OF THEM- ALL OTHER CREDITORS OF
E s. EDWARD O'REILLY,
(DE- Fb2 ENDANTS)...................e.
AND
ELIZA
O'REILLY
(OR
PETRIE)
(PLAINTIFF),
AND
JOSEPH
O'REILLY
AND
WILLIAM
}RESPODNS O'REILLY, EXECUTORS OF THE
PONDENTS. ESTATE OF THE
EDWARD
O'REILLY, (DEFENDANTS)
APPEAL FROM THE OF, APPEAL FOR ONTARIO. An ante-nuptial contract provided that "in the future view the said intended marriage he, the said Edward O'Reilly, for and consideration of the love and affection and esteem which hath for and beareth to the said Miss Eliza Petrie, hath given, granted and confirmed and these presents doth give, grant and confirm unto the said Miss Eliza Petrie, accepting hereof the sum of twenty-five thousand dollars, currency Canada, payable unto the said Miss Eliza Petrie the heirs, executors, administrators or assigns of him the said Edward O'Reilly, the payment whereof shall become due and demandable after the death of him the said Edward O'Reilly."
The parties were married and on the death of the said O'Reilly his wife claimed the right to rank on his estate as a creditor for the said sum $25,000 which claim was contested the general body creditors who had all become such after said contract was made. *PRESENT:-Sir Charles Fitzpatrick C.J. and Girouard, Davies, Idington and Duff JJ.
Ontario(1), affirming the judgment of a Divisional Court which sustained the verdict for the plaintiff at the trial.
The only question to be decided on this appeal was the construction of the clause of Edward O'Reilly's will which is set out in the above head-note. The plaintiff, Mrs. O'Reilly, had judgment in her favour in all the courts below.
Casgrain K.O. for the appellants.
Lafleur K.O. and Chrysler K.O. for the respondents. is claim for $25,000 filed by a wife on the estate of her deceased husband to whom she was married at Aylmer, in the Province Quebec, on the 26th of June, 1889. The marriage contract produced in support of the claim was made at the same place on the twenty-second of the same month.
The husband died on the 30th of December, 1907, leaving children issue of the marriage. The widow's claim to rank pari passft with them is contested by the appellants on behalf of themselves and all other creditors of the deceased.
The claims of all these contesting -creditors arose after the marriage contract was made and registered in the proper registry office.
It was found by the trial judge: First, & that O'Reilly, the husband, was insolvent at the time of his marriage and at his death; secondly, that when the contract was made there existed no intent to de- The Chief Justice. fraud either existing or future creditors.
On these facts two questions have been argued before us; one of law depending upon the construction of that clause in the marriage contract upon which the claimant relies; the other a mixed question of law and fact which involves the status of the contesting parties to impugn the validity of the gift made by the deceased to his wife. The clause in the marriage contract runs as follows:
Fourthly.-And in the future view of the said intended marriage, the said Edward O'Reilly, for and in consideration the love and affection and esteem which he bath for and beareth to the said Miss Eliza Petrie, bath given, granted and confirmed, and these presents doth give, grant and confirm unto the said Miss Eliza Petrie, accepting thereof: 1st, the household furniture now owned the said Edward O'Reilly and that which may hereafter acquired him any title whatsoever, to the said household furniture, held, used and enjoyed by the said Miss Eliza Petrie as her own absolute property for ever.
2ndly, the sum of twenty-five thousand dollars, currency Canada, payable unto the said Miss Eliza Petrie the heirs, executors, administrators or assigns of him, the said Edward O'Reilly, the payment whereof shall become due and demandable after the death him, the said Edward O'Reilly; and, in the event of the said Miss Eliza Petrie departing this life before the said Edward O'Reilly, but there being children issue of the said intended marriage at the death of the said Miss Eliza Petrie, the said sum of money shall be held in trust the said Edward O'Reilly, or his heirs, executors, administrators or assigns for the sole benefit of all the children issue of the said intended marriage and shall paid unto them share and share alike as they shall attain the age of majority; it being pressly understood that should she, the said Miss Eliza Petrie, depart this life before him, the said Edward O'Reilly, and should there be no children issue of the said intended marriage at the death of the said Miss Eliza Petrie, then the said gift shall become null and void as if had not been made; and provided further, that the said sum of money (said gift), or any portion thereof shall not liable for the debts the said Miss Eliza Petrie, nor in any way liable to seizure therefor.
The effect of such a clause in a marriage contract made under the civil law of the Province of Quebec is the first question to be determined.
The widow contends that it is to be construed as a gift of present pro- Justie. perty (donatio inter uivos), and that as a result of her subsequent marriage she became forthwith her husband's creditor for the sum of $25,000, the payment of the debt only being deferred to the date of his death, if he should predecease her.
(It is not necessary to consider the rights of the children.)
The creditors contesting say, on the other hand, that in terms this clause purports to be merely a gift of future property-a gift made in contemplation of death, or, as it is sometimes called in the civil law, an institution contractuelle, translated by Mr. Justice Anglin in the court below, very happily, I think, as "a contractual institution of heirship."
If this latter construction of the clause prevails, then all further consideration of the second question is unnecessary for. the very obvious reason that a gift of future property carries with it, in the absence of any stipulation, the obligation on the part of the donee to pay the debts due by the donor at the time of his death; and, as the deceased was then insolvent, the claim of the widow to rank pari pass4 -with the other creditors must be dismissed. Rambaud, Code Civil (9 ed.), vol. 2, page 270, says: A donnbs, ni m~me crbancier sous une condition suspensive; sa situation est celle d'un hritier futur.
The question was very ably argued for the appel- Co. lants and is most interesting; but, in the last analysis, our obvious duty is to ascertain the common intention The Chief of the parties to the contract, giving to the particular
Justice. words they used for the purpose of expressing that intention their natural meaning.
Rambaud, vol. 2, pages 269 and 270, defines a gift of present property and a gift made in contemplation of death in these words:
La donation des biens pr6sents est celle qui rapproche le plus des donations ordinaires. Ainsi donateur dessaisit actuellement et irr6vocablement des biens donnds au profit du donataire; il pent plus les grever servitudes et d'hypothbques, les alibner A
+itre on6reux on titre gratuit; en un mot, le donataire en acquiert la propri6t6 actuel et irrevocable, d'oft nom donation biens prdsents qui lui a 6t6 donnae.
La donation biens a venir est celle par laquelle la donateur s'oblige a transmettre au donataire tout partie des biens qu'il laissera 0. son en depouillant du droit d'en disposer pour
I'avenir titre gratuit, en faveur d'autres personnes.
La donation biens A venir est aussi appel6e institution contractuelle. Institution, parce qu'elle se rapproche du testament, conferant au donataire un droit sur la succession; contractuelle, parce qu'elle rapproche du contrat, par le concours de volont6 qu'elle suppose chez les deux parties.
Applying to the clause under consideration these definitions which set out very accurately and plainly the distinctive character and legal effect of each of these two dispositions in a marriage contract, we are, in my opinion, driven irresistibly to the conclusion that it must be construed in favour of the claimant. The terms used express as clearly as possible the intention on the part of the donor to create a present obligation. The future husband declares that in view of the intended marriage he hath given, granted and confirmed and by these presents doth give, grant and confirm unto his futuire wife, who accepts: 1. The household furniture; 2. The sum of $25,000.
Language could not be found to express more clearly the intention to create a debitum presenti, and that intention is not in any way qualified by the following words which fix the death of the donor as the time when the payment the sum given is to become due and demandable. Taken altogether the words used clearly create an unconditional obligation to pay at a determinable future time fixed by the occurring of an event which is certain to happen.
Rambaud, vol. 2, at page 158, says, after enumerating the essential elements of a donation inter vivos:
If I have given to this provision of the marriage contract its proper legal construction the widow by reason of the marriage contract and her subsequent marriage became a creditor of her late husband and is entitled prim4 facie to be collocated pari pass4t with the other creditors on his estate.
The validity of the gift as against the contesting creditors now remains to be considered.
The nature of the contract with respect to its gratuitous or onerous character was much discussed here and in the courts below where there has been on this point some difference judicial opinion.
There is much to be said on both sides.
It might be argued, possibly, that, on a true construction of all the provisions of the marriage contract, the gift of $25,000 should be held to constitute a conventional dower which is not in law deemed gratuitous; but it is not necessary for me to decide this difficult question now as, in my opinion, the appellants have no status on the facts to impugn the validity of the gift.
They are subsequent creditors and the trial judge found that, although the deceased O'Reilly was insolvent at the time of his marriage and at the time of his death, no intention to defraud existed when the marriage contract was entered into. Under such circumstances on what ground can the appellants ask that the contract be set aside ? If we take the measure of the claimants' rights as fixed by the Quebec Code, we find that the avoidance of. a contract may be asked for when it is made by the debtor with intent to defraud his creditors and that actual injury results to that creditor. (Art. 1033, C.C.)
There must be the animus and the eventus as in the revocatory action (action Paulienne) of the Roman law. The right to attack such a contract is limited, however, by the Code to those creditors whose claims arose previous to the transaction impugned, art. 1039, C.C., and the reason for the limitation is obvious.
Whoever incurs an obligation renders all his property, present and future, liable for its fulfilment (art. 1980, C.C.), and the property of a debtor is the common pledge of his creditors. The common pledge of the creditors is the property which their debtor has at the time he incurs his obligations towards them, and that which he acquires during their currency. If, having contracted with his creditor on the faith of his possessions, the debtor subsequently diminishes that creditor's security by fraudulently dealing with his estate, the creditor is injured and to that extent can complain.
Subsequent creditors are not in the same position. The estate of their debtor was when the claim arose diminished to the extent of all the obligations lawfully contracted by him before that time. Rambaud, ibidein, page 336; Langelier, vol. III., page 436; and Mignault, V., page 294.
must be remembered that there is no article in the French Code which corresponds with our article 1039. As Planiol says, commenting upon article 1167 C.N., in vol. 11. (5 ed.), at page 109:
It was to supply this omission in the French Code and to.provide rules for the protection of the rights of creditors that articles 1033-1034 of the Quebec Code were originally enacted.
(First Report of Codifiers, page 14.)
The Commissioners say:
And they add:
And article 1039, C.C., is not one of the three. That article expressly declares that no contract can be avoided by reason of anything contained in section VI. of the Civil Code at the suit of a subsequent creditor. I have carefully examined the cases to which we have been referred, and Ivers v. Lemieux(1) is the only one in which the effect of article 1039 of the Civil Code was considered.
In that case the deed was set aside not because the effect of it would be to prejudice subsequent creditors generally, but because the object of the parties at the time they made their contract was to defraud the particular creditor who attacked the deed. Casault J., speaking for the court of review, composed of Meredith C.J., Stuart J., and himself, a very strong court, says, at page 131:
The same observation applies to Perreault v. La Parroise de la M-lalbaie (1), which is referred to by Langelier. I do not wish, of course, to be understood as holding that if an intent to defraud the particular creditors attacking the deed is proved that the principle fraus omnia corrumpit would not apply. In any event the positive finding of the trial judge, concurred in by the provincial courts of appeal, that, on the facts, there was no intent to defraud rebuts the presumption created by article 1034, C.C.
On the whole I would dismiss with costs.
For the rule laid down by the French commentators, I refer to Beaudry, vol. I., "Obligations," no. 689; Planiol, vol. II., nos. 312 and 313; Dalloz, '91, 1, 331; Dalloz, '93, 2, 470; Dalloz, Code Annot, art. 1167, nos. 131 et seq., and specially no. 138.
J.-On the 22nd day of June, 1889, in the Village of Aylmer, in the Province of Quebec, before Dumouchel, notary, the respondent, Eliza Petrie, and Edward O'Reilly, both domiciled in Aylmer, made a marriage contract, which was followed by the celebration of their marriage; and, in that marriage con- SoN & Co.
tract the parties stipulated separation as to property, and the future wife renounced to the community of Girouard J. property and also all dower; and, finally, the future husband made a gift to his intended wife in the following terms:
Fourthly. And in the future view of the said intended marriage, the said Edward O'Reilly, for and in consideration of the love and affection and esteem which he hath for and beareth to the said Miss Eliza Petrie, hath given, granted and confirmed and these presents doth give, grant and confirm unto the said Miss Eliza Petrie, accepting hereof: First, the household furniture now owned the said Edward O'Reilly and that which may hereafter acquired him any title whatsoever, to the said household furniture, held, used and enjoyed the said Miss Eliza Petrie as her own absolute property forever.
Secondly, the sum of twenty-five thousand dollars, currency of Canada, payable unto the said Miss Eliza Petrie the heirs, executors, administrators or assigns of him, the said Edward O'Reilly, the payment whereof shall become due and demandable after the death of him, the said Edward O'Reilly.
It is contended that this stipulation constitutes only an institution d'hritier to take effect after the payment of the debts of the donor, if any, and only after his death, and, also, subject to the condition that the wife survived him.
In this case the wife has survived the husband; but he has not left sufficient property to pay his debts in full and the above mentioned sum of twenty-five thousand dollars. Therefore she claims the right to rank on his estate as a creditor.
It is difficult to understand how this agreement can be considered otherwise than as a donation. The marriage contract calls it a "gift"; and, should the wife die before her. husband, he agrees to keep the said sum of money "in trust" for their children, to be paid unto them as they shall attain the age of majority.
It seems to me that this stipulation is not only a donation, but a donation 4 titre on6reux. The deed must be read as a whole, each clause being duly weighed, to carry out the intention of the parties. The gift is made not only "in consideration of the love and Girouard affection and esteem," but also "in the future view of the said intended marriage" which is to be celebrated after the wife has renounced the advantages of community of property and of dower (art. 1038, C.C.); and for that reason article 1034 of the Civil Code does not apply.
Finally, the creditors contesting the claim of Mrs. O'Reilly are all creditors posterior to the said marriage contract and, therefore, are not in a position to contest the validity of her claim; art. 1039, C.C.
During the lifetime of the husband no claim could be made; but, after his death, it becomes exigible, "due and demandable," as expressed in the said marriage contract.
I am, therefore, of opinion that the appeal should be dismissed with costs.
and DUFF JJ. concurred in the opinion of the Chief Justice.
Appeal dismissed with costs.