McQueen v. Phoenix Mutual Fire Insurance Co.

-Nov. 18, 19.

.muchl1 3 .THE PH(ENIX MUTUAL FIRE IN- RESPONDENTS. *r

I8URANCE COMPANY...

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO. The appellant, being indebted to certain persons and desiring to have his stock of goods insured, applied to the agents of respondents for insurance to the amount of $2,000 for three months, "loss if any to be payable to his creditors of whom G. McK. is one and McM. & Co. are second." An interim receipt was issued by the company, dated 19th November, 1877, which stated the insurance to be subject to the conditions contained in and endorsed upon the printed form of policy in use by the company, one of which conditions (No. 4) stated, that if the property insured should be assigned without a written permission endorsed on the policy by an agent of the company duly authorized for such purpose, the policy should be void.

On the 28th November the appellant transferred the insured property to the said G. McK., in trust for his creditors, the balance, if any, to be payable to himself. The agent of the company was notified of this transfer and assented to it, stating that no notice to the company was necessary, the policy being made payable to the creditors. The property was destroyed by fire on the 15th January, 1878. The policy sued upon was dated the 12th December, 1877, but was not delivered until the morning after the fire. Byit the loss was made " payable to G. McK. and McM. & Co., and others as creditors, as their interests may appear." After the fire the Inspector of the company wrote twice to McK. calling for proof of loss.

Held,-Reversing the judgment of the Uourt of Appeal for Ontariothat the notice of the trust assignment to the company's agent PRsmN:-Ritohie, C. J. ; and Strong, Fournier, Henry, Taschereau and Gwynne, J. J.

it; APPEAL from a judgment of the Court of Appeal for Ontario reversing a judgment of the Court of Common Pleas (2).

The facts of the case are sufficiently stated in the head note and judgments hereinafter given.

It is important, in this case, to consider carefully the terms and the object of the assignment and the circumstances under which it was executed by the insured. Clearly the object of the assignment was not, and the effect of it is not, to divest the appellant of all interest in the goods, but as the evidence of both McKenzie and McQueen shows, to enable the appellant to dispose of the goods and to apply the proceeds towards paying the appellant's creditors, the very men to whom the policy is made payable, the appellant still retaining an interest in the goods.

Then also by the terms of the application the loss is made payable to " George McKenzie and MclJiaster 4- Co." only. The policy is made payable to " George lMcKenzie, McMaster 4- Co., and others, creditors" of the appellant. The trust assignment makes the proceeds of the goods payable to all the creditors of the appellant, exactly in the terms of the policy, thus largely extending the number of payees mentioned in the application and in this respect differing materially from the application. From this circumstance alone the appellant contends that it is clear that, between the date of the trust assignment on the 28th November, 1877, and the date of the policy 12th December, 1877, the respondents must have had notice of the trust assignment, else how does it come that the payees in the trust assignment and the policy are identical, and both differ from the payees in the application.

Moreover, with full knowledge of this assignment, at latest in the month of January, 1878, the respondents call on the appellant for proof of loss. Peck, the Inspector of respondents, sent McKenzie a postal card; and again, on the 13th February, 1878, and by direction of the manager wrote a letter, both communications calling for proof of the loss-and all this long after the manager had full knowledge of the assignment, " knowledge " before the date of policy as appellant contends, or at all events " knowledge " before calling on appellant for proof of loss, as the manager in his evidence admits.

Another answer to the argument founded upon the execution of this trust deed is this, when the assignment was made the interim receipt was the only contract between the parties, the policy had not issued, the defendants were not bound to issue it at all. The appellant is not shown to have had any notice of the conditions. No evidence to show that condition 4 was one of the conditions on policies issued by respondents at the date of the interim receipt.

The appellant should not be bound by conditions not made known to him, and not shown to be one of the conditions in respondent's policy when insurance effected.

Fourdrinier v. Haviford Fire Ins. Co.

And the respondents, having held the policy until after the fire, dispensed with the VOL. IV.] SUPRiE COURT OF CANADA.

necessity of endorsing the assignment on the policy. Appellant could not have this done, and it was not necessary that it should be done. Where an endorsement is required to be on a policy that assumes the issue of a policy. Parsons v. Citizens Insurance Co. The want of this interest is one of the two grounds on which the Court of Appeal reversed the judgment of the Common Pleas.

If during the currency of the policy the insured transferred his interest in the goods, but before the loss he regains it, the policy will not be void. Here the appellant transferred the goods to pay his creditors, reserving to himself the residue after paying such creditors;

before the loss these creditors were paid, and whatever goods remained revested in appellant.

Crozier v. Phoe nix Ins. Co.

The words " aliened by sale " in condition 4 mean an absolute and unconditional sale, in which no interest is reserved to vendor. Here an interest is reserved in the trust deed to vendor, and he, therefore, had an interest in the property at the time of loss. Sands v. Standard Ins. Co. (8) and the cases there cited. See also Bardcastle on Statutes (4).

And I may add also that condition No. 4 only refers to alienations made after the policy was issued. Here the policy is dated on the 12th Dec., 1877, but not issued to appellant until after the fire, while the alleged alienation was on the 28th Nov., 1877.

The condition says: "In case any property be alienated by sale, the policy shall be void," clearly implying the existence of a policy prior to the act of alienation. The condition does not say that the insurance in existence at the time of change of ownership under an interim receipt shall be void, but only when policy issued.

We have also express decisions by American courts that an assignment for benefit of creditors does not avoid a policy unless the assignment is of such a character as to deprive the debtor of all-interest in a loss. Lazarus v. The Commonwealth Ins. Co. (1).

We also contend the evidence shows that the agent of the company had notice of the assignment. And notice to the agent is sufficient. Rowe v. The London 4- L. F. Ins. Co. (2).

And in any event, if the respondent's agent led the appellant to believe that notice of the assignment to the company was unnecessary, the company cannot now take advantage of the want of notice to them or of noncompliance with condition 4. Beebee v. The Hartford Insurance Co. referred to in Herbert v. Mechanics F. Ins. Co. (4).

Here the agent had express notice of the assignment, and when told to notify the respondent, said " Notice to company not necessary," and when the agent thus misleads the insured, and tells him not to do a thing called for by the condition, the company is bound by the act of the agent. Hastings M. F. Ins. Co. v. ; Core D. M. F. Ins. v. Samo.

Finally I submit that R. S. of 0. ch.161, sec.43, leaves it optional with the company to pay claims which are void under, and to waive objections mentioned in, sec. 41, which covers condition 4. Here the company by calling for proof of loss waived the objection now relied on, and did not exercise their option by cancelling the policy when made aware of the assignment.

Smith v. Commercial Union Ins. Co.

The learned counsel also referred to Richards v. Liv. 4- London Ins. Co. (1); Hutchinson v. Wright (2).

The appellant sues upon the policy issued by the respondents, with its conditions, as a perfect and complete I. contract.

The thirty days insurance effected by the interim receipt had expired prior to the date of the policy and the occurrence of the loss.

If the statements in the application are correct, they form continuing representations upon which the policy issued, and form the basis of the respondents' liability. Now, at the time of the application, there was no idea of an assignment, such as was made on the 29th Nov., 1877. The policy is the only contract upon which the appellant can succeed, and this policy includes the conditions upon which we rely, and upon a breach of which the learned Chief Justice found a verdict for the respondents. See Pim v. Reid (3); Sillem v. Thornton (4). We contend that the conditions avoid the policy, for at the time of the loss the appellant had ceased to be the owner of the property insured, and the insurance had been rendered null by the alienation.

Dadman ManuJacturing Co. v. Worcester (5) ; Eanady v. Gore District Mut. Ins. Co.

Nor can it be open to the appellant to rely upon the interim contract, as he has not declared upon it. But in any event the interim contract was by its terms subject " to all the conditions, rules and regulations contained in and endorsed upon the printed form of policy, in use by the company," and, if relied upon by the plaintiff, became void under the conditions mentioned. Grant v. Reliance M. F. Ins. Co. (7); Hatton v. Beacon Ins. Co.

Then as to what took place between the agent and the insured, it is immaterial, as notice to the local V. agent of the respondents cannot bind them, because when the local agent had transmitted the application to the head office of the respondents he was functus oficio. To bind the respondents, notice to the chief agent, the board of directors, was requisite.

Billington v. The Provincial Insurance Company (1) ; Stringham v. National Ins. Co.

As to waiver by respondents. The policy of insurance and the conditions of the policy date from the day on which the application was signed, and to make out a case of waiver it must be proved the agent had power to waive a statutory condition. The alienation was without the knowledge, assent, permission, or ratification of the defendants, their directors, secretary, or duly authorized agent.

There was no written endorsement of, or valid, authorized assent to, the alienation, or to a waiver of the conditions of the insurance: Hawke v. Niagara District, (3) ; Mason v. Hartford (4) ; Hendrickson v. The Queen ; McCrae v. Waterloo County M. F. Ins. Co. (6); Shannon v. Gore District M. F. Ins. Co. Xenos v. Wickman

There was no transfer of the insurance to the alienee.

Mr. Mowat, Q.0., in reply:

Sillem v. Thornton was overruled by Thompson v. Hopper (9) on the point relied on by respondent

Moreover the variation relied upon does not apply to a cash policy, for the very words used in the whole clause show they are only applicable to a mutual policy. This company had power to issue cash policies and this was a policy of that character.

The plaintiff, being indebted to certain persons, and McQUEN desiring to have his stock of goods insured, applied to TEE defendants' agent for insurance to the amount of $2,000 A for three months. "Loss, if any, to be paid to his FIR creditors, of whom George McKenzie, of Wingham, is I one, and Mcllfaster 4- Co., of Toronto, are second." Whereupon the said agent granted to plaintiff an interim receipt in these words:- INTERIM RECEIPT.

MUTuAL COMPANY-HEAD

Provisional Receipt No. 9.

Agents' Offce, 19th November, 1877. Received from James McQueen (Post Office), Wingham, twentytwo dollars, being the premium for an insurance to the extent of $2,000 on the property described in his application of this date, numbered 9, subject, however, to the approval of the Board of Directors in Toronto, and it is hereby declared that the property so described shall be held insured for thirty days from this date, or until notice be given that the proposal is declined, but the insurance hereby made is subject to all the conditions, rules and regulations contained in, and endorsed upon the printed form of policy in use by the Company at the date hereof.

Cash received, $18.50.

THOMAS HOLMES. N. B.-In the event of the above insurance not being completed, an equivalent portion of the premium now paid will be retained for the period during which the company has been upon the risk.

R. J. W. M. On the 28th November the plaintiff, by deed, transferred, inter alia, the property so insured, to the said McKenzie, in trust to sell the said property, and out of the proceeds thereof, in the first place, to pay all costs, &c., connected with thq trust, and in the second place, to pay the creditors:of the plaintiff named in the schedule annexed, including the claims of McKenzie (they being all creditors of plaintiff) in proportion to their respective claims, and in the third place to pay the balance of such proceeds (if any) to the plaintiff.

80't llicKenzie and Holmes, defendants' agent, and plain- MoQuszN tiff, give this account of the transaction:

McKenzie's examination resumed-We went to Holmes' office and PHanux made application to have an insurance effected on the goods of McQueen; that was on, the 13th November

It was to the amount 1,8 Co. of $4,000.00.

Holmes said on that occasion he would put it in the Western Assurance Company; he asked how long we wished to Ritchie,C.J insure, and then wanted to know the reason why we only wanted it for three months; we told him McQueen intended to run the goods off, and at the end of three months he would insure for a less amount. Then the application was made; and, shortly after, Holmes called me in, and told me the Western had accepted $2,000.00, and he was going to put the other $2,000.00 in the Pharis ; he stated he had filled up a policy. Mr. Holmes filled in the application. That is Holmes' writing ; the loss is made payable to McMaster and me. Holmes filled it up, knowing that McQueen had called a meeting of creditors on the 12th November, and that the creditors insisted the goods should be insured; the agent of McMaster insisted upon the goods being insured, and if MaQueen had not done it he would have done it himself. We were the largest creditors, and it was made payable to us. Nothing was said about the assignment at that time. That is, I think, about the sum and substance of it; that the creditors insisted upon having the insurance put on for their security. The application was drawn out first on the Western, on the 18th November, and this application on the 10th. Up to the making of this application nothing was said about an assignment; from the time of the application to the Western to the date of the application to the Pharniz, nothing was said. When we made the application to the Western, it was said the creditors were to get the loss; and it was still understood in putting it in the Pharnis that the payment was to be the same. I cannot say whether the interim receipt was given that day or not. From the time of the application until the time the trust deed was given Mr. McQueen went on carrying on the business-up to the 28th November.

I went to Mr. Holmes' office two or three times -cannot say when, to a day-before the deed was made, and I told Mr. Holmes that Mr. MQueen wanted to make the assignment for the benefit of his creditors; wanted this, as the creditors, some of them, were crowding him. It was intended to make the assignment to myself, in order to not go into the regular system of assignment, to save expense. I asked Holmes if he could fill a document of that kind, and he advised me to go to you-Mr. Cameron. I asked Holmes on that occasion if it was necessary to notify the Insurance Company of this proposed assignment, and as I understood him, he said no, as the policy was payable to us, it was not necessary to notify them. I went to him twice on that business. One time I , wished him to notify the Company, and afterwards I told him of the ,. agreement; on which occasion I told him, I cannot say. I came to you.

It was in pursuance of that arrangement I got the document prepared.

When I got the document prepared, I went to Holmes and told him I had got the thing arranged; that there was an agree- INs. Co. ment drawn up between McQueen and myself, with the consent of RitchieAJ some of the creditors. I told Holmes about it, and spoke to him about the insurance again. Either on one occasion or the other I wished him to write to the Company and tell them what had been done; he told me on one occasion there was no necessity, as the policy was payable to the creditors-and I, being one, it was not necessary. McQueen was not insolvent; if he had been, this arrangement would never have been made. After the deed was signed, I went into the shop and sold goods.

McQueen continued there all the while; he continued business the same as before, until the fire. I managed, and my son was the principal one. He was a clerk there and was employed by McQueen. McQueen was carrying on business all the time. There was no change whatever in the mode of carrying on the business-only I took charge of the cash; they counted the cash to me, and I took charge of it. We pushed the business a little harder and tried to dispose of the goods. I got the policy from Holmes. I got. it on the morning after the fire. I did not get the policy until after .the fire. The policy was not handed over to either McQueen or myself until after the fire-the morning after the fire. I knew nothing of the terms of the policy whatever. Neither the application or the policy were read by me or to me by any one. If the amount of the policy is paid there will be over $900.00 coming to MQueen; that is, if he succeeds in this suit, there will be over $900.00 coming to him. This is after payment of all his debts. Cross-Examined-I am the person who gave instructions for this suit. I managed this throughout under the power of Attorney annexed to the deed, and another power of Attorney was given at the time of the fire for the purpose of collecting this loss.

We did not intend at the time we made application to keep up the stock. Both McQueen and I intended to reduce the stock. This was in order to satisfy the creditors.

It was not arranged what was to be done afterwards.

There was no amount fixed to reduce it; we intended to reduce it as much as we could in order to satisfy the pushing credit. ors. Mr. McQueen's lease continued for three years. We had no idea of the assignment at the time we made the application; we intended to reduce the stock. The agent ought to have known what was necessary. The amount of stock, if it had been properly taken Mc-EN at that time, would be $7,000.00.

At the time the insurance was effected, Mr. Holmes was told to insure it for three months, and that TaH the reason of the short date policy being asked for was that we intended to reduce the stock; that they did not wish to pay insurance FiRE on a larger stock than they were carrying. That they intended to Co. reduce the stock, and then insure on the smaller stock. I have now RtchieCj. got the claims of most of the other creditors-nine-tenths of them. I purchased some of them at a shave. I have got about the same amount of interest as Mr. McQueen. There was some cash on hand at the time of the fire. I have got a larger interest than Mr. Mc Queen; it is close on a thousand dollars. There is not much difference between us. I did not see the policy in the hands of Holmes before the fire. I did not ask for it. I did not know he had that one. I knew he had the Western. I thought it necessary to notify the Company of the transfer. I thought the agent was the proper party to notify. I was not often in Toronto at that time.

Thomas Holmes-I am the agent of the Phanix at Wingham. I knew McQueen and Mackenzie. I think Mr. Mackenzie spoke to me first about the insurance. The application was made to the Western first. I think both McQueen and Mackenzie were present then. Subsequently an insurance was effected in the Pharnix for $2,000.00. Mr. Mackenzie said to me, when the Western would not take the whole, to fill up the application for the Phcanis and he would send Mr. Me Queen up for it. I think it was Mr. Mackenzie who said they were going to run off the goods. I think Mr. McQueen was present then. I asked them why they did not take it for a longer period, and they told me they were going to run off the goods to pay the creditors; then they would insure for a longer period for a smaller amount. I do not know that any reason was given why they were making it payable to the creditors. Both these men told me to make it so. I do not remember that they gave any particular reason. Some time after Mr. Mackenzie had been away, and he came back and told me he had been appointed manager or assignee of McQueen's or something like that, and he asked me if that would make any difference. I think this was before I got the policy from the head office. I am not sure what answer I gave to him, but my impression is I said to him that it would not make any difference, as the loss was made payable to the creditors. I really cannot say whether Mr. Mackenzie asked me to notify the Company; I do not remember whether he did or not. I do not think he said anything further about manager or assignee. 1 think he was there after he told me this. I think that was the only time this matter was spoken of. I do not, know that I recollect anything being said about drawing up an assignment.

I have a kind of a recollection of his being at Goderich, but I am not sure.

I do not recollect his asking me to draw up an assignment. After he had been away in some place, he came and told me he had been made assignee or manager. I do not recollect where he had been.

I do not recollect recommending him to go FiRE to your (Mr. Cameron's) office to get the papers prepared, but it is Co. very likely I would. In the application I took from Mackenzie the RitceiO.J. loss is payable to Mackenzie and McMaster. The loss in the policy is made payable to McQueen, McMaster and others. I do not know why that went in there; the policy is generally made the same as the application. I cannot say that I ever knew it to differ. I do not know whether in this case it differs or not. I never read the policy. I may have written them for Mackenzie as assignee or manager, but I have no recollection of it. I have no recollection of writing the company after getting the notice from the company, and before the fire. I do not remember writing any between the application for the insurance and the fire itself. I wrote them once after the fire. I do not remember what was in the letter exactly, but I remember saying I was sorry they were not settling up the claim. I do not remember saying anything in that letter about notice being given to me of the assignment. I sent one letter with the application, and, after the fire, this other letter that I have just told you of. I do not recollect of any but these two letters. There may have been a third letter written some time after, advising them to pay the loss. That is the letter I am referring to now. I am not sure whether I wrote that the day after the fire. I wrote, some considerable time after the fire, this letter I am telling you of. It is quite likely I would write to them, telling them the fire occurred. I cannot tell you the date. I do not know if I said anything in that letter about the assignment. I told them it was an honest claim and that they ought to pay it. That is all I remember.

Cross-examined-My powers were to take applications and to for. ward them to Toronto, and to give interim receipts. I was agent, and had whatever powers that gave me.

Re-examined-There might be other agents there for anything I knew. I do not remember of giving any notice of any change in the risk. The Company has not been in operation very long, I think, over a year. I do not recollect of any change being made in the risk I took. I never took many risks for this Company.

Examination of plaintiff under order

Jy virtue of an order of this Honourable Court, made herein under "The

Administration of Justice

Act," bearing date the c0 EN26th day of September,

1878, and hereunto annexed, directing the examination, on oath, of said plaintiff before me under said Act, at such time and place as should be appointed by me in writing endorsed on said order, I did in pursuance of ' said order appoint Tuesday, the eighth day of October, at ten o'clock in the forenoon at my chambers in the court house, RitchieC.J. the town of Goderich, for such examination, at which time and place the said plaintiff did attend, and having been duly sworn said as follows:

I am the plaintiff. I had been in business before. effected this insurance a little over a year.

came to Wingham 4th October,

I bought out McKenzie's stock and rented his store. The stock was taken by me, McKenzie and his son before I bought. It was valued at something over $6,000. I paid $5,560 for the stock. We took stock again about 1st November, 1877.

Mr. McKenzie assisted me in this. I entered it in the stock book then. It was burnt I suppose. There was a safe there at the time of the fire. At the time of the fire there was nothing but the lost stock book and the cash book in the safe.

I had finished stock-taking at time I made this insurance. At the time I made the insurance, 19th November, 1877, 1 was considerably in debt. McKenzie and I had not at that time any condition as to going out of business. Mr. Holmes took my application. It was some time before I received any policy. He gave me a receipt for the money I paid at the time of the application. had it up to the time of the fire.

I read it through.

It wasn't a printed form.

I believe it is destroyed by fire now. I paid Holmes the cash he asked. At that time we were doing a nice business. I think Holmes went over the premises when he took the application. He asked me some questions, but I can't say what. I knew the kind of business carried on next door. After I made the application, I made an agreement with Mr. McKenzie, now produced marked

I r-member all about the agreement. There had been no condition between us as to such an agreement before I made thQ application.

It was at the time of the agreement the condition occurred. He went on selling off.

He was taken in to take care of the cash. The business went on in that way up to 15th January. The stock was then reduced. I intended leaving the place as soon as I got everything sold oft, and my creditors paid off. The arrangement was made to secure McKenzie and the other creditors.

Most of our sales were cash sales, but there were not many credit sales. books shewing the credit sales were destroyed by fire.

We bought no stock after this arrangement was made. I don't know how the fire took place. It occurred between one and two o'clock. The first notice I had of it was when I got up to attend to my little girl and I saw some smoke in the room, and I then went to the room where '"" ' we kept a stove and saw the fire was out there, and then I got hold of my wife and child and carried them out. There was then no fire in my place. I went out by the back of my house and saw the fire coming out of the hardware store next door. They kept some coal oil next door. I couldn't tell how much. There was a place back INs. in the yard where they kept coal oil. I couldn't say in what part of the hardware store they kept coal oil. Mr. McKenzie carried on the business with me at the time of the fire.

His son had been with me all along, and was with me when the fire occurred.

Mr. Holmes handed me my policy. I had no connection with Holmes from the time I made the application till I got the policy. From the time I got the policy and the fire Holmes and I had no conversation about it. At the time he gave me the policy nothing was said. He just handed it to me. I didn't write to Holmes at any time. I never sent any letter to the company before the fire. The signature to the proof of loss, now produced marked B, is mine. The signature to the paper produced marked "0," is Mr. McKenzie's. I can't say, I am sure, why I didn't tell the company of the arrangement with Mr. McKenzie when I made the application. I thought there was plenty there to pay every man. After I made the arrangement with McKenzie I began to reduce the stock, and had no intention of increasing it. I intended to sell off. I gave no notice to Holmes of my arrangement with McKenzie, nor did I authorize any one to do so, nor have I any reason to believe any other person gave such notice.

At the time of the fire I suppose my liabilities were somewhere between $2,000 and $3,000.

We arrived at the credit sales, after the loss, from what we knew of them in round figures. The cash sales were something over $700.

The stock book we last used was not the same one that we used when I purchased. It's a new stock book. The old one was destroyed by the fire. At the last stock-taking we put down the goods at less than invoice price. Some of the stock destroyed had been in hand since the purchase. I was also insured in the Western. I valued stock at the time of fire, at $4,354.01.

It was because he was there to look after things, that I stated in my application that I was the bonafide owner.

'Oross-examined-The valuation of stock at time of fire was based on the last stock-taking. Because the stock was taken at a reduced figure the amount at the time of the fire would be much larger. We add usually more than 20 per cent. to actual cost price to cover profits, carriage, &c.

When I made this valuation I honest ly believe it was correct. Our sales were mostly cash, and very little MC~gH Excredit from the beginning. I believe the amount of debt due me from beginning to time of fire was $288.

There might have been a few dollars of this incurred after the last stock-taking. I think in the cash book no distinction was made between cash received on sales FaiE and cash received on debts due from the beginning. The cash re- INs. Co. ceived for sales made before last stock-taking would be about the RitchieC.J. same as the amount of credit sales after last stock-taking. We arrived at amount of stock at the time of fire by deducting from the amount at last stock-taking the cash sales, less 10 per cent., and the value of goods saved. I never saw the policy before the fire. When I made the application I told Holmes that McKenzie and McJfaster & Co. had a claim against me. I told him the insurance was for the benefit of my creditors. The agreement marked "A" was subsequently made to carry out the intention I expressed to Holmes. Thomas Holmes filled out this application for me ; I did nothing but sign it. He read it over to me. I applied to Holmes first for an insurance on the whole, and he put the half in the Phoanix of his own notion. It was read over to see if it was right for the benefit of my creditors.

(Mr. Cameron proposed to ask, " when you stated in application the average value of your stock at $6,000 did you mean before the application?" and I refuse to admit it.] The reason why I did not afterwards mention the agreement marked "A" was because I thought it was sufficiently mentioned in the application. I don't know whether I ever saw the inspector before now. The papers for proof of loss were first sent to Mr. McKenzie. I remember getting papers from the inspector to have proof made in my name at the time of the application and after I was really owner of the goods, subject to the claims of McKenzie and others. I never ceased carrying on the business up to the time of the fire. I had the general management of the business all the time. McKenzie was helping me to sell. There was no change in the books, or accounts. I took home the goods that were saved. At the time of the agreement I was indebted, but I had enough to pay everybody in full, but I wanted Mackenzie in to help me. Holmes lives near me.

Re-Oross-Examined-According to the way it was done the Weswould only take $2,000 on the stock. Mr. Holmes didn't tell me why application was made in the Phaonix. I gave Mr. Holmes the information contained in the application. I mean the answers to the questions. I mentioned to Holmes that loss was to be payable to my creditors.

Up to that time I had not spoken to McKenzie about it. At the time of the application my creditors had been pressing me. Mr. McKenzie was pressing me.

I myself suggested the agreement with McKenzie, and the agreement was drawn up by a lawyer.

I didn't explain any of my business difficulties to Holmes. I only told Holmes, McKenzie and others were creditors.

JAMas THR Taken and signed before me this

MUEALs 8th October, 1878.

hRE W. R. SQUIER, Exa.

INs. Co. A fire occurred which destroyed the property insured RitchieC.J. on the 15th January, 1878 ; the policy, which was dated the 12th December, 1877, was not delivered until the morning after the fire. After the loss on the 80th of January, 1878, the inspector of the defendants wrote McKenzie as follows:- PosT

Geo. McKenzie, Esq., Wingham, Ont.

Toronto, Jan. 30th, 1878. SiRy-Yours of the 24th inst. to hand, and in reply would say Mr. McQueen has been sent claim papers to be filled in, and as the policy has not been assigned to any one, he is the only one that can make out such papers; of course when the amount of damage is settied, the parties named in the application have a right to receive the same.

I am, yours, &c.,

R. PEr, Inspector. And on the 18th January, 1818, he agrees with Mc- Kenzie as follows:- Geo. McKensie, Esq.

foronto, 13th February, 1878. SR,-I would like to have all the information possible to lay before the Board at its next meeting in reference to the McQueen claim. Will you kindly let me know who were MeQueen's creditors at the time the fire occurred, and what was the amount of their respective claims. As vouchers for correctness of prices at stock-taking, the Board will probably require duplicate invoices of stock, which you had better have ready.

Respectfully yours,

0Gr R. Psor, Inspector. S1tP1MME COURT OF CANADA.

The manager says: " I presume that was written by my authority."

It is now claimed that the loss cannot be recovered on account of the transfer to McKenzie, and because it is alleged no notice was given of it to the company; * and if entitled to recover, the plaintiff is only entitled RitchieC.J. to recover to the extent of his own interest.

As to the first, the interim receipt was granted with full knowledge by the agent of defendants that the insurance was for the security of plaintiff's creditors as well as himself. He was informed and consulted as to the transfer and the notification thereof to the company, and McKenzie says: " When he wished the agent to write to the company and tell them what had been done, he told him (McKenzie) there was no necessity, as the policy was payable to the creditors and I being one it was not necessary," and after the fire, from the letters of the inspector, the liability, if not in express terms admitted, certainly was inferentially recognized. It is not at all to be wondered at that the agent treated the information as immaterial to be communicated, for in substance and reality there was no change in the position of matters, as between the plaintiff and defendants, and no new parties were introduced into the transaction. Had the plaintiff made an assignment whereby he had parted with his interest in the property, the case would have been very different. Though he transferred the legal title in the goods to McKenzie, the real pecuniary interest of neither him nor McKenzie was altered. As insured by the interim receipt, if the goods were destroyed by fire the creditors would receive their payment, and plaintiff so be relieved from his indebtedness, and plaintiff would receive the surplus; if the goods had not been insured the whole loss would fall on plaintiff, as he would lose his goods and still have to discharge his indebtedness to his creditors; so, though the assignment was made to McKenzie, if the goods were destroyed without insurance, plaintiff would be in the same position, and if destroyed, as they were, the result is just the same as if destroyed after interim receipt given and before assignment, for McKenzie and creditors will be entitled to receive only _ what is due them, and plaintiff will get the surplus. So that, as plaintiff was at the time of the making of the interim receipt interested to the whole value of the property and to the full amount assured in case of loss, so was he interested after the assignment and at the time of the loss. And so the creditors were in like manner interested in the insurance under the interim receipt in case of loss, and under the assignment and policy, but not to any other or greater or less extent, the only change in the position of the parties being that the legal title of the property was, after the assignment, in McKenzie in trust for the creditors and plaintiff, instead of the legal title being in plaintiff for the benefit of the creditors and himself, the equitable and beneficial interests of both plaintiff and creditors being at time of interim receipt and continuing till time of loss the same. I think it is not open to defendants, after what took place between plaintiff, McKenzie and the defendants, by and through their agent, and after having, after the loss, handed over the policy, and subsequently, through their inspector, after knowledge of the assignment, recognized the claim as valid and apparently only desired to be satisfied as to the amount, now to dispute it; and as to plaintiff only recovering what may after payment of the creditors be coming to him, what I have already said shows he had an insurable interest in the whole value of the goods. All matters connected with the transaction, both before the interim receipt and after, and before the date and issuing of the policy and its delivery as a valid and binding instrument, were fully and truthfully conmunicated to the agent authorized by the company to effect the insurance. In fact, all was done under his advice and subject to his directions.

I think he must be assumed to have RitchieCJ. been furnished by his principals with all necessary information to enable him to deal in a proper manner with the parties who the company, through him, sought to get to insure with them.

To him the assured most naturally would and did apply, and on the information furnished by him the assured acted, and he well knowing that in fact the interest of the parties remained the same, and that there was no substantial change in the position of the property or the parties in reference thereto, the change being, in truth, merely to keep the property in the position it was, so that it might not be seized by any one creditor, but be held for the benefit of all, and they get the benefit of the insurance money in case of loss, as was contemplated when the original application was made. in other words, simply to secure the continuance of the arrangement as to the insurance for the benefit alike of the creditors and the assured, and without in any way increasing the liability of the insurers. The company, through him, their agent, did not treat the transfer in this case as an " alienation by sale, insolvency or otherwise," and, therefore, not such a transfer as was contemplated by the <onditions of the statute, and so not in this case a transfer of a character to affect their position as insurers, or in anyway to change the risk or increase their liability, and, therefore, not necessary be communicated in writing to the company or endorsed on the policy, which, in fact, could not be done. Therefore in view of what took place between the assured and the company thro' their agent, and the delivery of the policy after the loss without objection, and the conduct of the company, thro' their officers, in inferentially recognizing and admitting T their liability after the loss and after knowledge of the assignment, desiring only to be satisfied as to the amount, was a full ratification of all that had been done by the agent, I think, now to permit the company to Ritchie,CJ. ignore the knowledge and conduct of their agent and officers (all which I think we must assume was within the scope of their authority) and to repudiate all they wrote and said and did, and so to deny successfully their liability under such circumstances, would be, in my opinion, to allow them, with the sanction of a court of justice, to evade payment of what their agent, cognizant of all the circumstances and who acted for them throughout, says is an honest claim, and would be thereby to assist them in perpetrating a gross fraud on an innocent party, who dealt with them through their agent and officers in a frank, truthful and straightforward manner.

The appeal must be allowed with costs in this court and in the Court of Appeal, and the judgment of the Court of Common Pleas affirmed, except so much requiring the plaintiff to produce and file the releases by said judgment required to be produced by the plaintiff.

J.:- I concur with Mr. Justice Gwynne.

FOURNIER, J., concurred.

J.:

The discussion of the points in this case took a wider range than, in my opinion, was necessary to determine the rights of the parties to be affected by our judgment.

The action was brought to recover two thousand dollars, insured upon goods of the appellant by a policy issued by the respondent's company, dated the twelfth of December, 1877, but not delivered to the appellant till after the loss, which occurred by fire on the fifteenth pR of January, 1878. The declaration sets out the policy with the statutory conditions applicable to the points J. in issue, and " variations in conditions applicable to mutual insurances " and " additional conditions." In it the appellant avers that after making application for this insurance, and some time before the fire, he made an assignment in trust to one George McKenzie of the goods insured (he having then a contract of insurance upon them in the shape of what is called an interim receipt) to sell the goods to pay :-1st, the costs of the execution of the trust; 2nd, to pay himself and the other creditors of the appellant the amounts due to.them, or if insufficient for that purpose, to divide the trust fund amongst them in proportion to their respective claims; and, in the third place, to pay the balance of the trust fund, if any, to the appellant ; that at the time of the loss the property assigned was more than sufficient to pay his creditors, and a surplus was afterwards coming to him out of the property so insured; that at the time of the making of the policy the respondents were aware of the assignment in trust; and that the creditors were interested in the insured property, of which, at the time, the respondents had due notice; that the plaintiff and the creditors were so interested when the loss occurred; and assigned a breach for non-payment of the amount insured either to the appellant or the creditors referred to in the policy, and to whom the loss, if any, was made payable.

To this declaration seven pleas were put in.

The first one requiring notice is the third. It alleges that the appellant " was not, at the time of the alleged loss, interested in the said dry goods, groceries, boots and shoes, as alleged."

That plea is put in as an answer to the whole claim of the appellant:

It must be sufficient to defeat the whole claim, or it is not an answer at all. If, thereft fore, the appellant at the time of the loss had any insurable interest in the goods covered by the J. policy, our judgment must be for him. The evidence shows that the appellant was the owner of the goods in question, which formed the stock of a business then being carried on by him.

Being in solvent circumstances, but behind hand in meeting promptly the bills of some of his creditors, and to secure them, he made, on the 28th of November (some days after his application for the insurance), the assignment in trust referred to and in part recited in the declaration.

It would be, I think, an unnecessary waste of language to prove, that by such an assignment the appellant did not part with his whole interest; but afterwards had, as cestuique-trust, a valid insurable interest. I will have occasion hereafter to refer more particularly to this subject when dealing with the defence under other pleas, and feel it quite enough to say at present that the third plea is not an answer to the appellant's claim or the declaration setting it out.

There is not the slighest pretence that there is any evidence to sustain the fourth plea,that the appellant made a false and fraudulent account of the loss.

The 5th plea alleges the making of the application, and that the appellant therein represented,amongst other things, that the goods were not encumbered by mortgage or otherwise; that the value of his average stock was six thousand dollars; that the appellant therein declared the statements in the application were a just and true exposition of all the facts, in regard to the condition, eituation, value and risk of the property to be insured, so far as the same was known to him and agreed that the same should be held to form the basis of the liabilities of the respondents; that the policy was effected upon those representations; that after the application, and before the making of the policy, to wit, on the 28th of November, the appellant assigned the insured property to one George McKenzie, in trust to sell the same and apply the moneys to arise from such sale in the manner set forth in the declaration, and put McKenzie in possession of the goods; that the plaintiff then ceased to carry on business or keep his stock in trade up to an average value of six thousand dollars; that it was material to be made known to them (the insurers) that the appellant had so assigned and transferred the property and had ceased to cary on business or keep his average stock up to the value of six thousand dollars, in order to enable them to estimate the risk, but (and here is the gravamen of the charge and upon which the defence is rested.)

I have had no littldifficulty in determining whether the alleged concealment is by the plea made applicable to the time of the application, or to a concealment of the transfer between the time of the application and the making of the policy, and I cannot even now congratulate myself upon having arrived at a proper conclusion as to what was intended. Some parts of the plea could only apply to a concealment at the time of the application, but that again is wholly inconsistent with other parts of it, and with the acknowledged facts, and is in its nature impossible, for there could be no coicealment at time of the application of what had not then taken place. If applicable at all, it can only be an alleged PaEnzx concealment of the subsequent assignment between the FR time of its execution and the making of the policy. How the failure to give notice of the assignment (if Henry,.J. such were the case) can be called a fraudulent or deceitful concealment, I am wholly at a loss to discover. The plea shows that there is no ground for imputing any concealment when the application was made. The application being then correct and unassailable, the policy might be avoided for other reasons, but certainly not for those set out in the plea. But the plea rests the defence under it on the further ground that the appellant "did not give to the defendants or their local agent " any notice of the assignment and other things therein mentioned, but the evidence shows the local agent knew all about it. He was consulted before it was made, and agreed to it, and knew of it several days before the policy was issued.

I will conclude my remarks as to that plea briefly' thus: In the first place, it raises no material issue, nor does it contain a sufficient answer.

2nd. It is untrue, when charging the appellant with any fraudulent or deceitful concealment, and it is equally untrue in the statement that he did not give the respondents or their local agent notice of the assignment when made. The evidence shows the very opposite.

3rd. I think the plea is bad for the reason that the assignment was not of that nature, that in this case rendered any notice of it necessary.

The appellant, it is true, by the assigment changed the nature of his interest, but he still retained such an interest as would be considered an insurable one for the whole value of the property; and if his application had been made after the assignment, his right to insure and recover on a policy would have been in law the same as it had been previous to it. If, indeed, the appellant stated in his application that he was the sole owner, so as to negative the fact of a trust assignment, the case might be different, and the assignment and a change of posess- J. ion, if shown, might be reasonably considered as circumstances necessary to be communicated in the application, and if made after the issue of the policy to the applicant, it might require the written assent of the Company.

I have, however, looked carefully at the application and, strange to say, although apparently stated, in reality it is not, that the appellant was the owner of the goods. The first question to be answered by the applicant relates to landed property, and is so answered.

The 2nd, " Is applicant owner of property insured? If not, give owner's name." The answer is: " The owner, Geo. McKenzie,-applicant is tenant." The 3rd question, " Name of tenant or occupant ? " Answer "James Mc Queen." These are the only questions and answers in any way relating to the ownership of the goods, if even they do, which I think is not the case. The three questions read seriatim are calculated to impress the idea that the second did not refer to landed property. It is seldom, if ever, such a question would be asked as to goods; but owing to mortgages, it is more necessary to ask such about landed property. The question is followed by the direction " If not, give owner's name," and that immediately followed by requiring the " name of tenant or occupant," shows clearly that question number two was originally, at all events, intended to enquire as to landed property. The application was filled in by Holmes, the local agent of the respondents, and he, as their agent, and acting for them, wrote an answer to question number two as applicable to landed property. The result is, that if the question SUPtEME COURT OF CANADA.

was intended to ascertain the owner of the goods, it failed in its object; and under the circumstances the appellant cannot be said to have represented himself as the owner of goods wholly unencumbered. If a mistake in this respect was really made in the filling up of the ap- Fox plication by the respondents through their agent, the appellant is not answerable. The agent, in his evidence, Henry, J. says: "My powers were to take applications and to forward them to Toronto, and give interim receipts. I was agent, and had whatever powers that gave me."

Some fire insurance companies provide against their liability through the mistake or wrongful act of any of their local agents, and the policies provide that if an application be filled up by such agent it will be deemed the act of the applicant. There is no such provision in this policy, and in such a case I must look at the act of the agent here as that of his principal. He had authority over the whole subject-matter up to the receipt of the premium and the granting of the interim receipt, and, as I hold, he was the proper recipient of a requisite notice of any change up to the making of the policy. Under the circumstances, I think no notice of the change was necessary, but if it were, I think that given to the agent was sufficient. If the manager of the company looked carefully, as it was his duty to do, at the answers given to the printed questions, he could not have failed to discover the mistake (if it was one) of the agent in filling up that to question number two. By not doing so, and by not seeking for further information as to the ownership of the goods before issuing the policy, the company is now estopped from saying that the appellant made any false representation whatever as to such ownership.

The sixth plea alleges the application and payment of the premium and the issue of the interim receipt which it recites : that the receipt constituted an insurance for thirty days unless sooner cancelled, " subject to all the conditions, rules and regulations in and endorsed upon the printed form of policy in use by the Panix defendants at the date thereof;" that the receipt was not cancelled, but the same was in force, to wit, on the 12th of December, 1877, " when the defendants executed and delivered the policy in the declaration mentioned "; that the conditions, rules and regulations set out in the declaration are same as those referred to in the interim receipt ; that the appellant, at the time of the application, was the legal and equitable owner of the insured property; but that, while the same was covered by the interim receipt, he made the assignment referred to in the declaration,

Had the appellant's right of action been founded on an insurance contract, which at one time existed, under the interim receipt and no policy issued, I could understand a contention that a transfer of the property which would have left no interest in the insured at the time of the loss would prevent the recovery of the amount covered by it; and the same principle is equally applicable when the insurance was by a policy. We are, however, not called upon to say anything as to the effect of the conditions as applicable to an interim receipt. By the terms of it and by the tacit and understood agreement of the parties, that was only to be in force till a policy should be issued, and that when issued the parties were to be governed by it alone. The interim receipt was only for an insurance in the meantime. The policy by express words related back to the time of the application, and was in all respects a substitution for the interim receipt.

The question then is not, whether the appellant for. feited his insurance under the interim receipt, for that is not the issue, but did he forfeit it under the subsequent policy? To plead to the action on the policy what is stated to be a defence under the interim receipt would be a departure, would raise an immaterial issue and be therefore no defence. How then Henry, J. does the condition (No. 4) operate in regard to the interim receipt, is a question that may be asked; and my answer is that in consequence of the pecular wording of it it may, as I think it is, be wholy inapplicable.

The condition is that license to assign must be " endorsed hereon."

Until a policy exists it is impossible to endorse anything upon it. The condition is therefore only inapplicable an interim receipt ;

and if no policy issued, and an action were brought on an interim receipt, I should have great difficulty in deciding that the condition formed a part of the contract. The undertaking of the insured amounts to this, "should a policy be hereafter issued on my application, I hereby agree to make no assignment of the property without a written permission endorsed thereon." The defence therefore, as I think, could not be set up to an action on the interim receipt. It may be considered inequitable to rule so, but it must be remembered this is but a technical objection to a large extent, and where such are raised they should be clearly provided for, and companies should either make contracts of their own drawing plain, or take the consequences of all ambiguities or defects. I think that condition No. 4 refers to an assignment subsequent to the policy, and not to one subsequent to the application and before the making of the policy which is the case here.

The seventh and only remaining plea alleges, that at the time of the sealing and delivery of the policy and loss, the property was owned by one George McKenzie, plaintif's The answer to the defence set up by the latter plea is, first, that the property was not owned by McKenzie, as evidenced by the declaration and the assignment Henry, J. therein recited, at any time up to the loss, so as denude the assured of his insurable interest; and secondly, that by the wording of the condition it does not apply to an assignment previous to the policy.

The 4th statutory condition, respecting which we have heard so much, is after all to a great extent the same as the law otherwise prescribes.

By the latter no one can recover on a fire insurance policy unless he has an interest at the time ofthe loss. If a party insured property and subsequently assigned it, but got it back before the loss, he could recover. The conditions generally annexed to policies and the statutory conditions provide otherwise.

They, however, provide that, if the company in a particular manner manifest their assent, the insurance still remains notwithstanding the assignment, and, in case of loss, the interested party will be indemnified up to the amount insured. In some cases this is secured by an assignment of the policy with the assent of the company. Such an arrangement dispenses with the necessity of a new policy and enables the purchaser to appropriate for his own benefit, what he otherwise would not have, the policy of the seller. Where the whole interest in insured property is assigned, a case arises wherein it is necessary, for the object just mentioned, to obtain the assent of the company, the object being, as the seller's interest in the policy will be terminable by a sale and transfer, to enable the purchaser to get the benefit of the unexpired term, and in case of loss to recover the insurance.

Such then I take to be the object and intention of the condition in question annexed to policies. The assignment contemplated I take to be one by which the assignor divests himself of all title and interest. The words are: " If the property is * assigned,"-which means wholly transferred. It is not prohibitory of the assignment of an interest as security by way of a chattel mortgage or otherwise, where the resulting beneficial interest remains; or to a conveyance made J. to enable a party to sell and convey property for the use and benefit of the party making it. It is admittedly good law that an equitable interest is sufficient, and this court unanimously lately so held in the case of

Clark v. The Scottish Imperial Insurance Company In that case the plaintiff had but an equitable lien without any possession of the subject-matter, but the authorities justified our judgment.

In this case the appellant always retained an insurable interest to the extent of the whole value of the property, and also the possession in the same building. He, it is true, made an assignment to McKenzie, but it was for special objects-first to sell the property, then to apply proceeds to pay the creditors of the appellant and to pay any remaining balance to him, the appellant. That assignment was not irrevocable. The assignor, by paying otherwise his creditors, or, in certain events, without doing so, might call for a re-assignment. None of the creditors, except McKenzie,hadany vested interest,for thereis nothing to shew their acceptance of the assignment or agreement to be bound by it, and the latter was under no obligation to them to execute the trust. They were not bound in any way to agree to the assignment or to the terms contained in it. If McKenzie executed the trust they might of course adopt the assignment so far as to claim from him payment according to their several interests, but up to the loss the assignment was one to a great extent between the appellant and McKenzie only (2). The appellant was interested throughout. He was not insolvent, and is shown to be entitled to $900 after providing for the payment of all his creditors' demands, if he recovers in this suit. Nothing could more pointedly show his continuing interest in the insured property. I regret to have been obliged to go so much into detail in this matter, but as differences of opinion have, been expressed by several of the learned judges of the courts in Ontario in regard to some of the points in issue in this and other cases, I have thought it but right to give my views at length in regard to those involved in our decision. According to my best judgment the appellant is legally entitled to succeed, and I think the appeal should be allowed, the judgment of the Court of Appeal of Ontario reversed, and that of the Court of Common Pleas affirmed with costs. J., concurred.

J.:- In the view which I take of this case, it raises no question, whether the Ontario Statute, known as "The Fire Insurance Policy Act of 1876," is or not ultra vires of the Provincial Legislature; nor whefher the provisions of that statute, assuming it not to be ult a vires, apply to an insurance effected through the medium of what is known as an "interim receipt ;" nor can the fact, that the plaintiff had been temporarily insured through the medium of such an " interim receipt," before the execution by the defendants of the policy which is declared upon, be at all invoked to the prejudice of the plaintiffs right to recover upon the policy declared upon, which is duly executed under the common seal of the defendants.

The case went down for trial before a judge without a jury, under the provisions on that behalf contained in ch. 50 of the Revised Statutes of Ontario. The learned judge who tried the cause, after hearing all the evidence on both sides, entered a formal verdict for the de- a fendants, reserving to the plaintiff leave to move the court in which the action was pending to enter a ver- Pinx dict for him for the sum of $2050, if the court should be of opinion that, upon the whole evidence, the plaintiff ought to recover; and it was agreed that to give effect to J. this reservation all amendments that might be necessary should be made. This reservation was plainly made in view of the provisions contained in sections I and 8 of ch. 49 of the Revised Statutes of Ontario, which enacted that no proceeding at law or equity should be defeated by any formal objection, but that at any time during the progress of any action, suit, or other proceeding at law or in equity, the court or a judge may, upon the application of any of the parties, or without any such application, make all such amendments as may seem necessary for the advancement of justice, the prevention and redress of fraud, the determining of the rights and interests of the respective parties and of the real question in controversy between them, and best calculated to secure the giving of judgment according to the very right and justice of the case.

Now, the effect of this reservation accompanying the verdict was to impose upon the Court in which the action was pending the duty of determining the rights of the parties upon the real question in controversy between them, upon a view of the evidence alone, and to say whether or not, upon such view of the evidence, the plaintiff was entitled to recover, with this provision added, that his right should not be defeated by any formal objection, but that if the issues joined were not such, having regard to the evidence, as sufficiently to raise the very point in controversy, the Court should amend the pleadings, nunc pro tunc, so as to make them conform to the evidence, or might render such judgment as the evidence warranted, irrespective of the issues as joined, in case there should prove to be any defect or informality in those issues, or that these were not appropriately framed, having regard to the evidence.

Fmn

The short material substance of the plaintiff's declaration is, that before effecting the insurance of the goods mentioned in the policy declared upon, which is dated the 12th day of ])ec., 1877, to wit on the 28th Nov., 1877, he assigned the goods to one George McKenzie in trust to sell, and out of the proceeds thereof in the first place to pay all expenses, attending the trust, and in the second place to pay the creditors of the plaintiff, and among others the said George McKenzie, McMaster 4 Co., and others, who were then creditors of the plaintiff, the amounts due to them, and in case the said trust fund should not be enough to pay the said creditors in full, then to pay them such trust fund in proportion to their respective claims; and, in the third place, to pay the balance of such trust fund to the plaintiff; and the plaintiff averred that at the time of the making by the said defendants of the said policy the defendants were aware of the said trust assignment as aforesaid, and that the said George McKenzie, the said McMaster 4- Company and others, the creditors of the plaintiff, were interested in the said property so insured as aforesaid, and the said defendants at the time aforesaid had due notice thereof. And further, that the plaintiff and the said George McKenzie, the said McMaster 4. Company and others, the creditors of the plaintiff, continued interested in the property so insured by the defendants until the loss by fire stated in the declaration.

Yet the defendants did not make good the said loss or damage so sustained or any part thereof, and did not pay to the plaintiff, nor to the said George McKenzie, McMaster and Company and others, or either of them, the said loss or any part thereof, to the plaintiff's damage of $8,000,

The real point in controversy between the parties appears to have been, was it or not true, as alleged in the declaration, that at the time of the making of the policy declared upon the defendants were aware of the PHauxx trust assignment stated in the declaration ? The defendants, however, pleaded several pleas in bar of the plaintiff's action.

Gwynne, 1st. Non estfactum-this plea was disproved.

2nd. That the goods insured were not destroyed by fire as alleged, this was also disproved.

3rd. That the plaintiff was not at the time of the loss interested in the said goods, as alleged in his declaration. This plea was also disproved, for it appeared that the plaintiff's interest at the time of the loss was just the same as it was at the date of the policy.

4th. That after the loss the plaintiff delivered to the defendants a false and fraudulent account of the alleged loss and damage, in which (among other things) he stated that he was the bond fide owner of the property stated to be destroyed, holding the same as stated in the policy, and that no other person or person had any interest legal or equitable in the said property, excepting as mentioned in the said policy, whereas the plaintiff before the happening of the said loss without the knowledge or permission of the defendants had assigned, transferred and set over to one George McKenzie the said property in the said policy mentioned, in trust to sell the same and to apply the monies arising from such sale in the manner mentioned in the plaintiff's declaration.

The defendants could scarcely have expected to have succeeded in establishing a statement to be false and fraudulent, which, assuming it to have been made, was made in the belief, which the evidence warrants the conclusion that the plaintiff entertained, that the words in the policy whereby the defendants covenanted with the plaintiff: " That the loss, if any, should be payable "to George McKenzie, of Wingham, and McMaster 4 "Co., and others as creditors, as their interest may ap- "pear," were inserted therein for the purpose of expressing the true nature of the plaintiff's interest in the property, especially if, as is alleged by the plaintiff in his declaration, the precise nature of the plaintiff 's interest, ~and the fact of the execution of the trust assignment, by which alone McKenzie, McMaster 4- Co., and others, the creditors of plaintiff, acquired any interest, was communicated to the defendants before they granted the policy sued upon, in which case, if the policy did not sufficiently express plaintiff's interest according to the fact, it was the defendants own fault: however, a verdict upon this issue had necessarily to be rendered in favour of the plaintiff, for the defendants do not appear to have offered any evidence in support of this plea, or to have relied upon any such false or fraudulent account of loss as is alleged in the plea.

The 5th plea, after averring that on the 19th Nov., 1877, the plaintiff made a written application for insurance, which he agreed should form the basis of the defendants' liability, in which he represented the goods to be unincumbered and that the value of his average stock was $6,000, and that the defendants executed the policy sued upon on the faith of the representations contained in the said application, alleges, by way of defence to the action, that on the 28th Nov., 1877, the plaintiff executed the trust assignment in the declaration mentioned and ceased to carry on business and to keep his stock up to an average value of $6,000, and the defendants say that the plaintiff fraudulently and deceitfully, and with intent to induce the defendants to effect the policy, concealed from the defendants the fact that he had so assigned the said property to McKenzie and had delivered possession thereof, and had ceased to carry on business, or to keep up the general average value of his stock as aforesaid, and did not give the defendants, or their local agent, any notice thereof, by *. reason of which concealment the defendants aver that the policy is void.

As to this plea, it is to be observed, in the first place, that the policy does not import into it anything con- J. tained in the written application referred to in this plea. If the insurers desire to make the contents of the application, or any part thereof, part of the policy, such part should be introduced into the policy; they may elect to make such part of the application as they please part of the policy by introducing it into the policy; or they may exclude the whole from the policy by omitting to introduce any part into it

There was nothing then in this policy which required the plaintiff to keep up the average value of his stock to $6,000.

The gist of this plea, however, is that the plaintifffraudulently and deceitfully, and with intent to induce the defendants to grant the policy, concealed from the defendants, and did not communicate to their local agent, the fact of the execution of the trust assignment.

of the 28th November, or give him any notice thereof.

In this it joins issue directly with the allegation in the plaintiff's declaration upon what is the real substantial point in controversy between the parties. Now the evidence upon this point establishes beyond all doubt that the local agent of the defendants, at the time of receiving the'application set out in the plea of the date of the 19th November, was informed that the plaintiff had called a meeting of his creditors, and that it was they who insisted that the goods should be insured, and that in reply to a question put by him enquiring why the application was not for a longer period than three months, he was informed both by the plaintiff and Mackenzie, to whom the trust assignment was subquently made, that they were going to run off the goods to pay the creditors; that subsequently, and just R,,.

before the 28th Nov., the local agent was also informed that the plantiff was about to execute an assignment J. for the benefit of his creditors to Mackenzie, and the defendants local agent was asked to prepare the document, but that he advised Mr. Mackenzie to go to a lawyer, a Mr. Cameron, for that purpose ; that Mr. Mackenzie asked him to notify the company, the defendants, of the proposed assignment; that upon the trust assignment being executed the said local agent of the defendants was informed thereof, and was requested to write to the defendants and to tell them what had been done, and that he said there was no necessity, as by the application then already sent forward the policy was asked to be made payable to the creditors, and as McKenzie was one of the creditors it was not necessary.

PNow at this time the policy had not been granted, nor was it executed for a fortnight afterwards; there can be no doubt that upon the 28th of Nov. Mr. Holmes, the respondents' local agent, to whom the application was originally made, was as much the agent of the defendants to receive information and notice of any matter which might influence the defendants in determining to grant the policy, or to decline assuming the risk, as he was their local agent to receive the application in the first instance, and notice to him of the intention to execute the trust assignment and of the fact of its having been executed when executed was notice to the respondents. There is nothing that I know of that requires that notice to him of these matters should of necessity be in writing. The plaintiff seems to have done every thing necessary for him to do, to enable the defendants deliberately to determine whether they would incur the risk or not, when he communicated these facts to the local agent through whom the application had been made. These facts were so communi.

cated before the defendants granted the policy which is Fn. sued upon, and although it may be true that the local agent of the defendants neglected to convey to the J. defendants the information communicated to him for the purpose, still the defendants, when they executed the policy upon the 12th of December, must be held to have had knowledge of the facts so communicated to their agent, and to have executed the policy with the knowledge of those facts. There is, however, a piece of internal evidence in the policy which is not explained, and from which the reasonable and rational inference can be drawn, that in fact these officers of the company who prepared and executed the policy were aware of the execution of the trust assignment; for the policy provides that loss, if any, should be paid to plaintiff's creditors, precisely as is provided in the trust assignment, " as their interest appear." The issue therefore upon this plea, which raises the real point in controversy between the parties, could only have been found for the plaintiff. The sixth plea, after averring the application made upon the 19th Nov., 1877, to defendants' agent for a policy for $2,000.00 for 8 months, and the granting by such agent of an interim receipt, which the plea avers to have operated as an insurance for 80 days, unless cancelled within that period, subject to all the conditions, rules and regulations contained in and endorsed upon the printed form of policy in use by the defendants at the date thereof, proceeds to say, that while such interim receipt insurance was in full force, the defendants executed and delivered the policy in the declaration mentioned, and the defendants further say that at the time of the making of the said application, and while the said property was so insured as aforesaid under the said receipt, subject to the conditions, rules and regulations contained in and endorsed upon the printed form of policy in use by the defendants, which are those set out in the declaration as endorsed upon the policy de- J. clared upon, the plaintiff on 28th Nov., without the written permission endorsed on the said policy by an agent of the defendants' duly authorized for such purpose, as required by the condition in that behalf, endorsed on the said policy, and without the knowledge and consent of the defendants, executed and delivered to George McKenzie, the deed of assignment mentioned in the declaration, by reason of which the said policy and the insurance so effected with defendants became void.

The issue offered by this plea is substantially the same as that offered by the 5th plea, although the form of the plea has created some confusion.

The declaration had already alleged the execution of the trust assignment of the 27th Nov. and the subsequent execution by the defendants of the policy of the 12th Dec., with full knowledge and notice given to them of the execution of the trust assignment in favor of plaintiff's creditors.

The gist of the plea is in its closing paragraph: It alleges the application for insurance on the 19th Nov., the granting then of an interim receipt, the execution of the trust assignment of the 28th Nov., the subsequent execution of the policy of the 12th Dec., which the ple4 insists is avoided for the reason that, as the plea alleges, it was granted without any knowledge of the execution of the trust deed, and without the consent of the defendants.

Now, if it be true, as alleged in the declaration, and as established by the evidence, as I have already pointed out when considering the 5th plea, that at the time of the trust assignment being contemplated the intention to execute it was communicated to the defendants'

. agent who had received the application, and that im- PHcNs x mediately upon its execution the fact of such execution and its purport were in like manner communicated, and that the defendants did not execute the policy J. for a fortnight afterwards, and that under the circumstances the defendants must be held to have consented to the assignment and-to have executed the policy with full knowledge of it, it can make no possible difference that at the time of the execution of the trust assignment, and of the communication to the defendants, through their agent, of the fact of its execution, there was an insurance existing upon an interim receipt.

When the information was so communicated the defendants might, if they had pleased, have avoided the insurance upon the interim receipt and have refused to grant a policy under seal; not having done so, but on the contrary having issued the policy under their seal, whereby they consented with the plaintiff that in case of loss the amount should be payable to George McKenzie and Master and Company, and others as creditors of the plaintiff as their interest might appear, the defendants must be held to have consented to the trust assignment, so that the only point in controversy in reality was, as was raised on the 5th plea: had the defendants, directly or through their agent, knowledge of the execution of the trust assignment before the policy declared upon was granted?

The condition relied upon in the plea is a condition which, in terms of the endorsement on the policy, is restricted in its application to " Mutual Insurances."

The condition is verbatim taken from the Act relating to Mutual Insurances, and its provisions relate to a policy granted upon the Mutual Insurance principle, whereas the policy declared upon appears to have been granted for a cash premium paid once for all, and not at all upon the mutual insurance principle; but assuming for the sake of argument, a . temporary insurance, effected by payment of premium and an J. interim receipt pending the determination of the company upon an application for a policy under seal for a definite term extending beyond the period covered by the interim receipt, to be subject to the 4th condition endorsed on the policy,unaffected by the variation which is declared to be applicable to mutual insurances; and, indeed,assuming the interim receipt insurance to be subject to the condition as varied (points which are not necessary to be determined in this case), still it is apparent that the assignment there contemplated is an assignment made subsequently to the granting of the policy under which the property assigned, is, at the time of assignment, insured. The condition is that if the property insured is assigned, without written permission endorsed hereon-that is on the policy whereby it is insured-the policy in existence shall become void thereby-that is by such assignment. Now, granting for the sake of argument it to be necessary in the case of an interim receipt insurance, that an assignment made pending the existence of the insurance upon the interim receipt should be endorsed upon the interim receipt at the peril, in default, of forfeiture of the insurance existing under the interim receipt, it is plain that the condition does not require such an assignment to be endorsed upon a policy subsequently granted under the seal of the company, containing the covenant of the company and extending the period of insurance beyond that covered by the interim receipt. The assignment when made could not be endorsed on a policy not in existence, nor could a policy not in existence become void. The StUPREME COURT OF CANADA.

insurance existing under the interim receipt might become void by reason of such an assignment not being endorsed upon the interim receipt; but if the company with full knowledge of the assignment should recog- Paaux nize it by issuing their policy under seal for a term R. extending beyond the period to which the interim receipt applied, such an assignment so recognized J. cannot, it is plain, be within the scope of the condition against assignment endorsed upon the subsequently issued policy. There is no sense or reason in the contention that it should be, for if the assignment was made known to the Company before they granted the. policy under seal, it is but reasonable that they should be bound by the covenant contained in the policy, which was made with full knowledge of the assignment; and if the assignment made an alteration in the condition of the property different from that in which it was when they insured, and upon the faith of which they did insure, and which it was material should have been made known to them, and was not made known to them, in that case the policy so granted might be avoided, not for a breach of the condition endorsed on the policy, but upon plea averring, as has been here averred by the defendants expressly in their 5th plea, and substantially also as it appears to me in the 6th-plea, that the plaintiff fraudulently withheld from the defendants all knowledge and notice of a fact material to be made known to them, and so by fraud and deceit procured the policy. This, as I have already said, is the real point in controversy between the parties here, and upon the evidence could not properly have been decided otherwise than against the defendants.

The Court of Common Pleas, on the argument of the case reserved, and in pursuance of the terms of the agreement entered into at the trial, allowed a replication to be filed to this 6th plea, but, as it appears to me, the issue which had already been joined between the parties, and which put in issue the. material part of the 6th plea, which, in my opinion, consisted in the allegation that the assignment of the 28th November had been made " without the knowledge and consent of the defendants," that is at the time of their executing the J. policy on the 12th December, was quite sufficient. However, the material part of the replication as allowed was, upon the evidence, properly found in favor of the plaintiff ; it would have been better and more conformable to the evidence if the replication, instead of alleging that notice of the assignment had been given as therein stated " before the loss," had alleged, as the evidence established that it had been given before the defendants granted and executed the policy declared upon. The case, when analysed and its facts are thoroughly understood, seems to me be free from all difficulty, the whole point being, whether or not an agent of an insurance company authorized to receive applications for insurance, and who had received such an application, is the proper person, (while the application is still under the consideration of the company who have not yet agreed to grant the policy) to whom any alteration in the subject of the insurance, affecting such application, and material to be communicated to enable the company to determine whether they will or not grant the policy, may be communicated so as to affect the company with notice thereof.

I cannot entertain a doubt that he is, and that he is was never doubted or disputed, but on the contrary was assumed as clear law upon all sides, and by this court in Liverpool, London 4- Globe Insurance Co. v. Wyld (1). Nothing was said in argument upon the 7th plea, nor do I think could be, because the evidence, I think, shows that the interest of McKenzie in the property was known to the defendants when they granted the policy, and also the interest of the plaintiff, and the reference to McKenzie in the policy as a creditor of the plaintiff does, I think, sufficiently comply with the condition referred to in the 7th plea, but assuming it not to do so, still, as the defendants are held to be affected with In. knowledge of all the facts of the case when they executed Gwynne, the policy, it is wholly their fault if the interest of the plaintiff is not sufficiently stated in the policy, and as by the reservation at the trial, the rights of the parties are to be determined by the evidence, the defendants could not be allowed to prevail upon this plea if there were anything in it.

The Court of Common Pleas, in the rule which is the subject of this appeal, has ordered that a verdict be entered for the plaintiff for $2,050.00, upon the plaintiff producing to and filing with the master a release from all necessary parties of their claim to the insurance monies, proof of necessary parties to be given by affidavit to the satisfaction of the master, such release to be handed over by the master to the defendants by.their attorney. I confess 1 cannot see the necessity or propriety of this condition so attached to the entry of a verdict in favor of the plaintiff. The policy, although having in it the words

"loss if any payable," is granted to the plaintiff. He is the person named therein as the insured, he is the person with whom the defendants contract, with whom the defendants covenant to make good all loss or damage to be sustained by the peril insured against, and the words " loss if any payable," operate to enable the defendants, in fulfilment of that covenant, to pay the parties named, and to set up such payment to an action by the plaintiff against them for breach of this covenant, but if they do not pay them or any one, then, if loss has been incurred within the terms of the policy, a breach of their covenant is committed, and

StIPREME COURT OP CANADA.

In McCallum v. The Atna Insturance Co. the Court of Common Pleas held, and I think rightly, that, even in a marine policy which had not in it the words "for J. "or in the name of all parties interested," nor " for "whom it may concern," but stated that the policy entered into "on account of A. C."-" loss if any pay- " able to L. Mc the contract was with A. C., who only could sue for a breach of the contract. A fortiori in this case, which is not a marine policy, and where the policy expressly states the plaintiff to be the person with whom the contract is made and with whom the defendants' covenant is made, he should sue alone for a breach of that covenant.

I cannot see upon what principle the Court should have interposed its authority to impose a condition affecting the plaintiff's verdict, in the interest of the defendants who have committed a breach of their covenant sued upon, and which condition was of a nature that the defendants, not only had not set up any claim to be entitled to the benefit of, but could not have put the claim upon the record in the shape of a plea in excuse of the breach of covenant for which the action is brought, or in bar of the action.

Although the plaintiff is not a party objecting under rule 61 of this Court to the rule against which the defendants have appealed, still, lest this case should be regarded as a precedent approving of the restriction imposed by the Court upon the entry of a verdict in plaintiff's favor, and lest these conditions should be found embarrassing in the particular case, I think that under the rule we may with propriety order the rule of the Court of Common Pleas to be amended by omitting the condition imposed as to filing releases, and leave the assignee McKenzie to protect the interest of the creditors, which he can easily do if there be any necessity for his interfering for that purpose.

The defendants have no right that I can see to claim . the interference of the Court to protect them against the Jns.-co. legal consequences of the breach of their covenant with j. the plaintiff, and to suspend the recovery of a verdict against them until all plaintiff's creditors shall release the defendants from all claim they may have to the money recoverable by the plaintiff from the defendants for such breach. If the defendants had paid McKenzie, the assignee in trust, they could have pleaded that payment as a fulfilment of their covenant, and by this conditional verdict they are given a benefit, not only not asserted on the record, but which could not be, and which in fact operates as a premium to them for committing the breach of covenant for which they are sued.

tVOL. IV. 1879 - APPENDIX.

*June 2.

*Dec. 12.

CLARK vs. SCOTTISH IMPERIAL INSURANCE COMPANY.

JUDGMENT OF STRONG, J. (1).

The facts material to the decision of this appeal are not in dispute, and may be very shortly stated. In 1872, .Tohn Bishop, who proposed to build a schooner at Hopewell in New Brunswick, applied to the appellant, a merchant in St. John, to make him advances to enable him to complete the vessel. This the appellant agreed to do upon certain terms as to security for what he should advance, which the plaintiff, in his evidence, states as follows:- The arrangement was that I was to supply him to build this vessel and hold the vessel as security for my advances. I was to dispose of the vessel in shares or the whole, as I saw proper, and when the vessel was disposed of, whatever remained after I got my pay was to go to Bishop. That was the arrangement. In pursuance of that arrangement, I made advances to him to over $2,000.

The testimony of Bishop is to the same effect. He says in his re-examination:- I wanted to build a vessel and I wanted plaintiff to supply her, and I told him he should have the vessel as security for what he supplied me with. That I would put in all I could myself. I said I could not tell how much I could put in. That was about all that passed. He was to sell her, or make any bargain he could with her, and then to pay me the balance of what was paid him.

On the 10th of August, 1874, whilst the vessel was still in course of construction, the plaintiff obtained from the respondents the policy of insurance against (1) See page 212.

loss by fire, which is the subject of this action. The policy covered a period of six months from its date. The amount insured was and the property was a' described as " a schooner in course of construction by John Bishop, in his ship-building yard at Hopewell, Albert N. B."

J. In October, 1874, the vessel was burnt whilst still on the stocks. The respondents having disputed their liability, this action was brought to recover the amount of the loss.

A rule nisi to enter a non-suit was afterwards granted and made absolute. the Chief Justice, proceeds entirely upon the ground that the appellant had no insurable interest in the vessel.

It was contended on the argument of this appeal, as well as in the Court below, that under the law of New Brunswick an interest in the assured was not requisite to the validity of an insurance against fire, inasmuch as the Stat. 14 Geo. 8 did not apply to that province. I am against this objection. The contract of insurance against fire is one of indemnity, and at Common Law, upon obvious principles of public policy, such a contract cannot be effected by one having no interest in the property insured.

The law has for many years been so settled in New Brunswick, by decisions which are in entire accord with the higest English authorities. The decision of this appeal therefore involves only the consideration of the question:

Had the appellant, under the arrangement ilo s stated in the evidence of himself and Bishop, an insurable interest in the vessel ? That the interest need not be such a right of property as a Court of Law would strong J. recognise, but is sufficient if it would be recognised and enforced in equity, is settled beyond dispute by numerous authorities (1).

Then, did the appellant acquire any interest, either legal or equitable in the vessel, under the agreement with Bishop ?

I need scarcely say, that a legal mortgage of an existing chattel is unaffected by any provision of the Statute of Frauds requiring written evidence. On the contrary, such a security depends altogether on the Common Law, and may be constituted without. delivery by a writing not under seal, or even by an oral agreement. This was determined in the case of Flory v. Denny (2). which was decided on the authority of a passage in Littleton's Tenures cited in the judgment, which so states the law. In Flory v. Denny there was an informal written agreement not under seal, but I take it to be a well settled principle of the Common Law that when a deed is not requisite to pass an estate or interest an oral agreement is, in the absence of all statutory regulations, as effectual as an unsealed writing. Then, an incomplete chattel may be the subject of legal security, and if there is a contract to complete it and assign it when finished, the property in the completed chattel will be bound at law (4). This is founded on the principle that although a legal mortgage cannot be made of a non-existing chattel, yet personal property VOL. IV.J SItPREl bOURT OP CANADA.

i6 not in exisfence, bu't in whih fhe iiortja'oi has hat is called a poteiftial interest, may be made the subject of sbh a ieourity, as iA the case a mortgage by the s . ownef of land of the fruits or crops to grow upon it, a coitract which is effectual at law (1).

The leaened Chief Justice seeris io assume the fact to be that the coniitrnction of the vessel insured hAd been begun, and that some porflon of i' was actiidly hi existeice before the agreeizient betwien Bishop and the plaintiff, foi, in hiis judgnienit, I fiid this passage:

it that tle afteithe The plaintiff, in his cross-examinati6n, says he commenced advancing on the vessel now in question in the fall of 1872. Bishop safs the advaltces commenced in July, 1872. .ohn' Bishop J. says': 'She was commeiced in 1872, just after we got the 'Minnie' off." If we could bafelf infer from this evidefice that dny part of the ves'del had been actually con'structed at the fiide of the agreement between Bishop and Clark for scuring the advances, there 'Might, on the authorities cited, be a good legal iiortgage. It is not, however, essential to the detei-mination of the case that we should proceed oii Eiiy suchground, for it is clear that the agreement stated in the te'stimony of beth Bishop and Cldrk constituted a good equitable assignment-of the vesiel in favor of the Dlaintiff.

It is a well established principle in Courts of Equity, that an agreement to assign, by way of security, propViry in existence, or in which the assignor had no interesf at the dite of the ajreement, will operate as axi equitable assignment by way of equitable mortsage, lien; or charge, which will take effect upon the property Ptch Stin, when subsequently brought into existence, or acquired by the assignor.

This doctrine 'springs from the jurisdiction of Courts of Equity to decree specific performance.

In the present case, if the vessel had been completed and Bishop had refused to carry out the agreement to deliver her to Clark, a Court of Equity would have decreed specific performance, by compelling Bishop to put the plaintiff in possession in order that he might sell and retain his advances out of the proceeds. Again, had Bishop attempted to sell the vessel himself such a sale would have been restrained in equity at the instance of Clark. In the case of Holroyd v. Marshall (1) there is a very full exposition of the law as to equitable mortgages and assignments of chattels to be subsequently acquired by the mortgagor or assignor, in which all these principles I have stated are laid down by Lord Westbury. No higher authority than this could be quoted, and it establishes all that the plaintiff contends for-that he had an equitable interest in the burnt vessel. It is sometimes said by text writers that specific performance of agreement as to chattels will not be decreed, but that parties will be left to seek a remedy at law in respect of the breach of a contract relating to such property. This, however, is incorrect as regards specific and ascertained chattels, as is explained by Lord. Westbury in his judgment in Holroyd v. Marshall, and the rule as to such property as the schooner in question here is that which I have already propounded. The agreement, as stated by the plaintiff and Bishop, though it does not in terms provide that the plaintiff shall have any property in the vessel, but was in form only a stipulation by the plaintiff and a promise by Bishop that the possession of the vessel should be delivered to the former with power to sell and to pay himself out of the pro- (1) L191.

ceeds of the sale, is clearly sufficient in equity to create a lien. In the case of land, authority to a creditor to sell and retain his debt out of the proceeds, evidenced a by an informal written memorandum (writing being, of course, required in the case of land by the 4th sect. of CE the Stat. of Frauds), has been held to constitute a good equitable mortgage or charge (1).

The agreement here was precisely similar to that just mentioned, the only difference being that there was no writing and that the property was not existent when the agreement was made, distinctions which, for reasons already stated, can have no effect.

I have forborne to refer to the case of v. The Home Insurance for the reason that it was not an authority which in any way bound the Supreme Court of New Brunswick, but I may say that I consider it as establishing the conclusions contended for by the plaintiff.

I am therefore of opinion that the appellant had an insurable interest in the subject of insurance, both at the date of the policy and at the time of the loss, in respect of which he is entitled to recover against the respondents. The judgment of the Court below should be reversed and the rule nisi to enter a non-suit should be discharged with costs.

The appellant is, of course, entitled to his costs of this appeal.

J.

APPEAL-Appeal involving questions fact- Discretion of Judge, appeal not in general uoith-40 c. Constitutionality of.] Held: a disputed fact, involving nautical questions, raised an appeal the judgment of the Maritime Court of Ontario, as in the case of a collision, the Supreme Court will not reverse the decree of the Judge the court below, merely upon a balance of testi- - 2-Final judgment-Judicial proceeding-42 a. and In an action instituted in the Superior Court of the Province of the appellant against ff. A.

and nine other defendants, the respondents, three of the defendants, severally demurred to the appellant's action, except as regards two lots of land, which they acknowledge the appellant had an undivided share. The

Superior Court sustained the demurrer, and, on appeal, the Court of Queen's

Lower C.nada (appeal the judgment.

The appellant thereupon appealed to the Supreme Court, and moved to quash the appeal on the ground that the bupreme Court had no jurisdiction Held:

That as the judgment of the Court

Queen's (the highest court of last finally determined and put an end to the appeal, which was a judicial proceeding within the meaning of of Supreme

Court Amendment Act of judgment was from which an appeal would lie to the Supreme Court of Canada;

though an appeal cannot taken a court of first instance directly to the Supreme Court until there final judgment, yet whenever a Provincial Court of Appeal has jurisdiction, this Court entertain an appeal its judgment finally posing of the appeal, the being

"ther respects a proper subject of appeal.

AWARD-Final judgment-Power of attorneys enlarge tise for award-Appeal, additional ground on.] In an action contract, the matters rule of court,

AWARD.-Continued.

and with the consent of the parties, submitted to arbitration.

the rule of reference the award was directed be made or before the lst or such further or ulterior as the arbitrators might endorse from time to time the order. time for making the award was extended the arbitrators till the Ist of September, the 31st August, the attorneys for plaintiff and defendants, consent in writing, endorsed the rule of reference, tended the time for making the award till the 8th deptember. the September the arbitrators made their award in favor of the plaintiff the sum of in full settlement all matters in in the cause. Beld: of Nova Scotia, that where the parties, through their respective attorneys in the action, consent to extend the time for making an award under rule of such consent not rate as a new submission, but an enlargement of the time under the rule and a continuation to the extended of the authority of the arbitrators, and therefore an award made within the extended period an award made under the rule of reference. and is valid and binding on the parties.

That the fact of one of the parties being a municipal corporation makes rule nisi to set aside an award certain grounds of objection, and no new grounds are added way of amendment the court below, no other ground of objection to the award raised appeal.

BENEFIT SOCIETY-Expulsion of - - - - - - 1869-Sec. and 92-- ---- CVIL CODE-Arts Term of delivery-Reasonable time

-Damage--Arts. 0. L.

the the appellant sold to the respondent hundred tons writing, which was signed by the appellant alone, in following terms: "Sold to A..

hundred tons of timothy hay of best quality, at the price of per ton o. propellers canal, Montreal, at such times and in such quantities as the said 0. order. The said to perfectly sound and dry when delivered board, and weight tested if required.

The same to be paid for delivery of each lot by order or draft on self, at Bank of Montreal, the to consigned to order of Dominion

Toronto."

In execution of this contract, the appellant delivered hundred and fortyseven tons and thirty-three pounds after which the respondent refused to receive any more.

The appellant having several times nothe respondent, both verbally and writing, formal protest on the July, requested him to take delivery the remammg tons of bay. On the of vember following, the appellant brought an action of damages for breach of contract, which claimed to wit, difbetween the actual value of the hay at the'date of the protest and the contract price, and for extra expenses which the appellant -incurred, owing to the refusal of the respondent to fulfill contract.

Held: That such a contract to executed within a reasonable time, and that, from the evidence the usages of trade, the delivery, under the circumstances, was to made the new crop of hay, and that the respondent, being fault to receive the bay when required, was bound to the damages which the appellant had sustained, to wit, the difference at the place of delivery between the value when the acceptance was refused and the contract, and other necessary expenses, the amount of which, being a matter of evidence, is properly within the province of the court below to determine.

CORPORATION-Shareholder in public company,

-Actions against creditors of Co.-Registratienof ertijicate-Con. Slat.

In an action brought McK. under the visions of Stats. Can., against K.

at. as stockholders of a joint stock company incorporated under said act, to recover the amount of an unpaid judgment they had obtained against the company, the defendants K.

et at pleaded inter that they had paid their full shares and thereafter and suit had obtained and registered a certificate to that

Held: affirming the judgment of the

Court of Common Pleas, that under and Cons. Stats. Can., as as a shareholder has paid up his full shares and has registered, altho' not until after the mentioned a certificate to that liability to pay any debts of the company then existing or thereafter contracted ceases,

CORPORATION.-Continued.

excepting always debts to employees, as specially mentioned in [Ritchie, 0. J., and Fournier, J., dissenting.]

MoKsazia COSTS-Construction of

As costs, the court ordered that costs paid the respondents (executors and trustees of the will) out of the general residue of the estate of the deceased, but if the said residue should have been distributed then the said costs should contributed the persons should have received portions of the said residue ratably according to the amounts of the respective received them.

CROWN-Right of to plead prescription - - - - - DEED-Prohibition alienate in a purely onerous title void-Art. G'. L. ] W. F. and his brother were authorized to sell certain entailed property in consideration of a non-redeemable rent senting the value of the property. On the 7th September, F., the appellant, and E. F., assigned to their brother, a land forming part of the above entailed property, in consideration of a rete of six pounds, payable the first of October of each year. The was registered and contained the lowing stipulation: it agreed that the assignee cannot alienate in any manner whatsoever the said land, nor any part thereof, any person without the express and written consent of the assignors under penalty of the nullity of the said deed." property was subsequently seized judgment creditor of F., and appellant opposed the sale and asked that the seizure be declared null, because the property seized not sold reason of the above prohibition to alienate.

Held, appeal, the judgment of the court below, that the deed was made m accordance with the provisions of 18 and being purely onerous title its the prohibition to alienate contained in said was void. Art. 0. L. Query Whether the substitutes may not, when the substitution opens, attack the for want consideration. 2-Per

H. E. Taschereau and Gwynne, J.J., That a taken under a notary (though not under the seal of the Commissioners) a person in possession, which was subsequently a judgment of ratification of a Supeior Court, was a valid that all rights of property were purged, and that if any the auteurs of the petitioner failed to urge their rights on the monies deposited reason of the customary dower, the ratification the title was none the valid.

NDEX.

DEMURRER-Petition of Right-N. the sup pliant, petition of right, claimed, as resenting the heirs of P. 1. Jr., certain parce of land originally granted letters paten the Crown, dated January, to P

Senr., together with a of fo the rents, issues and profits derived therefron the Government the illegal det-ntior thereof. The Crown pleaded to this petition o right-let, demurrer, aufonda droit alleging that the description the limits and position of the property claimed was in law; that the conclusions of the peti.

tion were insufficient and vague; that far as respects the ren's, and there had no signification to the Governmept of the ifts or transfers made the heirE to the suppliants. Held: That the objection taken should have been pleaded d la/forme. pursuant to Art. P., and as the demurrer was to all the rents, issues and as as those sin* the transfer, it was large and should dismissed, supposing notification of the transfer necessary with respect to rents and pr. arf-rued previous to the sale to the heirs of P. W. Jr

Ta QusN

At the same time J F.

was negotiating for a loan a mortgage to respondent, and it was at first stipulated that the amount of this note should taken out the mortgage money. The agent of the pondent, after the election, at the request of J.

F paid the mortgage money full and allowed the matter of the note to stand until T.

F. G. could respondent.

.T F. stated that neither the note nor the mortgage transaction him any way, and that had to pay the note and did not expect respondent make a present of it. Held: That the evidence did not that the advance money was made order to induce T. F. to procure, or to endeavor to procure the return respondent, and was not therefore bribery withthe meaning of of of the

Dominion Elections Act,

As to the one A., the evidence showed that A's team was hired days the opening of the poll an agent of the respondent. for the purpose of bringing two voters to the polls. M.

went for the voters, returned the day previous

Continued.

to the polling day without the voters and was paid dollars. Held: That the term preceding sections" in the 98th section of "The Dominion Elections Act, means the sections immediately preceding the and therefore the hiring of a team to convey voters to the polls, prohibited the 96th section, was a corrupt practice within the meaning the 98th section.

[Henry, J., dissenting.) Bribery-Promise pay legal a voter, a prfessional pu6lie speaker -The Dominion Elections Act, sub- Appeal from a judgment Armour, holding that appellant had ployed and promised to pay the expenses a voter. who was a lawyer and a professional public speaker, and therefore was guilty of bribery within the meaning of of The Dominion Eleetoas evidence as to agreement entered into between H. and appellant was contradictory. It was admitted, however, that H addressed the meetings in the interest of the appellant, and during the time of the election made no demand for expenses, except on one occasion, when attending a meeting and finding himself without money asked and received the of for the purof paying the livery bill of his horse. Held: That the weight of evidence showed that the appellant only promised to pay BHs travelling expenses, if were legal to and such promise was not a breach of of The Dominion Elections Act,

[Tascheroau and Gwynne, J.J., dissenting.] Per Fournier, J.:-Candidates may legally employ and pay for the expenses and of canvassers speakers, provided the agreement be not a colorable one intended to evade the bribery clauses of the Act. Per Tanchereau and Gwynne, J.J.:-Such a payment would Gians

ENGINEER-Certificate of for

2-See

IMPROVEMENT8-Claimafor, incidental mand

LNDEX.

of Local Legislature INSURANCE.-Continued.

over matter of Insurance-British North

Riqlt of Action.] appellant, being America and 92-Statutory indebted certain persons and desirin t conditione-R. . 162-What conditions have stock of insured, applied to applicable when statutory conditions not printed the agents of respondents for insurance to the policy.] The Citizens' Insurance the amount of three months, pany, Canadian Company, incorporated

"loss if any payable to his creditors Act of the Parliament of Canada, since the of iIcK. and XcI. 4 passing of R. issued, in favor of are second" An interim receipt was P., a policy against which had not endorsed company, dated upon It the statutory conditions (B 0., which stated insurance to subbut had conditions of its own, which were ject to the conditions contained and not printed variations in the mode indicated endorsed the printed of policy the Act. The Queen Insurance Company. an bythe company, which any, carrying on business under ditions stated, that if the property an casued favor of P., after the passing of R.

an interim receipt for agin~ fie sbjet codiendorsed the policy insuranc n agent of company duly authorize tionsoftheCompany.

Western Assurance such purpose, the should a Canadian Company, incorporated the appellant transferred the Parliament of Canada before Confederathe insured property the said McK., a policy of insurance against favor J., the conditions of the policy, which in to etors

T alan different those contained R.8.0, y toe panya tfielf the age not being added in the manner reand assented to it, stating that notice to quired the statute.

The three companies the company was necessary, policy authorized to do Fire Insurance business payable creditors. prothroughout Canada virtue of a license erty was destroyed the granted to them the Minister of Finance

January, policy upon was under the Acts of the Dominion of Canada dated the but was not lating Fire Insurance Companies. The prountil the morning after the perties insured these companies were all dei situatedwithin the province of Ontario,and being

ZK. it t subsequently destroyed a-tions were citors nte a ophera brought against the companies.

The Supreme cr ir the Intrst myapar. Court of Canada, after hearing the arguments in

Afte tire thIcto o three cases, delivered but judgment, and wote twice ec aing it was-Held: That " The Fire Insurance Act,"

lo

Aeal

Rrsing nothe R. 8. 0., was not ultra and apout alsformentato ntc plicable Insurance Companies(whetherforeign otett assicient to company incorporated the Dominion) licensed to aget wa sicien p carry on insurance business throughout Canada, such assignment, and have executed the and taking risks on property situate within province of Ontario. That the legislation plcy ih noede ntat question, prescribing conditions incidental to such assignn t oeco p insurance contracts, passed in Ontario, relating property situate in was not a regula- That words "loss payable, if any, of Trade and Commerce within the meanto icK., operated to enable ing of these words in 8 N.

pondents, fulfilment of that covenant, to Act.

That an insurer in Ontario who has pay parties named; but they not not complied with the law in question and has paid them, and the policy expressly stated not printed his policy or contract of insurthe appellant to person with whom the statutory conditions in the manner the contract and the respondents' covenant dicated the statute. cannot set up against the action a breach of that insured own conditions or the statutory covenant was properly brought ditions, the insured alone, in such a alone. MoQuvwi v. dition. [fTaschereau and J.J., dissent- INTEREST-Fire Inurace-Aling.]

Per Taschereau and Owynne, J.J build ves:e--Insurable Interest.] That the power to legislate upon the subject- c. made advances to B. then matter of insurance vested exclusively the of construction, the faith a verparliament virtue of its power to bal agreement with B., that after the laws the regulation of Trade and launched, placed under the of the B. N. A. Act, hands for and that out of proceeds the Tas Orrizaes', V. PasoNs advances so made should be paid. When vessel Trust Assignment-Conditions of Policywas well advanced facts and Notice Agent-LZoss payable Creditors nature of interest to the agent of the respond- INTEREST.-Continued.

ent's company, and the company issued a insurance against loss by to U(. the sum of$3,000. The vessel was still unfinished, and in B.'s possession when was burned.

Held: Reversing the judgment of the Court below, that interest, relating as it to a chattel, was an equitable interest which was insurable, and therefore was titled to recover.

CONFIRMATION-Efect

LIMXITATION8-Statute of-Trespae-Plea tenementum-Poseasion, title

In an action of trespass quare fregit the purpose of trying the title to certain land adjoining the city of Belleville, defendants plesded not guilty; and that at the time of the alleged trespass the said land was the freehold the defendants,

E. McC. and J L. and they justified breaking and entering the said close their own right, and the other defendants as their servants, and their command. The was tried Armour, J., without a jury, and rendered a verdict plaintiff with thirty dolla s damages.

The judgment was set aside the

Court of Fleas, and they entered a verdict the defendants in pursuance of R.

0., appeal, the Court

Appeal for Ontario reversed this judgment, and restored the verdict as originally found Armour, J. defendants thereupon appealed the Supreme Court. Held: That the appellants (defendants), on whom the onus lay proving their plea of liberum tenementum, had not proved valid documentary title, or twenty years of that actual, continuous and visible character necessary to give them a title under the Statute of Limitations; therelore plaintiff was entitled to verdict [Henry, J., dissenting.]

-- - -- &ee Paion

ONTARIO-Held: That establishing court of maritime jurisdiction for the of fintarso, is intra vires of the Dominion Parliament.

" Tas Pic- NOTICE-Beneft society-Expulsion member-Prior notice not necesary under Bylaws-Mandomus.] L. was expelled bership L' St. J., an incorporated society, for being in default pay months, contributions. Art. of the society's by-laws.

provides that "When a member shall have neglected during six months to pay contributions, or the entire amount of trance the society may erase his name the list of members, and shall then no longer

NOTICE-Continued.

part of the society; for that purpose, at every general and regular meeting, itis the duty of the Collector-Treasurers to make known the names of those who are indebted in months' contributions, or a balance of their entrance and then any one may that bers struck the list of members the society."

L. brought suit under the shape of a petition, praying that a writ of mandamus should issue, enjoining the company to reinstate him rights and privileges a member the society. 1. the ground that had been put en demare in any way; and that statement or notice had been given him of the amount of indebtedness. 2. the ground many other of the society were in arrear for similar periods, and that it competont for the society to make any distinction amongst those in arrears.

ground that no motion was made at any regular meeting. The Court of Queen's L. (appeal side) held that L. should have had "Prior notice" of the proceedings to taken with the view expul-ion. es.: apneal, that as L did not raise pleadings want of "prior notice," or make it part of in the Court below, could not do appeal.

Per Taschereau and Gwynne, J.J.:- A member of that society, admits that arrears of months' contributions, not entitled to " prior notice " pelled for non-payment of

L'Umos Sr. RIGHT-Contract-Claim for tra work-Gerificate of engineer-Condition precedent-31 (D).]

suppliant gaged contract under seal, dated 4th ber, with the Minister of Public Works, to cons'ruct, and complete, for a lump of a wharf at the Richmond station at Halifax,N. 8, agreeably the plans the engineer'soffi and specifications, and with such directions as would given the engineer charge during the progress the work. the 7th clause of the contract extra work could unless " ordered writing the engineer in charge the execution of the work "

letter, dated August, the Minister of Public Works authorized the suppliant to make an addition to the whart the erection of a superstructure to as coal the additional of Further extra work, which amounted to was under another letter the Public Works Department

The work was completed, and the certificate of the Government's engineer in charge of the works, the of as the balance due, was paid to the suppliant, who gave the following receipt, dated April, the Intercolonial Railway, in full, for all amounts against the government works under tract, as follows: 'Richmond water wharf works for storage of coals, works for bracing RIGHT.-Conutinued.

wharf, rebuilding two stone cribs. the

" The suppliant for extra work, which alleged was not covered the ment made on the April, and also damages caused-to in and irregularity of payments

I petition was with costs; and a rule a trial was subsequently moved for and discharged leld, affirming judgment Court below: That all the work performed the suppliant the government was either tract work within the plans or specifications, extra work within the meaning of the clause the contract, and that was paid full the contract price, and also the price of all extra work which could produce written authority, and that written authority of the gineer and the estimate of the value of the work are conditions precedent to the right the suppliant to recover payment for any other extra work.

J, dissenting.1 t'erRit- O.J. : That neither the engineer, nor the the works. nor any subordinate charge of the works of the of Canado, have any power or authority. express or implied, under ie law to bind the Crown to any cout act expenditure not spec ally authorized the express terms of contract duly entered into between the Crown and the contractor according to law, and then only the manner provided for the express terms of contract

2-See

PRESCRIPTION-Petition of Right-9

37-Right of plead prescriptionyears prescription-Good faith-Translatory title-Judgment confrmation-Inacri;ptin feus-mprov for incidental denen I-Artt. C. C.

Art. C. P. (L. C)] N. the suppliant, his petition of right, claimed, representing the heirs of P.

Patent the Crown, dated 5th January.

to P. Senr., together with a the rents, and profits derived therefrom the Government the illegal detention thereof. to the merits the ant pleaded-Ist pre-emptory exemption, setting up title and Her under divers of sale and documents;

Prescription and years. An tion was also setting up that these transfers to petitioner the heirs of P. Jr.

made without valid consideration, that the rights alleged to have acquired disputable, dreits litigieux. The general and supplementary plea claiming value of improvements also fyled.

To first these exceptions the petitioner answered that the parties the deeds of sale relied upon had

Continued.

right of property the land sold, and the legality and validity of the other documents relied upon, and inscribed .favz against a judgment of ratification of title to a part of the property rendered the Superior Court the district of Aylmer, P. Q. To the exception prescription the petitioner answered, deying the allegations thereof, and particu arly the good faith the defendant. To the supplementary plea, the petitioner alleged bad faith on the part of defendant.

There were also general answers all the pleas. the thus raised, the parties went proof an enqudle had

Commissioner under authority of the Court, granted motion, accordance with the law of the Province The was argued the Exchequer Court

. Tascherpan, and dismissed the suppliant's petition of right with Whereupon the suppliant appealed to the Supreme Court of Canada. Held: tFournier and

J. J., dissenting

2.-40 Constitutionality qf 3.-The Domion Elections 4.-The Dominion Elections Act, 5.-The British North America Act, '718

STATUTE.-Cotinued.

6.-Cona.

8.-R. 0., 162,Conslitutionality of

See 2.

See

-- - -- VIBES-Not of the 'arliament of Cana'

2-Not of Legislature of Ontario-R. 0., ch162

----- WILL-Construction of-Tenants in jont will J. H. A.

rected :-" Until the expiration of four years the time decease, and until the division of estate hereinafter directed, executors shall every year place to the credit each of children the of sixteen hundred dollars, and if any of my children shall have died, leaving issue, then a like sum to and among the issue of the child dying. such of sixteen hundred dollars to paid half yearly instalments to such of my children as shall of age or married; but if any vances shall have made any them, and interest shall due thereon, such interest to deducted the said sum of sixteen hundred dollars.

" As regards the division, appropriation, and ultimate disposition of estate, it my will that, subject to the payment of my just debts and legacies, bequests and annuities, have heretofore given or may hereafter give, and to the of the management of my estate, all the rest, residue and remainder of my estate, and the interest, increase and accumulation thereof, distributed, settled, paid and disposed of, to and among children who may alive at the time of the division and appropriation into shares of estate hereinafter directed, and the issue then living of such of my children as may then dead, at the time an in the manner following, that to say: That immediately, on the expiration of four years my death, my executors, after making such provision as may necessary for the payment any debts and legacies that may outstanding and unpaid, and of out.

WILL.-Continued.

standing annuities, and of the expense of the management of my estate, shall divide all remaining estate into as many just and equal shares as the number of my then surviving children and of my children who shall them have died, having lawful then surviving, shall amount unto, and shall apportion and set such share to each of my said then surviving children, and one such share to the lawful issue of each of my then deceased children, whose lawful issue shall then surviving, all the issue of each deceased standing in the place of such deceased child. And it my will, and I direct, that from forth a separate account shall kept trustees of each share, and of the interest and profit thereof, and the payments made to or account of for the maintenance and education of each of my said children or issue, shall charged against the share apportioned to sich child or children, or wherein such issue shall be interested, that all accumulations and that may arise shall enure to the increase of each several share on which such accumulation profit shall accrue-it being my intention that after such division shall take place, the maintenance, education and support of each of children while under the age of twenty-one years shall drawn from the separate of such child, and the maintenance and education of the children of any of my children may have them died, leaving issue, shall drawn the share or shares set apart the issue of such deceased child or children. And that children, and such issue of ceased children being of age, that is to say, the age of twenty-one years, or when respectively they shall attain the age of twenty-one years, shall severally entitled to their own the whole of the interests and profits of the share and proportion of my estate to which they may respectively entitled." L. A,testator's daughter, married H. F., appellant.

Testator died 24th

25th August, testator's daughter died, leaving three children, F., B. f, and F.

Sept, IH. A. F, the eldest son appellant and L. died. Thereupon the appellant claimed that the three brothers took their mother's share under the will tenants in mon and property being personal property, F. share vested in te appellant, his father. Held: That the intention the testator was that his estate should divided, and that the children of testator's daughter took as tenants in and consequently the death of the eldest son the whole right, title and interest in share, vested the appellant. 1.-"

2.-"Trade and

-