Hobbs v. Guardian Assurance Co.

Hobbs v. Guardian Assurance Co.
Collection
Supreme Court Judgments
Date
1886-04-09
Report
(1886) 12 SCR 631
Judges
Ritchie, William Johnstone; Fournier, Télesphore; Henry, William Alexander; Taschereau, Henri-Elzéar; Gwynne, John Wellington
On appeal from
Ontario
Subjects
Insurance
Decision Content
Supreme Court of Canada
Hobbs v. Guardian Assurance Co., (1886) 12 S.C.R. 631
Date: 1886-04-09
Hobbs, Osborn & Hobbs (Plaintiffs) Appellants;
and
The Northern Assurance Co. (Defendants) Respondents.
and
Hobbs, Osborn & Hobbs (Plaintiffs) Appellants;
and
The Guardian Fire & Life Assurance Co. of London (Defendants) Respondents.
1885: December 4, 5; 1886: April 9.
Present: Sir W.J. Ritchie C.J. and Fournier, Henry, Taschereau and Gwynne JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Fire insurance—Condition in policy—Loss by explosion—Loss by fire caused by explosion—Exemption from liability.
A policy of insurance against fire contained a condition that “the company will make good loss caused by the explosion of coal gas in a building not forming part of gas works, and loss by fire caused by any other explosion, or by lightning.”
A loss occurred by the dropping of a match into a keg of gunpowder on the premises insured, the damage being partly occasioned by the explosion of the gunpowder, and partly by the gunpowder setting fire to the stock insured. The company admitted their liability for the damage caused by fire but not for that caused by the explosion.
Held, reversing the decision of the Court of Appeal, Taschereau J. dubitante, that the company were not exempt by the condition in the policy from liability for damage caused by the explosion.
APPEAL from a decision of the Court of Appeal for Ontario[1] affirming the judgment of the Common Pleas Division[2] in the suit against the Guardian, and that of the Queen’s Bench Division[3] in the suit against the Northern, both of which judgments were in favor of the defendants.
These two cases were precisely similar, the insurance effected in the two companies being the same premises and goods. The fire by which the loss occurred to the plaintiff was caused by a burning match being dropped into a keg of gunpowder, which exploded and set fire to the stock insured. A part of the loss was occasioned by the explosion, and a part by the subsequent fire, and the insurance companies claimed to be liable for the latter only, under the 11th statutory condition of ch. 162 R.S.O. which provides that “the company will make good loss caused by the explosion of coal gas in a building not forming part of the gas works, and loss by fire caused by any other explosion or by lightning. The amount of the loss caused by fire was paid into court and payment of the balance refused. The plaintiffs brought suit for such balance and submitted the facts to Chief Justice Wilson without argument, and a formal verdict was entered for the plaintiffs in such case which was set aside by the Divisional Court and the Court of Appeal. The insurance companies appealed from the decision of the latter court to the Supreme Court of Canada.
Gibbons for the appellants.
It is submitted that an explosion by gunpowder is a fire, it being, in fact, the action of a vapid fire.
See Scripture v. Lowell Mutual Fire Ins. Co.[4] where the authorities on this question are reviewed.
The following cases refer to the distinction between such an explosion causing fire and one not: Waters v. Merchants’ Louisville Ins. Co.[5]; City Fire Ins. Co. v. Corlies[6]; Everett v. London Assurance[7]; Taunton v. Royal Ins. Co.[8] Lightning causing fire is covered by ordinary insurance against fire.
In the present case there is an express provision in regard to explosion which distinguishes it from Stanley v. Western Ass. Co.[9], relied upon by the company.
See also Citizens’ Ins. Co. v. Parsons[10] Exception must be strong to relieve the insurance company, Harper v. New York Ins. Co.[11]; Barbat v. Allen[12]
Marsh for the respondents.
We have paid for all the loss caused by fire, and did not insure against loss by explosion. Even if the explosion is a fire, it is not such a fire as is insured against. The policy insures against “fire,” using the word in its general, not in its scientific, sense. The company are liable for loss by fire caused by an explosion, but not for loss by explosion not caused by fire.
But there is one case in which the company is liable for loss by explosion, namely, by explosion of coal gas. That necessarily excludes liability for loss by any other explosion. Expressio unius est exclusio alterius. See Aspdin v. Austin[13], Hare v. Horton[14], Blackburn v. Flavelle [15]
If the fire had caused the explosion we might be liable for the loss by the latter, but here the explosion was the proximate cause of the loss. I would also refer to Everitt v. London Ins. Co.[16], Bunyon on Ins.[17], Babcock v. Montgomery Mutual Ins. Co.[18]
Sir W.J. RITCHIE C.J.—The policy of assurance upon which this suit was brought is as follows:—
“Sum assured $7,000. Premium $35.00.
Whereas Messrs. Hobbs, Osborn & Hobbs, London, have paid the sum of thirty-five dollars to the undersigned, Greorge Denholm, as authorized agent at Montreal, of the Guardian Fire and Life Assurance Company, of London; being the premium for insuring from loss or damage by fire, the property hereby described; not exceeding the sum specified on each article, namely:—
On a four storey and basement brick building 31 by 100 feet, covered with patent roofing owned and occupied by the assured as a wholesale hardware store, situate and being Nos. 343 and 345 Richmond street, London, Ontario; adjoined by similar class buildings on either side as per application and diagram fyled in this office.”
I adopt the conclusions arrived at in Scripture v. Lowell M.F. Ins. Co.[19], that where the effects produced are the immediate results of the action of a burning substance in contact with a building, it is immaterial whether these results manifest themselves in the form of combustion or explosion or of both combined. In either case the damage occurring is by the action of fire and covered by the ordinary terms of the policy against loss by fire
The policy in this case being an ordinary policy against fire, the liability of the company to indemnify the assured would, in my opinion, be beyond question unless the assured’s right to recover is barred by reason of the terms of the 11th statutory condition which reads as follows:—
11. The company will make good loss caused by the explosion of coal gas in a building not forming part of gas works and loss by fire caused by any other explosion or by lightning.
I think this condition was not intended to limit but rather to extend, or at any rate to make clear, the liability of the insurer to losses caused by the explosion of coal gas in any building not forming part of gas works, and to make liable the company for loss by fire caused by any other explosion, and not to limit or restrict the right of the assured to recover for a loss by the action of fire, whether the results of such action is in the form of combustion or explosion, the same being such a loss as would be covered by the ordinary terms of a policy against loss by fire, in other words, was not intended to change the contract as entered into in the policy and alter the risk as expressed on the face of the policy, and I think this is abundantly manifest from the preceding section, which is as follows:—
“10. The company is not liable for the losses following from a to f inclusive:
a. In case of non-ownership.
b. Riot, invasion, &c.
d. Goods to which fire heat is being applied.
e. Repairs by carpenters, &c.
f. For loss or damage occurring while petroleum, rock, earth, or coal oil, camphine, burning fluid, benzine or any liquid products thereof, or any of their constituent parts (refined coal oil for lighting purposes only, not exceeding five gallons in quantity, excepted,) or more than twenty‑five pounds weight of gunpowder are stored or kept in the building insured or containing the property insured unless permission is given in writing by the company.”
Surely if the legislature had intended to exclude from liability such a loss, admittedly covered by the policy, as an explosion by gunpowder, we should have found it in the category of losses for which the company is not liable, but a critical reading of the condition excludes the construction of the defendants. It says the company shall make good a “loss by fire caused by any other explosion or by lighting,” but it does not say the company shall make good a loss by explosion caused by fire, which is the loss covered by the terms of the policy, but by fire caused by explosions. An explosion of steam or dynamite by concussion might overturn an oil lamp in the same or in the adjoining building whereby the building was injured and burnt; in such a case there would be a loss by fire caused by the explosion, and for such, under the terms of the contract, the insurer would be liable.
I think the appeal should be dismissed and verdict for plaintiff restored.
FOURNIER J.—I am in favor of allowing the appeal on the grounds stated by His Lordship the Chief Justice.
HENRY J.—This is an action on a policy of insurance issued to the appellants by the respondent company for $5,000 on a four-storey stone and brick building, having basement, owned by the insured, occupied as a hardware store (wholesale), situate on the west side of Richmond street, London, Ontario, against destruction or damage by fire, but subject to the terms and conditions printed on the back of the policy, which were to be taken as part of the policy.
The provisions required by the Insurance Act for variations from the statutory conditions were not adopted in the policy, and we are, therefore, to consider the rights of the parties in this case by applying those conditions as against those in the policy which conflict with them in favor of the appellants.
We are then to inquire how the loss occurred, and to what to attribute it. The question for our decision is whether, under the circumstances, the respondent company is liable for damage to the property covered by the policy not occasioned by the immediate action of fire, but through an explosion. If an explosion from any other cause than that of fire took place, without causing fire in the building insured, it could not be contended that any liability would arise, unless specially provided for either in the conditions of the policy or those prescribed by the Act.
An explosion in a building might be the cause of serious damage, but the general provision of the policy against damage by fire would not cover it; but if fire resulted, and damage was done thereby, such damage would be covered under the 11th statutory condition: “The company will make good loss caused by the explosion of coal gas in a building not forming part of gas works, and loss by fire caused by any other explosion or by lightning.”
The judgments of all the learned judges who decided this case in favor of the respondents are founded on their construction of that statutory provision. With every deference to opinions justly entitled to great weight and consideration, I feel constrained to say that in my opinion that statutory condition does not affect in any way the merits of the contest between the parties, and that the contract in, the body of the policy is the governing one in this case,—and I do not think the appellants need invoke the aid of the statutory condition, nor do I think that its provisions can aid the respondents.
The policy and the loss or damage are admitted, but the respondents allege that under the statutory condition they are not liable.
It is not so much a question of law as of fact that we are called on to decide. The policy is an indemnity against loss or damage by fire, and the legitimate inquiry is therefore to ascertain if the loss in this case caused more immediately by the explosion had or had not its origin in fire; and if we decide that question in the affirmative, then the only one left is as to subsequent results. We have to decide whether the fire was caused by the explosion, or the latter caused by the former.
The evidence upon that point is to be found in the “statement of facts,” agreed upon as follows: “The said loss was occasioned by some employees accidentally setting fire to some gunpowder stored in the premises insured.” Which, then, in the order of time was first, the explosion or the fire? Which caused the other? Did not the fire precede the explosion? If it did, how can it be said that the explosion caused the fire. It is said the company is not liable for a loss caused by explosion, nor would they be if it was an explosion not preceded by fire. Without the fire there would have been no explosion, and the damage was occasioned by the explosion as the immediate result of the fire. The damage was, therefore, through the agency of the explosion caused by the fire. The time the fire was burning is of but little consequence, and if it caused the explosion, it is unimportant how long it lasted before the explosion took place. Suppose that instead of the almost instantaneous explosion, which I presume took place in the appellants store, a fire had accidentally caught in some ignitable substances and after progressing for hours had reached and exploded gunpowder or some other explosive substances, and damage thereby was done to the insured property, could it be gravely argued that the subsequent explosion was not caused by the fire? The proposition to my mind, admits but of one solution. As well might it be said, in the case of three men standing on the verge of a precipice, one violently shoves a second against the third, who, by the violence, is thrown over the precipice and killed, that his death was occasioned by the second man who was pushed against him. The fire in this case took effect on the gunpowder, and the latter, influenced and promoted by the former, did the damage as the immediate and not remote result of the primary cause.
I think the defence not sustainable either under the contract in the body of the policy, or within the terms of the 11th statutory condition pleaded by the respondents, and, as the legal result, that the appeal should be allowed and the judgment of the learned judge who tried the action affirmed with costs.
TASCHEREAU J.—I have had some difficulty in reaching this conclusion, and if my judgment could have affected the case, I might have decided on dismissing the appeal. I will not dissent, however, though I was much impressed by the arguments of the judges in the court below.
GWYNNE J.—By reason of the neglect of the defendants to endorse on these policies the statutory conditions with variations, as required by the Act to secure uniform conditions on policies of fire insurance, ch. 162 of the revised statutes of Ontario, these policies must be read as being subject to the statutory conditions only. The policies are for indemnity against all loss by fire, but loss by fire only happening to the property insured, which consists of a hardware warehouse and the stock of hardware therein, subject, however, to the exceptions and qualifications specified in the 10th statutory condition, and subject also, to such exception and qualification, if any, as may be contained in the 11th of such conditions, which is as follows:
The company will make good loss caused by the explosion of coal gas in a building not forming part of gas works, and loss by fire caused by any other explosion or by lightning.
Some of these statutory conditions, if care be not taken by inserting variations framed so as to adapt the conditions to the particular property insured in each case, may prove to be inapplicable in some cases; for it must be always borne in mind that, although the act requires that when they are not endorsed on the policy with variations in the manner pointed out in the Act the statutory conditions alone without any variations are to be imported into the contract contained in every policy; they must be imported and read in their proper place and character, that is to say, not as what they are not, but as what they are, namely, conditions only, to which the contract, which is in the body of the policy, and is a contract of indemnity against loss to the insured property by fire, is subject. Now the contracts contained in these policies being for indemnity against any loss by fire which should happen to the insured property, subject to such qualification, if any, as is contained in the 11th condition, what is that qualification, if there be any?
The condition begins with an affirmation of liability in a particular case terminating with an implied negation of liability in another case. The affirmation is that “the company will make good loss”—what loss? Plainly only such as can be said to come within their contract for indemnity against loss by fire contained in the body of the policy, for they could be liable to make good no other—“Occasioned by the explosion of coal gas.” Now loss occasioned by explosion of coal gas occurring on the insured premises unless specially excepted, would be a loss within the contract of indemnity contained in the body of the policy, but in reading this condition in connection with the particular property here insured, it is not merely to an explosion of coal gas occurring on the insured premises, to which the condition relates, but an explosion of coal gas occuring “in a building not forming part of gas works,” and doing damage to the insured property of the plaintiffs—so that the manner in which this condition (if it affects at all the contract in the policy) operates as a qualification or modification of the liability of the defendants to indemnify the insured against loss by fire happening to the insured premises, namely, the plaintiffs hardware warehouse and stock of hardware, is that the defendants will not be responsible for any loss occurring to the insured property, although within the terms of the contract of indemnity contained in the body of the policy, if such loss be occasioned by the explosion of coal gas occurring in any building which forms part of gas works. This is the only way, in my opinion, in which this condition qualifies the contract of indemnity contained in the body of the policies, and except as qualifying such contract it can have no operation whatever.
As to reading the condition as an independent contract providing for the case of loss of a wholly different character, and occuring from a different cause from that mentioned in the body of the policies, namely, the case of loss occurring by concussion wholly apart from loss by fire, if such concussion should be occasioned by the explosion of coal gas, it might be in a building quite remote, that is, in my opinion, quite out of the question. Such a construction would create a wholly new contract, imposing a wholly new liability on the defendants, not imposed by the body of the policy—diverting that which is intended to be, and whose sole office is to operate as, a condition or qualification, subject to which the contract, which is in the body of the policy, is made into a wholly new and independent contract. Such a construction cannot, in my opinion, be supported. But the condition adds that the company will make good loss by fire caused by any other explosion or by lightning. Such losses, however, are within the terms of the contract contained in the body of the policies, and this affirmation of liability in respect of such losses is but a re-affirmation of a liability incurred by the contract, which is in the body of the policies, and is not a qualification of that contract. The language is not put in the form of an exception from or qualification of, that contract, and this condition in which the language appears can operate in no other way. If it had been intended to operate as creating an exemption from liability for such loss as should be occasioned by the explosion of gunpowder on the insured premises as distinguishable from loss by lire, it should have been specifically so expressed, and no doubt would have been in the 10th condition, in which provision is made for the case of gunpowder being on the insured premises, and which provision must, I think, be held to comprehend the whole of the provisions as affecting the policies in so far as gunpowder or its explosion is concerned.
The whole question really arising in the cases is one arising on the contract as contained in the body of the policies, unqualified, as it appears to me, by the 11th condition, and is simply this: When gunpowder within the quantity authorised by the tenth statutory condition is on the insured premises, and becomes ignited by contact with fire, whether of the flame of a candle, or a lighted match, or otherwise, and by explosion expands and spreads the fire by which it became ignited, and in such explosion and expansion does damage, is or is not the whole of the property so damaged loss within the contract contained in the policy for indemnity against loss by fire? And are the defendants liable for the whole of the damage so occasioned, or only for a part? And can they separate the loss so as to claim exemption from liability for so much as is attributable to the explosion as distinguished from that attributable directly to fire subsequent to the explosion, and the answer, in my opinion, is that the whole loss or damage is loss by fire within the contract of indemnity, and that the defendants are liable for the whole.
In the case of the Northern Insurance Company, whose policy insured the stock in trade on the insured premises, including the gunpowder which exploded, the contention that the defendants are exempt from liability for a part of the loss as attributable to the explosion seems to me to border upon the brink of absurdity. The gunpowder itself, having been part of the stock in trade insured, its loss surely is a loss within the terms of the policy for which the insured is entitled to be indemnified—its loss was loss by fire. If, then, the plaintiffs are entitled to indemnity for the loss of the gunpowder, how can their right to indemnity be said to be limited to the property damaged or destroyed subsequently to the loss of the gunpowder? The loss for which the plaintiffs are in both cases, in my opinion, entitled to indemnity is the whole loss caused by and consequent upon the lire which ignited the gunpowder which, by its explosion, expanded and caused the whole loss.
The appeals, therefore, in both cases, should, in my opinion, be allowed with costs to the plaintiffs in all the courts, and judgment should be entered for the plaintiffs on the verdicts rendered in their favor.
Appeal allowed with costs.
Solicitors for appellants: Gibbons, McNab & Mulkern.
Solicitors for respondents: Lount & Marsh.
[1] 11 Ont. App. R. 741.
[2] 7 O.R. 634.
[3] 8 O.R. 342.
[4] 10 Cush. 356.
[5] 11 Peters 213.
[6] 21 Wend. 367.
[7] 19 C.B.N.S. 126.
[8] 33 L.J. Ch. 406.
[9] L.R. 3 Ex. 71.
[10] 7 App. Cas. 96.
[11] 22 N.Y. 441.
[12] 7 Ex. 609.
[13] 5 Q.B. 671.
[14] 5 B. & Ad. 715.
[15] 6 App. Cas. 628.
[16] 19 C.B.N.S. 126.
[17] P. 38.
[18] 4 N.Y. Rep. 326.
[19] 10 Cush. Mass. 356.