Boiler Inspection and Insurance Company of Canada v Sherwin-Williams Company of Canada Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Taschereau J.,Rand, J,Estey J.,Locke, J. |
| Judgment Date | 22 December 1949 |
| Date | 22 December 1949 |
| Court | Privy Council |
Supreme Court of Canada
ON APPEAL FROM THE COURT OF KING'S BENCH, APPEAL SIDE, PROVINCE OF QUEBEC
Present: Rinfret C.J. and Taschereau, Rand, Estey and Locke JJ.
J. A. Mann, K.C. for the appellant.
John T. Hackett, K.C. and L. P. Gagnon, K.C. for the respondent.
Insurance — Against damage caused by accident — Policy excludes loss from fire and from accident caused by fire — Accident followed by fire and explosion — Whether loss covered — Cause of — Assignment of insured's rights — No signification — Whether insured can still claim — Arts. 1570, 1571 C.C.
APPEAL from the decision of the Court of King's Bench, appeal side, province of Quebec 1, reversing the judgment of the Superior Court, Tyndale CJ., and dismissing appellant's action on an insurance policy.
An insurance policy insured appellant against loss on property directly damaged by accident and excluded losses from fire and from accident caused by fire. A tank, which was the object of the insurance, burst permitting the escape of fumes which ignited and exploded causing considerable damage to appellant's factory. The Superior Court maintained the action on the policy and the Court of Appeal dismissed it on the ground that the damages were caused by fire and were not the direct result of the tearing asunder of the tank.
Held: The damage was the direct consequence of the accident to the tank; the bursting of the tank was the proximate cause of the damage. Coxe v. Employers' Liability Ass. Corp. (1916) 2 K.B. 629; Leyland Shipping Co. v. Norwich Union Fire Ins. Society [1918] A.C. 350 and Canada Rice Mills v. Union Marine and General Ins. Co. [1941] A.C. 55 referred to. Stanley v. Western Ins. Co. (1868) L.R. 3 Ex. 71 distinguished.
Held also, that the appellant was not deprived of its right of action against the respondent, as the assignment of its rights to the fire insurance companies had not been signified to the respondent.
Per Band (dissenting): The explosion damage was attributable to the fire which, existing briefly after the initial stages of the accident to the tank, caused the explosion and was a new point of departure in the chain of causation.
The judgment of the Chief Justice and of Taschereau J. was delivered by
— The first point that has to be dealt with, is the question of the appellant's interest. It is contended on behalf of the respondent that the appellant shortly after the institution of the present action, having transferred and assigned to the fire insurance companies, all its rights against the respondent, for and in consideration of the sum of $46,931.28, cannot succeed for lack of interest.
With this proposition, I do not agree, as I think that even if the appellant had assigned its rights before the action was started, without the necessary signification being given, it would still have the necessary interest to claim from the respondent.
The assignees of the claim did not insure the appellant assignor for damage caused by accident. Their policies covered damage caused by fire, and in this respect they have fulfilled their obligation, by paying to the appellant the full amount of its losses. But they have additionally paid $46,931.28 for the damage caused by an explosion, which the appellant now says is covered by the respondent's policy. Assuming therefore the liability of the defendant, it necessarily follows that the fire insurance companies are not the appellant's insurers for the damage now claimed in the present action.
We are not confronted here with the case of an insurance company which, after having paid its own client, victim of an accident, the amount to which the latter is contractually entitled, obtains a subrogation receipt against the tort-feasor. In such a case, there is no doubt that the victim, although having signed a subrogation receipt, may still claim against the author of the damage he has suffered. The legal relations that exist between the victim and the insurer are obviously contractual; those between the victim and the wrongdoer are delictual. They are two entirely different causes of action. It is for his own protection that the victim has paid to obtain compensation, and not for the benefit of the wrongdoer. The latter has no concern with the rights of the insured and the insurance company inter se.
In such a case the rights of the victim to sue the author of the tort have been often recognized. Vide ( McFee & Co. v. Montreal Transportation Co. 2); ( Millard v. Toronto R.W. Co. 3).
In Hebert v. Rose 4, the ourt of Appeal of the Province of Quebec held: —
Where a certain sum is found to be due for damages caused to an automobile through a collision, an amount received by the plaintiff from an insurance company which had insured his automobile against loss or damage through collision, cannot be deducted from the award.
And later in Coderre v. Douville 5, Mr. Justice Rivard, speaking for the same Court, said: —
L'appelant va plus loin; il soutient que de demandeur n'a pas le droit aux dommages-intérêts parce qu'il a déjàété indemnisé par la compagnie d'assurance, qu'il y aurait eu subrogation et novation. Les termes de l'acte intervenu entre le demandeur et l'assureur sont clairs; c'est bien une cession de ses droits que Douville a consenti. Dans ce cas, le recours au nom du créancier contre l'auteur du dommage reste ouvert.
In all these cases, the plaintiffs had been paid by their insurers, but this jurisprudence cannot determine the rights of the plaintiff in the case at bar. I have referred to it, merely to point out the entirely different rights of the plaintiff, and to avoid any further confusion on the matter. It may also be said that the amendment to section 2468 C.C. enacted by the Quebec Legislature in 1942 (6 Geo. VI, chap. 68), which says that civil responsibility shall in no way be lessened or altered by the effect of insurance contracts, would cover cases similar to those which I have cited. The object of this section being to confirm the principle established by the Court of Appeal of Quebec, that a wrongdoer may not deduct from the amount of damage he has occasioned, the moneys received by the victim from an insurance company.
In the present case, the various fire insurance companies, the transferees of the claim against the respondent, are not insurers against damage originally caused by explosion. They are assignees of a debt which they have bought from the appellant, and therefore, different principles have to be applied.
The two relevant sections of the Civil Code are 1570 and 1571. They read as follows: —
1570. The sale of debts and rights of action against third persons, is perfected between the seller and buyer by the completion of the title, if authentic, or the delivery, of it, if under private signature.
1571. The buyer has no possession available against third persons, until signification of the act of sale has been made, and a copy of it delivered to the debtor. He may, however, be put in possession by the acceptance of the transfer by the debtor, subject to the special provisions contained in article 2127.
Between the appellant and the fire insurance companies, the sale was perfected at the date the relevant document was signed, but it is not contested that a copy of it has never been delivered to the respondent. Of course, this was essential to give the insurance companies ‘possession available’ against the respondent, but it is argued that although the assignees could not exercise their rights until the fulfilment of this requirement of the law, the assignor was nevertheless divested of all his rights of ownership, and could not properly bring the present action. If he did so, it would be in violation of section 81 of the Code of Civil Procedure, which says: —
81. A person cannot use the name of another to plead, except the Crown through its (recognized officers.
It has been said that this theory has received the support of Mr. Justice Cimon in Montreal Loan & Investment Co. v. Plourde 6. But I do not think that such is the case. A perusal of that judgment shows that the plaintiff, the assignor had sold to the assignee a claim against the defendant, but the latter, in lieu of notification, had accepted the assignment. The learned judge rightly decided that the assignee was the only proper party who could claim, haying, on account of the acceptation by the debtor, a ‘possession available’ against him. In view of 1571, the assignor was divested of all his rights, and any action taken by him was in the name of ‘another’ and contrary to 81 Code C.P.
But here, there was no notification, no acceptance, and if, between the seller and the buyer the deed of sale was complete, it was not as to third parties. Until the signification is made, as to third parties, the title remains in the assignor. This is so true, that a garnishee may be served in execution of a judgment against the assignor upon moneys in the hands of the debtor. The former or the assignee will not be allowed to oppose the transfer, if no signification has been made. Vide Aubry & Rau (Traité Pratique de Droit Civil, Vol. 7, p. 450).
Article 1690 of the French Civil Code is similar to section 1571 of the Quebec Code. The French authors are unanimous to accept the theory that until a copy of the deed is served upon the debtor, the title, as to third parties, remains vested in the assignor, who alone may properly bring action to recover the debt.
Troplong (Droit Civil Français, De la Vente, Vol. 2, 1854, page 457) says: —
Si la signification eat encore à faire, le cédant poursuivra le débiteur sans que celui-ci puisse lui opposer que, lui cédant, il s'est dépouillé de ses droits. C'est ce...
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