Judgment of the Court
J.-M. Lavut & Son, who were merchants, carrying on business in Montreal, had insured their stock in trade against fire in five insurance companies; the policies were issued severally at various times, and in different amounts, from 21st February, 1923, to 6th June, 1926; and, in order to secure the payment of moneys which the firm had borrowed, or intended to borrow, from the defendant bank, these policies, with one exception, contained the provision, in the body of the policy, " Loss, if any, payable to the Dominion Bank." The excepted policy was the first of the series, and it was issued to the assured, M. Lavut & Son, by the Alliance Assurance Company, Limited. By its terms,
Form 2 of the blank endorsements printed on the back of this policy was filled up and executed in August, 1924, as follows:
Endorsements
Form no. 2,-Loss payable clause
In case of loss the amount for which the company shall be liable shall DomiNioN be payable to Dominion Bank of
BANK. Signed at Montreal the 8 August 1923 by
Newombe .1 M. LAVUT & SON per D. Assured. The company hereby accepts the above notice that the loss (if any) under this policy shall be payable to the said Dominion Bank.
Signed at Montreal, the 11th August, 1924, by
E. E. KENYON,
Per R. Manager. The policies were kept in force, and a fire occurred on 20th September, 1926, whereby the stock insured was destroyed or damaged; the firm became bankrupt, presenting a petition on 13th October, 1926, which was granted on that day, and, on 11th November, 1926, the plaintiff became the trustee.
The following facts, among others, are stated in the admissions:
4. All these fire insurance policies were remitted to the defendant at the dates of the issue of the policies for those which were originally made "loss payable if any to the Dominion Bank" and on August 8, 1924, in so far as the Alliance Assurance Company Limited is concerned, and were all held by the defendant as security for advances made and to be made by the defendant to M. Lavut & Son, until the occurrence of the fire, on September 20, 1926.
5. At the time of the bankruptcy of the said J. Lavut & Son and of the fire, the latter was indebted to the defendant in the sum of $8,731 (as shown by sworn proof of claim now in the hands of the plaintiff, 6squalit). 6. The said sum of $8,731 was the balance of an account on advances made from time to time by defendant to the said M. Lavut & Son against the securities held by defendant.
7. After the fire the defendant received out of the fire insurance policies a total of $3,436.79, by cheque made by those fire insurance companies, each cheque payable to M. Lavut & Son and to the defendant, at the different dates mentioned in the evidence, and endorsed by M. Lavut & Son.
The purpose of the action is to have it declared
* * * que les cessions des indemnit6s par I'assur6 M. Lavut & Son, A la d6fenderesse. provenant des diverses polices d'assurance ci-dessus mentionnies, soient d~clar6es frauduleuses, nulles et illigales;
and that the plaintiff trustee be adjudged to recover the indemnities for distribution among the creditors.
Archer J., the learned trial judge, dismissed the action, and, upon appeal, he was upheld unanimously by the Court of King's Bench (1).
The errors now alleged are three; it is contended, first, J.that the courts below erred in holding that the bank was authorized, under s. 75 of The Bank Act, R.S.C. 1927, c. 12, to make advances upon, or to take as security, the obligations of fire insurance companies to pay the indemnities stipulated in case of loss; secondly, that the clause, " Loss, if any, payable to the Dominion Bank," did not operate otherwise than as an assignment of the insurance policies to the bank, and could not have that operation, inasmuch as the bank had no insurable interest in the property insured; and, thirdly, to use the words in which the point is stated, that the courts were wrong
Respecting the first point, I should be reluctant to suggest a doubt as to the right of a trader to make his fire insurance available as a security to a bank in the manner adopted in this case, or as to the power or capacity of a bank to take or hold such a security. The argument arises upon the interpretation of s. 75 of The Bank Act, and it is said that, inasmuch as clause (c) of subs. 1 expressly mentions certain securities, including " bills of exchange, promissory notes and other negotiable securities," upon which the bank may lend money and make advances, it could not have been intended that the next following clause (d), of the same subsection, should extend to securities not included in the preceding specific description. But that is practically, and unnecessarily, to limit the generality of the comprehensive power separately defined by clause (d) so as to exclude the lending powers which appertain to banking. The words of the clause are these:
The maxim, expressio unius est exclusio alterius, enunciates a principle which has its application in the construction of statutes and written instruments, and no doubt it has its uses when it aids to discover the intention; but, as has been said, while it is often a valuable servant, it is a D . dangerous master to follow. Much depends upon the context. One has to realize that a general rule of interpretation is not always in the mind of a draughtsman; that accidents occur; that there may be inadvertence; that sometimes unnecessary expressions are introduced, ex abundanti cautela, by way of least resistance, to satisfy an insistent interest, without any thought of limiting the general provision; and so the axiom is held not to be of universal application.
per Lord Campbell, L.C., in Saunders v. Evans (1); McLaughlin v. Westgrath (2).
It is not denied that the transaction in question belongs to the business of banking within the meaning of clause (d), if that clause be not limited by the implied exception for which the plaintiff contends, and it must be remembered that, according to the frame of the Act, exceptions or prohibitions are intended to be expressed by subs. 2 of s. 75. These do not suggest any intention to exclude the lending of money upon securities, merely because the securities are not of the class which is described as negotiable; and the maxim is thus, perhaps, more aptly available to the bank when it contends that, since certain securities not foreign to the business of banking are expressly prohibited, it may be inferred that other securities of that character remain within the scope and operation of the general clause. Several provincial decisions of high authority are cited by the learned judges of the Court of King's Bench in support of the bank's power, and there is none to the contrary. My own view is that the Parliament, in introducing the securities enumerated by clause (c) of subs. 1, evidently did not intend to make those enumerations comprehensive, and that, so far as any question arising in this case is concerned, clause (d) was meant to have its full effect, subject to the provisions of subs. 2. Moreover, it is difficult to escape the inference from subs. 3 that insurance may be placed for the security of a bank; on the contrary, it is expressly provided that
Secondly, it is urged that the bank, having no insurable interest in the goods insured, was not qualified to receive payment of the amount of the loss under the direction to that effect embodied in or endorsed upon the policies, and the plaintiff relied upon several articles of the Quebec Civil Code, namely, 2472, 2474, 2482, 2568 and 2571, but they do not support his contention. It is said that the words under which the bank claims have effect as an assignment of the policies, but that is not so. The stipulations operate only in the event of loss, and give effect to the intention of the parties that the indemnities to which the assured have become entitled shall be paid to the bank as the nominee of the assured, the latter remaining bound by and subject to the terms of the policies which have been contracted. It seems unnecessary to add to the discussion which this question received in the reasons given by the learned judges of the Court of King's Bench; but it may be observed that the considerations which they advanced are supported, not only as matter of fair interpretation, but also by the authorities in Ontario and in the United States. See, inter alia, McPhillips v. London Mutual Fire Insurance Company (1); Fogg v. Middlesex Mutual Fire Insurance Co. (2); Minturn v. Manufacturers' Insurance Co. (3); Frink v. The Hampden Insurance Co. (4).
I find it somewhat difficult to realize the authority or principle which underlies the third objection. We are referred to art. 1981 of the Civil Code, and it is said that the transaction amounts to an illegal preference under the Bankruptcy Act, R.S.C., 1927, c. 11; but the article in question is not intended to prevent a debtor from creating a valid security; and, as to the Bankruptcy Act, admittedly none of these securities was given within the period of three months limited by s. 64 of that Act; and, moreover, there