VOL. Xi.] SUPREME COURT OF CANADA.
THE SOYEREIGN
FIRE
INSUR- ANCE COMPANY OF
CANADA
APPELLANTS; (DEFENDANTS) ..........................
*Oct.
Mar. 8. ON APPEAL FROM THE JUDGE IN EQUITY OF THE PRO. VINCE OF NEW BRUNSWICK.
Sir W. J. RITCHIE C.J.-The case set forth that it is admitted:the 17th day of August, A.D. 1883, and duly filed in the odiice of the Registrar of Deeds in and for the City and County of Saint John on the 29th day of said month of August, a copy of which said chattel F. Is. Co. mortgage, it is agreed, may be filed and read as part of this case. It is admitted that the chattel mortgage aforesaid was made and executed by the said defendants, John Peters and Thomas F. Ritchie C.J. Sutherland, to the said plaintiff without procuring the written consent of the said defendants, the Sovereign Fire Insurance Company of Canada, thereto, and that no consent in writing to the said chattel mortgage was ever indorsed by the said defendant, the Sovereign Fire Insurance Company of Canada, on the policy; that, in fact, the said Abraham D. G. Vanwart (the company's agent) had not, nor had the said Sovereign Fire Insurance Company of Canada heard of said chattel mortgage having been made before said fire, nor had any notice been given to them, or either of them, or to their agent. That the delivery of the shoes mentioned in the attestation clause of said chattel mortgage to the plaintiff was so made as a matter of form, as the parties to said chattel mortgage believed it to be a necessary form in order to make said chattel mortgage legal as a chattel mortgage, and, in fact, the said plaintiff did not, previous to the time of the fire above mentioned, enter into possession of any of the property or effects mentioned in said chattel mortgage, or take any proceedings to foreclose said chattel mortgage, or realize the amount secured thereby.
That the said Peters & Sutherland, after the execution of said chattel mortgage, continued in possession of said property and effects, and paid over to the plaintiff, from time to time, amounts on account of the amount secured by said chattel mortgage, as they had likewise done on account of the amounts due him before its execution, but there is still due to said plaintiff on account of the amounts secured by said chattel mortgage, a large amount in excess of the amount of $2,000 insured under said policy as aforesaid. That the said plaintiff and the said John Peters and Thomas F. Sutherland, or William Peters, junior, at the time of making said chattel mortgage or said trust deed, had not, nor had any of them, read over the conditions of said policy, and none of said parties intended to commit a breach cf any of the conditions of said policy, and neither of them knew or believed that such chattel mortgage or trust deed would affect said policy in any way.
It is admitted that if the said policy was in force and valid at the time of said fire, the said plaintiff is entitled to maintain this action and to recover against the defendants, the Sovereign Fire Insurance Company of Canada, the sum of $2,000 and interest I differ entirely from Mr. Justice Palmer as to the F. meaning of the words "property insured" in the third condition.
That learned judge says they may fairly C.Jmean the insurable interest in the subject insured. That, certainly, is what is insured, and such interest is property. *With all due deference to that learned judge, I think the property insured was the following property :
as specified in so many words in the policy. Then we have the third condition, in reference to which the policy is made and accepted, and declared to be part the contract, " that if the property insured is assigned without the written consent of the company." What property ? In my opinion, clearly the stock of boots and shoes, &c.
But, if anything is wanting to make this more clear, we have the last words of the condition, " but this condition does not apply to change of title by succession, by operation of law, or by reason of death." Change of title ? To what, if not to the stock of boots and shoes, does this apply ? Then again, if it could possibly be required to be made plainer, we have condition four: "When property insured is only partially damaged no abandonment,
What is this property insured but the stock of boots and shoes ? So at the end of this condition:
" No abandonment of property insured will be allowed," &c.
Does this apply to the insurable interest ?
So again, in condition twelve, as to the directions to be observed by persons entitled to make a claim under the policy, we have, inter alia :
Also by condition 15:
But it is, in my opinion, idle to pursue the matter further; the case is too clear for argument. There is not a doubt, in my mind, that the assignment of the property insured referred to the insured subject, the thing insured. I have looked at the cases relied on by the learned judge, and cannot discover that they have the slightest bearing on this case; nor can I agree with the learned judge, that " it follows that the only question is what is the meaning of the words " property insured."
The question is simply: Was the execution of a chattel mortgage, without the written consent of the company, such an assignment of the property insured as would render the policy void under the third condition ?
I think this must be read as an absolute assignment of the property insured, of all the assured's interest therein, and that the condition, as against the assured, should not be read as forbidding a mortgage of incumbrance on the property, where the assured retains an insurable interest. That condition must be strictly construed, and, as said by Chief Justice Cockburn in Fowkes v. Manchester and London Assurance Ass. (1) :
Forfeitures are certainly not favored by the law. It has been well said that in enforcing forfeitures courts F. should never search for that construction of language which must produce a forfeiture when it will bear Rlitaiiecj. another reasonable construction which will not pro- ""
duce such a result.
In the last edition of the Imperial Dictionary assign is, in law, to transfer or make over to another the right one has in any object, as in an estate, chose in action or reversion, and in this sense we may fairly assume that the words were used.
A mortgage is one thing, an assignment of the property is quite another; the one being conditional, the, other absolute. In order to operate as a forfeiture, I think the assignment must divest the assured of all interest in the property, as he would be by change of title, by succession, by operatiop of law, or by reason of death, which changes are excepted from the operation of the condition, but so long as an insurable interest remains in the assured the policy is valid to the extent of that interest. Condition number twelve, in its fifth and sixth paragraphs, which provide directions for parties making claims under the policy, seems to indicate that the property may be encumbered without the knowledge or consent of the insurers.
1',r. 5.-In decaie at 6.-Whether But nowhere is it said that where an insurable interest is shown, the policy is avoided by any incumbrance thereon.
If it was intended that the policy should be forfeited, notwithstanding the assured retained an insurable interest in it, I think such an intention should be clearly apparent from the language of the policy or condition.
I think the assignment should amount to an absolute transfer of the assured's whole interest; in other words, a transfer of the title and determination of his interest.
The case from Ontario Sands v. Standard Ins. Co. Ritchie holds that in a condition "if a property is assigned without the written consent, &c.," the word "assign" did not cover a dealing with the property by way of mortgage, with which decisions the American authorities seem to be entirely in accord.
I think therefore the appeal should be dismissed with costs.
J.-Sutherland et Peters, aprbs avoir effectu6 une assurance pour un an, le 29 mars 1883, sur leur fonds de commerce, compos6 do chaussures et d'articles concernant la manufacture de chaussures, consentirent un chattel mortgage (hypothbque sur les meubles)
en faveur de l'intim&, comme stret6 collat6rale d'une dette.
Celui-ci ne prit pas possession des articles en question et ne fit aucun proc6d6 pour rialiser sur le chattel mortgage. Le 8 d'octobre suivant, les effets converts par la police d'assurance et par le chattel mortgage furent consumes par un incendie. La question resultant do ces faits est de savoir si la cr6ation d'un chattel mortgage sur les meubles assures, constitue une violation de la troisibme condition de la police d'assurance, conque en ces termes:
at inlorsed
La creation du mort±gag-e est-elle en realit6 une violation de la condition que les meubles assures ne peuvent
6tre transport6s sans le consentement de la compagnie ? et comme le chattel morigage no laisse plus aux assures que le droit de racheter leurs propri6t6s en remboursant le montant de ce mortgage, leur reste-il encore, dans ce j.cas, un int6rat assurable ?
La proprit6 des assures ne consistant plus apris le chattel mortgage que dans un droit de r6demption (equity. of redemption), ce droit peut-il Stre consid6r6 comme compris sous les termes property insured? Le terme property, en matibre d'assurance, a t6 interpr6t6, comme ayant une signification assez 6tendue pour prendre un int4rTt assurable. Voir Holdbrook v. Brown (1) ; Wiggins v. i10 rcantile Ins. Co. (2) ; Locke v. North American Ins. Co. (3).
Si les mots property insured comprennent [un int6rst assurable, il ne reste done qu'd! savoir si aprbs 1'ex6cution du chattel mortgage, les assur6s poss6daient encore un int~rit assurable. Par l'article 15 du cas special, il est admis que la livraison mentionn6e dans la clause d'attestation n'a 6t6 ainsi faite que comme matibre de forme et sous l'impression qu'elle 6tait n6cessaire a la validit6 du chattel mortgage, mais qu'en r6alit6 cette livraison n'a pas eu lieu, et que de fait, avant l'incendie, l'intim6 n'avait pris possession d'aucun des effets mentionn~s dans le chattel mortgage et n'avait adopt6 aucun proc6d6 pour r6aliser la somme dout le remboursement 6tait garanti de cette manibre- Peters et Sutherland 6taient done encore en possession des articles affect6s au chattel mortgage, et pouvaient, en payant le montant ainsi garanti, rentrer dans leur droit de propri6t6 et alors, dans le cas d'incendie, la perte des effets assur6s retombait sur eux. Il r~sulte de cette position qu'ils avaient conserv6 dans les effets en question un int6rft assurable suffisant pour leur permettre de recouvrer le montant couvert par la police d'assu. rance. Cette cour ayant d6ji exprim6 son opinion sur ce qu'elle considbre comme un int6r6t assurable dans la cause de Clark v. Scotish Imperial Insurance Co. (1), F. et dans celle de Anchor Marine Ins. Co. v. Keith (2), je crois qu'il serait inutile de citer h ce sujet d'autres Fournier J. autorit6s que celles de ces deux causes et des nombreuses d6cisions sur lesquelles la cour s'est alors appuy6e pour en venir A la conclusion qu'elle a adopt6e.
Je consid6re done ce point comme r6gl6 et, en consquence, que 1'intim6 a droit do recouvrer sur la police.
Mais l'appelant ayant aussi invoqu6 comme d6fense le fait qu'il y avait en violation de la troisibme condition par la cr6ation du chattel mortgage, qui dans ses termes contenant un transport de la propri6t6 assur~e, il est n6cessaire de voir quelle interpr6tation il faut donner au mot assigned dans cette condition.
L'intim6 a fait i ce sujet une savante dissertation en se basaut sur les ragles d'interpr6tation pour en venir a la conclusion que le mot assigned n'a rapport dans cette condition qu'd une ali6nation compl~te des articles assures qui n'aurait laiss6 aucun int6rot assurable h Peters et Sutherland.
Une clause semblable a d6ji fait l'objet de discussions importantes dans les cours de la province d'Ontario, dans la cause de Sands v. Standard Ins. Co. (3).
Dans la meme cause, entendue de nouveau in banco, et rapport6e au 27 vol. Grant, p. 167, le jugement do l'honorable juge Proudfoot d6cidant quo la condition dont il s'agit ne s'appliquait pas A une ali6nation par hypothique (mortgage), mais a un transport absolu, fat confirm6 par tous les juges.
La condition dont il s'agit en cette cause est semblable, dans ses parties essentielles, A celle qui faisait le sujet de la discussion dans la cause de Sands v. The Standard Ins. Co;
il n'y a qu'une diff6rence sans importance dans les termes qui ne sont pas de nature a modifier la question d'interpr6tation du mot assigned dans la troisibme con- F. IN. Co. dition dont il s'agit ici.
L'interpr6tation admise est 6videmment applicable en cette cause.
En cons6- Henry J. quence, l'appel doit 6tre renvoy6 avec d6pens.
HENRY J.-This is an action by the respondent as mortgagee of Peters & Sutherland on certain goods and assignee of a policy of fire insurance issued by the appellant company to the said Peters & Sutherland on the same goods previous to the execution of the chattel mortgage. The question as to the validity of the assignment was submitted under a special case in which everything necessary to the recovery of the respondent is admitted except as to the validity of the policy when the loss occurred, which was a few months after the execution of the chattel mortgage and the assignment of the policy. The third condition of the policy is as follows :- If the property insured is assigned without the written consent of the company, at the head office, indorsed hereon, signed by the secretary or assistant secretary of the company, this policy shall, thereby, become void, and all liability of the company shall thenceforth cease but this condition does not apply to change of title by succession, or by the operation of the law, or by reason of death. The 18th and 19th clauses of the special case are as follows - It is submitted that the said plaintiff is the lawful assignee for value of said policy of which the said defendants, the Sovereign Fire Insurance Company, had notice immediately after the said fire, but the Sovereign Fire Insurance Company of Canada had not notice of any assignment of the policy to the plaintiff until after the said fire, nor has the Sovereign Fire Insurance Company of Canada done any act showing they accepted the plaintiff as their assured. It is admitted that if the said policy was in force and valid at the time of said fire, the said plaintiff is entitled to maintain this action and to recover against the defendants, the Sovereign Fire Tnsurance Company of Canada, the sum of $2,000 and interest thereon from the 26th day of December, A.
The case concludes as follows:- It is contended on the part of the defendants, the Sovereign Fire Insurance Company of Canada, that the third condition indorsed on F. Iss. Co. the said policy was a proper and reasonable condition, and the exe- E. cution and delivery of the said chattel mortgage was a breach of the said third condition indorsed on said policy of insurance, and that Henry J. the said policy therefrom became void and of no effect whatever, and that the plaintiff cannot recover thereunder. It is admitted, however, that if the execution and delivery of said chattel mortgage was not a breach of said third condition, then the said policy of insurance was valid and in force at the time of said fire.
The question for the court is whether the said policy of insurance was valid and in force at the time of said fire. If so, then the plaintiff to have judgment for the amount aforesaid, said sum of $2,000 and interest and costs of this suit, and, if not, the said defendants, the Sovereign Fire Insurance Company of Canada, to have judgment with costs.
Reference is made in the special case to an assignment alleged to have been made subsequent to the mortgage, and before the loss by Peters and Sutherland to Wm. Peters, junior, of all their property for the benefit of their creditors, but it appears that nothing was done under it, and the creditors did not execute it, but at all events, no question was raised on it so as to affect the policy. We have therefore only to decide as regards the mortgage. I have no doubt that Peters and Sutherland, after the mortgage given as security, had an insurable interest in the property covered by the policy.
That after the mortgage they might have insured the property covered by it, and that the creation of the security by the mortgage was not such a transfer or assignment of the property as is prohibited by the third condition of the policy. The assignment therein referred to, is one by which the property is absolutely and wholly assigned, so that no interest in it remains in the assignor.
Such is not the case where security by mortgage is given on the insured property.
I have no doubt of the correctness and validity of the decision appealed from to this court, and am therefor of opinion the appeal should be dismissed with costs. J. concurred in dismissing the appeal. J.-The case of Burton v. The Gore District Mutual Insurance Company and cases of that class being cases depending upon the peculiar provisions of the statutes relating to mutual insurance companies, have no bearing upon the present case, but although an absolute assignment of an insurer's whole interest in chattel property avoids the policy, and divests the insured of all right to recover thereunder upon the property being subsequently destroyed by fire without any condition indorsed on the policy to that effect, still, I think that it is an absolute disposition by assignment of all title in the insured property which is pointed at by the condition in question; the context in which the word " assigned " is used in the condition, leads, I think, to this conclusion. The object of the condition is, I think, to provide that although a change of the whole title by assignment without consent of the insurers shall avoid the policy, as indeed it would without any such provision, still that change of title by succession, or by operation of law, or by death, shall not.
So that in these latter cases the parties becoming entitled to the property shall have the benefit of the insurance, while the assignee of the title, that is of the whole title, in the case of assignment, as in the other cases, shall not, unless such assignment be consented to by the insurers in the manner provided for in the condition.
I agree therefor that the appeal should be dismissed.
Appeal dismissed with costs.