Ellard v. Millar

J.-The appeal is from the judgment of the Court of King's Bench (appeal side) of the province of Quebec modifying the judgment of the Superior Court sitting in the district of Hull from which both parties had appealed to the Court of King's Bench. The respondent has also given notice of cross-appeal to this court. The respondent is the widow of the late Joshua Ellard, in his lifetime merchant of the township of Wright, who died on March 24, 1916. Under the last will and testament of her husband, she was made his universal and residuary legatee. After his death she continued to carry on his business as a general merchant and is still carrying it on.

The appellant is the son of the respondent and of the late Joshua Ellard. Before the death of his father, he was already managing the business and continued so to do until the month of March, 1919, when he requested his mother to accept his resignation.

Matters however got to be unsatisfactory and the appellant was induced to assume once more the management of his mother's interests. The agreement arrived at was re- . duced to writing at Gracefield on July 4, 1919.

It begins by stating that the respondent

Rinfret 1. requires the assistance, advice and services of the said Herbert Millar Ellard in the administration of the said estate

*

*

* and also in the administration of her personal affairs and Herbert Ellard agrees to give them on the following terms: (1) He is to have " full control, care and management of the property, business and affairs " of Mrs. Ellard during her lifetime; (2) he is to have a power of attorney, irrevocable for five years, but subject to renewal at his own option, with " the most ample powers "; (3) Mrs. Ellard agrees to pay him $100 per month as salary for his services; (4) Mrs. Ellard agrees to convey to Herbert Ellard, on or before the 1st October, 1919, the properties known as the Victoria and Pickanock farms, save and except certain pieces of land therein described and also save and except the homestead with two acres of land adjoining, the store, hotel and mill properties together with such areas of land in connection with each of the said properties as will best serve the requirements of each of the said properties from the point of view of ultimate sale, rental, or other disposal thereof and Herbert Ellard is to cause a proper survey to be made thereof.

(6) Herbert Ellard agrees to render annually, on the first day of August, a statement, duly audited and certified by a chartered accountant, of his management of Mrs. Ellard's affairs.

(7) Finally, it is stated that the agreement cancels a donation made by Mrs. Ellard to Herbert Ellard in 1917. In order to carry out this agreement, so far as concerned the demarcation of the properties conveyed, the appellant caused a deed to be prepared, which the respondent signed on the 23rd June, 1920; but, as the lots in the said deed were not described by their official cadastral numbers, a further deed to cover this insufficiency in the description Rinfret J. was signed by the respondent on the 14th March, 1921. In both of these deeds the consideration provided for in the agreement of 4th July, 1919, was fixed at an annuity of $800.

On the 27th September, 1923, the respondent revoked the power of attorney she had given to the appellant. On the 22nd January, 1924, the respondent brought an action against the appellant praying that the agreement of 4th July, 1919, and the deeds of 23rd June, 1920, and 14th March, 1921, be set aside on the ground of fraud in securing the same.

The Superior Court maintained the action in toto, but the Court of King's Bench found that

The agreement made in Gracefield on the 4th July, 1919, was therefore upheld by the appellate court.

A further appeal to this court by Mrs. Ellard against the validity of the agreement proved unsuccessful.

With respect to the two deeds however, the judgment of the Superior Court was confirmed by the Court of King's Bench and the decision of that court was not appealed from.

The result was that Herbert Ellard still required a deed from his mother to obtain proper conveyance of the properties mentioned in the Gracefield agreement.

On the other hand, he had yet to account for the management of his mother's property, business and affairs.

(See judgment of this court in the first case between the same parties) (1).

The parties unfortunately were unable to come to an understanding and Mrs. Ellard brought this second action asking that, unless Herbert Ellard accepted the descriptions set out in a deed, which she tendered and which she declared her readiness to sign, the respective parts of the lots which she was entitled to retain and the parts her son was entitled to receive be defined by the court. The action also claimed $15,500 for annuities then due as the consideration of the conveyance and asked that, in case Her- J bert Ellard failed to pay this or such other sums as may be awarded, the agreement of 4th July, 1919, be set aside and Mrs. Ellard be relieved from all obligation to convey; and that, in that case, Herbert Ellard be ordered to deliver to Mrs. Ellard the properties of which he had taken possession and to pay $15,500 for the enjoyment thereof as well as for the value of pulpwood by him cut and removed therefrom.

Herbert Ellard pleaded in substance that on the 18th October, 1919, in accordance with the Gracefield agreement, he had caused a survey to be made of the parcels or tracts of land Mrs. Ellard had agreed to convey to him. A description of the lots in conformity with the survey was inserted in the deeds of 23rd June, 1920, and 14th March, 1921, but these had been set aside by the courts, for reasons having nothing to do with the survey itself. He thought this survey correctly defined the lots and was always willing to sign a deed accordingly, but Mrs. Ellard refused to accept it. He was still ready to do so, but would not sign the deed tendered by Mrs. Ellard, because the description of the lots widely departed from the agreement. Herbert Ellard further pleaded that until he secured a proper deed from Mrs. Ellard, he could not be called upon to pay her the annuities which, at all events, since she had revoked his power of attorney in September, 1923, amounted only to $800 and not to $2,000 per year; that immediately after the revocation of the power of attorney he had paid Mrs. Ellard $1,733.35, in full of all that was then due to her and she had accepted the amount; that from then on, he had regularly tendered to her payments on the basis of $800 a year, which she had refused.

He denied Mrs. Ellard's right in any event to the cancellation of the agreement of the 4th July, 1919, because of the absence in it of any resolutory clause.

The trial judge found that Mrs. Ellard was not entitled to the parcels of land claimed by her, and he proceeded to under the agreement. He also found that the true amount E,.

of the annuity was $2,000, to be paid to Mrs. Ellard during her lifetime, and not $800 as was contended by Herbert Ellard. He accordingly gave judgment on that basis for J. seven annual payments, less however a sum of $1,600 which he held to have been paid by the son in the interval. He dismissed all the subsidiary conclusions of the action. A deed embodying these findings was drafted by the judge himself and annexed to his judgment as representing the conveyance which Mrs. Ellard ought to sign.

The litigation in appeal centres around the correctness of the deed so drafted by the Superior Court.

The boundaries of the parcels of land to which each party is entitled are no longer in dispute. They were confirmed by the Court of King's Bench and they are now accepted by both the appellant and the respondent. But the parties still persist in every one of the other contentions they put forward at the trial.

The Court of King's Bench was divided on what has now become the main question in the case:

the total amount which the appellant must pay to the respondent. Three of the judges of appeal, forming the majority, were of opinion that the annuity was correctly fixed by the trial judge at $2,000, but they thought the respondent was barred from recovering the whole of the arrears of her rent because of the prescription of five years which, they held, applied in this case under arts. 2188, 2250 and 2267 of the Civil Code. For that reason, they reduced the amount of the recovery to $10,000, although they disallowed the credit of $1,600 accepted by the trial judge.

Of the two remaining judges, one (Hall J.) would have declared that the stipulated annuity was only $800 and that the yearly balance of $1,200 was to be paid Mrs. Ellard out of the profits of the store, which Herbert Ellard guaranteed to the extent of that sum. He discussed at length the accounts between the parties, including the item of $1,600 allowed by the trial judge, and came to the conclusion that the real balance due by the appellant up to the day of the institution of the action was $4,400.20. Yet another calculation was made by the fifth judge (Cannon J.), who thought that the payment of $1,733.35 made by Herbert Ellard to his mother, after the revocation of the power of attorney, should be regarded as final up to that date and who would therefore have computed the arrears of annuity as of that date (September, 1923), with the . result that, according to him, the total amount due was $9,066.87, including that sum of $1,733.35.

Rinfret J. All the judges of appeal agreed that Mrs. Ellard's grievances against the deed drafted by the trial judge were not to be entertained and they concurred with him in dismissing all the subsidiary conclusions of the action. In fact, the practical result of the appeal, on both sides, to the Court of King's Bench was a reduction of $2,400 from the amount awarded to Mrs. Ellard.

The same questions, except that concerning the demarcation of the lots, were again raised before this court. On the first question, i.e., the annuity payable by Herbert Ellard, we think, like the respondent, that there exists res judicata and that the whole discussion is concluded by the judgment of the Court of King's Bench in the first case between the same parties.

In that case, as already stated, Mrs. Ellard sought the annulment of the agreement of 4th July, 1919, and of the two deeds respectively dated the 23rd June, 1920, and the 14th March, 1921, executed for the purpose of carrying out the agreement. The dispositif of the judgment annulling the two deeds merely stated that the action was maintained pour ce qui concerne les dits actes de vente du 23 juin 1920 et du mars but one of the points discussed was that Herbert Ellard, depuis qu'il a obtenu de (Mrs. Ellard) ledite acte de vente du mars 1921, ne se pr6tend plus tenu envers elle qu'h une rente viagbre de $800 par annee.

The consideration stipulated in the deeds was $800 instead of $2,000 per year and they were annulled for that reason as appears by the following motif of the judgment: Consid6rant que la cause ou consideration de la vente telle qu'exprim6e dans ces deux actes de vente, n'est pas celle dont les parties 6taient convenues; que par l'acte du 4 jullet 1919, la demanderesse avait stipul6 du d6fendeur, comme considdration de la vente qu'eIle s'engageait b lui faire, une rente viagire de $2,000 par ann6e; qu'au lieu de cette rente, ce n'est plus qu'une rente de $800 par ann6e qui figure, comme considiration de la vente, dans lerdits actes de vente; que ce changement a 6 fait sans le consentement de la demanderesse et hors sa connaissance; que la demanderesse n'a pas lu ces actes et n'en a pas eu lecture avant de les signer;

* * * qu'elle aurait srement refus6 de signer, si elle eflt su que lesdits actes de vente ne faisaient mention que d'une rente de $800 au lieu de celle de $2,000 qu'elle avait stipulde;

* * * et que, pour cette raison, la demanderesse a le droit d'6tre relev6e du consentement et de la signature qu'elle a donn6e.

EuRD

As a rule, under Quebec law, the authority of res judicata MnL"A.

applies only to the dispositif (3 Garsonnet, Procedure, p. Rinfret J. 239, no. 465 and note 13; 7 Larombibre, ed. 1885, no. 18; 20 Laurent, no. 29; 8 Aubry & Rau, p. 369) or, in the language of the code (art. 1241 C.C.), " to that which has been the object of the judgment." In this case, the object of the judgment was no doubt the annulment of the two deeds. But the judgment " involved a determination of the same question as that sought to be controverted " in the present litigation (Spencer Bower on Res Judicata, p. 9), viz.: the amount of the annuity. The reason for the annulment of the deeds was that the consideration of $800 per year there expressed was not in conformity with that of $2,000 per year stipulated in the agreement. Clearly that implied a decision that the true amount of the annuity was $2,000.

Res judicata will result from the implied decision which is the necessary consequence of the express dispositif in the judgment (Cass. 22 March, 1882; S. 83, 1, 175: Cass. S. 1907, 1, 397; S. 1910, 1, 135).

Lacoste, a foremost authority on the subject, lays down the following rules:

La rkgle d'apris laquelle l'autorit6 de chose jugde ne s'attache pas aux motifs doit tre 6cart6e lorsque les motifs font corps avec le dispositif, lorsque, selon 1'expression de la Cour de cassation, ils sont n&cessaires pour soutenir le dispositif.

Souvent, en effet, le dispositif ne contient qu'une partie de ce que le juge a d6cid6, et I'autre partie se trouve dans les motifs. C'est ce qui se produit A chaque instant lorsque le juge doit statuer successivement sur deux points et que la solution donn~e pour le second est la cons6quence n6cessaire de celle qui est donn6e pour le premier; le juge met la premibre solution dans les motifs sous forme de considrant, et le dispositif ne renferme que la seconde. Ainsi le demandeur se pr6tend le fils de telle personne d6c6d6e et r6clame A ce titre Ia succession; plus d'une fois le tribunal ne constatera Ia filiation contest6e que dans les motifs, et le dispositif contiendra simplement I'attribution de 1'h6r6dit6. I est manifeste que, dans les cas de ce genre, 1'autorit6 de la chose jugde ne doit pas s'attacher uniquement au dispositif; le jugement contient, en r6alit6, deux d~cisions, I'une renferm6e dans le dispositif, I'autre ins6r6e dans les motifs. (Lacoste, De la chose Jug6e 3e 6d., pp. 92 & 93, & 226-227, et nombreuses autorit6s en notes.)

Posons done en principe, que si un droit a 6td affirm6 ou ni6 dans un procks, i1 y aura identit6 d'objet si dans un nouveau procks on remet en question le mime droit, alors mgme que ce serait pour en tirer une autre cons6quence qui n'a pas 6t0 d6duite dans le procks originaire." (Lacoste, p. 103, no. 252.)

La rigle A suivre est celle-ci: (says Baudry-Lacantinerie (3e 6d. vol. 15, no. 2677, p. 357), la seconde demande devra 8tre rejet~e toutes les fois qu'elle tend par son objet h mettre le juge dans l'alternative, ou de se EA contredire, ou de confirmer purement et simplement la sentence qu'il a d6j& rendue.

A similar view of the law is expressed in Juris-Classeur Rinfret . Civil (vo. Contrats-Obligations en g~ndral-Div. 155, art. 1351, nos. 57 et 107):

57.-A. Identith d'objet.-L'objet de la demande est le b6n6fice juridique inm6diat que l'on se propose d'obtenir en la formant.-Pour qu'il y ait identit6 d'objet, il faut donc que les deux instances portent sur le mgme droit, ou que l'une d'elles porte sur un droit qui fait essentiellement partie int6grante de celui au sujet duquel le tribunal s'est d6jh prononc6 de manibre d6finitive. Dans ces cas, en effet (et c'est le crit6rium de l'identit6 d'objet), le juge serait mis, par le nouvelle demande, dans I'objection ou de confirmer ou de contredire la premibre.

107.-Mais il ne faut pas confondre l'omission avec la decision implicite (V. supra, n. 47). La premibre laisse non r6solu le point omis qui peut donc faire I'objet d'une nouvelle demande; la seconde, qui d6coule n6cessairement de la solution exprimbe, participe logiquement de son autorit6, puisqu'elle ne pourrait tre remise en question sans remettre 6galement en question la d~cision qui I'impliquait.

Reference might also be made to the judgment of Lamothe C.J., then Chief Justice of the province of Quebec, in Ville de St. Jean v. Quinlan & Robertson (1), and to the decision of the Quebec Court of Queen's Bench in Stevenson & The City of Montreal & White (2), confirmed by this court (3).

We must therefore hold that the judgment delivered on the 23rd February, 1926, by the Court of King's Bench of Quebec constitutes res judicata as to the amount of the annuity payable by the appellant to the respondent. Of course the appellant argues that the revocation of his power of attorney had the effect of reducing the annuity. This was a new contention not apparently raised in the first trial and, at all events, not decided in the judgment just referred to. The power of attorney was revoked in September, 1923.

The first action was brought only after that date, but the fact of the revocation could not be urged in support of the two deeds executed long before the revocation. The appellant is right in saying that there is not res judicata as to this point, but he cannot derive any benefit from that fact. He acquiesced in his dismissal as (1) (1920) Q.R. 30 K.B. 189, at

(2) (1896) Q.R. 6 Q.B. 107. p. 191.

(3) (1897) 27 Can. S.C.R. 593.

manager of the business and affairs of Mrs. Ellard. Whether he could have made the dismissal a ground for repudiating the whole agreement is not in issue. He elected to proceed with the balance of the agreement as it now stands and to remain in possession of the farms and other properties acquired under the agreement.

He must pay the price stipulated therefor. That he should remain manager of the business was no part of the consideration of the conveyance, nor was it made by him a condition for his agreeing to pay the annuity of $2,000.

This disposes of the appellant's objections against the deed drafted by the trial judge. Those put forward by the respondent will be discussed when we come to consider the cross-appeal.

There remains to establish the amount due by the appellant when the action was brought and which gave rise to such a diversity of opinion in the courts below.

For this, it is necessary to refer to the course of dealing between the parties.

When Herbert Ellard undertook the management of Mrs. Ellard's " property, business and affairs," he was to receive a salary of $1,200 a year for his services. On the other hand, for the conveyance of the farms, etc., he agreed to pay " an annuity of $2,000."

Under the agreement, his salary was payable at the rate of $100 per month. No mention was made of a date when the annuity was to be paid and, therefore, the first instalment became due on the 4th of July, 1920, being one year after the date of the agreement. It may be pointed out that, unless Herbert Ellard received his salary during the year, compensation between it and the annuity took place pro tanto at the expiration of each year and the only sum then due by him to his mother would be the balance of $800.

The evidence shews that Mrs. Ellard did not make to Herbert Ellard monthly payments of his salary and that Herbert Ellard did not pay the annuity all at once and in a lump sum at the end of each year, while his management lasted. Instead of so doing, they

He did not receive his salary. It would only " be credited into the account

* *

* and the credit was left lying there."

In the same way he credited his farm produce delivered to Mrs. Ellard's store or hotel. He would take money from time to time and have it charged to the account.

So would Mrs. Ellard ask and receive odd sums of money and have it charged in the same way. These accounts were kept by different bookkeepers in the employ of the estate, outside of Herbert Ellard, and most of the entries were made by them. This method of dealing went on from the moment that Herbert Ellard took charge of Mrs. Ellard's affairs until the revocation of his power of attorney, or from the 4th July, 1919, until the 27th September, 1923. It was to the knowledge and with the consent of both parties.

The accounts were in the books of the estate and copies thereof were filed in the case. They shew that, in the fall of 1923, when Herbert abandoned the management, there was a balance of $1,733.35 due Mrs. Ellard. The appellant " squared up his account and went down to her and delivered her a cheque " for that amount, for which she gave him a receipt. The appellant accordingly claimed to have paid his mother up to the time of the revocation. The cheque of $1733.35 was only tendered back by Mrs. Ellard with the return of the writ of summons on or about the 2nd May, 1927, or more than four years later.

On this state of facts, it will be apparent that the payment of the salary or of the annuity and the several items pertaining to the administration by Herbert Ellard of the business and affairs of Mrs. Ellard were so bound up together that it would be unfair, not to say impossible, to deal with one without dealing with the other.

Charges for farm produce or for salary offset advances of money or payments of annuity and so on. They were made part of one and the same account.

As a consequence, it became no longer open to either of the parties to sue on a single transaction or for a specific sum of money, such as for the salary or for the annuity, for the period extending up to the revocation, but the recourse was necessarily by action to account. (Reid v. Brack (1); Stephens v. Gillespie (2); Duhamel v. Dunne and La Banque Royale (3).) Chief Justice Lamothe, in the latter case, said (p. 188): The trial judge picked out a single item of the accounts representing a sum of $1,600, and gave credit for it to the appellant.

No doubt the evidence, clear and uncontradicted, amply justified the finding so made but, in the matter of accounting, individual items may not thus be singled out; the account must be discussed as a whole, a balance must be struck and such balance alone may be awarded to the party entitled to receive it.

The judgments of the Superior Court and the majority of the Court of King's Bench fail to follow this principle. For this reason, we think the amount awarded by these judgments is wrong. Having regard to the method adopted by the parties, the whole period covered by the management of Herbert Ellard is one for accounting. Without an account properly rendered and discussed, it is not possible to decide whether there is any sum due and by whom. Provision was made in the agreement for the rendering of an account. The respondent may yet avail herself of the stipulation.

She may also make use of the accounts filed in the record by the appellant and bring an action en reformation de compte. It is to be hoped that this will not be necessary and that, the parties having now become better informed of their respective rights, will be able to come to terms.

We see no harm however, in adjudicating at once that the appellant must pay the sum of $1,733.35 acknowledged by him to be due to the respondent at the end of his administration.

(Art. 571 C.C.P.)

Upon payment thereof, he will be entitled to withdraw from the record the cheque he gave for that amount on the 24th September, 1923. Due credit of course would then have to be given to the appellant, in discussing the accounts, for the sum thus paid.

Having now disposed, at least so far as concerns this case, of the period during which the appellant was managing the affairs of the respondent, it becomes an easy matter to fix the amount owed by the appellant, independently of that period, up to the time of the institution of the action. From September 24, 1923, to 4th July, 1924, the annuity represented an amount of $1,548.

Further annuities of $2,000 each came due on the 4th July of the years 1925 and 1926, viz.: $4,000. In 1927, when the action was brought the annuity for that year was not yet due. We cannot in this action make any award in respect of it, nor of any other annuity accruing in the subsequent years, in the absence of an incidental demand on the part of the respondent. (Art. 215 C.C.P.)

The total amount due for annuities when the action was brought was therefore $5,548 to which, for reasons already stated, should be added $1,733.35, making a total sum of $7,281.35.

As for interest, the courts below decided that it should run " from the date of service of the action " and no complaint was made by either party in that respect. In the above view of the case, the question of prescription, on which the majority of the Court of King's Bench based its judgment, does not arise and does not require to be discussed.

This disposes of all the points raised in the main appeal, and we may now turn to those submitted by the respondent on the cross-appeal.

The draft deed prepared by the trial judge contains the following stipulation:

This was approved by the Court of King's Bench.

The respondent contends that she never renounced any part of the privilege which would ordinarily secure the payment of her annuity and that the judgments below are wrong in requiring her to sign a deed whereby her privilege or hypothee over the properties would be limited to $800 a year.

Clause 6 of the agreement of 4th July, 1919 (already cited) provides in part as follows:

We agree with the Superior Court and with the Court of King's Bench that this was a clear renunciation of part of the privilege given by law (Compare Lower St. Lawrence Power Co. v. L'Immeuble Landry Limitle (1).

No other purpose could be ascribed to the stipulation. In fact, unless it means a reduction of the privilege, it would lend colour to the contention of the appellant that the annuity was only $800 and that the balance of $1,200 was to be paid out of the earnings of the "trading and other operations."

The respondent further asked that in case the appellant should fail to pay the annuities that would be awarded, the agreement of 4th July, 1919, be set aside by reason of such default. The courts below have refused to grant such conclusions and the respondent complains of that part of the judgment.

The answer lies in article 1536 C.C. which provides: The agreement, it is true, is only a promise of sale, but the appellant took possession at once of all the properties defined in the judgment and has occupied them ever since. " A promise of sale with tradition and actual possession is equivalent to a sale " (Art. 1478 C.C.).

Article 1536 C.C. applies to a case of this kind and, in the absence of any stipulation to that effect, the agreement cannot be set aside by reason of the failure of the appellant to pay the price. If it were not so the respondent would yet be precluded from securing the remedy she claims by force of art. 1907 of the Civil Code:

On both these questions, therefore, we find ourselves in accord with the courts below.

Moreover, the draft deed for which we are now providing must be that which, according to the agreement, should have been passed on or before the first day of October, 1919. On that day the respondent obliged herself to supplement the agreement by a proper conveyance, but there was no corresponding and simultaneous obligation on the part of the purchaser to pay any part of the price. There was no cash payment to be made, the first payment of annuity would not be due until the 4th July, 1920. Even although, by force of circumstances, the deed will finally be executed only after the date agreed upon, there exists no reason why it should, on that account, be different now from what it should have been then. We see no necessity M'I4 for making in the deed any reference to a cash payment. - All requirements will be met by modifying the draft deed so as to state the consideration as follows:

an annuity of two thousand dollars ($2,000) per year from and after the fourth day of July nineteen hundred and nineteen, payable by the purchaser to the vendor during her lifetime.

It follows that, saving the modification just mentioned, and consequential changes hereinafter indicated, the draft deed annexed to the judgment of the Superior Court should be approved.

The cross-appeal must accordingly be dismissed with costs.

On the main appeal, the judgment should be modified as indicated and the amount of the condemnation reduced to $7,281.35 with costs to the appellant here and in the Court of King's Bench.

In the draft deed annexed to the judgment of the Superior Court, we would strike out the clause reading as follows:

The present transfer and conveyance is so made by the vendor to the purchaser for and in consideration of an annuity of two thousand dollars ($2,000) per year from and after the fourth day of July nineteen hundred and nineteen, payable by the purchaser to the vendor during her lifetime, the vendor acknowledging to have received at the passing of the presents the sum of twelve thousand four hundred dollars ($12,400), being in full of said annuity to the 4th July, 1926;

and the following clause should be substituted for it: The present transfer and conveyance is so made by the vendor to the purchaser for and in consideration of an annuity of two thousand dollars ($2,000) per year from and after the fourth day of July nineteen hundred and nineteen, payable by the purchaser to the vendor during her lifetime.

This however will not remove all difficulties in the path of the parties. The deed drafted by the Superior Court defines the lots which each party is entitled to receive and contains other stipulations in conformity with the agreement of 4th July, 1919; but it can take effect only if and when received before a notary after having been signed by both the appellant and the respondent. We should help the parties to work this out, and provide machinery, so far as we have the right to do it. (Grondin v. Cliche (1).) (1) [1929] S.C.R. 390.