Retail Credit Co. Inc. v. Commercial Finance Corp. Ltd.

Retail Credit Co. Inc. v. Commercial Finance Corp. Ltd.

The indemnity agreement did not cover the car‑checking service because the language "this service" and "information furnished" refer to confidential credit and character reports described in preceding paragraphs, not physical car checks; accordingly the Retail Credit Company remained liable for negligent car‑checking reports made by its agent. Alternatively, if the indemnity were read to cover the car checks, it would fail for lack of consideration because the car‑checking service had not been performed.

Citation
[1932] SCR 33
Parties
Appellant (defendant and Third Party): Retail Credit Co. Inc.; Plaintiff (respondent): Commercial Finance Corporation Ltd.; Defendant (respondent): Merchants Casualty Insurance Co.; Defendant (respondent): Western Assurance Co.
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
12 June 1931
Procedural Posture
Contract / On Appeal to the Supreme Court of Canada From the Appellate Division, Supreme Court of Ontario
Outcome
Appeal dismissed
Legal Topics
Indemnity Clause, Contract Construction, Negligence, Agency, Subrogation, Damages
Source Language
English
Contract Commercial Law Tort Insurance Law Indemnity Clause Contract Construction Negligence Agency +2 more

Case Brief

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Parties

Retail Credit Co. Inc.

Appellant (defendant and Third Party)

Commercial Finance Corporation Ltd.

Plaintiff (respondent)

Merchants Casualty Insurance Co.

Defendant (respondent)

Western Assurance Co.

Defendant (respondent)

Procedural Posture

Contract / On Appeal to the Supreme Court of Canada From the Appellate Division, Supreme Court of Ontario

Legal Issues

  1. 1 Whether the Retail Credit Company was liable for negligent car‑checking reports supplied through its local inspection agent
  2. 2 Whether the indemnity agreement (exhibit 9) exempted the Retail Credit Company and its employees from liability for losses caused by negligent car checks
  3. 3 Whether the indemnity clause was supported by consideration if the contracted service was not rendered

Ratio Decidendi

The indemnity agreement did not cover the car‑checking service because the language "this service" and "information furnished" refer to confidential credit and character reports described in preceding paragraphs, not physical car checks; accordingly the Retail Credit Company remained liable for negligent car‑checking reports made by its agent. Alternatively, if the indemnity were read to cover the car checks, it would fail for lack of consideration because the car‑checking service had not been performed.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed with costs
  • Judgment of the Appellate Division, Supreme Court of Ontario, affirmed