Canadian Surety Co. v. Quebec Insurance Agencies Ltd.

Canadian Surety Co. v. Quebec Insurance Agencies Ltd.

Majority: The bond is in substance an insurance/indemnity contract and, read in its commercial context and as a whole (including clause excluding unpaid reported premiums and the claim form), covers fraudulent or dishonest appropriation by the employee even if not embezzlement in the narrow criminal sense; therefore the insurer was liable for the proven fraudulent losses; Art. 1935 C.C. on suretyship limits did not bar this construction.

Citation
[1936] SCR 281
Parties
Appellant / Defendant: Canadian Surety Company; Respondent / Plaintiff: Quebec Insurance Agencies Limited
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
28 April 1936
Procedural Posture
Civil Appeal (collection / Fidelity Bond) / Appeal to Supreme Court of Canada From Court of King’s Bench, Appeal Side, Province of Quebec
Outcome
Appeal dismissed; judgment of Court of King’s Bench (appeal side) and Superior Court affirmed, Davis J. dissenting.
Legal Topics
Fidelity Bond, Embezzlement, Larceny, Suretyship Vs Insurance, Contract Interpretation, Employer Employee Liability for Fraud
Source Language
English
Priorities and Hypothecs Surety and Insurance Contract Law Commercial Law Criminal Law (embezzlement) Fidelity Bond Embezzlement Larceny +3 more

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Parties

Canadian Surety Company

Appellant / Defendant

Quebec Insurance Agencies Limited

Respondent / Plaintiff

Procedural Posture

Civil Appeal (collection / Fidelity Bond) / Appeal to Supreme Court of Canada From Court of King’s Bench, Appeal Side, Province of Quebec

Legal Issues

  1. 1 Whether losses were sustained by acts of larceny or embezzlement within the terms of the bond
  2. 2 Whether the words 'larceny' and 'embezzlement' must be given a strict technical/criminal-law meaning or may be construed in a popular/commercial sense
  3. 3 Whether the bond is a suretyship (subject to Art. 1935 C.C.) or in substance an insurance contract affecting its interpretation

Ratio Decidendi

Majority: The bond is in substance an insurance/indemnity contract and, read in its commercial context and as a whole (including clause excluding unpaid reported premiums and the claim form), covers fraudulent or dishonest appropriation by the employee even if not embezzlement in the narrow criminal sense; therefore the insurer was liable for the proven fraudulent losses; Art. 1935 C.C. on suretyship limits did not bar this construction.

Court Disposition

Appeal dismissed; judgment of Court of King’s Bench (appeal side) and Superior Court affirmed, Davis J. dissenting.

Orders

  • Appeal dismissed with costs
  • Judgment affirmed except that the $680.20 item is reduced by 20% commission to $544.16