CASE AND COMMENT
FINLAY v. GLOBAL INSURANCE COMPANY
LAYNG v. GLOBAL INSURANCE COMPANY
–
AUTOMOBILE OWNER DECEASED –
COLLISION
CLAIM UNDER POLICY
INSURANCE (AUTOMOBILE)
WHILE AUTOMOBILE PROPERTY OF THE ESTATE –
WHETHER POLICY OF AUTOMOBILE
OF THE NAMED
SS. 192(E), 197, 207(l), 214-
STATUTORY CONDITION
THE INTERPRETATION ACT, R.S.O. 1950, c. 184, s. 31(zE).
INSURED
–
INSURANCE TERMINATES ON THE DEATH
THE INSURANCE ACT, R.S.O. 1950, c. 183,
I(A)&(B)
–
The law presumes to have an answer to every problem that comes before
the courts for adjudication.3 However the situation that forms the subject
matter of this comment is one in which the law’s answer is quite obscure.
The cases of Finlay v. Global Insurance Co. and Layng v. Global Insurance
Co.,2 decided together by the Supreme Court of Ontario in July 1959, are
significant because it appears to be the first time that an insurance company has
claimed that -third party liability provisions in automobile insurance policies
lapse upon the death of the named assured, a position that was upheld by
the Court. It is by no means impossible for a similar situation to come before
the Quebec courts.
The pertinent facts of the two actions are: F, the driver of one car, and his
passengers, were injured in a collision with another car driven by L; F and
his passengers sued L and the executrix of the estate of the deceased owner
of the car which L was driving. The trial judge decided that at the time
of the accident, the car driven by L was the property of the estate of the
deceased, and that L was 90% at fault. He awarded damages against L
and the executrix of the estate. F then brought a class action against the
deceased’s insurance company under s. 214 of the Insurance Act of Ontario
in order to have the moneys payable under the policy taken out by the
deceased with that company applied to satisfaction of -the judgment. L brought
an action against the insurance company under the same policy, claiming
payment of his legal expenses included in defending the original action which
arose out of the accident. The insurance company refused to defend him on the
ground that the claims here were not those “for which indemnity is provided
by a motor vehicle liability” as provided by s. 214 of the Insurance Act,
because F, the insured, was not the owner of the vehicle at the time of the
accident, and because there was no such insurance policy in effect at the time of
lArt. 11 CC.: “A judge cannot refuse to adjudicate under pretext of the silence,
obscurity or insufficiency of the law.”
2[1959] Insurance Law Reporter, Paragraph 1-333.
McGILL. LAW JOURNAL
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the accident. The plaintiffs claimed that although the insurance contract for
indemnification for liability may have been essentially personal in character,
and to that extent ‘not transmissible to the estate, nevertheless the provisions
of the Insurance Act of Ontarib and of the particular insurance contract in
question had removed it from the classification of purely personal contracts
and permitted the benefits thereof to flow to the executor of the estate of the
named assured.
Spence J. dismissed the action. He held that while there was no authority
directly on the point, there had been cases in England under statutory provi-
sions and policies similar to those under consideration to the effect that “Third
Party liability policies are still personal policies, and are subject to the ordinary
rules of personal contracts”,3 and thus, in themselves, are not transmissible.
He further held that the following provision in the insurance contract:
The Insurer agrees
to indemnify the Insured, his executors or administrators,
and, in the same manner and to the same extent as
if named herein as the
Insured, every other person, who with the Insured’s consent personally drives
the automobile, against the liability imposed by law upon the insured or upon
such other person for loss or damage arising from the ownership, use or operation
of the automobile within Canada . . .
which was in accordance with the statutory conditions laid down in s. 192 of
the Ontario Insurance Act, referred to liability incurred during the lifetime
of the named insured, and did not make the insurance company liable for
a tort committed by the executors and administrators. The policy thus termin-
ated upon the death of the named insured, and there was, therefore, no
indemnity to be claimed.
The wisdom of the Court’s reasoning in arriving at ifiis decision is irrelevant
for the purpose of this comment. What concerns us here is what would or
should happen if the same situation came before a Quebec court for adjudication
under Quebec law. If an insurance company in Quebec were to take the same
stand as did Global Insurance in Ontario, would its position be upheld or
rejected under the laws of this province?
This question must be divided into two components. First, are motor
vehicle liability policies so personal
in quality that they must lapse upon
the death of the insured? Second, if an affirmative answer is given to this
question, does a clause such as that under consideration in the Finlay case4
.remove the policy from the realm of purely personal contracts? Does such a
clause constitute an agreement on the part of the insurer to indemnify the
liability of the executor or -heirs of the estate to which the motor vehicle is
transmitted? It should be noted here that automobile insurance contracts in
Quebec contain clauses .virtually the same as the one at issue in the Finlay
case. The interpretation of such a clause might consequently be of primary
importance.
Ibid., 1-333, p. 1602.
4The case under discussion will hereinafter be referred to as the Finlay case.
’No. 31
CASE AND COMMENT
It will be argued by the writer that the kind of insurance contract under
consideration is not of such an exclusively personal nature as to terminate
upon the death of the named insured.
It will also be argued by the writer that even if the first contention is not
accepted, the provisions of the contract remove it from the ordinary rules
governing agreements of an exclusively personal nature. They constitute an
agreement on the part of the insurer to indemnify the insured and his estate
for liability incurred even after the death of the original insured.
There is virtually no law either in the Civil Code or on the statute books
that directly governs motor vehicle insurance policies in Quebec. The Insurance
Act of Quebec lays down statutory conditions for fire insurance contracts, but
states that these statutory conditions shall apply “to the exclusion of motor
vehicle policies.” 5 The only rule set down for automobile policies is that they
must be approved by the Superintendant of Insurance as to form and policy
conditions. 6
The Civil Code of Quebec contains no articles that deal directly with auto-
mobile insurance, since there were no automobiles in 1866, date of the pro-
mulgation of the Code. There are, nevertheless, certain articles in the Code
that may be applied to the problem.
Title V of the Code, “Of Insurance” regulates marine, fire and life insurance.
Chapter I of Title V is entitled “General Provisions”, and section I of chapter
I is headed “Of the nature and form of the contract.” Art. 2483 C.C. found
in this section, reads as follows:
In the absence of any consent or privity on the part of the insurer, the simple
tranfer of the thing insured does not transfer the policy.
The insurance is thereby terminated subject to the provisions contained in article
2576.
What this general rule means is that when an insured transfers an object
to a third person, the insurance policy terminates unless the insurer agrees
to continue it. The basis of this rule is found in the Codifiers’ conception
of the nature of insurance. The Codifiers consciously and deliberately rejected
the French doctrine that insurance is an accessory of the thing insured, and
follows it into the hands of third parties. They preferred the English and
American doctrine that what is insured under a policy is the loss suffered by
a certain person (the insured) ‘who has an insurable interest in the thing.
In the words of the Codifiers :7
The opinion of the writers in France is based on the assumption that the insurance
is an incident of the thing insured and therefore necessarily follows it. The correct-
ness of this assumption may be doubted, and is contrary to the opinion found in
5R.S.Q. 1941, c. 299, s. 240.
6R.S.Q. 1941, c. 299, s. 242, reads as follows: “On and after the fourth day of
April, 1930, no motor vehicle insurance contract shall be executed or- renewed except
by an insurance policy approved by the Superintendant of Insurance as to its form and
policy conditions.”
77th Report, p. 242.
McGILL LAW JOURNAL
[Vol. 6
the English and American books. The contract of insurance
is there held to be
a contract on the part of the insurer to indemnify a particular person (the party
from loss, and not to indemnify any one who may afterwards acquire
insured)
the
the
imputation of liability, in favor of persons between whom and the original parties
there is no privity of contract whatever, and
in the sounder view of the subject
seems to be that of the English courts.
thing. The contrary construction of the contract
is pushing very far
The rule of art. 2483 C.C. is “subject
in
article 2576”. Art. 2576 C:C. appears in chapter 3 of Title V. headed “Of Fire
Insurance”. The first paragraph states:
to the provisions contained
The insurance is rendered void by the transfer of interest in the object of it from
the insured to a third person, unless such transfer is with the consent or the privity
of the insurer.
This paragraph is a repetition in a more explicit manner of the rule laid down
in art. 2483 C.C. De La Durantaye in his note to art. 2576 C.C. writes :8
Cette rigle est la m~me que pour l’art. 2483.
The Codifiers write about this paragraph :9
Ceci coincide avec ]a r~gle d~jL diclar6e dans l’art. 16 (2483) et les observations
sur ce dernier article s’appliquent igalement au present.
The second paragraph of art. 2576 C.C. goes on to say, however:
The foregoing rule does not apply in the case of rights acquired by succession …
In other words, although the insurance contract terminates when the object
insured is transferred to a third party unless the insurer agrees to continue
the coverage, it does not terminate when the object is transmitted by succession
upon the death of the named insured. This is only logical, since the heirs of
the insured are not really “third parties” under Quebec law. They continue
the person of the deceased; “le mort saisit le vif.”
Thus when a” person obtains under an insurance policy the right to be
indemnified by the insurer for loss suffered as a result of fire, the contract
does not terminate upon his death, and the rights and obligations engendered
by the contract are not extinguished by -his death.
This rule is in accordance with other articles in the Civil Code governing
the interpretation of contracts, the extinction of obligations, and the transmission
of rights by succession, and may be regarded as a particular application of those
articles to the subject of insurance. Would these same rules apply to liability
insurance? Let us examine the relevant articles in order to answer this question.
Art. 1030 C.C. reads:
A person is deemed to have stipulated for himself, his heirs and legal represent-
atives, unless the contrary is expressed, or results from the nature of the contract.
A corollary of this article is found in art. 1138 C.C. This article lists as one
of the methods by which an obligation is extinguished:
The death of the creditor or debtor in certain cases.
SPetit Code Civil Annoti, p. 795.
97th. Report, p. 251.
No. 31
CASE AND COMMENT
the contractual
This method of extinction can obviously only apply when
obligation falls within one of the two exceptions to the general rule enumerated
in art. 1030 C.C.10
In order to clearly understand the meaning of these important rules, let us
see what some of the authors have to say about them. First, the French
authors:
Pothier writes :11
Rfguliirement, les’crtances ne s’iteignent pas par la mort du crtancier: car ce qu’on
stipule, on est cens6 de stipuler tant pour soi que pour ses hritiers et autres
successeurs universels …
Larombi~re :’
En prncipe, les obligations ne s’&eignent ni par la mort du creancier, ni par celle
du d~biteur. Cependant, certaines obligations s’teignent par la mort de l’un ou de
l’autre. Mais ce mode d’extinction se r6sume, soit dans la -perte de ]a chose due,
lorsque l’obligation consiste dans des prestations personnelles, soit dans I’expiration
du terme de dure d&ermin6 ou sous entendu, s’il s’agit de prestations d’une
nature diffrente.
Laurent :13
les causes qui
Le code ne range pas la mort des parties contractantes parmi
6teignent les obligations. En effet, nous promettons et nous stipulons pour nos
hritiers; les dettes et les cr~ances passent donc aux h~ritiers des parties contrac-
tantes. II y a des exceptions, la loi n’a pas pu les mentionner dans une disposition
qui 6tablit la r~gle g~n~rale concernant les modes d’extinction des obligations.
Aubry and Rau :14
Les obligations ne s’6teignent, ni par la mort du cr~ancier, ni par celle du
d~biteur, i moins qu’il n’en soit ainsi en vertu d’une exception itablie par la loi,
ou par le titre de l’obligation.
In Quebec, G. Trudel writes:
les obligations d’un patrimoine continuent d’exister quand
le
Les droits et
patrimoine est transmis A un autre titulaire. Cette r~gle s’applique aux contrats parce
qu’ils sont des instruments propres i fonder des obligations ou des droits patri-
moniaux. Cependent, le contrat peut servir A d’autres principes. L’article 1030 C.C.
i.nonce cette r~gle g~nrale et en pr~voit les exceptions.
La r~gle ginrale ne pr~te gutre i des difficult6s d’application. Quand aux
hritiers, il 6tait superflu de l’6noncer: continuateurs de la personne de leur auteur
quant au patrimoine, ils bnficient des droits et doivent exkuter les obligations
qu’ils se trouvent dans ce patrimoine.
Two other articles of the Civil Code should be noted before proceeding further.
One is art. 596 C.C. which defines succession as “the transmission by law or
by the will of man, to one or more persons, of the property and transmissible
rights and obligations of a deceased person” The other article is 607 C.C.
10For a comparison with the Code Napoleon, see Colin and Capitap, Droit Civil
Franvais, t. 2, 10th. ed., 1948. No. 471.
11Bugnet, t. 2, p. 369.
12Thorie & Pratique des Obligations, ed. 1857, t. 3, p. 53.
13Principes de Droit Civil, 4th ed., t. 17, p. 464, No. 470.
14Droit Civil Franrais, 6th ed., t. 4, p. 219. No. 314.
McGILL LAW JOURNAL
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which states that “the lawful heirs, when they inherit, are seized by law alone
of the property and actions of the deceased. …
It is clear then from the Civil Code itself, and from the doctrine, that a
contract, and the obligations created by it do not terminate upon the death
of the creditor, unless it is so expressly stipulated, or unless such results from
the very nature of the contract. Art. 2576 C.C. is in perfect harmony with
the general law of obligations.
The following question must nowbe considered: Is the contract of third
party liability insurance by its very nature so different from the contract
of fire insurance that it obeys a different set of rules? Or, put in other terms,
is third party liability insurance so “exclusively attached to the person”15 of
the insured that it falls within the exceptions envisaged by arts. 1030 and
1138 C.C.?
To answer this question, we must consider what kinds of contract and
so exclusively attached to the
what kinds of right are “intuitu personae” –
person of the creditor that they are extinguished by his death. In so doing
it must be remembered that there is a rule of interpretation applicable to the
Civil Code to the effect that any exceptions to a general rule must be interpreted
restrictively.
There are some contracts that by their very nature clearly terminate upon
the death of the creditor. A contract by which a person obtains the right to
a life rent, “une rente viag~re”, is one example; a contract giving to a person
a right of usufruct in a thing until he dies is another. A contract entered
into between a doctor and a patient by which the doctor undertakes to perform a
specific operation upon the patient would clearly terminate if the patient were
to die before the operation.
In some instances, the Civil Code ordains that a contract shall terminate
upon the death of one of the parties. The contract for lease or hire of personal
. .” and “is also
service “is terminated by the death of the party hired. .
terminated by the death of the party hiring, in some cases, according to cir-
cumstances.”‘u The contract of mandate terminates “by the natural death of
the mandator or mandatory.”‘ 7 The contract of partnership is dissolved “by the
death of one of the partners.”‘ s
There are some rights that arise through operation of the law rather than
through contract which are “intuitu personae,” and consequently cannot be
transmitted to one’s heirs. Examples of these are the -right to sue for an
alimentary pension, and the right to sue -for separation from bed and board.
iSThis terminology is used in art. 1031 C.C. which states: “Creditors may exercise
the rights and actions of their debtor when to their prejudice he refuses or neglects
to the
to do so; with the exception of these rights which are exclusively attached
person.”
‘ 6 Art. 1668 C.C.
1″Art. 1755 C.C.
ISArt. 1892 C.C.
No. 3 ]
CASE AND COMMENT
What all the above examples have in common is that in each case a contract is
entered into or a right accrues to a person by operation of the law because
of some particular quality or characteristic of a certain person. The rights are
inextricably intertwined with the person of the creditor. The doctor under-
takes to operate upon A because A suffers from a particular disease, e.g. cancer.
A enters into a contract of mandate or partnership with B because B possesses
some particular skill in conducting business affairs. The quality in these cases
is so essential, so fundamental, to the existence of the contract that when the
person who possesses the quality dies the contract terminates. In such cases,
and in such exceptional cases only, are the rights of a party not transmitted to
his successors.
In the opinion of this writer the contract of third party liability insurance,
while to a certain extent personal to the insured, just as is fire insurance, is not
so exclusively personal or so exclusively attached to the person of the insured
as to fall within the exceptions to the general rule of art. 1030 CJC. and
hence to terminate upon the death of the insured. There is nothing in the
nature of this contract to render it incapable of transmission to the insured’s
succession. This opinion is held for the following reasons:
1) Although it is true that the insurer, in entering into a contract of
insurance, takes into consideration, to some extent, certain qualities of the
insured, these qualities are not so particular or unique to the insured as to be
exclusively attached to his person. The insurer expects that the insured be
able to drive a car, possess a driver’s license, and have an average anmount
of good sense and judgment not to drive the car in a reckless manner that
would increase the risk of accident. The insurer also expects the policy holder
to be reliable enough not to lend .his car to reckless people, since third parties
who drive with the insured’s consent are also covered by the policy. Surely,
however, this ability to drive, and -this average good sense and judgment of
“le bon citoyen” that the insurance company demands in issuing a policy are
not such extraordinary or unique or outstanding qualities as to render the
contract so personal that it must by its very nature terminate on the death of the
insured. If in fact insurance companies demanded unusual or exceptional
qualities in a person before issuing policies, they would enter into far, far
fewer contracts than they do now. The contract is not so exclusively personal
as to fall within the exceptions to the basic rule of art. 1030 C.C.
2) In addition to the fact that the qualities expected of the insured are not
so unique or outstanding as to be so very particular to him, the insuring
company also agrees under the contract to indemnify an indeterminate number
of third parties who are completely unknown to it, since it provides indemnity
for all who drive the insured’s car with the consent of -the insured. In fact the
standard third party liability clause in Quebec insurance contracts extends
coverage not only to those who drive with the insured’s consent but even to
those who drive with the consent of any adult member of the insured’s household
other than a chauffeur or domestic servant. In view of this –
the contract and
McGILL LAW JOURNAL
[ Vol. 6
the indemnity provided under it –
it surely cannot be considered so inextricably
bound up with the person of the insured as to -be incapable of transmission to
his heirs. Why should not this contract that provides coverage for any one
of the many above mentioned people not equally provide it for one who inherits
the automobile?
3) Finally, while the Codifiers regarded insurance as being attached to the
person of the assured rather than to the object of insurance, it may be argued
that insurance is attached also to the right of ownership in the object, as a
it.
protection surrounding that right of ownership and transmissible with
When a person obtains automobile liability insurance, the insurance is not attach-
ed only to his person. The company undertakes to indemnify him for liability he
incurs only when driving a certain and determinable automobile; and this
automobile is described very carefully in the policy. He is not covered by
the policy when driving any motor vehicle other than his own described in
the policy. The insurance -is a form of protection that he gives to his right
of ownership in the car. Surely the insured expects, as should be expected,
that this protection which surrounds his right of ownership should continue
to be attached to it when it is transmitted to his estate. Why should this
protection that is transmitted in the case of fire insurance not be transmitted
also in the case of automobile liability insurance?
There are instances in Quebec law in which rights that are attached to tl.e
person are transmitted to the heirs of the deceased. The contract of lease or
hire of things provides an example of this. This contract depends on the
qualities of a person to the same extent as does an automobile insurance
contract. One would not wish to lease an object, e.g. a house, to an irresponsible
or unreliable person. Yet art. 1661 C.C. declares that
The contract of lease or hire of things is not dissolved by the death of the lessor
or lessee.
Faribault comments :19
Vu les termes g~i~raux avec lesquels l’article 1661 est r~dig6, il faut en conclure
qu’il s’applique A tous les genres de baux, meme aux partiaires, quoi que pour
ces derniers il arrive souvent que la personnalit6 du fermier ait 6t6 le motif principal
qui a d~termin6 le propriftaire i
The right to damages accruing to a person for “personal suffering” and
for the shortening of his life, in the case of an accident caused by another,
while extremely personal rights, are upon his death transmitted to his heirs.20
In Green v. Elmhurst Dairy Ltd., Casey J. said :21
lui accorder le bail.
There is no doubt that the claim for the items of pain and suffering and loss of
life expectancy were personal to the victim. It may even be said they were exclusive-
ly attached to the person within the meaning of art. 1031 C.C. and that the right
to claim for these damages could not have been exercised by her creditors. But this
does not mean that they were not transmissible.
19 Traiti de Droit Civil du Quebec, t. 12, p. 266.
2oIt is true that this right arises by operation of the law rather than by contract,
but does not a contract create law between two parties?
21[1953] Q.B. 85, at p. 89.
No. 3]
Casey J. said further :22
CASE AND COMMENT
We must start with the premise that the generality of art. 607 C.C. couched as
it is in the widest terms, is restricted only when we find the victim in possession
of rights of action which by their very nature are incapable of being transmitted.
The only rights of action not transmitted under 607 are the ones which cannot
possibly survive the person who possessed or enjoyed them.
The court was unanimous on this point, and this doctrine was reaffirmed
in 1956, again by a unanimous bench. 23
To recapitulate the argument thus far, this writer holds that just as fire
insurance is personal to the insured, but not so exclusively personal as to be
incapable of transmission to the estate of a deceased insured, -in accordance with
arts. 1030 and 2576 C.C., so also is automobile liability insurance personal
to the insured, but not so exclusively personal as to be intransmissible. It is
submitted that should an .insurance company take the position in our courts
that Global Insurance took in Ontario, that position should be rejected, by
our courts under the law of Quebec.
However, it can by no means be predicted with certainty that a court would
hold this way in Quebec. The nature of the insurance contract under considera-
tion is such as to place it in the border region that~divides contracts which by
their nature are purely personal from those which are not, and the decision
would depend on the particular view of the judge as to the nature of the
contract. In the words of Denogue :24
Dans certains cas, la transmission des obligations aux hfritiers est delicate …
Dans les cas non privus le juge apprieiera en fait si
secondaire …
le c6t6 personnel est
We must examine the actual terms of -the contract to decide whether there
is an obligation assumed by the insurer to honour the policy after the death
of the original assured. The clause under consideration in the Ontario case has
already been enunciated above. The standard third party liability clause in
Quebec insurance contracts is virtually the same. It reads:
The Insurer agrees to indemnify the Insured, his succession or his administrators,
and, in the same manner and to the same extent as if named herein as the Insured,
every other person who with the consent of the Insured, or the consent of an
than a chauffeur or domestic
adult member of the Insured’s household other
servant, is personally driving the automobile, against
the liability imposed by
law upon the Insured or upon any such other person for loss or damage arising
from the ownership, use or operation of the automobile within Canada. .
.
.
This writer holds that should the case depend ultimately on an interpretation
of the third party liability clause in the contract, as it did in the-Fintay and
Layng cases, the court should decide not for the insurance company, as did
Spence J. in the Ontario Supreme Court, but against it.
To begin with, the following remark of Rinfret J. in Halle v. The Canadian
Indemnity Company should be borne in mind :25
22Ibid., at p. 90.
2 3Levesque v. Malinosky, [19561 Q.B. 351.
2 4Traiti des Obligations en Ginaral t. 7, No. 666.
25[1937] S.C.R. 368, at p. 375.
McGILL LAW JOURNAL
(Vol. 6
There is nothing in the definition of the Code (civil) to the effect that the person
‘called the insured’ must be the person who applies for the policy.
Let us examine the clause in question. It begins with the words:
The Insurer agrees to indemnify the Insured, his succession or his administrators.
We know then that the succession or the administrators are insured for
some liability. But for whose liability? Further on the clause reads:
The problem resolves itself, then, into the following question –
against the liability imposed by law upon the insured or upon any such other person.
do the
words “any such other person”2 6 refer only to those who drive the car with
the consent of the insured, or do they refer also to the succession and the
administrators? This writer submits:
1) The context implies the inclusion of the succession and -the administrators
in those who are covered by the policy. Since the words used are “upon the
insured or upon any such other person,” and since the words “the succession
or -his administrators” follow immediately after the mention of the insured,
they should be regarded as coming within the words “any such other person.”
2) Even if it is felt that the term “any such other person” does not clearly
and unambiguously cover the succession or the ‘administrators, the clause is
nevertheless sufficiently ambiguous to bring into play the rule that ambiguous
provisions in insurance contracts, are to be interpreted against the insurer,
contra proferentem. Surely “any such other person” could be deemed to
encompass the succession or administrators.
The rule of interpretation invoked above is one that is well established in
our jurisprudence. In Crown Life Ins. Co. v. Milligan, a case heard before
the Supreme Court of P.E.I., Saunders J. said :27
The policy in question having been prepared and issued by the appellant company,
they naturally are supposed to make the terms, conditions and provisions of the
policy clear and unambiguous, –
otherwise the policy will be interpreted ‘contra
proferentes’: Fitton v. Accidental Death Ins. Co., 17 C.B.N.S. 122, 144 E.R. 50.
Saunders J. then proceeded to quote further English authorities for the rule.28
This rule of interpretation has been affirmed and applied many times in Canada.
In Metal Stampings Ltd. and Lush v. Standard Life, Schroeder J. said :20
In construing a policy of insurance whether life, fire or marine or any other
kind of policy, an ambiguous clause should always be construed against rather
than in favour of the Insurance Co.
The Supreme Court of Canada affirmed the rule in Ontario Metal Products
Company v. The Mutual Life Ins. Co. of N.Y., where Anglin J. said :30
26The Ontario provision reads “such other person” without the word
27[1939] 1 D.L.R. 737, at p. 745.
2SEtherington v. Lancashire and Yorkshire Accident Ins. Co., [1909] K.B. 591.
Fitten v. Accidental Death Ins. Co., 17 C.B.N.S. 122, 144 E.R. 50. Anderson v.
Fitzgerald, 10 A.E.R. 551.
‘any’.
29[1951] O.W.N. 625, at p. 626.
30[1924] S.C.R. 35, at p. 41.
No. 31
CASE AND COMMENT
It is well established law that the preparation of the form of policy and application
being in the hands of the insurers, it is but equitable that the questions to which
they demand answers should, if their scope and purview be at all dubious, either
in themselves or by reason of context, be construed in favour of the insured …
Finally, the rule has been affirmed by the Court of Queen’s Bench in Quebec.
In Travellers Indemnity and Another v. Miss Powers and Dean, McDougall J.
said :31
The insured was entitled to a contract adopted to his particular protection, subject
of course, to statutory provisions, and if in the contract given him ambiguity has
arisen from the form the agreement takes, such ambiguity is to be construed against
rather than in favour of the insurer (1013-1021 C.C.).
By the application of this rule alone, the contract should be held to cover
the liability of the executors and administrators of the estate (or the succession
and the administrators in Quebec). Yet there is no mention of this rule in
Spence J’s notes in the Finlay decision.
3) In searching for the real intention of the parties to the insurance contract
(see art. 1013 C.C.) we must take into account the fact that before and since
the stand taken by the Global Insurance Co. in Ontario, it was and still is the
general practice of insurance companies to indemnify the succession of the
original insured under such contracts. It is certainly reasonable to suppose in
view of this that the insured in taking out a policy intends to obtain coverage
for his estate and that he feels that he is obtaining such coverage. It is also
reasonable to suppose that the insurer in using the standard form intends at the
time when the contract is drawn up to insure the estate. This would be another
reason for deciding against the company.
4) Finally, art. 1016 C.C. says that:
Whatever is doubtful must be determined according to the usage of the country
where the contract is made.
Article 2497 C.C. reads:
Marine policies in cases of doubtful meaning are construed by the established and
known usage of the trade to which the policy relates; such usage is held to be
a part of the policy when it is not otherwise expressly provided.
Usage has also played an important role in the development of the rules
of the Common law on such matters. General usage should have dictated in
Ontario and should dictate in Quebec that the view taken by the Global
Insurance Co. be rejected by the courts.
In concluding, let it be said that the only way to really provide certainty that
the estates of policy holders will be covered by such policies would be for
the Quebec Legislature to so enact. An addition to the Insurance Act to this
effect would be appropriate. If the Legislature refuses to act for the general
protection of all by making automobile liability insurance compulsory in this
province, let it at least provide for complete protection for those who already
have taken such insurance.
HARVEY YAROSKY*
a1[1943] Q.B. 479, at p. 483.
*Of the Board of Editors, McGill Law Journal, second year law student.
