LANGE-APPELLANT; s LIER (PLAINTIFF, CONTESTANT) ....
A
; Oc *Oct. 20 ANTOINE
AIMR CHARLEBOIS
RESPONDENT. (INTERVENANT) .............................
AND
THE COMMERCIAL UNION ASSU- RANCE COMPANY....................GARNISHEES. ON APPEAL FROM THE COURT OF KING'S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC.
The lessor of real estate insured the leased property " in trust " and notified the inasurers that the lessee, his son, was the real beneficiary.
The lessee paid all the premiums and, the property having been seized in execution of a judgment against the lessor, the lessee purchased at the sheriffs sale and became owner in *PRESENT :-Sir Elzdar Taschereau C. J. and Sedgewick, Girouard, Davies, Nesbitt and Killam JJ.
fee.
He afterwards increased the insurance, the insurer acknowledging, in the second policy, the existence of the first in his favour.
The property having been destroy by fire, payment of the amount of thefirst policy to the lessee wag opposed by ajudgment creditor of the lessor and the money attached in the possession of the company.
Held, that the lessee having had an insurable interest when the first policy issued and being, when he acquired the fee and when the loss occurred, the only person having such interest, he was entitled to the payment of the amount of the policy insured upon the application of the lessor.
Held, also, that even if the lessor knew that his father was embarrassed at the time he took the lease and when he purchased the property at the sheriff's sale, that would not make the transaction fraudulent as against the father's creditors.
A creditor who was a party to the action against the lessor in which the property was sold in execution subject to the lease and who did not oppose such sale could not, afterwards, contest payment of the amount of the policy on the ground of fraud.
APPEAL from the judgment of the Court of King's Bench, appeal side, reversing the judgment of the Superior Court, District of Montreal, and declaring that the intervenant alone was entitled to the moneys deposited in court by the garnishee and further dismissing the contestation of the intervention with costs. In March,. 1900, the appellant, having an unsatisfied judgment against Alphonse Charlebois, the defendant in the action, attached moneys in the hands of the garnishees, as belonging to him.
The garnishees declared that in May, 1899, they had insured Alphonse Charlebois " in trust " to the amount of $3,500 for twelve months upon a property known as the "Academy of Music Theatre," Quebec; that after the policy was so taken out, they were informed that the trust was in favour of his son A. A. Charlebois, the respondent; that said A. A. Charlebois had paid the premium and that he had made a claim under the policy for loss by fire; and the sum of $3,500, admitted to be payable under said policy, was deposited in court, to be disposed of as the court might direct.
The respondent then fyled an intervention asking to have the garnishment set aside upon the ground that, when the policy was taken, he had leased the property insured for nine years at a rental of $700 per annum, payable in improvements; that he had commenced to make said improvements in May, 1899, when he took the insurance policy of $3,500 through his father, the defendant, who was then acting as trustee for him; that on the 6th of February, 1900, he had purchased the said property at sheriff's sale, under execution; that on the 16th March, 1900, he had applied to the insurance company for additional insurance upon the same property, and that in the policy issued upon said second application the insurance company had recognized him as the beneficiary under their previous policy; and moreover that his purchase of the property at sheriff's sale had the effect of transferring to him the legal right to the policy, in virtue of clause 4 therein declaring that a change of title to the insured property "by succession, or by operation of law, or by reason of death" should not have the effect of voiding said policy.
The appellant contested this intervention upon the ground that all these transactions between the defendant and his son, the respondent, had been made by the former when notoriously insolvent to the knowledge of the son, and with the object of defrauding his creditors; that the father had made no legal transfer of the policy or his interest therein to the intervenant; and consequently, that the amount payable thereunder was properly seizable by defendant's creditors.
The trial judge maintained the plaintiff's contestation and dismissed the intervention.
This judgment was reversed by the judgment now appealed from, Hall dissenting.
Beaudin K.C. and Gouin K.C. for the appellant. The insertion of the words " in trust " after the defendant's name in the policy of insurance could not have the effect of altering his rights in the property or under the policy in respect to third parties to whom he was indebted; Bank ofiMontreal v. Sweeny. Trusts as known to the English law are not recognized in the Province of Quebec but may be declared merely in a donation or a will; art. 981a C.C.; and cannot be proved by parol testimony; arts. 2570, 2571 0.C. The agreement between respondent and his father with regard to the insurance policy was fraudulent and made with the sole intent of avoiding the payment of the defendant's debt to the appellant. The alleged lease is a contract of an onerous nature and was evidently made with a view of decreasing the value of the property in the event of a judicial or other sale.
When it was signed on 7th August, 1899, the defendant was insolvent, and the respondent knew it. Under art. 1035 C. all contracts a titre onereux, by an insolvent debtor with a party who knows of his insolvency, are presumed to be fraudulent. The respondent has not destroyed this presumption of the law, and it appears by his own testimony that the allegations of fraud contained in the contestation of his intervention were true.
The only person named as beneficiary under the policy is the defendant, and the amount cannot be paid to anybody else in the absence of a formal assignment or transfer.
The impressions or understandings of agents of the insurance company, at variance with the terms of the policy, cannot avail to defeat the seizing creditor. Arts. 2483, 2576 0.0.; Forgie 4- at. v.. Royal Insurance Co. (1)
Brodeur K.C. and Pelletier for the respondent. The insurance company was, at the time of the delivery the policy, made aware of the name of the real beneficiary, though it did not appear in the policy, by the declaration that the trust was in favour of the intervenant; May on Insurance (4 ed.) vol. 2, p. 1024, § 445; vol. 1, p. 179 ; also by his letter stating that he was the owner of the property insured. Intervenant had, at any rate, an insurable interest ; art. 2271 0.C.; and the company received subsequent premiums from him with knowledge of the facts, after the purchase at sheriff's sale, at the same time admitting the validity of the former policy.
At the time of these transactions, the appellant was not a creditor of the defendant and, at the time of the fire, defendant had no interest whatever in the property insured.
A change of ownership took place under the sheriff's sale by operation of law and with the knowledge and consent of the company.
The company declared that they owed nothing to the defendant, that the policy was in trust for the respondent, and that after the loss the claim was filed by the respondent for his own benefit and interest. Under the circumstances, the appellant was bound to contest that declaration and to allege and prove that the defendant was entitled to the money. Having failed to do so the intervention was rightly maintained. The deposit of the $3,500 in court did not create a title of ownership in favour of the defendant or his creditors. The money so deposited is the absolute property of the respondent.
We refer to Anchor Marine Insurance Co. v. Allan (1); Bank of v.. Sweeny ; Leipschitz v. The Montreal Street Railway
The transactions in regard to the lease of the theatre, the character of the lease, the son's efforts to help his father through his financial troubles which, later on, caused him great distress, the public sale by the sheriff, made with the appellant's knowledge and unopposed by him, everything in connection with the case, as shewn in evidence, all go to prove absolute good faith and the entire absence of fraud on the part of the intervenant and his father, the defendant. There was no prejudice to the creditors in the lease- there is none by the sheriff's sale, and still less in the contract of insurance, which is completely independent of all the other transactions, and to which the defendant was not a party, except as the respondent's agent. THE CHIEF JUSTICE.-This seems to me a plain case. The sheriff's sale to the respondent on the 6th February, 1900, incontrovertibly put an, end to the lease. The respondent could not be a tenant of his own property. Now that sale is not and cannot be impugned in this case, were it only for the absence of the parties to it. So that when the building was burnt down on the eighteenth of March the defendant suffered no loss. The only sufferer was the respondent. How then can the defendant claim an indemnity for a loss that he has not suffered ? How could he have made proof of loss when' he suffered none ?
Assuming that at first the policy should be held to have been issued to the defendant, the respondent became the equitable owner of it, as against the defendant, when he acquired the ownership of the property, and, with the company's assent to continue the insurance for him and as if a new policy were taken in his name, he became the insured to all intents and purposes.
I would dismiss the appeal with costs.
concurred in the judgment dismissing the appeal with costs.
J.-II ne s'agit ici que d'une question de faits d~cid6e dans un sens par la cour sup~rieure et dans un autre par la cour d'appel, Hall J. diff6rant.
est incontestable qu'A 1'6poque de 1'incendie de l'Acad6mie de Musique, le d6fendeur, Charlebois, n'en 6tait pas propri6taire, et il nous semble qu'en pr6sence de ce fait les deniers saisis en cette cause qui reprbsentaient cette propri6t6, ne peuvent 6tre r6clam6s par lui.
Ce simple motif devrait suffire pour nous en gager a renvoyer l'appel.
Voilk peut-Atre pourquoi la cour d'appel, compos6e de Witrtile, Hall, Blanchet, Onimet et Tellier, ad hoc, J.J., a simplement d6clar6 : A Les notes des juges ne nous out pas t6 transmises, bien que demandbes.
Nous avons cependant le jugement motiv6 du juge Charland, si4geant en la cour sup6rieure et le dissentement 6labore de M. le Juge Hall.
L'appelant soutient que ce moyen ne pourrait 6tre invoqu6 que par la compagnie d'assurance Commercial Union, qui non seulement ne 1'invoque pas, mais a d~pos6 en cour le plein montant de la police pour 4tre remis ' qui de droit, et qu'il ne pent 1'6tre par Charlebois fils qui n'6tait que le pr~te nom de son phre insolvable, dans le but de soustraire cet immeuble aux poursuites de ses cr6anciers.
I] est done pr6f6rable et dans l1nt1rt parties d'examiner cette partie de la cause qui a induit M. le juge Hall A diffirer de M. le juge Charland.
La preuve au dossier justifie-t-elle la pr6tention de l'appelant? Elle n'est pas volumineuse, consistant principalement dans le timoignage de Charlebois fils et de ses ouvriers. Charlebois phre ne fut pas t6moin. Les ouvriers attestent qu'ils n'ont eu affaires qu'avec le fils et qu'ils furent payds par lui. Le t6moignage de ce dernier offert de sa part est long; il a td soumis A des trausquestions rigoureuses et serrdes.
Ses r6ponses sont promptes, fermes et entibres, sans equivoque h6sitation, et apr~s les avoir lues et relues, je suis rest6 convaincu qu'il dit la v6rit6, toute la v6rit'. fait disparaitre entibrement la prisomption de fraude que la parent6 fait naitre tout d'abord.
tablit, h mon entibre satisfaction du moins, . que les transactions et operations du fils 6taient non seulement dans les limites de ]a l6galit6, mais qu'elles 6taient marquies an coin d'un des plus nobles sentiments, la reconnaissance, malheureusement trop ra;e de nos jours.
Que le fils ait connu le mauvais tat des affaires de son pare h l' poque il en obtenait le bail, le printemps de 1899, c'est certain; il l'admet lui-mame, sans pouvoir dire s'il 6tait r~ellement insolvable car il ne connaissait pas ses affaires et il l'avait toujours cru riche. Aucune demande de cession pour b'n'fice de ses cr6anciers n'avait 6 faite. II savait, cependant, que plusieurs jugements avaient 6td rcemment ren dus contre lui, et que des saisies avaient t6 pratiqu6es sur ses biens. C'est alors qu'il rsolut de venir a son secours et de 1'aider, m6me A supporter le fardeau journalier de la vie par tous les moyens que ses propres Tessources p4cuniaires mettaient A sa disposition.
considdrait 6videmment que la reconnaissance demandait sa protection en faveur de celui qui, plusieurs ann6es auparavant, une 6poque le phre 6tait g4neralement reput4 riche et mime cott4 comme valant
$300,000, lui avait fait don de propri6t6s foncires valant une trentaine de mille piastres, qui 6taient encore a son avoir soit en nature ou en argent.
n'y a pas un mot de preuve et il n'est pas mime all~gu6 que le phre fut insolvable lorsqu'il fit ces dons et d'ailleurs 1'appelant n'6tait pas creancier 'a cette 6poque.
(1) L'insolvabilit6 alligu4 ne remonte pas plus loin que la date du bail. Enfin depuis quelques annies, le fils avait fait des affaires prospres ayant 6 le girant d'une fabrique importante aux Trois-Rivibres, et ayant acquis d'autres immeubles.
Bref, il n'eut aucune difficulti h rialiser on emprunter les fonds nicessaires pour acheter plusieurs jugements et proprit&s de son pore vendues par le shirif. Qui pr6tendra que son but n'6tait pas m~me louable ? Mais il y a plus.
L'article 1038 du Code Civil dit que mime s'il y a intention de frauder, il faut en sus que 1'acte dont on se plaint ait I'effet de nuire au criancier. Oi pouvait
6tre le prejudice dans 1'esp~ce qui nous occupe, savoir le bail de 1'Acadimie de Musique qui est la seule transaction attaque par la contestation comme entachie de fraide?
Le pare loue une propridtd, d'une grande valeur il est vrai, que 1'assur6 estima dans sa r4clamation contre la Commercial Union A $25,000; mais n'4tait pas loude ni louable vu qu'elle avait besoin de reparations urgentes et consid4rables.
Le phre ne la vend pas pour argent comptant qu'il aurait pu empocher; il la loue pour neuf ans, non pas pour un loyer en argent qu'il aurait peut-6tre pu transporter, mais moyennant des reparations nicessaires et durables que le fils locataire s'engage de faire, en sus du paiement des taxes municipales, i raison de $700 par ann6e, le montant total ne devant pas d6passer celui du loyer, J. savoir $6,300.
Il fut mrme stipul6 au bail que Le locataire se mit de suite en frais de faire d'abord les r6parations urgentes, couvrir l'6difice A neuf, puis il renouvela les boiseries, la plomberie, les peintures decorations, etc., et finalement dipensa la premibre annie une somme d'environ $10,000, sur laquelle $4,000, 'taient encore dues aux ouvriers, A l'4poque dela saisie arrit de l'appelant.
Cette somme de $10,000 est done venu augmenter la valeur de la propridt6 et le gage des creanciers loin de le diminuer.
Les r parations 'taient presque termin6es lorsque, le 3 janvier 100, les h6ritiers d'un nomm'i Hough qui avait un jugement contre l'appelant firent saisir l'Acad6mie de Musique sur Charlebois pere, conme dibiteur de ce dernier et le firent vendre par le sh6rif le 6 f6vrier suivant, L'appelant ne se plaint pas que la procedure n'a pas 6t6 r6gulibre et que les avis n6cessaires n'ont pas t6 publi6s.
n'a jamais songe A attaquer la validit6 du decret.
Naturellement, Charlebois fils se porta adjudicataire pour la somme de $6,000 qu'il paya an moyen d'un emprunt fait au Trust and Loan. Devenu propri6taire, il termina ses amiliorations et pris une nonvelle police d'assurance pour $2,250 et se fit reconnaltre par la mime compagnie comme 4tant le b6n6ficiaire de celle qui existait avant pour $3,500, pen importe le nom de l'assur6, que ce fut Charlebois pare on -une autre personne.
Charlebois fils avait, A Npoque de l'incendie, seul intirt dans 'immeuble. En supposant que le bail fut frauduleux, la vente du shirif a n6cessairement mit fin A toutes plaintes de cc chef. Ds ce moment la compagnie d'assurance devait payer an fils qui solda de ses deniers toutes primes et qui soul peut la lib6rer.
II avait ces deux polices d'assurance lorsque l'incendie detruisit tout 1'idifice et son contenu, le 18 mars 1900, plus une autre police de la
Royale, pour $4,500 et une quatribme de l'Atlas pour
$2,500, en tout $12,500. Le dp6t ' en cour de la somme que la Commercial Union doit encore ne peut changer les relations et les droits des parties.
Et puis si le fils n'6tait que le pr~te-nom du pere, si tous ces proc6d6s n'6taiont qu'une conspiration et un plan gigantesque pour frander ses crianciers sous le manteau de la justice et les apparences de la 14galit6 tram6s depuis des ann6es,-ce qui n'est ni alligu6 ni prouv4,-non seulement la premibre police pour $3,500 serait la propri6t6 du pere, ainsi quo
1'appelant le pretend, mais aussi la derniare pour $2,250 et les polices de la Royal et de l'Atlas. Il n'attaque cependant que la premibre, et il a laiss4 les compagnies payer le montant des trois autres polices i l'intim6*
Sa position n'est pas logique, iii soutenable.
Enfin, s'il y a un creancier qui ne pent attaquer le bail en question pour cause de fraude, c'est bien l'appelant. II a laiss6 le shi6rif vendre l'immeuble sujet an bail en question.
6tait partie dans la cause inme de Hough oil il fut d4crit4.
Il n'a pas port6 opposition ni fait d'objection, et le laissa adjuger A Charlebois fils sujet an bail.
ne pent maintenant se plaindre de ce bail et de ses consequences.
L'appelant jure que la vente du sh~rif a eu lieu hors sa connaissance.
Mais c'est son malheur, sinon sa faute, s'il n'a pas mieux surveill6 ses droits. Il avait d'autant plus raison d'6tre vigilant qu'il- avait antirieurement pratiqu6 une saisie sur le meme immeuble, qui n'eut pas de suite, parcequ'il demandait que l'immeuble fut vendu sans tre sujet au bail et que Chalebois fils s'y opposait.
Lui qui est avocat, se rappelle sans doute la maxime Vigilantibus et non dormientibus jura subve- J.
Pour ces raisons, nous sommes d'avis de renvoyer l'appel avec d4pens.
and JJ. concurred in the judgment dismissing the appeal with costs.
KILLAM J.-At the close of the arguments in this case, I was inclined to the views indicated by Mr. Justice Hall, in the Quebec Court of Appeal. To my mind the case turns upon the acceptance of the intervenant's evidence as reliable proof of a real, bond Jide lease to him of the theatre property and of a real agreement by the defendant to insure for the protection of the intervenant's independent expenditure. Having reference to the strong opinion of my learned brothers that his evidence should be accepted, I] do not now dissent from their conclusion.
Appeal dismissed with costs.