Liverpool and London and Globe Ins. Co. v. Wyld and Darling

Liverpool and London and Globe Ins. Co. v. Wyld and Darling
Collection
Supreme Court Judgments
Date
1877-06-28
Report
(1877) 1 SCR 604
Judges
Ritchie, William Johnstone; Strong, Samuel Henry; Taschereau, Jean-Thomas; Fournier, Télesphore; Henry, William Alexander
On appeal from
Ontario
Subjects
Insurance
Decision Content
Supreme Court of Canada
Liverpool and London and Globe Ins. Co. vs. Wyld and Darling, 1 S.C.R. 604
Date: June 25th 1877
The Liverpool and London and Globe Insurance Company (Plaintiffs) Appellants;
and
Frederick Wyld And Henry William Darling (Defendants) Respondents.
1877: June.
Present: The Chief Justice, and Ritchie, Strong, Taschereau, Fournier and Henry, JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Fire Insurance—Interim Receipt—Description of premises in policy—Authority of Agent—Costs.
On the 9th of August, 1871, the Plaintiffs (Respondents) applied to the Defendants (Appellants) through their agent H., at Hamilton, for an insurance on goods to the amount of $6,000 contained in a store on the south side of King street, described in the application as no. 272 in Defendant’s special tariff book, and marked no. 1 on a diagram endorsed in pencil by the Secretary of the Company at Montreal; the diagram being a copy of a diagram on a previous application for policy by insured. The premium was fixed at 62½ cts. on the $100, and was paid on the 10th of August. On the said 10th of August the Plaintiffs gave a written notice to H. that they had added two flats next door to their former premises (which would form part of no. 273 in Defendants’ special tariff book), and that part of their stock was then in these new flats. A few days later, H. inspected the building, and said the rate would have to be increased in consequence of the cuttings. On the 29th of August, H. notified Defendants of the opening into the adjoining building, but did not communicate the written notice in its entirety. An increased rate, making it one per cent., was fixed, and paid by the 23rd of September, the agent issuing an interim receipt, dated back the 9th of August for the full premium. The policy issued immediately thereafter, dated as of the 9th of August, describing the premises substantially as in the application of the 9th of August, and referring to the diagram endorsed on the application of the insured, S.T., 272. On the policy there was an N.B. in reference to “an opening in the east end gable of the premises, through which communication is had with the adjoining house occupied by one O .” The policy was handed to the Plaintiffs in September, 1871, and the loss by fire occurred in March, 1872.
The Plaintiffs brought an action in the Court of Queen’s Bench on the policy, but failed on the express ground that the description therein did not extend to or cover goods which were in the added flats. Thereupon the Plaintiffs filed their bill to reform the policy or restrain the Defendants from pleading in the action at law that the policy covered only goods contained in S.T., no. 272.
Held:—That the true construction of the application, written notice and interim receipt, read together, established a contract of insurance between the Plaintiffs and the Defendants, embracing the goods situated in the flats added by Plaintiffs, and that notwithstanding the acceptance of a policy which did not cover goods in the added flats, Plaintiffs were entitled to recover for the loss sustained in respect of the goods contained in such added flats.
(Henry, J., dissenting; and Ritchie and Fournier, J.J., dissenting also, but only on the ground that the evidence did not, in their opinion, establish an application for insurance on the goods in the added flats, nor an agreement for such insurance by the agent, but that the application, interim receipt and agreement were confined to the goods in the premises, S.T., no. 272. )
As to Costs:—The Judges of the Supreme Court being equally divided in opinion, and the decision of the Court below affirmed, the successful party was refused the costs of the appeal.
But (Per the Chief Justice) By 38 Vic. c. 11, s. 38, the Supreme Court being authorized, in its discretion, to order the payment of the costs of the appeal, the decision in this case will not necessarily prevent the majority of the Court from ordering the payment of the costs of the appeal in other cases where there is an equal division of opinion amongst the Judges.
This was an appeal from a judgment of the Court of Appeal for Ontario, dismissing an appeal from a decree of the Court of Chancery in this cause, which declared that “the contract of insurance between the Plaintiffs and the Defendants embraced the goods situated on the flats, added by the Plaintiffs to the building, no. 272, S.T., in the Bill mentioned, and that the policy in the pleadings mentioned should be reformed, so as to make the same conform to this declaration. “It was referred to the master to take an account of the loss of the Plaintiffs in respect of goods situated on the said flats, and to tax the Plaintiffs their costs.
It appeared that the Defendants’ agent at Hamilton, through whom the insurance was effected, was one Frederick L. Hooper, and the Chief Agent in Canada was one George F. Smith, resident in Montreal.
The first application for insurance was made in July, 1871. The receipt given for the premium was cancelled because the rate was too low.
On the 9th August, 1871, another application was made for insurance to the amount of $6,000 on the stock of dry goods contained in a stone building, covered with S. & M., marked no. 1 on diagram and owned by one Irvine. To question seven, contained in the application, enquiring as to distance from other buildings, the answer was “see diagram on policy, 1,377,249, expired.” The letters S.T. 272, referred to that number in a book which Defendants had relating to buildings in Hamilton called the Special Tariff Book.
The premium was $37. 50 and was paid by cheque dated 10th August.
On the 10th August, 1871, the Plaintiffs gave a written notice to Hooper that they had added two flats over Mr. William’s store, next door to the former premises, and that part of their stock was then in these new flats. Hooper a few days after inspected the premises, found that large doorways had been cut in the second and third flats between the original premises, and that part of the Plaintiffs’ stock of goods was in these flats. The added flats were in the house, no. 273, in the special tariff book. Hooper told the Plaintiffs the rate would have to be increased in consequence of these cuttings. On the 29th of August, Hooper wrote to Smith in Montreal, informing him that Plaintiffs had cut an opening into the building adjoining on the east side, formerly occupied by Williams’ Canada Oil Company and that the lower portion of that building was then occupied by one Onyon as a coal oil store. He also informed him that he had inspected premises, and he had notified the Plaintiffs their rate would have to be increased at least to one per cent. He added: “The Royal and Hartford have agreed to the same. Will you please let me know if you will accept the risk at that figure? The British America have a risk on Mr. Onyon’s stock at 1 per cent. “
Before this letter, dated on the 23rd September, 1871, Hooper had received from the Plaintiffs $22.50, which with the $87.50 paid on the 9th of August, made $60, viz.: 1 per cent. on the $6,000, for which Plaintiffs wished their stock insured. And, on the same 23rd September, Hooper gave them an interim receipt, dated 9th August, for the $60, for insuring the $6,000 on the stock for one year from that date. If assurance was approved of, a policy would be delivered, or, if declined, the amount received would be refunded, less the premium for the time so insured.
The Plaintiffs afterwards received from Hooper a policy of insurance “on their stock of goods, &c., contained in a building owned by one Irvine and occupied by insured as a dry goods store, on the southside of King Street, Hamilton, built of stone, covered with shingles laid in mortar, and marked no. 1 on a diagram of premises endorsed on application of insured, filed in this office, no. 10, 995, which is their warranty, and made part hereof, S.T., no. 272 six thousand dollars.
“N.B.—There is an opening in the east end gable of above, through which communication is had with the adjoining house, which is occupied by one Onyon as a coal oil store. Not more than two barrels of refined coal oil permitted in said store, but 10 barrels of the same are allowed to be kept in the yard.”
The policy bore date the 9th August, 1871.
A fire took place on the 11th March, 1872, originating in the coal oil store occupied by Onyon, occasioning a loss to the Plaintiffs’ stock in trade of several thousand dollars, the goods damaged and destroyed being partly in the store first occupied by the Plaintiffs and partly in the two added flats. The Defendants refused to pay for the loss sustained on goods in the latter portion.
The Plaintiffs then brought an action in the Court of Queen’s Bench on the policy above referred to, but failed on the express ground that the description therein did not extend to or cover goods which were in the adjoining flats, which had been added when the extra premium was paid, and that the Plaintiffs suing upon the policy were bound by the description contained in it.[1]
Thereupon the Plaintiffs filed the Bill in this case. The prayer of the Bill was that the policy so issued and dated the 9th of August, 1871, might be amended by inserting therein appropriate words, shewing that it was intended to and did cover the goods in the two upper flats of no. 273, and that the defendants might be restrained from pleading at law that the policy covered only the goods contained in no. 272, and that they might be ordered to strike out the pleas raising such defence.
The cause was carried down for hearing at the sittings of the Court at Hamilton in the spring of 1874, and Blake, V.C., declared the Plaintiffs were entitled to a decree against the Defendants, with costs[2].
The cause was then re-heard before the full Court during the December sitting, and the decree was affirmed with costs[3].
From that decision the Defendants appealed to the Court of Appeal for Ontario, and that Court dismissed the appeal with costs[4].
The Defendants thereupon carried the case to the Supreme Court.
JANUARY, 23rd, 24th AND 25th, 1877.
Mr. James Bethune, Q.C., and Mr. Alexander Bruce, for the Appellants:
The Court of Queen’s Bench have properly held by their judgment in the suit between these parties (reported 33 U. C. Q. B. 284), that only the goods in the westerly building, described as S. T. 272, were insured under the terms of the policy issued by the Appellants; and the Respondents, by coming into a Court of Equity seeking to have the terms of that policy altered, admit that the Court of Queen’s Bench were correct in so holding. The Respondents cannot complain of the judgment in the Queen’s Bench, for they never appealed from it.
There is thus an instrument, solemnly executed by the Appellants as their contract with the Respondents, delivered to the Respondents in the month of September, 1871, and so accepted by them and retained without question until after a fire takes place in the month of March, 1872. The Respondents do not even then question that this policy contains their contract with the Appellants; but, on the contrary, relying on it as evidencing their contract, they bring an action upon it, and it is not until they find that the construction of the policy by the Court of Queen’s Bench is contrary to their contention, that they come forward and say that the policy does not truly state their contract.
After such conduct on the part of the Respondents, it should require a case and evidence of the most conclusive character to warrant a Court in interfering, and the Appellants contend that the Respondents have failed to make out such a case, and that their evidence falls short of what is necessary to entitle them to the relief they seek for.
The insurance effected by the interim receipt was superseded by the issuing of the policy.
The Respondents are not seeking to enforce the contract of insurance as expressed by the policy granted to and accepted by them; but, on the contrary, are seeking to vary the same, and the onus is on them to establish this right by the most clear and incontestible evidence.
Now, it is clear, upon the evidence, that it was not within the scope of Hooper’s authority for him to enter into an absolute binding contract of insurance with the Respondents, but his powers were limited both as to extent and duration. He could only grant an insurance for a limited period of time, by issuing an interim receipt, showing on its face that it was to be superseded by a policy, and that the issuing of such policy was a matter which had to be determined by the approval of the Board of Directors at Montreal. When the Board at Montreal acted, by issuing a policy, all that Hooper had done or could do was superseded:—Davis v. Scottish Provincial Insurance Company[5].
The increased rate of 62 ½ cents per $100 paid by Respondents, was for the increased risk in consequence of the opening into the building adjoining on the east side.
The Company at their office in Montreal had certainly no notice of any desire or intention on the part of the Respondents to have the portion of their goods in the easterly building S.T. 273 covered by Appellants’ policy, and it is equally clear that the Appellants had no intention to insure such goods. This is clear from the language used in framing the policy, which is such as to convey an intimation to the Respondents that only the goods in S.T. 272 are intended to be insured by the Appellants, and is borne out by Mr. Smith’s evidence; and the policy has a notice, prominently endorsed thereon, particularly requesting the insured to read his policy and to return the same immediately if any alteration was necessary. Linford v. Provincial Horse and Cattle Insurance Company[6]; Graves v. Boston Marine Fire Insurance Company[7].
Solins v. Rutjer’s Fire Insurance Company[8]; Ryan v. World Mutual Life Insurance Company[9].
The most that can be said is, that the evidence does not establish more than this, that the terms of the policy are not in accordance with the wishes and intentions of the Respondents, but this is not sufficient to vary or alter a written document. The mistake must be mutual, in order to correct a written instrument; or, to put it in another way, there was no concensus to anything different from what was contained in the policy:—
Fowler v. Scottish Equitable Insurance Company[10]; Davega vs. Crescent Mut. Ins. Co. of New Orleans[11].
The evidence to entitle them to a change in the policy must be very strong, for they must not only establish that the policy does not contain the contract intended, but must go further and make out that the Appellants entered into a contract different from that contained in the policy, and in the terms contended for by the respondents And, as the happening of the fire has altered the position of the parties, so that they cannot be placed as they should be according to the Respondents contention there is the stronger reason for not interfering with the contract entered into by the Appellants.
Cox v. Ǽtna Insurance Company[12]; Powell v. Smith[13]; Bleakely v. Niagara District Mutual Fire Insurance Company[14]; Lyman v. United States Insurance Company[15]; Andrews v. Essex Fire and Marine Insurance Company[16].
Moreover, by the terms of the interim receipt, the insurance so effected was partly in the nature of an application for insurance, and was only to be binding upon the Appellants until they had an opportunity of accepting the same by the issue of a policy on the terms of such application, or of declining it. The Respondents were bound to the exercise of reasonable care and caution in ascertaining that the policy was issued in accordance with such application and their intention—and a policy having been issued by the Appellants in good faith, and in accordance with their understanding of the application, and in terms free from ambiguity—such policy became and was in fact the the only contract of insurance, and it was incumbent on the Respondents to see if it was in accordance with their wishes—and the fire having occurred many months after the delivery of such policy to the Respondents, and after their acceptance of it as representing the true contract between them, they are precluded, after the happening of the loss, and when the Appellants cannot be placed in statu quo, by the rules prevailing in a Court of Equity, from any relief.
This is very different from the case of a policy issued in the form desired by the insured and the Company afterwards resisting payment on the ground that their agent had failed to communicate some of the facts to them. In such a case the insured were naturally content with holding a policy which expressed what they desired; but here the policy contained a different contract from what the insured say they intended, and the insured should not have been satisfied with it, but on its receipt, should at once have said to the Company “this is not the insurance we intended to effect,” when both parties might have come to a proper understanding; instead of which, by holding the policy without any question or objection, they give the Company to believe that it expresses truly the contract intended.
Atlantic Insurance Co. v. Wright[17]; Columbia Insurance Company v. Cooper[18].
It must also be borne in mind that in this case the policy was issued by the Appellants at Montreal, and could be only so issued, and that Hooper had not that extensive power which some local agents have who are authorized to fill up and issue policies; and it will be found that in many of the American cases where Companies have been held liable on their policies, or where policies have been reformed, it has been because the policies were issued by an agent who had these extensive powers, and who combined, as it were, the powers possessed in this case by both Mr. Hooper and Mr. Smith.
Woodbury Savings Bank v. Charter Oak Insurance Company[19]; Peck v. New London Mutual Insurance Company[20].
All the cases cited by Blake, V.C., are cases where the agent had power to issue policies. The agent here was not a party to the contract, and his mistake cannot bind the Company.
The learned counsel also referred to the following authorities:.
Patterson v. Royal Insurance Company[21]; MacKenzie v. Coulson[22]; Acey v. Fernie[23]; Hendrickson v. Queen Insurance Company[24]; Henkle v. The Royal Insurance Co[25]; Rolland v. The North British & Mercantile Insurance Company[26]; Motteaux v. The London Assurance Co[27].
Mr. Edward Martin, Q.C., for Respondents:
The evidence shews that Hooper was the Defendants’ agent at Hamilton, authorized amongst other things to accept risks for the Defendants, receive the premiums therefor and issue interim receipts in the form set out in the bill, which are binding contracts of insurance; to receive notice of changes or alterations in the application for insurance, or in the risk, receive extra premiums therefor, bind the Defendants by his assent thereto before the issue of the policy; that he was the proper person to receive the notice, dated 10th August, 1871, and to assent thereto, and receive the extra premium therefor, paid on 23rd September, 1871, when the second receipt ante-dated 9th August, 1871, was given, and that, in fact, the Defendants did, by a binding contract prior to the issue of the policy, insure the goods in both the original store “272” and the added flats, as stated in the bill.
The interim receipts granted by Hooper, including the one given to the Plaintiffs, were “subject to the approval of the Board of Directors, Montreal; the said party to be considered as insured until the determination of the said Board of Directors be notified; if approved of, a policy receipt and afterwards a policy will be delivered; or, if declined, the amount received will be refunded, less the premium for time so insured.”
The Directors never declined the insurance on the goods in the original premises and added flats, effected through Hooper, nor was the premium ever refunded.
The Directors afterwards issuing a policy, it was an acceptance on their part of the contract entered into by their agent, and Respondents are entitled to a policy in accordance with the terms of the interim receipt.
Until then the Defendants are bound by the interim contract made by Hooper, who was the proper officer to receive the original application for insurance, and the notification of 10th August, 1871, which, together, constituted the application, and to act thereon, as proved by demanding and receiving the extra premium for insuring the whole stock in both the original shop and added flats, and giving the interim receipt therefor. English & Foreign Credit Co. v. Arduin[28].
The fact that the Company were bound by the interim receipt distinguishes this case from Fowler v. Scottish Equitable[29], and that class of cases where the agents of the Company had merely authority to receive and submit applications for insurance, but had no authority to bind the Company to any contract of insurance
The acts, notice and knowledge of Hooper, who admits that he always thought he was insuring the whole stock, are to be treated as the acts, notice and knowledge of the Defendants, and the contract so made through Hooper was never put an end to by the Defendants; but, on the contrary, the acts and conduct of the Defendants confirmed the contract made by Hooper, and the Defendants are bound and estopped by the acts and conduct of Hooper.
Wing v. Harvey[30], is a case in point. Also Patterson v. Royal Insurance Co.[31].
The learned counsel on this point referred also to Wyld v. L.L., & G.[32], Penley v. Beacon[33]; Rossiter v. Trafalgar Ins. Co.[34]; Davis v. Scottish Prov. Ins.[35]; Re Universal non-Tariff Co.[36]; Columbia Ins. Co. v. Cooper[37]; Ellison v. Albany Ins. Co.[38]; Meadow-croft v. Standard Ins. Co.[39]; Phillips on Insurance[40]; Pimm v. Lewis[41]; Smith v. Hughes[42]; as to receiving evidence of what is the subject matter mentioned in the contract—Macdonald v. Longbottom[43]; Newell v. Radford[44]; Joindes v. Pacific Ins. Co.[45]; and the cases cited in the judgment in Chancery and in the Court of Appeal. Brown v. British American Insurance Company[46]; Campbell v. National[47]; Redford v. Mutual Insurance Company[48]; Montreal Assurance Company v. McGillivray[49]; Johnson v. Provincial Insurance Company[50].
The notice to Hooper was in effect the same thing as a notice to the Company and Respondents cannot be made responsible for the neglect or mistake of Hooper, while acting within the scope of his authority, nor for any neglect, error, or omission of Hooper in forwarding or communicating any documents, notices or information to the defendants, or any of their agents, or otherwise; nor for the neglect of any officer of the Company in conveying information to Hooper, or to the Plaintiffs or otherwise. The Defendants are therefore estopped on the facts proved from denying that the Plaintiffs were insured on the whole of their stock, both in original building and added flats.
Laidlaw v. London and Liverpool and Globe Ins. Co.[51]; Rowe v. Lancashire[52]; Ross v. Commercial Union Ins. Co.[53]; Gale v. Lewis[54]; Marsden v. City Plate Glass Co.[55]; Hough v. City Ins. Co.[56]
The Appellants knew that the stock was partly in no. 272 and partly in 273, and still they kept the money which was intended to insure the whole stock which interim receipt covered. Then, if the policy differs from the actual agreement, equity will decree relief on the agreement and not on the policy, and this after happening of the loss insured against. Collett v. Morrison[57]; Jones v. Provincial Insurance Company[58]; Franklin Fire Insurance Company v. Hewett[59].
It cannot either be argued that the Respondents ever agreed to accept a policy on stock in the original building alone. If the agent had thought the additional premium was only for increased danger, he would have given a receipt to that effect as did the Royal, and not a renewal receipt, thinking it a new insurance. In point of fact, the Appellants contend that they had a right to accept the whole risk; to take the premium and retain it, and yet to so frame their policy as to escape liability. Now the policy, not being in accordance with the previous actual agreement between the parties, it could not supersede the interim receipt.
Earl Beauchamp v. Winn[60]; Xenos v. Wickham[61]; Cooper v. Phibbs[62].
As to the power to reform a policy after the loss, the learned counsel referred to Phœnix Ins. Co. v. Gurnee[63]; Phœnix Ins. Co. v. Hoffeums[64]; Manhattan Ins. Co. v. Webster[65]; Philips on Insurance[66]; Collett v. Morrison[67].
And as to the effect to be given to the finding on the facts by the Judge who heard the evidence and tried this cause in the first instance, to “The Alice[68]”.
Mr. Bethune, Q.C, in reply:—
The meaning of the interim receipt is that the party is insured until another contract is agreed upon. The Company could not have returned the premium, for Mr. Smith knew nothing more than that the risk had been increased in consequence of the cutting. The language used in the N.B. on the policy is clear and positive, and yet the Respondents keep the policy for six months; and it is only after the loss and after an action on the policy has been decided against them that they come and ask to have the policy reformed. The mere misinterpretation cannot affect this matter unless the Court is satisfied that the mistake is mutual.
June 28th, 1877.
The CHIEF JUSTICE:
The first question to be considered is, whether Hooper, the Defendants’ agent, had authority to bind the Company by granting interim receipts on taking risks for them, and as to alterations made requiring additional premiums on the substitution of one policy or interim receipt for another. Mr. Smith, the Defendants’ secretary and chief agent in Canada, said: “Hooper’s duties were to receive proposals or applications for insurance and give interim receipts subject to confirmation by the Montreal office; if not confirmed by that office, the risk was to be cancelled and the premium returned less the amount earned by the Company. His duty was to receive notices of changes in the risk; to inform the Montreal office of them; and his action in these matters was subject to the approval of the head office. On cross-examination, he said changes in the character of the risk take place frequently during the course of the risk, and changes in the stock and its location; and, in these cases, the local agent has the same power as in the acceptance of a risk in the first instance. If what he does is not approved of, the Company returns the premium less the amount earned. The agent has the same power to make alterations or modifications of an insurance, as he has to make an original insurance. In all cases the agent has a power subject to the control of the head office. The agent has this power of modification, pending the issue of the policy, and Plaintiffs were certainly insured up to the 23rd September. It was within his power to assent to the continuance of this insurance, notwithstanding the change notified by the letter of the 10th of August. He did not make us aware of the fact that a part of the property insured was moved; it was his duty to have done so, &c.”* * *
“If Mr. Hooper had insured deliberately the goods in these buildings, as one risk, it would have been binding as long as this receipt was in force; that is, until the receipt is cancelled in some way or other the risk is binding, nothwithstanding it is in violation of our standing rule as to splitting up the risks.”
Mr. Ball, Defendants’ agent and inspector, stated that he placed Hooper in charge as agent at Hamilton, and gave him instructions as to his powers and duties.
That Mr. Smith had stated the powers and duties of Hooper, as he (Ball) informed him they were at the time he gave him his instructions.
In addition to this, if the fact be, as is not denied, that Hooper was the Defendants’ agent to solicit and receive insurances, and to take the monies therefor, and grant interim receipts, which, on the face, shewed the party paying the money was to be considered insured until the determination of the board was notified, there are decided cases, both in England and in the United States, which shew that the acts of such an agent, relating to the taking or changing of risks before the issue of a policy, would be binding on the Company.
In what position did the Plaintiffs and Defendants stand in relation to the insurance on the stock of goods owned by the Plaintiffs, which were contained in the premises on King Street, in the town of Hamilton, on the 24th September, 1372, and before the issue of the policy granted to Defendants, bearing date 9th day of August, 1871?
The application signed by Plaintiffs, per J.J. Jermyn, is dated the 9th August, 1871, and is for insurance against loss or damage by fire by Defendants’ Company on the usual terms and conditions of the Company’s policy, in the sum of $6,000 for the term of one year, commencing the 9th day of August, 1871, at noon, on the property specified, to wit; on their stock of dry goods, chiefly clothes and tailor’s furnishings contained in a stone building covered S. & M, marked No. 1 on diagram, and owned by Irvine. Amount insured, $6,000; rate, 62 1/2c.; amount of premium, 37.50; S.T. No. 272. On the same day, 9th of August, Hooper, in a letter addressed to Plaintiffs, certified that he had received the $37.50 premium for insuring that stock for $6,000 for a year in S. T. 272, and stated that if at the expiration of four months they wished to cancel the policy they might do so, and he would refund the money for the unearned period. The cheque for the premium of $37.50, payable to Hooper, appears to be dated the 10th of August. Whether this date is erroneous or not is, perhaps, of little consequence. On that very day (the 10th of August) Plaintiffs wrote Hooper as follows: “We beg to advise you that we have added two flats over Mr. Williams’ store, next door, to our former premises, and that part of our stock is now in these new flats.” What is the proper effect to give to this notice. It was given within twenty-four hours of the date of the application; had reference to the same goods and the same premises; and it was well known, both to Plaintiffs and Defendants’ agent, that no policy at that time had been issued on the application. The interim receipt only had been given. The reasonable view to take was, that the Company would, as to the policy they were about to issue, make it to cover the goods as the premises were when the last notice was given on the 10th August. If the Company required a payment of increased premium, such increase would be for the whole year. It would not occur to any one that the premium for 364 days would be at one rate, and for one solitary day at another and less rate. It seems to me to be absurd to suppose that either Plaintiffs or Hooper thought, that after the letter of the 10th of August, they were to treat the matter in any other way than as virtually a new application for insurance on their goods in the premises as they were on that day. Combining, then, the letter of the 10th of August with the application of the 9th, it would read as follows: Application for insurance against loss or damage by fire, on the usual terms and conditions of the Company’s policy, in the sum of $6,000 for the term of one year, commencing on the 9th day of August, 1871, at noon, on their property specified, to wit: On their stock of dry goods, chiefly of cloths and tailors’ furnishings, contained in a stone building, and the two flats over Mr. Williams’ store added thereto as part of these premises, which stone building is covered with S. in M., marked no. 1 on diagram, owned by Irvine.
It ought to be so read, for this was the true state of the matter, and it had been so notified to Defendants’ agent, who had examined the premises. The delay that arose from giving the new receipt was occasioned by the Hamilton agent wishing to learn at what rate the Montreal office would take the risk as changed. In one of his letters, that of 2nd September, he refers to the Hartford having risks of $5,000, Ǽtna $10,000, Lancashire $10,000, and Scottish Imperial $10,000, at 1 per cent. on the premises; at this rate the matter was closed and a new receipt given. It was given on the 23rd of September, though ante-dated. The object of that date being put there by Hooper evidently was that the Company should receive compensation for the time the insurance had been running. It could not have been to confine the Plaintiffs to the description of the premises contained in the application of the 9th August, because they all then knew that a change had taken place. But what is now contended for by the Defendants is that the insurance should be confined to the building marked no. 1, because the application of the 9th August so asks for it. It is admitted that if that application had stated in express terms “We wish insurance on all our stock contained in the building, marked No. 1 on the diagram, and the two flats added to our premises,” and Mr. Hooper had given a receipt for the premium, based on such an express application, that it would have bound the Company, though their general rule, as they said, was to consider property so situated as being in two or more buildings, and the value to be insured on each should be separately stated; but the application, modified by the notice of the 10th, does, in effect, ask for the insurance on the whole stock as it was then situated.
Without going beyond the general rule laid down for the interpretation of agreements between merchants, and men engaged in the every day business of life, I think the proper inference to draw from the letter of the 10th of August, to Mr. Hooper, is that they desired the insurance to continue on their stock in the whole of their premises as they were after the two flats were added to their former premises (the building marked No. 1 on the diagram).
They not only inform him, that they have taken in the two flats, but that part of their stock was in those new flats:
If the object had been merely to notify the Company of the change that had been made, and to submit whether they should pay additional insurance on that part of the stock in the building marked No. 1 on the diagram, there would have been no necessity of referring to the fact that “part of their stock was then in the new fiats.”
Suppose the receipt given by Hooper had been dated the 23rd September, the day it was actually made out and signed, and it had been filled up to read:
“Received from Messrs. Wyld and Darling, the sum of sixty dollars, being the premium of an insurance to the extent of $6,000 on their stock, consisting chiefly of cloths and tailors’ trimmings, all contained in a stone building on south side of King Street, Hamilton, as described in agency order of the 9th of August” (the effect of a description in the agency order, after the notice of the 10th of August, being to include the two flats referred to) for twelve months from that date, subject to the approval of the Board of Directors, Montreal, the said party to be considered insured until the determination of the said Board of Directors be notified; if approved of, a policy receipt, and afterwards a policy will be delivered, or, if declined, the amount received will be refunded, less the premium for the time so insured.
“N.B.—This receipt is issued subject to all the conditions of the policy issued by the Company.
(Signed,) F.L. HOOPER,
Agent.”
If after the granting of this receipt, and before any other was issued, or a policy granted, a fire had occurred, I cannot doubt that Defendants would have been liable to make good their proportion of any loss on the Plaintiffs’, stock of goods, whether situated in the two flats or in the other portion of the building, used by them as a dry goods store.
The insurance is on their stock of goods, not on a part of it. There is nothing to shew that at the time the money was paid, or the receipt given, that any of the parties contemplated such an alternative as insuring part of the stock in one part of the premises, and part in another. The probability is, that when Hooper thought he was insuring their stock, it did not occur to him that the Company might consider it in the nature of two risks, and to confine the amount they insured to a particular part of the premises, and so he gave the receipt without so limiting the insurance.
After a good deal of vacillation in his evidence, this seems to me to be the proper deduction from it.
He says: “it never crossed my mind as to the effect “of the change on the goods moved into these two flats; * * * the original insurance had been in respect of the whole stock; it did not occur to me to divide the risk; if it had, I should have asked that the risk should be divided; * * * * I swear I did not know that by this letter the Plaintiffs wanted me to cover these removed goods; I do not now know what they intended; I conjecture they intended me to cover these goods by this insurance; I entertained this conjecture shortly after the fire.”
Further on in his examination, he said, if he had stated before the fire that he always considered the stock in both buildings covered by the insurance, it would have been true.
“I could truly have made this statement; I certainly thought all the goods were insured; I told Mr. Ball the same thing; * * * I always thought I was insuring the whole stock; I thought all the other companies, to which I have referred, were placed in the same position, so far as the goods covered were concerned; I thought all the companies were covering the stock in both buildings.”
On being recalled he said he thought he told Darling, after the fire that he always considered the stock in both buildings was insured, and that he so intended it.
If it had been the, intention of Hooper to receive the additional premium of $22.50, merely to cover the increased risk on a then subsisting insurance, which it was intended to confine to one building, the proper course, as a business man, for him to pursue, was to have given the receipt for that sum, stating what it was for. But the taking up of the first receipt and giving a new one for the full amount, referring to their stock of goods, after he was notified of the adding of the two flats, and a portion of the stock being there, looks like the effecting of an insurance on the premises in the state they then were in, as the other companies did who charged the same rate of one per cent. If Hooper himself were the insurer, I should say there could be no doubt that he would be liable as for an insurance on the whole stock, up to the time the policy was issued. I think it is satisfactorily shewn that Hooper had the fullest power to bind the Company with regard to all preliminary matters connected with the effecting of an insurance, until what he did was disapproved or affirmed by the company.
Looking at the written application and the notice of the 10th of August as to the alterations in the premises and the payment of the additional premium, making the rate on Plaintiffs’ stock one per cent.; the giving up of the old receipt and the granting the new one on the 23rd September, though dated 9th August, I think the insurance under this receipt did cover the Plaintiffs’ stock in the whole of the premises, and was not confined to the part of the stock that was not in the flats that had been added.
When in addition to these written documents, Mr. Hooper himself admits that he considered he was insuring the whole of the stock in both buildings, I am relieved from the feeling that he might possibly have misapprehended the effect of the application and notice, and of the receipt he was signing.
It does not appear that Mr. Smith understood so clearly what was intended, though he seems to have had a lively apprehension of it when he came to prepare the policy. But if Hooper had done his duty, and sent forward the notice to him that part of the stock had been removed into the added flats, I cannot doubt he would have had a clear understanding of what was meant. This omission of Hooper, however, is not a matter of much consequence when considering the construction that should be given to the receipt he signed on the 23rd September, and certainly it should not prejudice the Plaintiffs. It may have had the effect of inducing Mr. Smith to make out a policy granting an insurance different from that which had been agreed upon, and so have caused the mistake which it is the object of this suit to remedy.
The effect of the receipt, then, being a contract to insure the Plaintiffs on their whole stock in their premises as they were on the 23rd September, how are they to be deprived of the benefit of the contract?
That contract was not accepted by the Company. The policy sent has been held to be not an acceptance of that contract. If it was intended to accept the interim contract and ratify it, that was not done, and there must be a mistake which should be rectified. If it was not intended to accept that contract, then there has not been another made which both parties assented to, and so the one made on 23rd September remains. The terms of the interim receipt being: if approved, a policy will be sent; if declined, the proper amount will be refunded. The only evidence of the Plaintiffs having accepted the contract, as contained in the policy, was that the policy was sent to them, and they kept it. That might be primâ facie evidence of acceptance, but it seems clear that they thought the policy was such as they had stipulated for, and brought an action on it in that view. Two of the learned Chief Justices, as well, as the learned Q.C. before whom the case; at law was tried, were not of opinion that the language of the policy so clearly confined the insurance to one building that they would have so decided on reading it.
It would certainly be laying down a very harsh rule to say, that an unskilled person should be held as accepting a contract, created by an instrument framed in such a way that learned Judges thought it would bear a construction which accorded with that put on it by the party who received the instrument, because a Court of Law, after serious consideration and argument, thought another construction that the framer of the instrument put upon it, was that which was the strictly legal one. In such a case, a party would be held constructively to have assented to an agreement which, in truth and in fact, was the reverse of what he intended to agree to. In this particular case the Plaintiffs were undoubtedly expecting a policy to cover the whole of their stock, and reading over the policy, supposing the Company knew what Hooper knew as to the change of their premises after the 8th of August, they would naturally suppose that the policy referred to their stock contained in a building owned by Irvine, occupied by them as a dry goods store, situated on the south side of King street (as it was occupied when they paid the additional premium), particularly as it referred to the opening into the adjoining house, and the coal oil kept there. They had no reason to anticipate anything different was intended by the policy from the receipt which Hooper had given, nor could they suppose that Defendants, without notice to them, would send a policy which neither they nor the Defendants’ agent intended should be sent.
If the policy itself were the only contract, and there was no interim receipt, and no slip or statement showing what the contract was, it might be difficult, if not impossible, for the Plaintiffs either to reform the contract or to enforce their claim on the interim receipt given on the 23rd September. In such a case no binding contract of any kind would be shewn; the policy itself being the only evidence of the contract. The Plaintiffs might have meant one thing and the Defendants another; and the Defendants could not be bound by a contract they had never entered into or intended to enter into. But if an insurance slip contained the true terms of the intended policy which both parties assented to, and the Insurance Company, in entering the matter in the policy, admittedly made a mistake, then the authorities are clear that the contract should be reformed.
Here, however, Hooper having power to make the interim contract to bind the Defendants, under it Plaintiffs continue insured until the Company have notified the acceptance or rejection of the application. As I have already stated, I do not think they are bound by the terms of the policy because they did not return it; they supposing that it really carried out what they agreed for.
Practically, it is of little consequence whether the decree is to reform the policy so as to make it conform to the insurance effected by the receipt signed on the 23rd of September, or to hold that the Company is bound by the insurance effected by the receipt referred to, and in that way answerable for the loss claimed.
I refer to the opinions expressed in the very able judgments of the learned Judges in the various courts through which this long pending case has passed in the Province of Ontario. All the Judges in the different Courts of Law and Equity before whom this case has been brought, including the trial at Nisi Prius, eleven in number, with singular unanimity, have had strong convictions that these Plaintiffs are entitled to recover the amount they claim in this matter.
Were it not that three of my learned brothers in this Court entertain a different opinion I should have thought that the undisputed facts in this case shewed such a clear right on the part of the Plaintiffs to recover, that any respectable Insurance Company, after the opinions expressed by so many Judges, would not have persisted in refusing to indemnify the Plaintiffs for the loss they have sustained, and to protect themselves against which they had in good faith paid their money to the Defendants, and which they still keep.
The authorities referred to on the argument, many of them cited in the various judgments in the Courts below, seem to me to be sufficient to sustain the conclusions arrived at by the learned Judges.
I shall only refer to two or three cases not referred to in the Courts below, which seem to me to accord with them.
Motteaux v. The London Assurance Co[69]; where Lord Hardwick amended a policy by a slip which was signed at the time. In subsequent cases he refused to reform the contract of insurance, unless it could be clearly shewn that it was a mere mistake that was to be corrected.
In one of the American cases[70], the doctrine is laid down in these words: “There must be a distinct showing, by clear and unequivocal allegations * * * that there was, before the policy was framed, an agreement, a concurrence of the minds of the assured (or his agent), and the underwriter to protect risks, which were afterwards, by mistake or fraud of the underwriter, left out of the formal instrument.”
In Phenix Insurance Company v. Gurnee[71]; the complainant applied to the company for insurance on a two story and a half frame grist mill, one run of stones, two bolts. &c. with privilege to use a stove in second story; cost $1750; insurance, $1,200. He signed the application, the policy was made out and delivered to complainant, and the insurance was as follows: “On his frame mill house, two and a half stories high, privileged as a grist mill only.” The mill was afterwards burnt down, Defendants insisted the policy was on the mill house only. The Complainant applied to them to correct the policy according to the written memorandum; Defendants refused to do so; Complainant filed a Bill to correct the mistake, and the Circuit Judge decided the policy should be corrected agreeably to the written memorandum. There was an appeal to the Chancellor Walworth.
He said the difference of description must have been clearly a mistake of the clerk, in filling up the policy, or an intentional fraud upon the insured, and the latter is certainly not to be presumed.
Although the Complainant read over the policy, it is hardly to be presumed that a plain countryman, unacquainted with the law of insurance, would have noticed or understood the difference which was produced by the change of phraseology in the policy from the plain and intelligible memorandum which was probably taken down from the lips of the insured.
The case of The Franklin Fire Insurance Company v. Hewett[72]; in the Court of Appeals, in the State of Kentucky, is in some respects like the case before us. The assured held goods consigned to them, and the question was whether the insurance covered the loss of goods. The effect of the receipt was considered in connection with the facts under which it was granted, and the Court came to the conclusion that the certificate or receipt covered that class of goods, though not specially named as such in the contract; the judgment then proceeds: “whatever degree of particularity might be required in the policy itself, it is sufficient that the certificate indicates with reasonable certainty, and without any ambiguity on its face, that the insurance was in fact made upon goods which the agent knew were held, and expected to be received on commission. But the certificate, though it evidences a contract which the Defendants are bound to comply with by furnishing a policy covering the subject which it indicates as having been insured or by furnishing the indemnity which the insurance implies, is enforceable against them in chancery only (per Woodworth, 4 Cowen, 661). * * * If they had delivered no policy as, according to the import of their agent’s acts, they were bound to do, the insured would have a remedy against them in a court of equity, perhaps for coercing the execution of the policy before a loss, and certainly for enforcing the indemnity implied in the insurance, upon the occurrence of a loss by fire within the period fixed by the terms of the agreement. And the only remaining question in this case is, whether, by reason of the delivery to their clerk of a policy, materially varying in its effect from the original contract as evidenced by the certificate, and by their failure to object to it until after the loss had occurred, they are precluded from claiming the benefit of the original contract.
“They allege in their bill, that they had not seen the policy, and did not know of it until after the fire occurred which occasioned the loss * * * If, as may be assumed, they never saw it, there could have been no such acceptance of it by them, as would prove that they had waived the original contract, or taken this policy as a consummation of it. And although their neglect to enquire whether it had been delivered, or to examine it if they knew of its delivery, shows a high and culpable degree of carelessness, we think it would be visiting upon them too heavy a penalty for this neglect, to say by that alone they had forfeited the indemnity for which they had paid the stipulated price, and especially as they held the certificate, which bore evidence of the contract, and as they had no reason to anticipate a variance from it in any policy which had been or might be furnished. * * * “It is by no means certain, nor even very probable, they would have at once detected the variance, or become aware of its importance until they demanded payment upon it. * * * The question is not whether they (the Plaintiffs) shall be allowed, after the loss has fallen, to make an election, which they might not have made before and thus throw a heavy loss on the insurers, which, if the election had been made before the event, might nothave fallen on them; but whether the complainants have, by their mere delay in examining a policy which they would undoubtedly have rejected as soon as they understood it, lost the advantage of their actual contract, or whether the insurers shall, by that delay, which can be attributed to no sinister motive, be saved from a loss of $5,000, which, under the original contract they were liable to sustain, and which they would have been bound to sustain under the policy, if, as was their duty, they had framed it so as to effectuate the object of the actual insurance, In the view of the case which we have taken, we have not deemed it material to enquire whether the variance in the policy from the certificate was not occasioned by fraud, accident or carelessness. We think the policy, as made out, is not such an instrument as the Defendants were bound to make in consummation of the contract of the agent, that the delivery of the policy, as made, did not discharge them from the obligation to comply with that contract, and that the Complainants are not precluded by their own acts or conduct from the benefit of that obligation, but may enforce it in equity. * * * * “Although the facts were not originally within the knowledge of the Defendants themselves, they were within the knowledge of their agent, * * * and his knowledge of facts materially affecting the transaction, is to be attributed to them. * * * If he understood the matter differently (from the Complainants), surely it was his duty to let them know they were mistaken in supposing they had applied for insurance on consigned goods, and were negotiating for such an insurance.”
Then Collet v. Morrison[73], is a strong case in favor of the Plaintiffs. There, one Richardson, on the 9th September, 1844, went to the office of the Company, of which the Defendant was the managing director, and signed a printed form of a proposal for insurance. It contained amongst other things four enquiries: 1. Name, residence and description of the party proposing the insurance. 2. Name, &c, of party whose life is to be insured. 3. If of sober and temperate habits. 4. If now or ever afflicted with fits or any other of the enumerated disorders, or any other disorder tending to shorten life. Richardson answered the enquiries in the form which he then filled up: To the first, “Mrs. Emma Collett, of, &c., by her Trustee, W.J. Richardson, of, &c. “To the second, “daughter of the late Sir Thomas Gage, and wife of John Collett, Esq., M.P.” To the third, “both.” To the fourth, “not that I know of;” and Richardson signed the proposal. The usual enquiries having been made as to the health of Mrs. Collett, the proposal was, on the 16th September, laid before the directors, who agreed to accept the life and to insure it for the amount proposed. The usual notice having been given to Richardson that the life was accepted, and that the premium was to be paid within 30 days, he, on the 19th September, went to the Company’s office, filled up, and signed another of the ordinary printed forms of proposal, in which, in answer to the first of the questions above mentioned, he said not as before, but simply: “W.J. Richardson, of, &c., Esquire;” and to the fourth, instead of: “Not that I know of,” the answer was “No.” The answers to the other two questions were the same as in the former proposal.
On that occasion Richardson paid them the first year’s premium and stamp duty on the policy, for which a receipt was given by an officer of the Company: “Britannia Life Office, 1 Prince’s Street Bank, London, 19th September, 1844. Policy No.. 5,194. Date, 9th September, 1844. Sum assured, £999; premium, £34 9s. 2d.”
“SIR: I beg to acknowledge the receipt of £36 9s. 2d being first year’s premium and stamp duty for an assurance of £999, effected by you with the Britannia Life Insurance Company, on the life of Mrs. Emma Collett, the particulars of which will be expressed on a policy bearing the number and date above mentioned.” The policy was made out in the name of Richardson, without describing him as Mrs. Collett’s trustee; and, when completed, was sent to Mrs. Collett, who died in June, 1845. One of the conditions on the policy was, that if it was or should be at any time subject to any trusts, the receipt of the trustee for the time being shall be an effectual discharge to the Company.
On Mrs. Collett’s death, Richardson set up a claim to the policy for his own benefit. The Plaintiff, as the personal representative of Mrs. Collett, claimed the policy also. There had been some litigation about the matter, and the Bill was filed to have it declared that the insurance should be treated as an insurance effected by Mrs Collett, through Richardson, as her trustee, for her separate use on her own life, and that Plaintiff was entitled to have the policy rectified accordingly, or treated and considered as if so rectified.
It was argued for the Defendant, there was nothing in the fact of Richardson having at one time made a proposal as a trustee, to prevent the Company afterwards contracting with him on his own account. Vice Chancellor Turner in his judgment referred to the cause of Motteaux v. The London Assurance Company[74] as an authority authorising the amendment of the policy. He said: “This case appears to me fully to establish that if there be an agreement for a policy in a particular form, and the policy be drawn up by the office in a different form, varying the right of the party assured, a Court of Equity will interfere and deal with the case upon the, footing of the agreement and not of the policy.” The learned Vice Chancellor proceeded to argue on the facts. He asks, did they or did they not take the second proposal and prepare the policy in its present form for the purpose of carrying out the first proposal. He arrives at the conclusion that the Directors must be held to have accepted the first proposal wholly, and not in part only, and that at the time the policy was issued, the agreement made with the Directors by the acceptance of the first proposal remained in force. Further on in his judgment he used these significant words: “In dealing with this case I have abstained from entering into the question of fraud, as I do not believe that any actual fraud was intended; but in having taken this course, I must not be understood to give any countenance to the notion that insurance companies, preparing and issuing policies under such circumstances as occur in the present case, would not be held liable in equity on the ground of fraud. The case of fraud is more strong for the interference of the Court than the case of mistake. Lord Eldon, in ex parte Wright[75], refers to the distinction in cases where the duty of perfecting an instrument rests on the party who is to become liable under it; and the distinction is clearly well founded in principle, and, I believe, supported by authority.”
I think, therefore, this appeal should be dismissed.
RITCHIE, J.:—
Commented on the evidence at considerable length, and stated he had been unable to satisfy his mind that the Plaintiffs had made out, beyond all reasonable doubt, that the agreement entered into between Plaintiffs and the agent of Defendants, was for the insuring of the stock in the added premises. But, that as so many judges had arrived at a different conclusion, he wished to put forward his views on this question of fact with diffidence. Assuming there was a valid contract to insure, and the policy was drawn up in a form different from the agreement, altering the substance of the agreement and varying the rights of the parties assured, he thought the case should be dealt with on the footing of the agreement and not of the policy. The Defendants not having been notified that the risk as so agreed on by the Plaintiffs and Defendant’s agent was declined, and there having been no refunding or offer to refund the premium or any part thereof, the Plaintiffs might fairly assume, without examination, that the policy delivered was the policy referred to in the receipt, and not a new or other policy covering a risk which they had not offered the Company; and if the Company inadvertently or intentionally sent a policy not contemplated by the receipt, the Plaintiffs would not be bound by it. That this is not within the privilege conceded to the Company by the receipt of determining the risk under the receipt, but ought to be looked on either as an approval of the risk as agreed on by the agent, or an act dehors the receipt altogether; tantamount to a new offer on the part of the Company which the evidence fails to show has ever been acquiesced in by the Plaintiffs, leaving the receipt a valid outstanding instrument till so acquiesced in, and he could not think that the holding of the policy under the circumstances of this case could be considered such an acquiescence in a new agreement. That the mere transmission of the policy and retention by the Plaintiffs, would not as a matter of law, constitute an acceptance on Plaintiffs’ part. That the original agreement would continue in force until cancelled or modified by mutual consent. Whether there had been such consent, was a question of fact; that the keeping the new policy was matter proper for consideration as having some tendency to show an acceptance; but under the peculiar circumstances of this case he thought the Plaintiffs were, without being open to the charge of negligence, or laches, excusable in depositing the policy in their safe without examination, and relying with reasonable confidence, that the policy was transmitted not as a new offer on the part of the Company or as embodying insurance on a new or different subject matter, but as the policy referred to in the receipt, there being no understanding or agreement between the parties directly or through their agents, that any policy whatever was to be transmitted other than one covering the risk indicated in the receipt, and which policy was only to be transmitted on the Board of Directors approving of what the agent had done.
STRONG, J.:—
The Chief Justice has already so fully stated the facts established by the evidence that I need not repeat them.
The first enquiry is as to the extent of Hooper’s powers. It is not disputed that he had authority to bind the Company by insurances effected by means of interim receipts, such as those he gave to the Respondents when the original risk was accepted, and subsequently on the 23rd September, 1871, on the payment of the increased premium. It is also conceded by Mr. Smith, the Defendants’ chief agent, that notice of an increase in the risk during the currency of the interim insurance was properly given to Hooper. Indeed the necessary requirements of an insurance business, carried on through an agent at a distance from the head office of the Company, make such a course of business indispensable.
The important question in the cause on which its decision must depend, is that respecting the terms of the contract entered into between the Respondents and Hooper on the 23rd September, 1871, when the interim receipt for the premium of $60 was delivered. That receipt is, in my opinion, consistent with the contract alleged by the Respondents to have been verbally concluded between them and Hooper, for it is written evidence of an agreement for the insurance of the Respondent’s stock of goods in the stone building, mentioned in the receipt, as that building had, on the 23rd of September, 1871, been altered by the addition of the new premises. The receipt, it is true, contains a reference to a supposed description of the premises contained in a document called an agency order, but Mr. Smith says that the use of these agency orders had been discontinued for some years, so that we must regard the words “as described in the agency order of this date” as struck out of the receipt. It is true Mr. Smith says, that in the place of this agency order they had the application, but the Company cannot import the description contained in the application into the receipt, merely because they had made the application serve the purpose of an agency order, there having been no assent on the part of the Respondents that the description in the application should be considered as that referred to in the receipt. The reference being to a document of the latter description, and there being no such instrument, the receipt must be read as though the words were altogether omitted from the printed form. The receipt should then, if I am right in this view, be read as follows:—“Received from Messrs. Wyld & Darling the sum of $60, being the premium on an insurance to the extent of $6,000 on their stock of dry goods, consisting chiefly of cloths and tailor’s trimmings, all contained in a stone building on south side of King Street, Hamilton, for twelve months, subject to the approval of the Board of Directors, Montreal; the said party to be considered insured until the determination of the said Board of Directors be notified—if approved of, a policy receipt and afterwards a policy will be delivered, or, if declined, the amount received will be refunded, less the premium for the time so insured.”
À reference to the extrinsic facts, which is always permissible for the purpose of identifying persons or things, would shew that on the 23rd September, 1871, the stone building on the South side of King Street, in the city of Hamilton, which was occupied by the Respondents as a store, and in which was contained their stock of dry goods, consisted of the house originally occupied by the Respondents prior to the 9th of August, with two flats, extending over the adjoining house, added. To warrant the conclusion the Appellants contend for, we should have to read the receipt as though it provided for insurance on “so much” of the Respondents’ stock of dry goods as was contained in a stone building, on the South side of King Street; but the fact being that, on the 28rd September, the old and new premises were being used indiscriminately for the storage of the stock, we must, in order to give effect to the agreement to insure the stock, consider the added flats as being included in the description “stone building.” This construction is consistent with the facts, for the added flats had been incorporated with the stone building originally occupied by the Respondents, and notice of the alteration and addition had been given by the Respondents, by the letter to Hooper of the 10th August, 1871, and the place had been inspected by Hooper, who had himself seen that a portion of the stock had been placed in the new premises.
Assuming, however, that the application, Exhibit A., is to be referred to for the purpose of identifying the premises, we must read that document in connection with the interim receipt and as modified, as regards the description of the premises, by the letter of the 10th of August. Then, collecting the agreement from these three documents, the true contract between the parties appears to me to have been precisely that which the Respondents allege, and Hooper admits it to have been. The letter gives notice of the alteration in the premises. The insurance existing at the date of the letter was on the whole stock of goods, which the original premises had up to that time been used for the storage of. The letter is not confined to the notice of the alteration to the premises, but goes further, and shews by the intimation that part of the goods had already been placed in the added flats, that the extended premises were intended to be used for the same purpose as those originally occupied by the Respondents; that their stock, as a whole, which was the subject of the insurance, was intended to be thereafter kept indiscriminately in their newly arranged business premises without distinction between the old and the new parts of the building.
Had this letter read in this way: “And part of our “stock, on which we have your insurance, is now in these “new flats,” there would have been, to the satisfaction of the most hypercritical mind, on the face of the letter, an indication of an intention to continue the insurance on the whole stock. But, the fact was, that these goods were originally covered by the insurance existing; that they were parts of a whole so insured; and, in an ordinary letter of business, framed with the conciseness peculiar to such correspondence, and not with the fullness and accuracy of a legal document, there was nothing unusual in the writers leaving their obvious intention to be implied.
I regard the letter of the 10th August, read in the light of the circumstances which preceded and accompanied it, and making those implications and inferences which have always to be made in construing ordinary correspondence between men of business, as indicating a proposal to continue the insurance on the whole of the Respondents’ stock, just as clearly as if that intention had been verbally expressed. It is a much more reasonable and natural presumption to make—one more consistent with the well known usages of business, that a merchant, having an insurance on his whole stock in trade, and having enlarged his premises, giving such a notice as the Respondents gave, shall be considered as proposing to the insurers a continuance of the insurance on the same subject matter rather than that he intended to abandon the insurance which originally covered that portion of the constantly fluctuating stock which, from time to time, as convenience and the exigencies of business should require, he might deposit in the new as distinguished from the old portion of the premises.
No reason is suggested for making any such distinction. It would be wholly arbitrary. Let me put a case identical in principle with this, but, perhaps, more familiar in its circumstances. Suppose an insurance on the household furniture contained in the dwelling-house of the party insured, who, during the continuance of the risk, gives notice that he has built an addition of some rooms to his house, upon which the Insurance Company, after inspecting the premises, make a charge for increased risk which is paid, would any one suppose that on a loss occurring, a distinction was to be made by the Company between the furniture in the old part of the house, and that in the new, the former being treated as insured, and the latter as uninsured? In such a case, the objection of the insurer would surely be treated by a jury, or by any judges of fact, as an unworthy quibble.
Then, in what respect, as regards the inferences to be drawn from the conduct of the parties, does the supposed case differ from that now before us?
Sitting in appeal from a Court of Equity, this Court in dealing with a question of fact, has to make the same deductions and inferences as a jury would be called upon to make in a Court of Common Law, and making these inferences, there is, in my judgment, ample written evidence of the contract which the Respondents have set up and sought to enforce by their Bill.
But even if the written evidence should be deemed an inaccurate expression of a contract between the parties, such as the Respondents contend for, is not the oral testimony amply sufficient to warrant such an alteration of the receipt as will make it accord with the agreement set up by the Bill? There is the direct evidence of Hooper, who still continued at the date of the hearing to be the Appellants’ agent at Hamilton, that the contract was as the Respondents alleged it. If it is said his deposition contains self contradictions, it is to be remarked that he was a hostile witness, and that his admissions were adverse to his own interest. In several portions of his testimony he distinctly states that he intended to insure all the stock without making any distinction with regard to its situation. The question of the sufficiency of this evidence became one of preponderance of testimony—it was for the learned Vice Chancellor, before whom the cause was tried, to weigh the evidence of Hooper. No one can say that there was no evidence to support the finding, and after two judgments in courts below affirming that finding, hardly anything short of that should, I venture to say with sincere respect for the opinion of those from whom I differ, be sufficient to warrant a reversal here.
Then, if the contract as alleged by the Respondents is proved out of the mouth of the agent who made it, to the entire satisfaction of the judge in whose presence the witness was examined, I see no reason why that testimony, taken in conjunction with the evidence of the Plaintiffs’ other witnesses, Mr. Darling and Mr. Jermyn, and the circumstantial evidence, which, to my mind, makes a presumption in favor of the probability of the Plaintiffs’ case almost irresistible, should not be sufficient to authorize the Court so to reform the interim receipt as to make it express what Mr. Hooper admits to have been the true agreement.
So that, if the construction of the receipt and the letter, read either by themselves or in conjunction with the application for insurance, was, as in my judgment it is not, against the Respondents, they would still have the verbal evidence to fall back upon as a ground for the rectification of the receipt. In saying this, I am not unmindful of the strict principles which Courts of Equity apply when called upon to grant relief by way of rectification of written instruments in requiring strong, clear, irresistible evidence of mistake; but I think this condition is amply complied with without treating this case as one of exemption from the general rule.
It was Hooper’s duty to prepare the interim receipt, and it is a well established principle that Courts of Equity will afford relief by way of rectification much more readily when the preparation of the instrument was the peculiar duty of one of the parties, than in others where the parties are to be regarded as participating in it[76].
Further, if it is the duty of one party to a contract, to prepare the written memorandum, and he does so in such a way as to mistake the real agreement, and then refuses to correct the mistake, such conduct amounts to equitable fraud; that is, fraud in the sense of unfair, unconscionable conduct, and a Court of Equity, on that ground alone as distinguished from mistake, will give relief[77].
The Respondents are, therefore, as it seems to me, entitled to say, first:—That the true construction of the application, receipt, and letter read together is such that the agreement which they insist on is expressed in writing:—Secondly, that even if such is not the true construction, a verbal agreement, such as the Plaintiffs set up, is proved in the clearest possible manner to have been completed between them and Hooper, which Hooper, on this hypothesis, incorrectly expressed in the receipt dated the 9th of August, and delivered on the 23rd September; and that therefore they are entitled, on the ground of mistake, if not of fraud, to have that receipt rectified, and made to accord with the contract really entered into.
The result is, that on the 23rd of September, 1871, there was completed, through the agency of Hooper, a contract, subject to the conditions of the interim receipt, binding the Defendants to an insurance of the Plaintiffs’ whole stock, including such portions of it as they might choose to place in the premises which they had added to their original store. From that date all the stock on the premises as forming one building was insured.
Then, when was this contract of 23rd September, 1871, put an end to? By the terms of the interim receipt two alternatives were provided for: if the contract made by the agent was approved of, a policy receipt, and afterwards a policy, was to be sent, if declined the amount received was to be refunded, less the premium for the time insured. Neither of these modes of determining the receipt having been adopted by the Appellants before the loss, it seems clear, on general principles, that the only other mode of putting an end to the interim agreement, was a rescission by the concurring assent of the parties.
There is no pretension of any express agreement to rescind. Therefore, if the Respondents are now to be debarred from setting up the receipt as having been a binding contract of insurance at the date of the loss, it must be on one or the other of these two grounds, either because the assent of the Respondents to the new contract, embodied in the policy, is to be inferred from their retention of that instrument, or because their conduct has been such as to amount to an equitable estoppel, or estoppel in pais, precluding them from now insisting on the receipt. The construction of the policy haying been determined by the appropriate court of construction, the judgment of the Court of Queen’s Bench, in which the action was brought, is now res judicata, and I am therefore bound, whatever my own opinion might otherwise have been, to assume that the goods in the new premises were not assured by that instrument.
Then the facts being that the Appellants delivered a policy, but not one according with the terms or in consummation of the contract entered into with the agent; that this policy, thus containing what, in law, would be no more than a proposal from the Company for an assurance which the Plaintiffs never contemplated, came into the possession of the Respondents’ clerk or book-keeper, and was by him deposited in the Respondents’ safe, where it remained without ever having been read by either of the Respondents until after the fire, it is out of the question to say that there was ever such an assent on the part of the Respondents to the terms of the insurance embodied in the policy as to constitute an original contract independently of the receipt, and in that way to rescind or supersede the contract evidenced by the receipt. No contract, then, having been entered into between the parties subsequent to that of the 23rd September, 1871, made through the agency of Hooper, on the part of the Appellants, there has never been any rescission of that contract by an agreement, either expressed or implied.
Then, have the Respondents, by their conduct in retaining the policy, induced the Appellants so to alter their position as to entitle them now to set up an equitable estoppel against the claim of the Respondents to treat the policy as imperative, and to fall back on the receipt? I cannot see that they have. Though it has been said, that if the Respondents had promptly read the policy, they would have discovered the mistake in time to have returned it, and have given the directors an opportunity of declining the risk and returning the premium before a loss; still, actual knowledge of the contents of the policy is an indispensable element of such a defence; and the evidence not only fails in shewing such knowledge, but the testimony of Mr. Jermyn and of Mr. Darling shows that the policy was never actually read, or even seen, by the Defendants. Franklin Insurance Co. v. Hewitt[78].
There could be no imputed knowledge of the contents of the policy, inasmuch as there was no obligation binding the Respondents to read it; indeed, on the other hand, the Respondents might well assume that it was sent to them to carry out the only contract of insurance they had with the Appellants, that entered into through their agent, Hooper, and not, as according to the contention of the Insurance Company it must have been, as a proposal for a contract entirely different in its terms from that just mentioned. Moreover, had the Respondents read the policy, it is by no means sure that they, relying as they naturally would upon Hooper having communicated to the Company all the circumstances, including the le