Supreme Court of Canada
Hyde v. Lindsay, (1899) 29 S.C.R. 595
Date: 1899-06-05
John Hyde (Plaintiff) Appellant;
and
Thomas Lindsay (Defendant) Respondent.
1899: March 29; 1899: June 5.
Present: Sir Henry Strong C.J. and Gwynne, Sedgewick, King and Girouard JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Purchase of insolvent estate—Refusal to complete—Action by curator—Completion of purchase after judgment—Subsequent action for special damages—Res Judicata—Practice.
A merchant in Ottawa, Ont., purchased the assets of an insolvent trader in Hull, Que., but refused to accept delivery of the same. The curator of the estate brought an action in the Superior Court of Quebec to compel him to do so and obtained judgment whereupon he accepted delivery and paid the purchase money. The curator subsequently brought another action in Ontario for special damages alleged to have been incurred in the care and preservation of the assets from the time of the purchase until the delivery.
Held, reversing the judgment of the Court of Appeal for Ontario, that under the law of Quebec, by which the case was governed, the curator was entitled to recover the expenses and disbursements which, as a prudent administrator, he was obliged to make for the safe‑keeping of the property.
Held also, that these special damages, most of which could not be ascertained until after the purchase was completed, could not have been included in the action brought in the Quebec courts and the right to recover them was not res judicata by the judgment in that action.
APPEAL from a decision of the Court of Appeal for Ontario reversing the judgment at the trial in favour of the plaintiff.
This appeal involves the decision of two questions of law which, with the facts from which they arose, are sufficiently stated in the above head-note and in
[Page 596]
the judgment of the court. The Court of Appeal for Ontario did not deal with the question of res judicata as it held that the plaintiff had no right of action.
Belcourt for the appellant.
Aylesworth Q.C. and Pratt for the respondent.
The judgment of the court was delivered by:
GIROUARD J.—This is an Ontario appeal, but the merits of the case are to be determined by the laws of the Province of Quebec. On the 9th day of April, 1896, in the City of Hull, in the Province of Quebec, the respondent purchased for cash from the appellant, as curator to the insolvent estate of one F.X. Martin, merchant, of Hull, the stock in trade and all the assets abandoned by the said F.X. Martin, for the benefit of his creditors, but a short time afterwards he repudiated the sale and refused to take the goods. In consequence of this refusal, on the 21st April, 1896, the respondent was put in default and protested and finally sued. It was not till the 18th of March, 1897, that, in satisfaction of a judgment of the Superior Court of the Province of Quebec against him, he took possession and paid the balance of the purchase money, amounting to $11,712.57, together with the interest thereon from the date of service of process and costs of suit.
Now the appellant demands from the respondent the further sum of $953.63, as special damages which his default has caused to the creditors of the said estate.
The respondent pleaded res judicata, alleging that he had satisfied the judgment rendered against him, in principal and damages, the latter consisting in the interest on the balance of the purchase money and all the costs, and as stated in his plea, he contends
[Page 597]
that the claim of the plaintiff sued for in this action is one which the plaintiff included or might and ought to have included in his claim in said action in the Superior Court, in the Province of Quebec.
Whatever may be the meaning of res judicata under the laws of Ontario, there is no possible doubt that under the laws of Quebec the Quebec judgment is not res judicata of the present claim. The payment of the interest and costs means that and nothing more; C.C. Arts. 1077, 1534; it does not mean other damages resulting from the default in accepting delivery of goods, such as insurance, care-taking, etc., which are specially excluded and reserved by the declaration in the former suit,
the plaintiff, ês qualité, reserving to himself all rights to claim from the defendant all damages, costs, expenses, caused by the defendant’s default.
Art. 1065 of the Civil Code of Quebec says:
Every obligation renders the debtor liable in damages in case of a breach of it on his part.
Art. 1071:
The debtor is liable to pay damages in all cases in which he fails to establish that the inexecution of the obligation proceeds from a cause which cannot be imputed to him, although there be no bad faith on his part.
Article 1073:
Damages due to the creditor are in general the amount of the loss that he has sustained and of the profit of which he was deprived.
The loss here consisted not only in the loss of the purchase money for a time, but also the cost of keeping the property in dispute. The appellant could not include the damages which he now claims in the Quebec suit, either in the principal action or by an incidental demand. Some had happened before the institution of the suit, but the greatest part were in the future and could not be ascertained when the case was instituted or argued, less when it was decided. In fact these damages could not be ascertained before the default had ceased de facto, that is before the pay-
[Page 598]
ment of the full amount of the purchase money, on the 18th of March, 1897. They are necessary expenses and disbursements which the curator and the creditors had to incur pending the default of the respondent, which might have been of several years if the respondent had resorted to the appellate courts of the country. He wisely submitted to the judgment of the first court; he is nevertheless responsible for all the damages caused by his default. C.C. Arts 1065, 1067, 1069, 1070, 1071, 1073, 1074.
The respondent contends that he never authorized these expenses. This is perfectly true. The appellant was not his agent; he was not even a negotiorum gestor under article 1043 and following of the Civil Code; he was simply a curator of an insolvent estate; and it is only in that capacity that he can succeed.
Now, what is the legal position of such a curator? What are his duties, obligations and powers? They are defined in article 771 of the Code of Civil Procedure in force when this matter was pending:
The curator takes possession of all the property mentioned in the statement (of abandonment) and administers it until it is sold in the manner hereinafter mentioned.
The curator is therefore in possession and an administrator, and his administration ends only when the property is sold in the manner indicated by the Code, that is, if for cash, till the cash is paid.
As an administrator, was the appellant justified in making the claim he has preferred? Mr. Justice Moss has very accurately and concisely summarized its particulars, and I cannot do better than reproduce his observations:
The claim made in this action is in respect of four different classes of items:
(1.) At the date of the abandonment by Martin the property was insured in certain insurance companies under policies in respect of which Martin had paid premiums to a period far beyond the 11th of April, 1896, the date of the defendant’s purchase. These policies were
[Page 599]
allowed to continue until they expired, instead of being put an end to, and a return secured of a proportionate part of the premiums as would have been done if the defendant had fulfilled his contract according to its terms. The plaintiff claims the proportion of these premiums, amounting to $164.77.
(2.) When some of these policies expired after the sale to the defendant, short term risks were effected and premiums were paid out of the moneys of the estate in respect of them. These are claimed and amount to $42.60.
(3.) Certain disbursements were made out of the moneys of the estate for the care and feed of some horses forming part of the property sold, for coals supplied to heat the shop where the stock of goods was, and for men carrying some of the goods upstairs and removing ice from the basement of the shop. These are claimed and amount to $60.25.
(4.) A person named Mutchmore was directed by the plaintiff to look after the stock of goods, and he visited the place once, and occasionally twice a day, lit fires in the winter months, turned over the goods, packed away furs, and otherwise cared for the property until the defendant took it away. For this he had not been paid at the time of the trial, but in respect of these services and of the plaintiff’s supervision a claim is made of $686.00.
I would, however, add to the word “supervision” in the last line of the item, the words “and responsibility.”
All these expenses and disbursements were made in the safe keeping of the property in question. Can it be pretended seriously that a prudent administrator, for instance, a tutor or an executor, or a trustee, is not in duty bound to keep the property entrusted to his care and administration insured against accidents by fire? Is the appellant to be less careful than the insolvent who kept the same property insured while in his possession? Is he not justified in keeping a caretaker or guardian of an estate worth nearly $13,000? He had one before the sale, as is the practice pending the liquidation of insolvent estates. Why not one also after the sale, till the payment of the purchase money and the delivery according to the terms of the sale? Why not one till the property is removed from the curator’s hands? Is he to continue to discharge
[Page 600]
his duties and obligations for another year or more for nothing? I think all the classes of items contained in the bill of particulars, except the first, should be allowed, not because they were incurred in the interest and for the benefit of the respondent, but because they were the necessary consequence of his default, in the interest of the creditors. The creditors are responsible to the curator for the amount of the damage he claims, and it is only just that they be refunded or indemnified by the wrong doer. The respondent is clearly liable.
The first class of items, composed of insurance premiums paid by the insolvent before the abandonment, cannot be entertained, because the respondent not only bought the stock in trade, but also all the assets of the insolvent, and this item was certainly one of his assets.
We are therefore of opinion that the appeal should be allowed with costs before all the courts and that this action be referred to William L. Scott, Esquire, one of the masters of the High Court of Justice of Ontario, at Ottawa, to take an account of the amount reasonably and properly paid or incurred by appellant as such curator in respect of the above items 2, 3 and 4, in respect of insurance upon the stock in trade and fixtures of the said estate from the 21st of April, 1896, date of the default, to the 18th of March, 1897, date of the payment and delivery, and also in respect of the care and guardianship of the said property during the above period, including the curator’s fees or remuneration, and those of his guardian, and generally all the items of the bill of particulars filed, excluding only said item no. 1 in respect of insurance premiums paid by the insolvent previous to the assignment.
Appeal allowed with costs.
Solicitors for the appellant: Belcourt & Ritchie.
Solicitors for the respondent: Pratt & Pratt.