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MCINTYRE V. THE NATIONAL INSURANCE COMPANY.

Insurance-Statutory conditions—Arbitration.

Held, affirming the judgment of the Q. B., 44 U. C. R. 501, following Parsons v. Citizens Ins. Co., 4 App. R. 96, and Parson v. Queen Ins. Co., lb. 103, that a policy issued by the defendants, whose head office was in Montreal, signed by their president there, and countersigned by their local agent in Ontario, where the insured property was situated, was without conditions, as the conditions endorsed thereon were not headed either "Statutory" or "Variations."

The condition by which the defendants sought to defeat the action provided that all disputes touching loss or damage, should, after proof thereof, he submitted to arbitrators to determine the amount, but not the liability, and that an action against the company should not be sustainable until after an award had been obtained fixing the amount, or unless such action should be commenced within twelve months after the loss; and the defendants covenanted, in the body of the policy, to pay the loss within sixty days after the loss should be ascertained and proved in accordance with the terms of the policy.

It appeared that the assured had furnished the defendants with proof of the loss on the 5th of April, to which the defendants made no objection until the 11th June following, when they served a written request for an arbitration upon the assured, who refused to arbitrate, and the plaintiff, to whom the claim was assigned, brought this action. Held, that even if the condition were available as a defence, it had not been broken, as in the absence of a request to arbitrate within the sixty days, the loss must be considered as "ascertained and proved," and the plaintiff, therefore, had a right of action on the expiration of that period."

APPEAL from the Court of Queen's Bench discharging a rule nisi to enter a verdict for the defendants on the first and second pleas, and making a rule absolute to enter a verdict for the plaintiff, reported 44 U. C. R. 501.

The action was brought to recover the amount payable under a fire policy effected by one George Forrest with the defendants upon his stock in trade. It was alleged in the declaration, that the goods were destroyed by fire during the currency of the policy; that Forrest duly proved the loss; and that after the fire Forrest assigned his claim to the plaintiff.

There were ten pleas pleaded. Two of these were struck out at the trial, and the others were disposed of in the plaintiff's favour, except the ninth plea setting up a condition requiring any differences to be referred to arbitra

tion, and a refusal to refer, on which a verdict was was entered for the defendants, with leave to the plaintiff to move to enter a verdict for $1,532. The defendants had leave also to move upon the first and second pleas, which raised the question whether, under the Uniform Conditions Act, the policy was to be treated as one with or without conditions.

The pleadings and facts are fully set out in the report of the case in the Court below.

The Court of Queen's Bench held, following Parsons v. Citizens Ins. Co., 4 App. R. 96 and Parsons v. Queen Ins. Co., 4 App. R. 103, that the conditions of the policy not being in accordance with the statute headed either "Statutory" or Variations", the policy was one without conditions, and the condition as to arbitration could, therefore, form no defence.

The case was argued on the 18th May, 1880 (a).

J. K. Kerr, Q. C. for the appellant. All that I can urge in this case has been already said in Parsons v. Queen Ins. Co., 4 App. R. 103, and in Johnston v. Western Ins. Co., 4 App. R. 281.

The Court requested H. McMahon, Q. C. for the respondent to confine his argument to the questions arising under the ninth plea.

H. McMahon, Q.C. No judgment was given upon this point in the Court below as from the view they took of the case, it was unnecessary. The appellants cannot defeat the action on the ground set up in this plea, as they did not demand an arbitration until after the right of action on the policy sued on had become absolute by the lapse of the sixty days allowed by the policy after the delivery of the proofs of loss for payment of the policy. If the company could demand an arbitration after so long a time had elapsed, they could delay asking for it until after twelve months had expired, when the claim would, under the policy, be completely barred.

(a) Present.-BURTON, PATTERSON, and MORRISON, JJ. A., and OSLER, J.

Kerr, Q. C. Under the condition pleaded either party could demand an arbitration, and having had notice that the Company would not recognize his claim in full, the insured should have demanded an arbitration: McInnes v. Western Ass. Co., 30 U. C. R. 580.

September 7, 1880. PATTERSON, J. A.-Upon this appeal there is no room for discussion as to our duty to affirm the decision of the Court below, because the ninth plea relies on the violation of one of the conditions of the policy, and the policy is one which has to be read as containing no conditions binding upon the assured. The decisions of this Court upon the effect of the Act respecting Uniform Conditions have, since the argument of this appeal, been affirmed by the Supreme Court.

It has, however, been argued by Mr. McMahon, for the plaintiff, that even if the condition relied upon in the ninth plea were available to the defendants, it has not been broken, and I wish to say that I am decidedly of that opinion. The condition is the same which was in question in Ulrich v. The National Insurance Co., 4 App. R. 84, and resembles also a condition which we had occasion to discuss in Johnston v. The Western Insurance Co., 4 App. R. 284. But the point in Ulrich's case was not quite the same as that now raised, and therefore the particular words of the condition necessary at present to be considered do not appear in the report of that case. I extract the condition as it is printed upon the policy, not as it is pleaded in the ninth plea, which omits some parts of it. It reads as follows:

"In case differences shall arise touching any loss or damage, after proof thereof has been received in due form, the matter shall, at the written request of either party, be submitted to impartial arbitrators, whose award in writing shall be binding on the parties as to the amount of such loss or damage, but shall not decide the liability of the company under this policy. It shall be optional with the company to repair, rebuild, or replace the property lost or damaged with other of like kind and quality, within a

reasonable time, giving notice of their intention so to do within thirty days after receipt of the proofs herein required; and until such proofs, declarations and certificates are produced, and examinations and appraisals are permitted by the claimant, the loss shall not be payable. Nor shall any act of the company, except their written declaration, operate to waive the requirement of such proofs.

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It is furthermore hereby provided and mutually agreed, that no suit or action against this company, for the recovery of any claim by virtue of this policy, shall be sustainable in any Court of Law or Chancery until after an award shall have been obtained fixing the amount of such claim in the manner above provided, nor unless such suit or action shall be commenced within twelve months next ensuing after the loss shall occur; and should any suit or action be commenced against this company, after the expiration of the aforesaid twelve months, the lapse of time shall be taken and deemed as conclusive evidence against the validity of such claim, any statute of limitation to the contrary notwithstanding."

The proofs of loss were furnished on 5th April. Nothing was done on the part of the defendants by way of objecting to those proofs or of requiring further information or evidence, for doing which ample provision is made by another condition, until 11th June, when a written request for an arbitration was served, with notice that the company had appointed an arbitrator. The plaintiff, or rather Forrest, took no steps to appoint an arbitrator on his part or to submit the matter to arbitration. The action was begun on 5th August. The absence of an award is pleaded in abatement.

The question is whether, under the terms of the condition coupled with another provision to which I have to refer, the request of 11th June, sixty-seven days after the proofs of loss were furnished, entitled the defendants to insist upon an arbitration and award as conditions precedent to the plaintiff's right of action.

In the body of the policy it is provided that the loss is "to be paid in sixty days after the proofs of the same, required by the company, shall have been made by the

assured, and received at this office, and the loss shall have been ascertained and proved in accordance with the terms and provisions of this policy, unless the property be replaced, or the company have given notice of their intention to rebuild or repair the damaged premises." The loss in this case was clearly payable, and the plaintiff's right of action for it had become complete under this covenant at the end of sixty days from the 5th of April, or seven days before the notice to arbitrate was given. I do not think it necessary to repeat what I said on this subject in Ulrich's Case and in Johnston v. The Western Insurance Co., where I endeavoured to explain how, in my opinion, the words "ascertained and proved," &c., should be construed. The right of action, once vested, could not be divested by the notice to arbitrate. This consideration supplies a clear ground for reading the power to require an arbitration with the limitation confining its exercise to a reasonable time after the proofs are furnished. What that time should be I do not say, but it must be within sixty days, at farthest, from the time when the loss, in the absence of a request to arbitrate, would be taken as ascertained and proved. This view is enforced by noting the terms of the covenant I have just quoted, which make the money payable in the sixty days, unless-which necessarily means unless within that time-the company do one of two things, either replace the property, or give notice of intention to rebuild or repair it. If the property is replaced there is no further claim for money. If it is to be rebuilt or repaired, then, by the terms of the condition we are considering, that must be done in a reasonable time, and notice of the intention to do it must be given "within thirty days after the receipt of the proofs herein required.”

To hold otherwise, respecting the notice to arbitrate, would put it in the power of the company, as was pointed out by by Mr. McMahon, in some cases to put off the right of action until, by the lapse of twelve months from the time of the fire, it was barred for ever.

Upon the ground, therefore, that there has been no

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