Smith J.
A
N7 ANCE COMPANY (Defendant) .A.
*Nov.7 Nov. AND
JAMES D. CHERRY & SONS LIM- RESPONDENT.
Judgment of the Court
RITCHIE J.:-This is an appeal from a judgment of the Court of Queen's Bench of the Province of Quebec' dismissing an appeal from the judgment of Smith J. of the Taschereau, Fauteux, Abbott, Judson and Ritchie JJ. 1 [19611 Que. Q.B. 476.
Superior Court of the City of Montreal which awarded to THE the respondent damages in the sum of $8,000 as compensa- FiRE tion for loss caused by the appellant's violation of para. 9 Co.
of a certain agency agreement dated November 19, 1937, & whereunder the respondent and its predecessor had operated as a "general agent" for the appellant in the fire insurance Ritchie J. business in the Province of Quebec for seven years prior to the termination of the agreement by the appellant in July 1944. The sole issue in this appeal is whether, after termination, the appellant violated the provisions of the said para. 9 by entering into "direct agency" agreements with certain of the respondent's former sub-agents and thereby turning to its own account some of the "good will" accumulated by the respondent in its capacity as the appellant's general agent. Paragraph 9 of the agency agreement reads as follows: 9. In the event of termination of this Agreement, the Agent not being in default and thereafter promptly accounting for and paying over balances not in default for which he is liable, the Agent's records, use and control of expirations shall be deemed the property of the Agent and left in his undisputed possession; otherwise the records, use and control of expirations shall be vested in the Company.
The word "expirations" as used in this context has a meaning peculiar to the insurance business which is well defined in the decision of the United States Federal Court of Appeals in V. L. Phillips & Company v. Pennsylvania Threshermen & Farmers' Mutual Casualty Insurance Company':
(1) "Expirations" in the insurance field has a definite and well recognized meaning; it embodies the records of an insurance agency by which the agent has available a copy of the policy issued to the insured or records containing the date of the insurance policy, the name of the insured, the date of its expiration, the amount of insurance, premiums, property covered and terms of insurance. This information enables the agent to contact the insured before the existing contract expires and arms him with the information essential to secure another policy and to present to the insured a solution for his insurance requirements. It has been determined that this information is of vital assistance to the agency in carrying on the insurance business and it has become, in the insurance field, recognized as a valuable asset in the nature of good will.
During the lifetime of the agreement the respondent had accumulated a very considerable number of sub-agents who were in possession of "expirations" relative to the fire insurance written by them. During the same period the appellant had been operating a branch office in the Province of Quebec 1(1952), 199 F. (2d) 244 at 246.
for the writing of casualty insurance business, and for this purpose it had acquired a number of agents, some of whom were also sub-agents for the respondent in the fire insurance business.
On December 4, 1944, the appellant circularized such of its casualty insurance agents as had not been sub-agents of the respondent before entering the casualty field, inviting them to enter into "direct agency" agreements for the sale of fire insurance, and in so doing it was, in effect, inviting a number of the respondent's sub-agents to place their renewal fire insurance business with it on a "direct" basis. It is not difficult to see that by making the respondent's subagents its own direct agents it would obtain the advantage of the expirations in respect of the renewal of any fire insurance policy placed by such sub-agent for the respondent.
The essential facts are really not in dispute and the elaborate arguments made on behalf of the appellant to justify the course followed by it in this case have been reviewed by the Court of Queen's Bench and were, in my view, very fully and properly dealt with in the exhaustive decision of the learned trial judge who concluded that:
I do not think that the reasons for judgment of the Courts below are to be construed as deciding that the good will of a general agent becomes his absolute property free from all future competition from the insurance company on the termination of an agreement such as the present one nor do
I think, as was suggested by counsel for the appellant, that these judgments have the effect of transforming para. into a covenant in restraint of trade. This case should not, in my view, be construed as going further than deciding that the action here taken by the insurance company constituted a breach of the paragraph in question.
It is neither necessary nor desirable to lay down any rules of general application regulating the conduct of insurance companies in competing for business originally written by
S.C.R.