one thing is clear in my view. Raiche was not a mere soliciting agent, that is a man having no authority to make a contract binding the company. In order to hold that no contract results from the receipt of the premium with an application under such circumstances, one would have to say that this is an offer open to acceptance for an idefinite length of time that is, as long as the company does not decide whether to accept or to refuse the offer. This would mean that if a loss occurs in the meantime, which may be a matter of weeks if not of months, it could simply refuse the offer, but otherwise it could issue a policy dated from the day specified in the application, thus taking the benefit of the premium for the elapsed time without having been at risk. This cannot be so. If the company is to earn the premium from the date of the application by issuing a policy bearing that date, this means that a contract has been made when the premium was received by the agent.
On the basis that initially the application covered only the granary and the liability, appellant
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testified that there had been no questions put with respect to the Farm Equipment Floater and no answers given or written. He asked the agent to come back in order to cover the tractors but Raiche said this was unnecessary and it could be done by telephone conversation. Appellant admits that Raiche did not at that time repeat the statement that he would be covered immediately. In my view this makes no difference. The previous statement was clearly the enunciation of an established policy, as a matter of fact, the agent’s interpretation of the company’s established policy. It should therefore be understood to apply to the tractors as well as to the other risks.
This is borne out by the letter written by the company to appellant’s solicitors in which there is this statement:
Your letter deals with Mr. Blanchette’s application for insurance through Mr. Raiche and the fact that Mr. Raiche advised Mr. Blanchette that his equipment was covered by fire insurance, until our Company rejected the application. While this commitment on the part of our Agent may be correct, we have refused to accept the application, on the basis of misrepresentation and non-disclosure on the part of Mr. Blanchette.
In view of the evidence as to Raiche’s duties, I fail to see how it can be said that he did not have at least apparent authority to make this commitment. He was not a mere soliciting agent, he had some authority to bind the company and the latter should be held to whatever authority he professed to exercise and was reasonably believed to have (Whitelaw v. Ransom and Wellington Fire Insurance Co.; Berryere v. Fireman’s Fund Insurance Co.).
Under these circumstances, can the company rely on the inaccurate answer written by the agent? We are not here dealing with an application signed in blank which the insured has authorized the agent to fill subsequently. We are
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faced with what is really a second contract made by telephone between the agent and the insured. I cannot agree that an applicant for insurance who signs an application form leaving a part concerning “farm equipment” completely blank and who later applies for this type of coverage and authorizes by telephone the company’s agent to complete the form for that coverage, must be in the same position at law as if he had signed the form without reading answers previously entered by the agent. I can see no authority for that proposition and there is undoubtedly an important difference between the two situations. When the insured signs after the answers have been entered by the agent, he has the opportunity of reading them. On the assumption that he is under a duty to verify before signing that the agent has properly filled in the form, I can understand how he can be said to be negligent if he does not do so.
However, in the present case, the signed form was already in the hands of the agent when he told the appellant that the additional coverage could be obtained by his making the necessary additions on the basis of the information given him by telephone. When Blanchette agreed not to insist on Raiche returning to his home for the purpose of adding the tractor coverage on the insurance application, he had no means of verifying the correctness of the form as completed. In my view, it is unfair to hold that he should suffer the consequences of Raiche’s failure to complete the form properly.
In Stone v. Reliance Mutual Insurance Society Ltd., the U.K. Court of Appeal has recently declined to follow the rule in Newsholme’s case when it was shown to be “company policy” for the agent to fill the application form notwithstanding that the form there in issue, unlike that in the present case, expressly provided that:
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I HEREBY DECLARE that the answers given in the above proposal are in every respect true and correct… and that I have not concealed any important circumstances that ought to be communicated to the Society.
I further declare in so far as any part of this proposal is not written by me the person who has written same has done so by my instructions and as my agent for that purpose. I agree that the above proposal and this declaration shall be the basis of the Contract of Insurance between the Society and myself, and I am willing to accept a policy subject to the provisions and conditions contained therein, and I agree that the liability of the Society does not commence until this proposal has been accepted by the Directors and the premium paid.
Lord Denning M.R. said (at p. 474):
On those facts, it seems to me that the agent by his conduct impliedly represented that he had filled in the form correctly and that he needed no further information from her. Relying on this implied representation, she signed the form which he put before her. Later the policy was sent and she paid the premiums.
What then is the legal position? It is quite clear that, in filling in the form, the agent here was acting within the scope of his authority. He said: “It is company policy that I should put the questions, writing down answers.” This distinguishes the present case from Newsholme’s case, where the agent had no authority to fill in the proposal forms: and it was held that he was merely the amenuensis of the proposer.
In the present case, the evidence is clear that it was part of the agent’s duty to fill the application form. On the basis of the finding of the trial judge on credibility, that where there is a conflict between the appellant and Raiche the former is to be believed, it is impossible to hold that the appellant gave Raiche information justifying the erroneous answer. The company is therefore precluded from relying on an erroneous answer written by its agent. Lord Denning M.R. said (at p. 475):
…it was a mistake induced by the misrepresentation of the agent, and not by any fault of hers. Neither she nor her husband should suffer for it. No doubt it was an innocent misrepresentation for which in former
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times the only remedy would be to cancel the contract and get back the premiums. But nowadays an innocent misrepresentation may give rise to further or other relief. It may debar a person from relying on an exception.
Reference was made to Bawden v. London, Edinburgh and Glasgow Assurance Co., where Bawden was an illiterate man who had lost one eye, the agent filled in the proposal form and put it before him for signature. Bawden signed it. The agent had made a mistake in filling in the form because he ought to have stated the fact that Bawden had only one eye, but he failed to do so. Bawden was held entitled to recover on the policy. On this, Lord Denning M.R. observed (at p. 475):
That case was adversely commented on in Newsholme’s case, but I think it was correctly decided. It would have been most unjust if the company had been allowed to repudiate liability.
The pleadings do not appear to raise the contention that the risk involved in the operation of the tractors was such that the appellant had a duty to disclose it even if no question was asked. For this reason the point cannot be considered.
It is now necessary to examine the reason for which the respondent asks for a new trial if the judgment of the Court of Appeal for Saskatchewan is reversed. This is that the trial judge improperly rejected the defendant’s application requesting him to disqualify himself on account of apprehension of bias. In support of this application, correspondence was filed showing that the judge had actively pressed claims against the company defendant on behalf of members of his family and expressed strong dissatisfaction with the manner in which this particular insurance company was dealing with its insured.
In my view the principle to be applied is the same for judges as for arbitrators. A reasonable
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apprehension that the judge might not act in an entirely impartial manner is ground for disqualification as was held in respect of an arbitrator in Ghirardosi v. Minister of Highways for British Columbia. In the present case the insistent questions put by the judge for the purpose of ascertaining the identity of the defendant company in spite of some corporate changes could well lead the company’s representatives to believe that he might not be entirely unprejudiced. As it is necessary not only that justice be done but also that justice should appear to be done, it is impossible to render a final decision resting on findings as to credibility made under such circumstances. There should therefore be a new trial.
For those reasons I would allow the appeal, reverse the judgment of the Court of Appeal, set aside the judgment of the Court of Queen’s Bench for Saskatchewan and order a new trial. The appellant is entitled to his costs in this Court. The costs of the first trial and in the Court of Appeal to be at the discretion of the judge holding the new trial.
RITCHIE J. (dissenting)—This is an appeal from a judgment of the Court of Appeal for Saskatchewan allowing an appeal from the judgment rendered at trial by Mr. Justice Davis whereby he had awarded the amount of $10,333.16 to the appellant in respect of damage by fire to an International tractor which was allegedly insured by the respondent.
In reversing the judgment at trial, the Court of Appeal dismissed the appellant’s claim holding that the alleged contract of insurance was in fact nothing more than an application prepared by one who was acting as the agent of the insured and not of the insurance company and that it contained misrepresentations of material facts and was therefore not binding on the respondent.
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On May 1, 1968, one Albert Raiche, who represented the respondent company at Battleford, Saskatchewan, at the request of the appellant called at his farm for the purpose of discussing insurance and at this time the appellant signed an application form for $10,000 fire coverage on his granary and $100,000 public liability insurance.
I think it important to note that the form signed by the appellant at this time was of a composite character containing separate applications for different kinds of insurance and I would not disturb what I take to be the concurrent findings at trial and on appeal to the effect that when the application was signed by the appellant on May 1st, the types of coverage for which he was applying were limited to insurance on his granary and public liability and that the insurance on the tractor, with which we are here concerned, was the subject of a subsequent application. It appears to me to be convenient to refer to the granary and public liability application as “the first coverage” and the insurance on farm tractors which was subsequently applied for as “the second coverage”.
As I have indicated, the first coverage contained application for $10,000 fire insurance on the granary and $100,000 public liability insurance, and the premiums for these two types of insurance were $10 and $45.61 respectively, both of which were paid by the appellant’s company’s cheque signed by him and delivered to Raiche on May 1st, at which time, according to the appellant, Raiche told him that this insurance would be effective as soon as the form was signed and would so remain until 15 days after the company notified him of cancellation.
When the application form was signed on May 1st, the answers to a number of questions were completed by Raiche and I do not think there is any dispute as to the fact that Blanchette signed the form without having read
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those answers. One of the questions which was answered on this form was:
Have you ever had a loss of any nature under any of the classes of insurance for which you are now applying?
And I do not think there is any doubt that Raiche wrote in “no” in answer to this question, and although the appellant stated that he did not remember having been asked the question, the fact of the matter was that at the time when the application was completed Blanchette was being threatened with legal action arising from the burning of some granaries as the result of the escape of a fire started by one of his crews, and in the course of being questioned about the claim against him for the damage caused by this fire, the following exchange is reported:
Q. Why did you want to put on public liability?
A. Just to protect myself from anything that would happen like that.
Q. So that when you are clearing bush and a fire develops I suppose you would look to the insurance company to look after your liability, if any?
A. Yes, that’s why I buy insurance.
Under all the circumstances, I agree with the Court of Appeal that in light of this outstanding claim, the question as to previous losses is to be treated as having been falsely answered and as constituting a misrepresentation which was material to the risk within the meaning of statutory condition 1 of s. 124(2) of The Saskatchewan Insurance Act, R.S.S. 1965, c. 143, which reads as follows:
If any person applying for insurance falsely describes the property to the prejudice of the insurer, or misrepresents or fraudulently omits to communicate any circumstance that is material to be made known to the insurer in order to enable it to judge the risk to be undertaken, the contract shall be void as to any property in relation to which the misrepresentation or omission is material.
I think it to be of the very essence of the application that the following declaration
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appears immediately over the appellant’s signature at the end of the form:
I do hereby declare that the statements made in this application are true and correct and I hereby apply for a contract of insurance to be based on the truth of these statements.
As I am prepared to adopt the Court of Appeal’s finding that the question with respect to prior losses was falsely answered, it follows from the authorities to which reference will hereafter be made that the application for the “first coverage” was void.
I now turn to the “second coverage” which is directly at issue in this appeal. This was an application for fire coverage on a 1968 Versatile tractor and an International tractor and it is the damage occasioned to the International tractor by fire which forms the subject-matter of the claim at issue in this case. There was some conflict between the evidence of Raiche and the appellant in regard to the way in which this application was made, but as I have indicated, I accept the finding of the Court of Appeal and the trial judge in this regard, which is that no such application was made on May 1st and that the International tractor was not mentioned until May 2nd or 3rd when the appellant telephoned to Raiche and asked him to come out to his farm as he wanted to insure his Versatile tractor. Raiche replied that it was unnecessary for him to come out and that all he needed was the serial numbers which he could fill in, in the portion of the application relating to farm equipment which had been left in blank when the form was signed.
I have treated the two coverages as separate contracts and in this regard I consider it significant that when the application was made for the first coverage the appellant says that Raiche told him that it would go into effect at once and Blanchette thereupon paid the premium with his own cheque in the amount of $51.61; whereas when the second coverage was applied for, nothing was said about when the policy would
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take effect and the premium was paid by Raiche in partial discharge of a debt which he owed to the appellant. In this regard the following evidence is pertinent:
A. He said I was insured as soon as I signed the paper and then it sent into the underwriter and if they refused the policy they would send me a registered letter and fifteen days after I received the registered letter my insurance was cancelled.
Q. When you later added the International and Versatile was there any further discussion about when the insurance would take effect?
A. No.
Q. Did Mr. Raiche say anything to you about when it would take effect?
A. No.
Q. Did you ask him?
A. No.
…
Q. Now then, later in your telephone discussion with Mr. Raiche insuring the Versatile and the International did this question of when the insurance would take effect come up?
A. No.
Q. Did he say anything to you about it?
A. No.
Q. Did you say anything to him about it?
A. No.
The appellant’s understanding of what was said concerning the right of the underwriter to refuse to issue the policy must be read in light of the evidence from the respresentative of the insurers as to Raiche’s authority and Raiche’s own evidence on the same subject, but it is in any event clear that at the time of the application for coverage on the tractors, Blanchette understood that the answers in relation to this coverage which had been left in blank, were to be filled in by Raiche over the appellant’s signature and I cannot escape the conclusion that the appellant authorized this to be done. In this regard, I refer to the following passages in Blanchette’s cross-examination in which he
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describes the way in which, this application was made:
Q. In any event, you knew when you telephoned Mr. Raiche that this application had not gone in, did you not?
A. I didn’t know.
Q. As a result of your conversations you had with Mr. Raiche you were given to understand that was the case, did you not?
A. I knew when he just wanted the serial number that it wasn’t sent in.
THE COURT: YOU knew what?
A. When he just wanted the serial numbers I knew he couldn’t have sent it in.
Q. You knew that P-1, the application, was still with Mr. Raiche when you talked to him about the tractors?
A. Yes.
Q. You knew that when you provided the serial numbers that he was going to complete the form, isn’t that right?
A. Yes, he said he was going to complete the form, yes.
Q. When he completed the form, he was going to complete the form that you signed, is that correct?
A. Yes.
It appears to me therefore, that in applying for the second coverage, the appellant intended to authorize and did authorize Raiche not only to fill in the serial numbers but to complete the form relevant to the fire coverage which had been left in blank over his signature. In so far as the second coverage is concerned, I accept the conclusion of the Court of Appeal that in completing the application form Raiche did so “on behalf of the respondent and not as agent of the appellant” and I think that the answers which I have quoted from the appellant’s evidence make it plain, and that the fact that the premium was paid with Raiche’s money in partial discharge of a debt to the appellant reinforces this conclusion. The second coverage must be considered in light of the fact that, by reason of the declaration contained at the end of the form, the application for this coverage was intended to be
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based on the truth of the answers entered by Raiche.
The form relating to the tractors also contained two questions to which the answer “no” was filled in by Raiche after the telephone conversation. The question with which we are here directly concerned was:
Will any farm equipment be used for logging, forestry, brush cutting or sawmill operations?
The appellant freely admitted that the tractors in question were to be used for brush cutting and that this was a “real bad” fire hazard, so that the negative answer to this question written in by Raiche constituted a misrepresentation material to the risk within the meaning of statutory condition 1.
I think this is a convenient stage at which to consider the appellant’s position in seeking to obtain the insurance on his tractor. Just as he was seeking public liability insurance because of the fire claim which was being pressed against him, so he decided to make a separate application respecting the Versatile tractor because the dealer who had sold it to him told him that it should be insured, and it was something of an afterthought that he included the International. I will have occasion to refer hereafter to the fact that the appellant appears to have been an alert and industrious farmer who did a good deal of brush clearing and log hauling on the side. Unlike the plaintiff in Stone v. Reliance Mutual Insurance Society Ltd., the appellant was not a lone woman of little education whose insurance was solicited by an inspector of the insurance company concerned, nor was he like the plaintiff in the case of Bawden v. London, Edinburgh and Glasgow Assurance Company, who was an illeterate man, blind in one eye, whose insurance was being solicited by a local agent or convasser for the company. This appellant was
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an intelligent young man of 31 seeking to obtain insurance coverage through a friend who was in his debt. Mr. Raiche on the other hand was a part-time insurance agent with authority to accept applications for insurance for forwarding to his head office, but with no authority to bind his company in any way. In this regard Raiche testified:
I have no binding power whatsoever. The only place I do have is in the auto business, at which time I leave a man an application but there is no binding power. I take applications and send them on their way. I have no power to leave a binder if this is what you mean.
As to this phase of the matter, the representative of the respondent company, who gave evidence on discovery, stated as follows:
Q. I see. Well anyway, as an agent, what authority did he have to do business, on behalf of the defendant Co-op?
A. As an agent he would have certain authority accept—get business—and to take applications.
Q. Yes?
A. And submit them to the office.
Q. So then he would—his job then I would take it would be to write up applications, and submit them to the office.
A. That’s right.
…
Q. Now here, what is the policy of your company, with respect to applications of the kind that I have just showed you, together with—that has been signed by the applicant, and which is accompanied by some form of payment, of the premium. Does the company then consider that to be a policy that is insurance, in effect when they receive it?
A. If a policy is issued, it would be accepted from the date, effective from the date that it was applied for.
Q. But if, when the person applied, and actually in effect makes an application, and pays the pre-
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mium, is he not covered, until that policy is rejected by the company?
A. Yes, he would be, as long as the information, is, of course, in order.
There does not appear to me to be anything unusual or unbusinesslike in conducting an insurance business on this basis, nor am I prepared to assume that if a valid application was forwarded, together with the premium from some rural area to Regina and a fire occurred between the time of the sending of the application and the time of receipt at head office that the company would contemplate the possibility of refusing such a risk simply because the fire had intervened, nor have I any reason to think that the officials at the company’s head office would be in any way biased or influenced in determining the validity of the application by the fact that the fire had in fact occurred while the application was in the course of transit.
The legal question posed by this appeal must therefore, in my opinion, be considered in light of the fact that the appellant sought this insurance by means of a telephone call during which he authorized the agent on his behalf to fill in answers, the truth of which would form the basis of the policy, over a statement signed by him declaring that these statements were true, and the further fact that the agent had no authority to bind the company or issue a policy, and that no policy was in fact ever issued.
The learned trial judge found that:
…there was a proper agency which entitled the agent Raiche to accept the application, and it was accepted by him and by his principals; and that he told the Plaintiff that he was covered from the day when the machine was in fact covered, namely on the 2nd or 3rd day of May, A.D. 1968, and that there was accordingly, a binding contract between the Plaintiff and the Defendant Company. I have no reason to disbelieve the testimony of the Plaintiff and in fact, as I stated previously, I accept that testimony
It would appear from this passage that the learned trial judge regarded “authority to accept the application” as synonymous with “authority to bind the company”. What the evidence dis-
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closes is that Raiche accepted the application for forwarding to his company and with all respect to the learned trial judge, it certainly cannot be said that his “principals” accepted the application. It is true that the insurance company wrote to the appellant’s solicitor in reference to Blanchette’s statement that Raiche had advised him “that his equipment was covered by fire insurance until our company rejected the application” and the letter continued:
While this commitment on the part of our agent may be correct we have refused to accept the application on the basis of misrepresentation and nondisclosure on the part of Mr. Blanchette.
I do not read this as meaning anything more than that the agent may have made this commitment and having regard to the evidence given by the respondent’s representative at the discovery, I do not think that the letter can be treated as an admission that Raiche had authority to bind the company. Blanchette’s own evidence as to what was said to him by Raiche does not suggest that Raiche had any final authority to bind, but the suggestion which is now drawn from it is that Raiche’s statement indicated that he had authority to bind the company between the time when the application was completed and the time when it was either accepted or refused by his principals. There is no evidence that Raiche at any time stated that he was authorized to bind his principals.
In my opinion an applicant for insurance who declares that the statements made in his application are true and correct and that the contract is to be based thereon and who later seeks additional insurance and authorizes the agent by telephone to fill in a part of the application which had been left in blank over his signature is in the same position at law as an applicant who has signed a form without having read the answers which have previously been entered upon it by an agent. In the course of his reasons for judgment in the case of Newsholme Bros. v.
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Road Transport and General Insurance Co., at p. 369, Scrutton L.J. put the matter in this way:
If A. gets some one—C.—to fill up the form for him before he signs it, it seems to me that C. in doing so must be the agent of A. who has to make the proposal, not of B. who has to consider whether he will accept it.
I think this reasoning applies with equal force to an applicant who gets someone to fill in the form after he has signed it.
The law in the common law provinces of this country has, in my opinion, developed in conformity with the reasoning of Lord Justice Scrutton who said, at p. 376 of the Newsholme case, supra:
In any case, I have great difficulty in understanding how a man who has signed, without reading it, a document which he knows to be a proposal for insurance, and which contains statements in fact untrue, and a promise that they are true, and the basis of the contract, can escape from the consequences of his negligence by saying that the person he asked to fill it up for him is the agent of the person to whom the proposal is addressed.
I do not find it necessary to do more than refer to the reasons for judgment of Mr. Justice Kellock, speaking on behalf of the Court of Appeal for Ontario in Sleigh v. Stevenson, and those of Chief Justice Robertson, speaking for the same Court in Salata v. Continental Insurance Co., where he also adopted the following excerpt from the judgment of the Supreme Court of the United States in New York L. Ass’ce. Co. v. Fletcher, at p. 529:
It would introduce great uncertainty in all business transactions, if a party making written proposals for a contract, with representations to induce its execution, should be allowed to show, after it had been obtained, that he did not know the contents of his proposals,
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and to enforce it, notwithstanding their falsity as to matters essential to its obligation and validity. Contracts could not be made, or business fairly conducted, if such a rule should prevail; and there is no reason why it should be applied merely to contracts of insurance.
It is furthermore significant in my view to note the nature of the appellant’s claim as disclosed is para. 3 of the statement of claim where it is said:
The Plaintiff paid the said total premium and the Defendant’s insurance agent forwarded the application and the said premium to the Defendant. The Plaintiff says that the completing of the application for insurance and by paying the required premium to the defendant’s agent, a policy of fire insurance was in effect and the said Defendant became obligated to indemnify the Plaintiff against loss by fire until such time as the Defendant, by notice in writing to the Plaintiff, rejected the said Plaintiff’s application.
(The italics are my own.) It is thus apparent that the appellant’s case rests on the validity of the application and by suing on it he had adopted the statements which it contains. In this regard, the observations of Moss C.J.O. in Thomson v. Maryland Casualty Co., at p. 601, appear to me to be pertinent. He there said:
the question is not whether the statements were made by the assured or were filled up by some one else, or whether they were made in good faith and without knowledge of their want of truth, but whether the policy was obtained and a contract entered into upon the basis of the statements. If they form a basis of the contract of insurance, they bind plaintiff when suing to enforce the contract.
This statement was referred to by Rose J. whose judgment in St. Regis Pastry Shop. v. Continental Casualty Co. was adopted by the Court of Appeal of Ontario, where there was a false statement in an application for automobile insurance and the insured sued on the policy
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which contained that statement and the head-note reads:
Where an insurance policy has been obtained on the faith or representations in a written application, which are false, the policy is void whether or not those statements were made by or on behalf of the insured.
In the case of Dorsht v. Trans-Canada Insurance Co., the plaintiff made no written application for a contract of insurance but when the policy was issued it contained the declaration that the automobile insured “is and will be kept in a public or private—both—garage.” This was in fact a mis-statement, but the plaintiff contended that as it was not contained in a written application by the insured for the insurance, it did not constitute a defence, and in the course of his reasons for judgment in the Court of Appeal of Ontario, Mulock C.J.O. said, at pp. 510-1:
I think the learned trial Judge rightly held that the plaintiff in bringing this action and claiming the benefit of the policy must be held to have adopted the policy and is, therefore, estopped from denying such statement. The evidence establishes its materiality and I quite agree with the learned trial Judge’s reasons for dismissing the action.
In the same case, Masten J.A., observed, at pp. 512-3:
I think the evidence is such as to cast the onus of establishing that the application, which the witness Helwig saw bearing a signature purporting to be the signature of the plaintiff, was in fact not signed by him and that he has failed to meet the onus. The question, however, is not of importance in the result for if there was an application containing the above clause the case falls within stat.con. 1 of the Insurance Act. But if there was no application the same result follows under the law laid down by this Court in St. Regis Pastry Shop v. Continental Cas. Co., [1929] 1 D.L.R. 900, 63 O.L.R. 337. By suing on the policy the plaintiff adopts the representation con-
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tained in the copy of application which appears upon the policy.
In my view these considerations apply with equal or greater force to a case like the present where there is no policy and the plaintiff is suing on the application form which contains material misrepresentations.
Reference has been made to the recent case of Stone v. Reliance Mutual Insurance Society Ltd., supra, where an inspector from the insurance company called on Mrs. Stone to seek the revival of a policy which had lapsed because of non-payment of premiums and under which a fire claim had been paid some years previously. Mrs. Stone was alone at the time of the call and, in the words of Lord Denning “she was of very little education, and assumed that the agent would know all about the previous policies and that there had been claims made under them. She said: “He didn’t ask about any previous claims. He already knew about it.” The inspector filled in the application for the new policy, as he was authorized to do and in so doing he answered the following questions by entering the word “none”:
5. State Policy Numbers of insurance held by you with the Society and whether lapsed or in force.
7. Give particulars and dates of any claims you have made in respect of any risks hereby proposed to be insured.
Notwithstanding that the records of the company must have disclosed the earlier loss and the fact that the policy had lapsed, the company nevertheless issued a policy and accepted premiums in respect of it and subsequently, when a claim was made as a result of a burglary, liability was denied. The factor which immediately distinguishes the Stone case from the present one is that the company knew or ought to have known that the answers to Qs. 5 and 7 were
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untrue and yet the policy was issued and the premiums were accepted. Under these circumstances I fully agree with the result reached by the Court of Appeal whereby the insured was held to be entitled to recover.
In his reasons for judgment in the Stone case, Lord Denning seeks to distinguish the Newsholme case on the ground that the agent in that case had no authority to fill in the proposal forms, but in my opinion the Newsholme case is not limited by any such circumstances as is shown by the paragraph which I have quoted from the judgment of Scrutton L.J. which begins with the words “In any case”. In view of the peculiar circumstances of the Stone case, and particularly the fact that knowledge can be attributed to the company itself, I think it important to note that Lord Justice Megaw, who sat on the Court with Lord Denning, prefaced his reasons for judgment by saying:
In my view this appeal does not give rise to any question of a principle of law. It is a case which depends upon its own special facts.
and it is noteworthy also that the other member of the Court, Stamp L.J., opened his reasons for judgment by saying: “I agree that this case turns on its own special facts.”
With all respect to those who may hold a different view, I do not consider that the Stone case constitutes an authority for deviating from the law as stated in the case of Newsholme which, as I have indicated, has been widely followed in the Courts of this country, and which is epitomized in the passage from Halsbury’s Laws of England, vol. 22, 3rd ed., pp. 204-5, to which reference was made in the judgment of the Court of Appeal from which I find it convenient to quote the following excerpt:
Furthermore, where the proposer himself signs the proposal form, as is usually insisted upon by insurers, by signing he adopts whatever answers the agent has inserted and makes them his own. This is clearly the case where he reads and approves the answers before
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signing: but the position is the same if he chooses to sign the proposal without reading them, or if he signs the form when it is blank, leaving it to the agent to insert the answers later. It is irrelevant to inquire how the inaccuracy arose; or whether the agent acted honestly or dishonestly; or whether the agent had forgotten or misunderstood the correct information he had been given; or whether the answers were a mere invention on the part of the agent; if the result is that inaccurate or inadequate information is given on material matters, or that a contractual stipulation as to accuracy or adequacy of any information given is broken, it is the proposer who has to suffer.
(The italics are my own.)
Even if I took the view that Raiche was acting as the company’s agent in completing the application for the “second coverage”, I would be unable to conclude that this coverage was intended to be effective or was effective as of the date when it was applied for through Blan-chette’s telephone conversation with Raiche on May 2nd or 3rd. The burden of proving that the International tractor was insured at the date of the fire of May 13th rests upon the appellant. No policy of insurance was ever issued and the absence of any evidence as to the effective date of the “second coverage” having been orally agreed to in my view affords grounds for concluding that the second coverage was not in force.
For these reasons I would dismiss the appeal with costs.
Appeal allowed with costs, RITCHIE J. dissenting.
Solicitors for the plaintiff, appellant: Sallows, Osborn, Noble, Wilhelm & Walker, North Battleford.
Solicitors for the defendant, respondent: Wedge, McKercher & Stack, Saskatoon.
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