Industrial Development Bank v. Fayad, Fayad, Canadian Home Assurance Co., Berry Insurance Agency et al., (1976) 5 A.R. 451 (CA)

• Judge: McGillivray, C.J.A., McDermid and Morrow, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: November 25, 1976
• Citations: (1976), 5 A.R. 451 (CA)

Ind. Dev. Bk. v. Fayad (1976), 5 A.R. 451 (CA)

MLB headnote and full text

Industrial Development Bank v. Fayad, Fayad, Canadian Home Assurance Company, Berry Insurance Agency and Continental Insurance Company

Indexed As: Industrial Development Bank v. Fayad, Fayad, Canadian Home Assurance Co., Berry Insurance Agency et al.

Alberta Supreme Court

Appellate Division

McGillivray, C.J.A., McDermid and Morrow, JJ.A.

November 25, 1976.

Summary:

This case arose out of the plaintiff's claim to the proceeds under fire insurance policies. The plaintiff was the mortgagee under a mortgage which required the mortgagors to place insurance on the property. The mortgagors obtained an insurance policy on the building and another policy on fixtures, furniture and equipment with themselves named as insureds, but with a mortgage clause in each policy providing loss payable to the plaintiff mortgagee. The mortgagors quit the premises and the insurer under one of the policies notified the mortgagee that it intended to cancel its policy in 15 days. As a result, the mortgagee placed an insurance policy on the building and contents with itself named as insured. Before the other policy was cancelled, loss occurred through fire. The insurers claimed contribution, because there were two or more policies of insurance on the premises covering the same interest within the meaning of s. 225 of the Insurance Act, R.S.A. 1970, c. 187. The plaintiff mortgagee brought an action to recover the proceeds under all three policies in effect at the time of the fire. The Alberta Supreme Court, Trial Division, allowed the action. The insurers appealed.

The Alberta Court of Appeal dismissed the appeal. The Court of Appeal held that the two policies placed by the mortgagors and the policy placed by the mortgagee did not cover the same interest and that contribution could not be ordered.

Insurance - Topic 2946

Contribution among insurers - Conditions precedent - Two or more policies covering same interest - What constitutes the same interest - Insurance Act, R.S.A. 1970, c. 187, s. 225 - In accordance with a term in a mortgage the mortgagors placed insurance on a property with themselves named as insureds, but with a mortgage clause providing loss payable to the mortgagee - The mortgagee also placed insurance on the property with itself named as insured - The property burned and the insurers claimed that each insurer should contribute only a rateable portion of the loss, because there were two or more policies on the property insuring the same interest - The Alberta Court of Appeal held that the mortgagors' policy and the mortgagee's policy did not insure the same interest and that contribution could not be ordered.

Insurance - Topic 5963

Fire insurance - Loss payable to mortgagee (mortgage clause) - Nature of mortgagee's interest - The Alberta Court of Appeal held that under a mortgage clause in an insurance policy placed by the mortgagor, the mortgagee had an interest in the policy distinct from that of the mortgagor - See paragraph 21.

Cases Noticed:

London & Midland General Insurance Co. et al. v. Bonser (1973), 29 D.L.R.(3d) 468, appld. [para. 21].

Hastings et al. v. Westchester Fire Ins. Co. (1878), 73 N.Y. 141, appld. [para. 21].

London L. & S. Co. of Canada v. Union Ins. Co. of Canton Ltd., [1925] 4 D.L.R. 676; 57 O.L.R. 651, appld. [para. 21].

Laidlaw v. Hartford Fire Ins. Co. (1916), 29 D.L.R. 229; 10 W.W.R. 1063; appld. [para. 22].

Agricultural Savings & Loan Co. v. Liverpool & London et al. (1901), 3 O.L.R. 127, appld. [para. 22].

McMillan Estate v. Calgary Brewing & Malting Co. Ltd., [1923] 3 W.W.R. 202, appld. [para. 25].

Castellain v. Preston (1883), L.R. 11 Q.B.D. 388, appld. [para. 28].

Statutes Noticed:

Insurance Act, R.S.A. 1970, c. 187, sect. 225 [para. 15].

Counsel:

A. Zariski, for appellant Continental Insurance Co.;

J.M. Hope, for appellant Canadian Home Assurance Co.;

D.G. Mariash, for respondent Industrial Development Bank.

This case was heard at Edmonton, Alberta, before McGILLIVRAY, C.J.A., McDERMID and MORROW, JJ.A., of the Alberta Supreme Court, Appellate Division.

On November 25, 1976, MORROW, J.A., delivered the following judgment for the Appellate Division: