The Colonsay Hotel – Canada’s “Leading Case” in Insurance Valuation Law

The Colonsay Hotel around the time it was built in 1910. Source

The Colonsay Hotel was at the centre of a major insurance case that went all the way to the Supreme Court of Canada in the early 1920s. The Court’s decision, handed down on June 15, 1923, greatly limited the liability of insurance companies on old buildings. It also became known as the “leading case” in Canadian insurance valuation cases.

Built in 1910, the 22-room hotel at Colonsay was sold two years later to John Daley for $20,000. In 1912, even though Colonsay had a population of only 150 people, optimism ran high. At that time, the bars were open, and the sale of liquor was lucrative for the hotel business.

With the advent of Prohibition in 1915, the value of the Colonsay Hotel, as with all Saskatchewan hotels, plummeted dramatically. In 1917, Daley was forced to turn the hotel was over to – ironically – the Saskatchewan Brewing Company to which Daley owed $3,300.

In February 1920, Peter and Rosalina Pura, in partnership with John Lashkewicz, formed the Colonsay Hotel Company and bought the village’s hotel from the brewing company for $3,950. The Puras decided to operate a movie theatre in the hotel and had a $400 addition built. They took out three insurance policies totalling $14,500 – one with the Canadian National Fire Insurance Company for $6,500 on the building and contents; one with the Union Insurance Society of Canton, Limited for $4,000 on the buildings and furniture; and one with the British Crown Assurance Corporation, Limited for $4,000 on the building and contents.

Lashkewicz sold the Puras his half interest in the hotel property on September 20, 1920. Three weeks later, on October 2, 1920, the hotel was destroyed by fire. What resulted, according to newspaper reports, was a lengthy court battle between the hotel owners and the insurance companies. 

Courts Hear Insurance Case

Leader-Post, June 16, 1923

The Puras had insured the hotel at a value that they believed to be the replacement value of the building -- $14,500. After the fire, however, the three insurance companies offered to indemnify the Colonsay Hotel Co. for only $5,100. The owners appealed and were awarded $13,500 by the Court of King’s Bench in Saskatoon.

The insurance companies turned to the Saskatchewan Court of Appeal, claiming that the original verdict should have been based on the actual value of the hotel at the time of the fire rather than on the cost of replacing the structure. The Court of Appeal maintained the original judge’s verdict and dismissed the appeal with costs.

The insurance companies then took the case to the Supreme Court of

Canada, which rendered its verdict on June 15, 1923. The five judges decided with the insurance companies, stating that the appeal should be allowed. They referred to the Saskatchewan Insurance Act, chapter 84, R.S.S. 1920, section 82 which stated that insurance companies were not liable for loss “beyond the actual value destroyed by fire.” The Supreme Court then ordered a new trial which took place in September 1923.  The insurance companies were eventually awarded $8,000.

The Leading Case in Canada

 

Star-Phoenix, Sept. 22, 1923

According to Marvin G. Baer in his article on insurance law published in the Ottawa Law Review (Winter 1976), “Canadian National Fire Insurance Co. v. Colonsay Hotel Co.” became “the leading case” in Canada for determining actual cash value in property insurance. Baer notes, however, that “Canadian courts have been reluctant to be tied down to any particular test” for valuation. The courts have since used some combination of replacement value less depreciation or market value.

The unique factor in the Colonsay Hotel case, Baer asserts, was the fact that the building’s depreciation in value came about not by physical deterioration, but by “obsolescence caused by external factors.” The external factor in this case was, of course, the closure of the bars. The value of a large hotel in a small town following Prohibition “is an obvious example of the kind of obsolescence which should be considered” when assessing its actual cash value.

 

After the ashes settled, a new, smaller hotel was built in Colonsay which still stands today. It is now called Kobis Bar and Grill.

The Colonsay Hotel, April 2006. Joan Champ photo

©Joan Champ, 2019

The Woman in the Well: Murder at Sutherland's Shore Hotel

On June 29, 2006, on the west corner of 108^th Street and Central Avenue in the Saskatoon neighbourhood of Sutherland, a work crew discovered a woman’s body while excavating fuel tanks from an old gas station. She had been murdered, wrapped in a burlap sack, stuffed into a barrel, then thrown into a well. The Shore Hotel once sat on the site where the woman’s body was found.

Subsequent investigations by the Saskatoon City Police determined that the “Woman in the Well,” as she was soon called, had been killed sometime in the early 1900s. Her body and clothing were relatively well-preserved due to the mixture of water and gasoline from the gas station that was later built on the site.

Carole Wakabayashi, a clothing and textile historian, worked with the City police and was able to date the woman’s fitted jacket, high collared blouse, and long skirt to somewhere between 1910 and 1920. A broken golden necklace was found with the body. Also found rolled up in a ball next to the woman’s corpse were a man’s vest and trousers.

Two facial reconstructions of the Woman in the Well. Source

Dr. Ernest Walker, forensic archeologist at the University of Saskatchewan, helped the police determine that the victim was a Caucasian woman between the ages of 25 and 35, five feet and one inch tall, with a prominent nose and light brown to reddish hair. Walker extracted mitochondrial DNA from the woman’s remains, which investigators hoped would help to match to a living descendant. Police unveiled two facial reconstructions, a two-dimensional image from an RCMP facial reconstructionist in Fredericton, and a 3D model from an expert from Montreal who volunteered to work on the case. It was hoped someone might recognize the woman from old family photos. Police subsequently received about 30 calls from people across Canada and as far away as France looking for a missing mother, grandmother, or great aunt, but no DNA matches have been made to date.

The Shore Hotel

The only photo I have found to date of the Shore Hotel. Source: The Star Phoenix, December 16, 1912.

The Shore Hotel was erected in May of 1912 by William W. Shore in the village of Sutherland. Located about three miles east of Saskatoon, Sutherland was founded by the Canadian Pacific Railway (CPR) in 1908 and incorporated into a village in 1909. By the end of 1912, its population had grown from 100 to 1500. Over half of the residents were employees of the CPR.

“I have a good business here which has been growing by leaps and bounds,” Shore told the Saskatoon Daily Star in January 1914. “Since the advent of street cars, the receipts have doubled.” When the City of Saskatoon built a new streetcar line to Sutherland that year, people originally waited for the arrival of streetcars inside the Shore Hotel. The hotel must have had an unsavory reputation because, on January 14, 1914, the Sutherland Town Council requested that City of Saskatoon build a separate shelter, stating, “… it is not conducive to the morals of the community to have ladies and children awaiting the arrival of cars in the Hotel.”  

Prior to 1914 when water mains and sewer lines were extended from Saskatoon to Sutherland, water was either delivered by horse-drawn tanks to barrels in the kitchens of the town's homes, or hauled from wells. The well on the Shore Hotel site may or may not have been in active use at the time of the woman's murder.

Ownership of the Shore Hotel changed three times in 1914. On January 3rd, John King of Kindersley bought the business for $50,000. The 1914 Henderson’s Directory lists five members of the King family living in the Shore. Joseph Pelowski of Watson bought the hotel from King in July of 1914. Saskatoon real estate broker W. J. Graham handled the sale. On December 3, 1914, Graham sold the Shore Hotel to a Saskatoon man, whose name was withheld, for $51,000.

Source: The Star-Phoenix, November 23, 1927.

Prohibition (1915-1924) spelled the end for the Shore Hotel. According to Saskatoon City Archivist, Jeff O’Brien, the Town of Sutherland took the property back when the owner didn’t pay his taxes. The Henderson Directory lists the hotel as closed until 1925, when it disappears from the record. Advertisements in October and November 1927 issues of the Star-Phoenix show that the hotel building had been declared a public nuisance, dangerous to public health.Tenders were sought for the demolition of the old hotel.

Missing Persons

Who was the Woman in the Well? Was she a prostitute in this rough-and-tumble town filled with railway workers? Was she an employee at the Shore Hotel, killed by a man at the hotel? Was she a transient herself? Was the crime a domestic one?

Source: The Saskatoon Daily Star, December 27, 1912

 

One sad story. Saskatoon Daily Star, March 3, 1923

There were certainly a lot of missing persons back then. “Sorrowing Mothers, Fathers and Relatives Seeking Information in Regard to Missing Ones in Canada,” reads the headline in the December 27, 1912 issue of the Saskatoon Daily Star. “Western Canada appears to be the mecca for many people wishing to hide themselves if enquiries received here by mounted and local police during the past year are to by taken as any criterion.” The newspaper reported that, throughout 1912, hundreds of letters from anxious family members had been received by the Saskatoon police on an almost daily basis. The paper provided names and descriptions of some on the missing persons list, including several women. For example, Mrs. Charles Washam of St. John, North Dakota, was sought by her husband. “She is 5 feet tall, weighs 140 pounds, slight in figure, blue eyes, brown hair, fair complexion, brown fur hat and brown suit. Has false teeth.” 

Those last three words rule out the mystery woman found in Sutherland's well. Investigators revealed that she had one tooth that had been filled by a dentist and an abscessed tooth that would have needed attention. Sadly, despite the valiant efforts of the Saskatoon Police Service, we will probably never learn her identity.

©Joan Champ, 2019

Chambermaid Blues

 

Staff at the Turtleford Hotel, 1917. Source: Turtleford Treasures, 1986.

Chambermaids were essential to the operation of a small-town Saskatchewan hotel back in the early 1900s. The hotel chambermaid worked from morning ‘til night, cleaning guest rooms, doing laundry, and washing dishes for which they were paid $30 per month, plus room and board.

Some aspects of a chambermaid’s work were less than appealing. In the days before hotels had running water, chambermaids’ duties included retrieving chamber pots from under beds and emptying the contents into a receptacle behind the hotel building. And, in the “occupational hazard” department, chambermaids were usually the ones who discovered dead bodies in hotel rooms.

The Story of Pauline Gerring, Chambermaid

The most appalling story I have come across about a chambermaid in a small-town Saskatchewan hotel is the drugging and rape of Pauline Gerring in 1920. At age 19, Pauline applied for a position as a chambermaid at the hotel at Chaplin, located half way between Moose Jaw and Swift Current. When she arrived, she was shown to her room by the hotel manager, a woman of some disrepute named Virginia Paul. 

The Chaplin Hotel, c. 1915. Source

At the end of her first day on the job, Gerring was invited to a drinking party at the hotel proprietor’s house where she met a member of the Saskatchewan Provincial Police (SPP), Constable Harold Dewhirst. Prohibition was in full swing in the province, and it was the job of the SPP to enforce the Temperance Act. Dewhirst had other ideas. On the night of November 10, 1920, Gerring’s second night of work, the policeman and Virginia Paul gave the young girl two drinks of whiskey in the hotel. When the chambermaid refused a third drink of whiskey, Paul held a glass of water to the girl’s lips while she drank. The next thing Gerring remembered was waking up in the morning, partially dressed, with Constable Dewhirst in her bed.

As a result of Pauline Gerring’s complaint, Virginia Paul was charged with unlawfully administering drugs, and, along with Constable Dewhirst, with violating the Temperance Act. Dewhirst was also charged with a breach of the Provincial Police Act, fined, and dismissed from the force. He was later charged with bribing Pauline Gerring to disappear so that she would not testify against him on the rape charge. Gerring ran to Calgary. When she was brought back to Regina to testify, she was so frightened that she ran away a second time. On February 28, 1921, after two trial adjournments, the rape charge against Dewhirst was dropped because Pauline Gerring refused to tell her story.

Government Scandal 

For some reason, the Hon. George Langley, MLA for Cumberland and Minister of Municipal Affairs, decided to get involved in the Gerring case - a decision that ended his political career. When Gerring was brought back from Calgary after her first disappearance, the magistrate in the rape case committed her to jail in Regina until the next trial could take place. Langley felt it was wrong that the victim was being held as a prisoner. He therefore intervened, and on January 28, 1921, arranged for Gerring to be moved to a mental home on Dewdney Avenue in Regina. To read Langley's statement about these events, click here.

Gerring made her second escape from this home the day before the next trial date of February 7th. While Langley claimed that all authorities, including the police, had been notified of the removal of Gerring from jail, Premier Martin was furious. He charged Langley with having stolen the young woman from jail and hiding her from police. The Premier asked for, and received, Langley's resignation. To read the Premier Martin's entire version of the story, click here 

Corruption

Dewhirst told his side of the sordid affair in a letter to the Regina Leader-Post on February 4, 1922. “The whole thing simmers down to a jazz party, such as are carried on every day,” the unemployed former policeman wrote. He went on to blame Pauline Gerring, who “was not used to drinking liquor. She admits herself to two or three drinks. How much liquor will a person take if not used to it?” As for his violation of the Temperance Act, “how many persons holding important positions even of a more exacting nature that a policeman’s have also violated the [Act]?”

This crime against the young chambermaid at the Chaplin Hotel is an example of the negative effects of Prohibition. The growth of the illegal liquor trade in Saskatchewan fostered excessive drinking and made criminals out of many, including policemen.

No Money to Hire Chambermaids

After the decimating effects of Prohibition (1915-1924) on Saskatchewan’s hotels, and the subsequent onset of the Great Depression, there was no money to hire chambermaids or other hotel staff. All members of the hotel owner’s family had to share in the work of running the hotel. For example, Harry Swanson, owner of the Snowden Hotel, married his wife Aster in 1936. “I brought my new bride home to the new venture,” Swanson wrote in Snowden’s local history book. “She became cook, waitress, chambermaid, and did the washing by hand; what a job for my bride!”

©Joan Champ, 2019